On September 7, I had the pleasure of chatting with Richard Bonugli of the Financial Repression Authority, covering topics previously discussed on Notes From Underground. The podcast allows for a much deeper analysis of topics covered here (and usually over a shorter span). Enjoy the conversation, and, as usual, please follow-up with questions so we can all benefit from the intelligence of Notes From Underground readers.
***French President Emmanuel Macron seems to have a similar narcissistic bent as U.S. President Donald Trump. In an online Financial Times article by the pro-EU commentator Anne-Sylvaine Chassany titled, “Macron’s Reform Odyssey Moves on to Disrupting the EU,” Chassany questions Macron’s recent trip to Greece. In his prepared speech Macron said: “Because it was here that the risk of democracy was taken, the risk that puts the government of the people into the hands of the people in the belief that respectable law is better decided by as many as possible and not as few. We should ask ourselves: What have we done with our democracy?” Once Europe can achieve consensus on common goals then they can tackle “… more fundamental reforms–such as more fiscal transfers among eurozone members–would have to ensue.”
Macron is a MORON! Two weeks before the German elections he is forcing the idea of fiscal transfers into the headlines. This idea is what causes German angst:The Burghers of Bavaria will provide the credit card for all the past debts of its EU sovereign partners. If Chancellor Merkel were to have a narrow victory it would cause her to backtrack on some of her public support for Brussels and the Draghi QE program. President Macron raises the specter of Democracy while pressing for a radical program that makes Germany responsible for the consolidation of European debt. It was former Bundesbank chief economist Otmar Issing who raised the issue of NO TAXATION WITHOUT REPRESENTATION in an FT article more than a year ago.
The concept of German fiscal transfers to Brussels without the vote of the German voters is anything but democratic decision-making. Like Trump, a narcissist in front of the cameras or cellphone is dangerous. Macron, as your domestic support slips you strive to become a player on the international scene. Fool.
September 12, 2017 at 7:40 pm |
Good catch! On another note, I’m still wondering who’s buying all those Swiss Francs…
September 12, 2017 at 10:51 pm |
Why are investors so relaxed about the behavior of a North Korea?
September 13, 2017 at 4:27 am |
Perhaps because Noko is overblown? Like Macron now, the Noko regime has long pushed international buttons to compensate for domestic unpopularity. Taken from the playbook of totalitarian scoundrels, it has worked well in N.Korea for years.
The Noko regime isn’t serious about war; rather it’s serious about creating an image of an external threat for domestic consumption in order to perpetuate its position in power. IMHO.
September 13, 2017 at 2:51 am |
I appreciate your tone, Yra. : ) What can one even say at this point…
September 13, 2017 at 4:31 am |
I wonder whether Macron will get bailed-out by the market? If, as looks possible, Eurostoxx follow-through on its breakout this week above the TL of its 5-month slide. No doubt a major factor in the poor Eurostoxx performance has been the 17% surge in EURUSD this year, so what happens if EURO bids cool? Let’s see how markets close the week.
September 13, 2017 at 4:36 am |
September 13, 2017 at 7:35 am |
100% on target. We can only wonder whether this is a specious position by the French President (who must know the Germans would never go for this) to bolster popularity right at the moment his labor market reform agenda is finally hitting active protest resistance from the Left?
September 13, 2017 at 3:30 pm |
Yra,
Spot on as usual. It seems the 21st Century version of “Democracy” is avoidance of it. The ‘tyranny of the majority’ has no place with today’s enlightened leadership who all know better for humanity.
September 14, 2017 at 9:31 am |
Yra, are you sure Macron said this?
“… more fundamental reforms–such as more fiscal transfers among eurozone members–would have to ensue.”
Reading the article it appears to me that the “fiscal transfer” passage was inserted by the article´s author for clarification purposes (potential common goals).
I hate to say that I don´t agree with you in Macron´s assessment. I like what he´s doing. Pushing for real reforms in France, turning things upside down, leaving nobody untouched in the process – from left to right.
As for Europe the only “transfer” plans I´m aware of is for a European Treasury Secretary. But with a very limited starting point of coordinating funds towards economic programs across the Eurozone. No plans of taxes (yet). For that he has received the official backing of Schäuble and Merkel.
We´ll see what really happens after the German elections. I just don´t see Eurobonds fot the foreseeable time. The next big election is Bavaria in 2018. You cannot sell huge transfers to the people of this state. So maybe in 2019 in earliest, who knows? What they are going to do is to transform the ESM into a European version of the IMF.
Interesting nugget: the discussion of the day over here is to lengthen the time between major elections from 4 to 5 years…
September 15, 2017 at 11:59 am |
Green AB–your point is well made but the FT was not the sole news outlet to cite the idea of fiscal transfers so I would therefore say it was part of the discussion.Yes,you make a very good point about macron desiring to overturn the moribund status quo of French politics and social policy for i believe in constructive destruction in the political realm as well as economic–but macron is talking much and seems to be losing some of his support and because his election victory was based on a very low turnout he will run into a great deal of resistance to some of his proposed changes.Remember also that the French public sector is 58% of the economy and therefore any retrenchment will be met with typical French “outrage”—but it will come down to burden sharing and it will require the Germans to accept a great deal of financial responsibility—in today’s FT there is a very interesting item on the change of German bond holdings—have a good weekend and as always thanks for the input