François Hollande: the new French president, the defeat is bitter

(François Hollande elected president)(source: bfmfan.com)

It is with great sadness that I announce the victory of François Hollande in the presidential elections of France 2012. He won with 51,8% of the vote against Nicolas Sarkozy, who won 48,2% of the vote.

A great mistake

Whereas many didn’t think about the consequences of electing Hollande as president, France now appears to be in very delicate position dealing with the other European countries. It is France in the forefront for the moment. It is time to change the country, says Hollande “Le changement c’est maintenant!” (Change is now). In fact, by change, he means that we are no longer going to have economic stability, that we are going to spend more, mobilizing public funds for people who already have a job and leaving on the side others looking for one. Moreover, there is no need to mention again his willingness to raise taxes for the rich for the supposedly equity and giving the rights to any foreigners living in the country without knowing anything about the French culture.

The role of the media

The media played their role perfectly promoting Hollande in a good way while they couldn’t stop beating upon Sarkozy criticizing his presidential term. Good job! Now we can really see who was manipulating whom! However, this is an even more difficult pill to swallow when young partisans of Hollande went door to door trying to convince, or should I say manipulate, people to choose the wrong candidate. Let them make their own choice, they don’t need you! In this frustrating situation, the conservative president tried to do his best and demonstrate that he managed to keep the country safe when compared with Spain, Italy or Greece.

What about finance?

On the investor side, the victory of François Hollande had no effect. After opening sharply lower on Monday 7^th of May at -1,57%, the CAC 40 (equivalent of the FOOTSIE) returned positive in the middle of the day to settle there securely. Actually, this fall in the morning was mainly due to the Greek elections that were held at the same time because of the massive presence of the radical neo-Nazis party in parliament. In fact, the principal threat for investors would be the breakup of the Eurozone with the coming to power of anti-European political parties. This is why Hollande with power is a great menace for Europe. He clearly voiced during his only debate with Sarkozy, that his first goal is France and not Europe. The debate was the only one because he was not brave enough to face the challenge. He also declared to Angela Merkel, the German chancellor, that he wanted to make great changes concerning European politics, for example with the renegotiation of the European fiscal pact. Obviously, it was out of the question for the chancellor to accept such a proposition, especially when it came from a man who is not open to international relations.

We can still fight back

In mid June we have the upcoming legislative elections, which are going to be very important for the future French government. Indeed, if many deputies from the conservative party will be elected, there will be no space for the governance of Hollande to manoeuvre. According to many statistics (Nouvel Observateur), he won’t have the Parliament majority so he will be constrained to govern by decree, therefore there will be no lows.

Let’s react and take this opportunity to prevent Hollande from burdening the country with huge liabilities.

Sarkozy, the first outgoing French president who didn’t win the first round of the elections

The first round of the French presidential elections was held on April 22 2012. It came as no surprise that Nicolas Sarkozy (the president) and François Hollande (the socialist) were the winners of this first round. Indeed, the estimated results were announced a few days ago, sourced from a number of surveys completed in the country.

François Hollande's party is progressing

While we were told about the progression of the socialist party in the election race, yesterday, the Minister of the Interior confirmed that Hollande came top of the polls with 28,63% of the vote. This was the first victory for this candidate, who wanted to crush all opposition but in particular Sarkozy who obtained only 27,18% of the vote. It was also the first time that a candidate from the Socialist party reached a record score for the first round with the exception of François Mitterrand in 1988 (34,11%).

For many French, it was the time to react against the actual economic crisis. As a result, we have seen an increase in participation, now higher than 80%, one of the highest rates since the introduction of the president by universal suffrage.

People are fed up with Sarkozy

In fact, the French were voting against Nicolas Sarkozy’s existing government. They were fed up with the character of the president, which was, according to many politicians of the opposition, too arrogant and exhibitionist with his “bling bling” lifestyle. They obviously didn’t mention the good things he did during his five years of presidency. For example, he maintained a  stable economic situation by saving many French companies to preserve the domestic labour force, while other European countries were overwhelmed by debts and faced high unemployment. Evidently, when people are ignorant about a situation and prefer to follow the crowd like sheep, we can’t really say that their comments are relevant, especially when they are quick to criticize without substance.

The surprising rebound of Marine le Pen 

However, it must be mentioned that people who usually vote for the right-wing party didn’t show any loyalty this time because of their aversion to Sarkozy. Consequently, we saw the majority of their votes lying with the National Front led by Marine le Pen. This was actually the surprise of the 2012 presidential elections. She took over her from father just a year ago and got 17,9% of the vote, the best score ever achieved by anyone in the FN party for presidential elections.

Some difficulties for Sarkozy

After her victory in gathering people to her cause, she called them to vote blank to show their protest against both candidates Hollande and Sarkozy. She declared publicly that none of them would save anyone. It is just a ‘deception’ from the actual president or a ‘false hope’ from the socialist candidate (Le Monde). This creates difficulties for Nicolas Sarkozy who needs to find his missing votes. It is clear what he needs to do to achieve this, and it won’t be pleasing. He must try to adapt his speech to include some extremist views, which do not represent the current ideas of his party. However, if he wants to be president again, he actually needs 80% of Marine le Pen votes and therefore has no choice, he has to try to convince them.

Left-hand parties acting like sheep

As for Jean Luc Mélenchon, the leader of the French Left Front who obtained 11,11% of the vote thanks to his useless and provocative rhetoric, he has asked for all his supporters to vote for Hollande in order to crush Sarkozy. What he hasn’t said, is that he has made an agreement with the Socialist party to ensure him a place in government if Hollande is elected. Clearly the other insignificant left-hand parties followed the same path like sheep.

(source: LeFigaro.fr)

The situation at present is that Nicolas Sarkozy and his partisans are in great trouble. Whereas some think about leaving the ballot blank, the conservative politician remains confident because he believes in a France united by fraternity. He will definitely need more than his confidence to be re-elected again. 

A year after Fukushima: the Japanese trade deficit is reaching a record high

                                                                         (Source: american.com)

It has been a year since the Fukushima nuclear disaster took place. Now that we can appraise its consequences in more detail, the situation is alarming.

The earthquake of March 11 2011 led the country to the temporary closure of its nuclear plants, which pleased the entire Japanese population. As a matter of fact, despite the radioactive fallout, the Japanese economy remains the principal victim of the catastrophe. The global economic cost of the accident continues to increase day after day, seriously affecting the country’s level of debt and its foreign trade.

The foreign trade accounts of the world's third largest economic power reported a record negative balance of ¥4.410bn in March 2011, the equivalent of nearly €42bn. Indeed, the balance of trade has been deeply affected due to the impact of natural disasters on the Japanese industry and the gloomy economic situation in the US and Europe. This forced companies to import more hydrocarbons due to the reduction of nuclear power production, leading the country to a deeper indebtedness.

The weight of crude oil imports

Japanese exports increased in March for the first time in six months, largely thanks to the automotive industry and the demand from the US. However, the high price of crude oil imports put the balance of trade back into the red. Exports rose 5.9% month on month in March 2012, while economists on average expected no increase. In the preceding twelve months, exports declined by 3.7%m, a value of ¥65,281.2bn, approximately €616bn. This is mainly due to a fall of 14.7% in overseas shipments of semiconductors and other electronic components, and a decline in deliveries of home entertainment, cars, plastics, paper and metals (Reuters). 

On the other hand, Japanese imports jumped by 11.6% from April 2011 to March 2012 representing ¥69.692bn (± €658bn). Part of this was due to a jump in the volume of crude oil purchases, petroleum products and liquefied natural gas needed to fuel thermal power stations and compensate for the lack of nuclear power.

The strength of the Yen does not help

For more than a year and a half, the Japanese currency has been strengthening, which mechanically reduces the competitiveness of Japanese products to foreign markets and discourages production in the archipelago. 

Consequences

It seems to be very difficult for Japan to reconnect with its legendary market power. Even though it can count on the dynamism of emerging countries to increase demand and maybe renew its activities with the US, there is still a lack of energy resources that can seriously influence the development of high technology, an important sector for Japan. If the country continues to import as much as it does, the level of unemployment will rise leading to a less stable economy. This situation would cause many problems for Japanese citizens, and one of the most tragic one would be a decline in the competitiveness against Korea, for instance in the high tech sector.

Moreover, the Fukushima accident has raised the question about denuclearization in Europe. After the news came out, some nuclear plants over the continent were supposed to be destructed. We can understand that it was for the security of the people, however, we didn't take into account all the effects of denuclearization. It will cost an incredible loss of jobs in certain areas where nuclear activity is the main source of income. Therefore, there will be a rise in energy imports which can make a country dependent for a short time until it develops enough alternative energies to compensate for the nuclear one. This is quite a dangerous strategy in these times of crisis especially when some countries in the Middle East are suspected to conduct secretly nuclear tests to develop atomic weapons via nuclear programs. 

In fact, it would be better to secure nuclear plants while developing alternative energies at the same time in order to avoid deficit in the balance of trade, a loss in competitiveness and a dependency on imports.

The Greek bailout might only offer brief respite

(source: evenkeelmedia.com)

Last week, Europe contributed to the biggest public debt-restructuring plan since the Greek post-war years.

Following the financial crisis of 2008, during which Greece almost went bankrupt due to a lack of funds to pay back its debts, private investors have agreed to shrink the country's public debt.

More than 107 billion euros will be subtracted from the total debt figure of 206 billion euros worth of bonds held by private investors. This restructuring will allow the country to benefit from a second international aid program worth 130 billion euros from the euro zone. 

This has been great news for the Greek financial minister, Evangelos Venizelos, who considers the country to be recovering from rather difficult years.

However, some remain very pessimistic about Greece's future, since there are still many issues that the country needs to tackle.

A return to sustainable growth?

                           

The Greek economy may face some difficulties returning to sustainable growth, which may make the government debt burden unmanageable. In fact, GDP has contracted 15% on average since 2008. Moreover, 10% of jobs have disappeared and more than half of young people are unemployed.

Once thing is certain, austerity measures, that the country has been forced to adopt in exchange for international support, are not the answer for Greek citizens looking to get their jobs back. It is clear that austerity measures will lead to further recession.

Consequently, the social situation will deteriorate if unemployment continues to grow in a country fond of protests and demonstrations. 

We can hope that the Greek elections on the 29^th of April will help improve the country's financial situation. It goes without saying that the government risks becoming a huge target in the eyes of the public if supporters demand new sacrifices in light of quarterly inspections.  

Therefore, if Greece is unable to comply with the time limits set for the repayment of its loans, there is a possibility that debt levels will return to their starting point. We should be prepared for a much more severe restructuring process at some point in the future, or even an exit by Greece from the euro zone over coming months.

What can we do?

The participation of all public investors would be the only way to significantly reduce the level of debt. However, many investors are reluctant to commit to this given the sharp increase in default risk. This is why the government has recently applied collective action clauses (CACs), to force backers to exchange their bonds for new ones worth half the face value. Obviously, this measure has angered some creditors and a case could be brought to the European Court of Human Rights, using treaties protecting investments concluded between Greece and other countries.

What can Greece do?

The restructure does not address Greece's uncompetitiveness. They need a better fiscal administration, a better system preventing corruption, they need to eliminate pensions, and liberalise the economy. Thus, a close eye on financial statistics and economic government indicators is vital in the next few months. 

(source:toonpool.com)

François Hollande doesn’t like the rich, he likes taxes!

Last Tuesday, France heard terrible news from François Hollande, the socialist candidate for the presidential elections of 2012.

He surprised everybody when he announced his intention to tax incomes over one million euros at 75%.  He cited patriotism as a reason to pay extra taxes to straighten out the country, while the actual president Nicolas Sarkozy criticizes improvisation and amateurishness from the socialist candidate. 

In this case, 10 000 people earning an annual income above a million of euros could be affected according to a simulation of the economist Thomas Piketty. Accused of theft by the minister of the economy François Barroin, the socialist team evaluate the yield of this measure to be between 200 and 250 million euros to the government. However, they pointed out that most of the time, the average rate of tax would be lower than 50%.

Who would be targeted?

Basically: financial professionals, bankers, artist, and sportsmen and women.

Indeed, after this politician became aware of the wage increase of 34% of stock market bosses, he jumped at the opportunity to rally partisans to his cause.

His main target is people from poor backgrounds, immigrants, and employees with low incomes. He wants them to take part in his project to eradicate this ‘elite’ who remains in the socialist's sight. He relentlessly accuses 'the financial industry' to be the cause of the economic crisis and all the problems that France has had to face during recent years. But isn’t it finance that helps a country's development, economic growth and improvement of international business and relations? Everything is interlinked and it is incorrect and easy to blame the financial system for that. Yes it has its imperfections, but if we work on it to avoid previous issues happening again, we could make the most of it to re-establish a stable economy.

Hollande's objectives

To be clear on Hollande's objectives - he not only wants to tax the rich, but all citizens! After he publicly announced his project, he also indicated his intention to tax all Life Insurance holders at the same rate as income tax. Here, we are not talking about 10 000 people anymore but 17 million households! This is appalling and ridiculous! This means that if you earn a million through life insurance, after paying taxes of 75%, you would only have one quarter of this amount left. So, all you have saved over the years, before daring to withdraw money from your insurance, will be partly taken away by the State.

Now the question is, what would these people become if François Hollande wins the election? They would leave the country for sure and others would use offshore accounts to secure their money. So, investment will diminish both domestically and internationally, since it will also deter foreign direct investment to enter the French market. France would then become uncompetitive and would surely see its growth fall sharply (which is not very high at the moment).

This news has incredibly affected François Hollande's credibility and campaign for the next elections. I will be following this carefully !

(source: françoishollande95.fr)

(HOLLANDE WANTS TO TAX THE  VERY RICH ...

Charles !...

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