I suppose it's a good thing that it's a Frenchman chairing the ECB, as that way there's no question of national animosity playing a role...

Those whom the Gods wish to destroy They first make mad. -- Euripides

fiscal policies and the macro-economic policy mix in the EMU, the need to moderate unit labour costs developments in some countries (through an increased dialogue with the social partners) in order to giver lesser reasons to the ECB to take a rigid stance, the need to improve the functioning of capital, labour and goods/services markets in the EMU and finally the question, how in a mid-term perspective the EMU could be given a democratically legitimate fiscal regime including mechanism to ensure cyclical stabilisation across national and regional borders

rephrased:

• fiscal policies and the macro-economic policy mix in the EMU,

  should be about coordination of tax policies, something the neolibs violently fight ("tax competition is good) so I epxect this about lowering taxes everywhere

• the need to moderate unit labour costs developments in some countries (through an increased dialogue with the social partners)

  the more traditional drivel about "reform", i.e. pay workers less, because wage inflation is the only evil kind of inflation

• the need to improve the functioning of capital, labour and goods/services markets in the EMU,

  blablabla deregulate markets

• how in a mid-term perspective the EMU could be given a democratically legitimate fiscal regime including mechanism to ensure cyclical stabilisation across national and regional borders

  yes, the real elephant in the room, which was supposed to happen, but of course is not (cf the above 3 points) and whose absence leads to complaints about the ECB;

I've made it clear that I am generally favorable to the tight ECB monetary policy, but I'm not satisfied with the institutional framework to deal with economic policy at the EU or eurozone level, and as nothing is done there, the cognoscenti should not be surprised to see those unhappy with that situation to complain about it. If others won't help you build something for you after you helped them build somethign for them, then threatening to break what's been built is may be a way to get their attention focused on the new building...

In the long run, we're all dead. John Maynard Keynes

The more integrated the Eurozone economies are, the more a supranational redistributive and social policy is needed. "Improving" the internal markets easing the flow of capital, labout, goods and services, is only going to exacerbate the dislocations within the Eurozone and make a collective redistributive policy more, not less necessary.

So now we have a unified monetary policy, but without a balancing unified emploment policy, for instance, and the kind of employment policy advocated here is focused on controlling wages, supposedly to fight inflation. Phrasing it in terms of "moderating unit labour costs" gives the game away: seeing wages as a cost only indicates the problem is framed from the perspective of business owners. As "controlling inflation" is the job if the independent ECB, the putative Eurozone economic policy of the governments should focus on things other than controlling inflation.

Those whom the Gods wish to destroy They first make mad. -- Euripides

A lot to chew on here, as we have in the past.

First of all, Trichet is funny when he cites so much evidence supposedly against what is essentially a left-right consensus in France. Of course, his evidence is largely out of context and misleading, so much so that it actually distracts from his point imho.

He says 75% of french approve of the ECB institution, which surprises me greatly, but if true I suspect it was just after the launch of the Euro, when employment was pretty hopeful and growing thanks to the PS/PCF/Green gov't.  If true (and I'd like to see confirmation) it certainly is out of context.

Equally unbelievable (except maybe by people like Minc) is his positive reference to ratification of Maastricht, which barely passed an historic referendum in which the sitting President had to make an impassionned plea on national television in order to get it passed. He clearly has forgotten about the resounding rejection of the constitution, and if he doesn't think his institution is a major part of that, he's as out of touch as much of Brussels has been for so long. Which is, at root, the largest problem in the European project today - no popular confidence in European institutions. Trichet certainly does nothing here to remedy this.

As the scope for action in the public sector (job creation programmes etc.) is small due to tight public finances, while programmes to enhance employment in the private sector have not brought the intended results in recent years, the candidates are probably glad to have found a scapegoat - the ECB.

I believe you are correct here, but I would characterize the ECB more as a "source of rightful blame" than as a scapegoat. They've historically had their rates well and demonstrably too high, in particular after German re-unification through the '90's but also in response to the softening at the earlier part of this decade (probably because the ECB president at the time didn't have the cojones to ride out the bumpy start of the Euro's exchage with the USD) and unemployment in core Europe paid a steep price.

(If the constitutions' best opponent in France's name was Dutch, Bolkenstein, it's second best opponent was also Dutch, Duisenberg.)

So the French critics are free-riding on the fact that the euro is there - and share the potential costs of their irresponsible behaviour with their Eurozone partners

You could equally say that critics of more accomodative policy are free-riding on the potential social costs of their irresponsible behaviour with their EU social-pact partners (such as France). This argument cuts both ways.

Comes down to do you want a Europe (and it cannot be Europe and not be social, and note that the PS platform says "full employment") or not?

For instance in Germany, where in recent years some openness to discuss economic governance in the EMU developed, the debate in France re-awakes fears that EMU cannot be maintained as the stability union it was designed for - and diminishes the readiness to engage in a pragmatic debate on future reforms of the EMU.

Again, this is a two-way debate. Seems to me you are saying all this French activity makes Germans more skittish about reform. Well, all that German paranoia about inflation makes a lot of French folks on both left and right real skittish about the Euro in the first place.

It's perhaps too late to go backwards, of course, but its not too late to do other things.

If the bank gets the feeling that the polemics against it gain so much influence that market participants revise their inflation expectations to a higher level, it will get ever more insistent on price stability and more restrictive in its monetary policy to avoid secondary effects through wage increases based on higher inflation expectations.

This is exactly the sort of attitude, and re-inforces exactly the sentiment against the bank for unresponsiveness to all citizens, that is already pretty high against it. And not just in France.

French politicians should rather use the political and economic weight of their country to speak to the other member governments in order to get a joint assessment of the situation.

Agreed, as another tack in the overarching debate over the ECB's role. Kind of the good cop against the rhetorical bad cop you hear Villepin and Sarko and Sego being. And of course electoral politics are driving a lot of what is being said in France today. But on the other hand, trying to get a consensus in today's environment - not easy. Not sure good cop will do the job. And there is a problem with crisis of faith in EU institutions, and the ECB is a big part of this. So I suspect that will be seeing the bad cop for the foreseeable future, until the ECB is suitably reformed, at the very least to add pursuing full employment to its charges of responsibilities. And at the present time, I suspect "bad cop" is a better technique than "good cop" in getting this done.

At least four issues should be considered: fiscal policies and the macro-economic policy mix in the EMU, the need to moderate unit labour costs developments in some countries (through an increased dialogue with the social partners) in order to giver lesser reasons to the ECB to take a rigid stance, the need to improve the functioning of capital, labour and goods/services markets in the EMU and finally the question, how in a mid-term perspective the EMU could be given a democratically legitimate fiscal regime including mechanism to ensure cyclical stabilisation across national and regional borders which could make the real interest rate problem less salient. ackling these issues makes more sense than bashing the ECB - if the objective really is to give EMU an economic government, which Sarkozy again claimed yesterday.

This actually makes a lot of sense. Where can I sign?

Of course, I have no reason to be confident that such a process could be cedibly undertaken; certainly there are no institutions today capable of doing what is necessary to come to a proper consensus which is accountable to all European citizens.

Which is why so many politicians score easy points against the ECB. And this won't change anytime soon, as long as it is run as arrogantly as Trichet appears in his comments y'day.

The Hun is always either at your throat or at your feet. Winston Churchill