Monday, July 14, 2014

The End Of The End Of History; Socialism Fails Again-Hopefully Finally

In 1992 Francis Fukuyama published "

The End of History and the Last Man"

Summarised at Wikipedia LINK  as "the advent of Western liberal democracy may signal the endpoint of humanity's sociocultural evolution and the final form of human government." and "The end of history means liberal democracy is the final form of government for all nations. There can be no progression from liberal democracy to an alternative system."

And from 1992 to 2008 the world experienced a massive growth in development, individual wealth and "third world" movement upwards from utter poverty. In late 2008 as a result of a combination of leftist dogma and capitalist greed and shenanigans a substantial recession commenced.

It is arguable whether further government intervention, which was a major cause of the recession, was the right economic medicine, rather than letting the marketplace heal itself was the correct remedy but that was the course chosen during the Obama administration.

That socialists, specially hard core leftists which made up the base of Francois Hollande's incoming government in France won the 2012 presidential election on a strongly anti-capitalist program.
Rather than see the root cause of that country's stagnation was its outmoded statist economy with its ridiculous early ritrement age, short working  week archaic employment practices, and government involvement in ownership, the socialists saw the problem in the capitalist class who needed to be punatively taxed to ensure an even bigger welfare state,

The "end of history" struck back. Below are excerpts from an article by Ty Andros (full article is at Market Oracle LINK Following that,as presented in the Wichita Eagle is the end political result which is a sharp hard dose of reality. The Hollande government now has decided that the "anti-capitalist class rhetoric must cease and that capitalists, who fled the country to seek less punitive tax rates as any sensible person would, should be encouraged to assist in get the economy moving again.

It is a sorrow and a pity that a country like France should have been so wedded to such outdated and economically stupid doctrines to the point that president Hollande is the most hated politician in France, and the government has to undertake a humiliating reverse of course (whilst blaming "The EU"). Hopefully Fukuyama's lesson has finally sunk in, not only in France but also with the American electorate who have an opportunity to advise the Obama administration this November that the lesson is understood by the voters and it is time for "Hope and Change" to change. If not this November then most certainly in 2016, otherwise what France is undergoing could happen with much worse ramifications world-wide

"France is IMPLODING economically: Vive la France.

Over the last several years most Europe's economies have struggled to grow other than Germany and most recently the UK have provided more robust expansions. But for France it has been a one way ticket on a down Elevator since Francois Hollande was swept into power shortly after the Global Financial crisis began in 2008. After the crisis began most European governments changed leadership except for Angela Merkel in Germany and most swung from socialist to conservative leaning. But France was the exception as Nickolas Sarkozy was replaced by UBER socialist Hollande.

He immediately expanded the welfare state, increased entitlements, hiked taxes to confiscatory levels (75%) on the private sector and expanded regulations (sounds like the chosen one in Washington DC doesn't it?). In France the private sector is the property of the socialists in power and its citizens who are all on the dole in one way or another. Look no further than the recent GE purchase of Alstom where the Government demanded a 20% government stake in the new company":
"It's a prerequisite that France takes 20pc of the capital," ... "If that's not realized, GE's bid will be blocked." - French industry minister Arnaud Montebourg

This deal was blocked until GE caved in and Jeffrey Immelt the consummate crony capitalist worked his magic as he so regularly does in Washington DC. This deal was as Mr. Montebourg put it:
"A political success for the return in force of the state in the economy."
A pyrrhic victory indeed for the state as since 2007 when the crisis began foreign direct investment has COLLAPSED 94% from $84 billion in 2007 to 5 Billion annually today! Talk about a collapse in confidence. 

This has been accompanied by a stampede out of the country by its most productive citizens as over 400,000 of them have voted with their feet to avoid becoming slaves to the WELFARE STATE since Hollande ascended to power. Do you know how much 400,000 top producers represent in leadership, investment, earning power past, present and future? He has CUT the head off those that must build the recovery. They won't be returning soon.

Unemployment is at all-time highs at about 12% and Youth unemployment is at 25%. Its banks are loaded to the gills with dubious lending to the Ukraine and Russia to name a few. Although as Chuck Prince once said, they "are still dancing".
Other than a few months earlier this year the PMI surveys have been under the all-important 50 line (above 50 means growth, below 50 means contraction) for years.
France PMI Output and Business Activity

Anyone remotely familiar with FRENCH regulation of the employment market is Orwellian to say the least, firing a worker for economic reasons or poor performance is virtually BANNED and if you want to hire someone the employment contract must be submitted to the government for approval before any hiring can take place.

Government CONSUMES 57% of GDP, suffocating the private sector and its budget deficit is stuck above 4%, and economic growth is virtually NON EXISTENT. It's called a debt spiral. Its debt on the books is 94% of GDP and projected to rise to 103% in 2016 by the IMF and its GAAP adjusted deficit is several times that. France is TRULY one of the SICK MEN of Europe and like the UNITED STATES it is saddled with incompetent socialists at the helm for SEVERAL MORE YEARS before policies can be expected to CHANGE. So ECONOMICALLY and SOCIALLY the downward spirals can be expected to CONTINUE. Gasoline in France is $11 dollars+ a gallon. Ouch. A bowl of soup in Paris... 15 to 20 euros.

France is Europe's second largest economy, so its health is CENTRAL to the EU project. Its POOR economy, aggressive banks, and governance more closely resemble ITALY and Greece. When this country finally IMPLODES it will be a shot heard round the world. To rescue this morally and fiscally insolvent behemoth will REQUIRE TRILLIONS of Euros to be rescued. They no longer have a domestic money printing capability, which now resides at the ECB. So the domestic banks must take up their patriotic duties and load up with government debt as a quasi-printing press, further loading themselves with ultimately TOXIC sovereign debt on their balance sheets. Its debt and economic death spirals 

France pleads for new EU economic strategy

France's economy minister is blaming European authorities for the lack of growth in France and Europe, and says it's time for a new economic policy that shuns austerity.
Arnaud Montebourg, in a closely watched speech Thursday on economic recovery, also suggested France may seek more time from EU authorities to bring down its debt.

France, with Europe's No. 2 economy, is holding back the rebound across the continent. Its growth has been flat for two years, and unemployment continues to rise. French President Francois Hollande has promised to nurture a more business-friendly environment, in hopes of turning the tide of investment and persuading companies to hire.

Montebourg said the policy of cutting public deficits in Europe and France was "morally right but economically wrong" and that austerity measures are a "European disease" that stunted eurozone growth.
Montebourg also said the European Central Bank should do more to weaken the euro in order to boost growth.
He vowed the government would make 50 billion euros ($68 billion) in spending cuts, as planned, but proposed to use only one-third of the money saved to reduce the deficit, with the rest going to cut taxes.

Montebourg's speech is part of a larger strategy by Hollande and the Socialist government to mollify their hard-left electoral base and lay the groundwork for long-awaited economic reforms.

In a speech Sunday intended to bring around rebellious factions within the party, Prime Minister Manuel Valls said the time was long past for half-measures and demonizing capitalists.
"What does it mean to be a leftist? Is it to raise public spending? Is it to raise taxes?" he said. "Who will create jobs if not companies?"

The government is pushing for more flexibility in the EU budget rules, and analysts agree that France will probably fall short of its commitment to bring the budget deficit to the limit of 3 percent of gross domestic product next year.

Meanwhile, Socialist Pierre Moscovici, former finance minister of Hollande, is a candidate to become the next European economics commissioner, one of the most powerful positions in the EU.

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