by Jerome a Paris
Wed Nov 18th, 2009 at 05:10:23 AM EST
Sarkozy, who had run on a campaign to reduce government deficits and public debt is now presiding over a record increase in both deficits and debt. As Cheney before him, he's decided that "deficits don't matter" as long as he's seen to be doing something about the financial crisis. One of his big symbolic announcements to blunt the effect of his about face on debt was to propose a grand emprunt ie a big national bond that would be open to the population and be invested in big, visible, projects - and thus rally voters (especially those with savings to invest, ie his natural constituency) under a "save the country" banner" and associate them in a profitable way to his big spending plans.
The ministry of finance was apalled, given that France has no trouble borrowing on debt markets, but would need to pay a substantial premium on normal borrowing rates to make such a bond attractive to retail investors. It has thus been running a behind the scenes campaign to limit the size and scope of the operation - and has been borrowing the same amounts preemptively on the markets to limit its cost in any case. The news yesterday was that, despiute public calls by many in Sarkozy's own party to raise 100 billion euros, the emprunt would be limited to 35 billion euros.
But now we have this:
France's "big loan" likely to be raised on markets
PARIS, Nov 18 (Reuters) - France's planned special loan to fund strategic investments will be raised on the financial markets and not, as originally indicated, via small investors, one of the men charged with overseeing the project said.
Now, Sarkozy, out of misplaced pride, may still decide to go ahead with a public operation - or he may decide that the debate on the grand emprunt was enough, politically, to give him cover. But either way, it's yet another exemple of his governing by spin and not having any consistent policies or principles.
But hey, it's only taxpayer money.