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I don't know about craven but it is a total capitulation of France, possibly an act of desperation by a President that has squandered his popularity at a staggering pace, and the final death knell of the European social-democratic establishment as a progressive force.

Wolfgang Münchau: The real scandal is France's stagnant economic thinking (FT.com, January 19, 2014)

First, when you try to solve a shortage of aggregate demand through supply-side policies, the results are not going to be any different in France than they were elsewhere. Some targeted structural reforms such as the introduction of a single labour contract would indeed be a good idea because it could help bring down youth unemployment. But this is not going to happen. Mr Hollande's reforms are of the tax-cut and spending-cut variety. Do not romanticise his U-turn two years into his term and compare it with François Mitterrand's similarly-timed adoption of the "franc fort" policy in 1983. The purpose of the Mitterrand's decision was to allow France to coexist in a semi-fixed exchange rate regime with West Germany. It was a political choice of macroeconomic adjustment, not one of supply-side voodoo and ideological convergence.

...

The French policy shift will have an immediate impact on the eurozone periphery. If France goes to the trouble of aligning with Germany on German terms, expect no mercy for others. The message of righteousness will be broadcast in stereophonic quality.

The third significance lies in the fact that the new consensus spans the entire mainstream political spectrum. If you live on the European continent and if you have a problem with Say's Law, the only political parties that cater to you are the extreme left or the extreme right.



A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Sun Feb 9th, 2014 at 04:24:19 AM EST
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