Here we must ask a question far more important than those raised by the spokesman of the PS: why the European Central Bank lends Does 1% to banks while the government has to borrow at 3.51%?
This is a scandal that is far more serious than the budget for 2010. Why the ECB does she not admit the effort made by governments to maintain activity, and she does not give them the same privileges as the banks, which are anyway, should not forget it, those responsible for the crisis in which we are immersed?
course we know the answer: the status of the ECB. This obliges the latter to fight against inflation.
Except that the financing of part of public debt by the Central Bank does not necessarily cause inflation. We know the history of Germany in 1923-24, but we forget that the German Central Bank was to finance further debt accumulated a budget deficit exceeding 30% and linked to state funding of the strike General in the Ruhr to protest against the occupation by Belgian troops, French and Italian. One could multiply examples and we would find that the hyper-inflations have each time been triggered by a severe external shock (the occupation of the Ruhr, funding for a hunter in the case of Israel, etc..). In addition, we are now much more threatened by deflation than inflation.
Under these conditions, and if we were in a world, if not perfect, at least composed of reasonable people, we could have a decision by the ECB to pay 1% or even 0%, the portion of the deficit that is (a) directly related to the crisis (the result of decreases in tax collection and recovery plans) and (b) which concerns the efforts investment made by states. This would not cover current expenses. These conditions are generalized to the second part of the deficit mentioned here, and would be restricted by cons to the duration of the crisis for the first part.
Therefore, funding for necessary action at the exit of the crisis could take place without exerting a constraint on future growth and would end the current overvaluation of the euro is so expensive that the French economy (13).
But, we know we're not in a world populated reasonable people. Past experience proves, alas, were sacrificed growth to a certain conception of the Euro zone (14). You have to remember how to ensure the triumph of reason.
One solution would be to threaten to leave the eurozone. This threat is not taken lightly by our partners, especially if accompanied by preparatory measures making possible such an output. Germany, to mention that she can not see without fear of France out of the Euro area and devalue its currency by about 20% to 25%. The impact on German foreign trade would be immediate. This should logically we avoid to resort to this extreme, and one might think that a compromise is possible on the status of the ECB.
However, this compromise will be possible only if our partners are truly convinced of our determination to leave the eurozone. So should you seriously consider this solution, even if only to avoid having to implement it.
The output of the eurozone poses are really three issues: a technical problem (printing new notes), a monetary problem (whatever the exchange rate and what convertibility), finally the problem of accumulated debt. These are serious problems, but not insoluble.
The first problem, the printing of new notes, can be resolved within six months. This is also the time that the French government should focus its negotiating partners.
The second problem is the exchange rate. It is clear that output in the euro zone must be accompanied by a devaluation of 20% to 25% to be effective. The first thing to do is to immediately reintroduce exchange controls and capital, including from the announcement of the time we give to our partners. This measure will convince them otherwise the seriousness of our commitment. If an agreement can be reached before the expiry of 6 months, what I want, it is clear that these measures will be lifted. Otherwise, they are to be maintained to stabilize the franc during both the downside and upside. For some of them, a gradual relaxation is conceivable (primarily for measures concerning the possible exchange relating to business transactions). Finally recall that the development of the practice of credit cards will
Exchange Control much more efficient than it was before. A related problem is the transformation of the bank accounts of the euro in France. We can suggest that this transformation takes place at different rates depending on the amounts. For example, if we start from the assumption that a franc worth 0.8 Euro (20% devaluation from the Euro or 25% from the new course Franc), we could have a transformation on the using a coefficient of 1.25 (or 1.25 to 1 Euro Franc) A and booklets for all popular savings accounts to the tune of 50,000 Euros. The rate could then move gradually from 1.25 to 1 for other accounts and the higher bands. Of course, this applies only to persons residing in France and, under certain conditions that remain to be determined, the French non-residents. For all residents by cons, their debt will be converted into France during 1 to 1. Thus establishing a difference between the treatment of deposits and debt will help to alleviate the debt of the poorest households are exposed and contribute to their solvency.
leaves the third problem, that of debt, which is by far the most difficult. Our debt is now denominated in euros. It can therefore only increase about the devaluation of our GDP calculated by the Franks. The solution here lies in the redemption of this debt successive annual installments, by issuing new debt in francs or in a partial default. The first of these solutions is hoped, to the extent a failure, even partial, would condemn us for some time to renounce foreign financial markets. However, since the convertibility of the franc would be limited to commercial transactions, such a renunciation would probably have less impact than you can imagine. Note that for new deficits, the rules explained above apply, and it would not issue to finance, without exception due to a particularly bad economic conditions, operating deficits through Central Bank (which would be returned to the Bank of France). This would also have the effect of requiring the State in presenting its budget to carefully distinguish what is the operation of which is investment.
There is no doubt that out of the Euro would be a difficult operation, but it is far from impossible. It would be better not to have to do it, but this remains largely suspended the decision of our partners. Provide the most bad scenarios is therefore a realistic policy. Not that one wants that outcome, but it is considered possible.
It should be noted here that if, God forbid, we had to leave the Eurozone, while the devaluation of 25% is recommended that we could afford to abandon, at least temporarily, to the adoption of a protectionist system vis-à-vis other countries in the European Union. The problem arises however still to countries outside the zone.
One can certainly argue that it would have undermined what happens in the eyes of some for longer great victory of François Mitterrand's second seven. To that one can answer that only fools who fetishize a symbol, and it is far more important to ensure the prosperity of France than clinging to a symbol. As far as I know Benoît Hamon is not a fool.
(1)
Associated Press, 29/09/2009.
(2) Agoravox
, September 30, 2009, interview with Benoît Hamon.
(3) And we shall recall here only part of the public debt of the Länder is not consolidated with the public debt Germany, the United States has extended the state guarantee for various financial firms whose debt represents about 15% of GDP in Britain's local government debt is not consolidated public debt etc ...
(4) And here, the author of this text Pleads Guilty in early 1980, helped to teach this model to students in 2nd year economics, knowing well that was very far from representing the reasoning of Keynes. But he also argues the mitigating circumstances. The professor called as Dominique Strauss-Kahn.
(5)
The Tribune, September 29, 2009.
(6) A useful on the effects of the European competition in the insurance field D. Scalera and A. Zazzaro, "The Unpleasant
Effects of Price Deregulation in the European Third-Party Motor Insurance Market: A Theoretical Framework" , The BE Journal of Economic Analysis & Policy , vol. 7 (2007): Issue I (Contributions), Article 50 . This section may well apply to the utilities sector. (7) S. Borenstein, "The trouble with electricity markets: Understanding California's restructuring disaster »
in
Journal of Economic Perspective , vol. 16, n°1/2002, pp. 191-211. (8) J. Percebois et P. Wright, « Electricity consumers under the state and the private sector: comparing price performance of the French and UK electricity industries, 1990-2000 »
in
Utilities Policy , n°10/2001, pp. 167-179. (9) Ce que l'on appelle la consommation inter-temporelle.
(10) P. Artus, « Quels risques pèsent sur les salaries européens ? »
,
Flash-Economie No. 2006-153, April 11, 2006, IXIS, Paris. See also P. Artus, "Why trade openness seems to be unfavorable in some cases? ", lyrics Economics No. 2004-53, February 17, 2004, CDC-IXIS, Paris. (11) See interview in Agoravox of 30/09/2009.
(12) F. Cachia, "The effects of the appreciation of the Euro on the French economy"
, in
Note Synthesis INSEE, INSEE, Paris, June 20, 2008. (13) J. Bibow, "Global Imbalances, Bretton Woods II, and Euroland's Role in All This "in J.
Bibow and A. Terzi (eds.),
Euroland and the World Economy: Global Player or Global Drag? , New York (NY), Palgrave Macmillan, 2007.