EU: Don't cry for me, François
The Telegraph ^ | 11/1/2012 | Ambrose Evans-Pritchard
Posted on November 2, 2012 12:14:41 AM CDT by bruinbirdman
French leader François Hollande is uncomfortably close to a collapse in credibility. His poll rating has sunk to 36pc. The speed of decline has been shocking.
The latest broadside comes from ex-German chancellor Gerhard Schröder, supposedly his ally on the Left.
"The election promises of the French president are going to shatter on the walls of economic reality," he said in Paris.
The backsliding in the retirement age is indefensible and "cannot be financed". Two or three more blunders of this kind and "reality will catch up with out French friends".
Mr Schröder knows what it takes to claw back competitiveness. He lost his chancellorship on the Hartz IV labour reforms.
This tale of political sacrifice can be exaggerated of course. The Hartz IV reforms are not the chief reason why Germany is super-competitive today within EMU. The country’s hiring and firing laws are among the least reformed in the OECD to this day.
The Teutonic machine regained a labour edge by screwing down wages for year after year (as companies like VW threatened to relocate plant to Eastern Europe). It was an internal devaluation. Hartz IV was the icing on the cake.
Be that as it may, there is no doubt that Berlin is seriously worried about the strategic direction of France. Le Figaro – which now seems to launch daily attacks of considerable ferocity against the hapless Hollande – had a two-page spread today on German disgust with the new sick man of Europe.
The French are living in Alice and Wonderland. Bild Zeitung asked whether France is becoming the "new Greece". You get the drift.
The business lobby Medef warned two weeks ago that the country is heading into a "hurricane". It said Hollande is making a disastrous mistake by slapping on extra business