http://www.zerohedge.com/news/2014-08-25/france-political-turmoil-after-hollande-unexpectedly-dissolves-government

Earlier this morning, those expecting an out of control European deflationary tumble got one step closer to their goal when French President Francois Hollande asked his prime minister, who only assumed the post a few short months ago in March, to form a new government, following what Reuters reported was him "looking to impose his will on the cabinet after rebel leftist ministers had called for an economic policy U-turn" spearheaded by economy minister Arnaud Montebourg demanding an end to French "austerity." The Guardian is somewhat more direct and to the point: "France has entered uncharted political waters after the prime minister, Manuel Valls, presented his government's resignation amid a political crisis triggered by his maverick economy minister who called for an end to austerity policies imposed by Germany."

Quote :

"The prime minister, a social democrat who has been compared to Tony Blair, acted with characteristic swiftness in a bid to reassert his authority. His aides had let it be known on Sunday that the economy minister, Arnaud Montebourg, had crossed a "yellow line" for his dual crime of criticising both the president of France and a valued ally. Montebourg, 51, fired his first broadside in an interview with Le Monde on Saturday and followed up with a speech to a Socialist party rally the following day. In a veiled reference to President François Hollande, he said that conformism was an enemy and "my enemy is governing". "France is a free country which shouldn't be aligning itself with the obsessions of the German right," he said, urging a "just and sane resistance". He was joined in his criticism by the education minister Benoit Hamon, who on Monday denied that he had been disloyal. A third minister, Aurélie Filipetti, also appeared in danger of losing her job after wishing a "good day" on Twitter to her two dissident colleagues."

Perhaps in an ironic case of poetic justice, she will also be terminated via Twitter? Meanwhile, nothing changes for France where other people's money appears to have run out:

Quote :

"Hollande, who is politically weakened with his approval rating at an all-time low of 17%, asked Valls to form a new government "consistent with the direction set for the country", which is expected to be announced on Tuesday. Valls has pledged to stick to a course in which deficits would be cut while the tax burden on businesses would be eased, bringing him into conflict with the left wing of the party represented by Montebourg. The changes have not yet been carried out, unemployment is at nearly 11% and growth in 2014 is forecast to be only 0.5%. Now, with the fragmentation of the left bursting into the open, Montebourg is scheduled to deliver a speech later on Monday. Centre-right politicians had called for the economy minister to step down, while some Socialists recognised that it was illogical for an economy minister to attack his own government's economic policies. The National Front is demanding the dissolution of parliament. The challenge for Valls will be to put together a government that can win the approval of the national assembly, despite the revolt by the Socialist party's left flank and desertion by the ecologists."

There is some hope that not every minister will become a ward of the state:

Quote :

"Analysts said that Valls was likely to keep Hollande loyalists in the cabinet, including the finance minister, Michel Sapin, the agriculture minister, Stephane Le Foll, and the defence minister, Yves Le Drian. But the justice minister, Christiane Taubira, could be among those to pay the price of falling out with Valls. It remains to be seen whether Valls, who became prime minister in March, will be allowed more leeway in forming his new government, compared with the outgoing cabinet that reflected the internal contradictions of Hollande himself. Le Parisien reported on Monday that he had said to Hollande "it's him or me". referring to Montebourg."

Finally, it is not just the left that is turmoiling. So are the moderates on the center/right:

Quote :

"The crisis is unfolding as politicians already have an eye on the next presidential elections in 2017. Montebourg may now see himself as the flag-bearer of the left, while Valls until now has remained popular in the country as a whole although his popularity ratings have also shrunk. The centre-right UMP is also in crisis, however. Former president Nicolas Sarkozy has not yet announced whether he intends to run although he is widely expected to do so. But former prime minister Alain Juppé, mayor of Bordeaux, and former agriculture minister Bruno Lemaire , have said in the last few days that they would take part in a primary."

The biggest winner from the latest socialist fiasco: the extreme, far right National Front, whose leader Marine Le Pen was one of the biggest winners in this year's European Parliament elections. And so Europe once again goes full circle as the rise of nationalism inevitably follows the now cyclical economic collapse which follows Europe every few decades.

Meanwhile, European stocks soar thanks to both this, and the weaker than expected German IFO Business Climate print, as an out of control European deflationary collapse simply means more "easing" by the ECB (if only for the 1%), which after already being backlogged by the previously announced OMT, TLTRO, and ABS, now has QE on its "to do" list as well.

*end article

A handful of Frenchmen are on another non-political board I'm on. Pretty much all of them thought whoever won the last election was going to ride the bucket down to the bottom as the money had run out and none of the major parties wanted to accept that. That and two weak candidates in Sarkozy and Hollande.

[Edited on August 26, 2014 at 12:33 PM. Reason : .]

8/26/2014 12:32:21 PM

not reading all of that

8/26/2014 1:12:54 PM

Yea I saw this on CNN. In fine print. About 4 of 5 lines down from the main headline.

I guess CNN doesn't consider dissolution of a major European player a big deal.

8/26/2014 1:50:39 PM

Hollande deserves whatever he gets. He campaigned on turning away from austerity but hasn't followed through at all.

I give this Montebourg cat credit. As finance minister he thinks he knows how to help France , and probably thought Hollande was on board (as his campaign rhetoric indicated) until he wasn't. Rather than toe the party line he criticized what he thought was wrong (albeit in a slightly underhanded way). Takes some spine IMO.

[Edited on August 26, 2014 at 2:00 PM. Reason : Lol at zerohedge being worried about a deflationary tumble, something I never thought I'd see]

8/26/2014 1:50:45 PM

Quote :

"I guess CNN doesn't consider dissolution of a major European player a big deal."

Europe's about to enter deflation on a continental scale (which can lead us out of this general recession and into general depression) outside of a few outliers, and France are probably the most important country that look screwed. They're tied at the hip to Germany and Germany's leaving them. If Portugal for example, go down, no big deal. France is an entirely different and far larger problem. And with the two main parties lacking legitimacy, the next largest player on the block is Le Pen of the French far right.

Quote :

"I give this Montebourg cat credit. As finance minister he thinks he knows how to help France , and probably thought Hollande was on board (as his campaign rhetoric indicated) until he wasn't. "

Where's the money? We know where some is, a lot of French Parliament keeps their money in Switzerland. But the big anti-austerity idea as far as I can tell is the European Central Bank doing Fed-style Quantitative Easing or Japan-style Abenomics, which have hardly been unqualified successes. If Montebourg wants to stop austerity, he himself can do nothing about it unless he wants France to leave the euro and bring back the French franc. France gave up control of their economy when they helped launch the euro.

Hollande meanwhile is a president in the John Buchanan mold. And I am shocked, SHOCKED!, that a candidate for a country's leadership lied during the campaign on what his plans were.

[Edited on August 26, 2014 at 5:52 PM. Reason : /]

8/26/2014 5:47:01 PM

Heh, agreed on a politician being disingenuous, but this seems a little above and beyond. The primary way Hollande distinguished himself was his anti-austerity views, it was almost the entirety of his platform, at least that's how it was reported in the US (I really don't follow EU politics that closely).

After a little reading this afternoon, I've got to reduce some of my credit for Montebourg too. It seems that a large part of his outspokenness is due to his ambitions for the French Presidency.

The austerity situation is the ECB (which has done some, but not nearly enough) and a few other countries demanding budget cuts in order to finance France and the other EU states that are having trouble. You're correct that raising taxes in a country like France could possibly do more harm than good in this situation with already high tax rates. But there are still some things a president can do, primarily by growing a spine and advocating for your country instead of just lapdogging for Merkel. First close loopholes on tax avoidance as much as possible (although I agree this won't solve their problems). Every ECB meeting the president needs to be there screaming at the bankers, throwing IMF white papers in their and Merkel's face, just constantly make them defend their actions. Threaten to leave the EU when necessary, and have your Government begin making preparations to do so. As a last resort just spend the money you don't have and ask for financing after the fact.

Yes I realize those last two items could totally backfire and sink France, the EU, or likely both. But it seems as though that will happen regardless. Is it better to go down guns blazing or just slowly limping along , shackled to a bunch of other zombie countries, headed toward a deflationary spiral?

8/26/2014 7:39:54 PM

Weird. I've never seen overhyped news on Zero Hedge before.

8/26/2014 8:04:50 PM

^ Granted. But there's other news sources as well, the financial problems are very well known, even Hollande's own party hates him and he has 3 years left in office, and the government that was just dissolved did just last 5 months.

^^ France threatening to leave the EU would be a bit like Virginia threatening to leave the U.S.

Re the lapdogging to Merkel, true. But you actually have to change Merkel's point of view and Germany are the ones with the money in this situation and are the power. Ultimately it'll come down to the ECB and everyone is expecting them to do Fed-style QE, which is going to be a respite for a bit but won't fix the underlying problems.

Hollande went from "typical politician that slimes his way up the leadership" to "really, this guy was put in charge?" when I found out him and Segolene Royal were partners (as in married but they never got the piece of paper on purpose, and they had multiple children together). Royal was the Socialist Party's candidate for president in the preceding election (has the political incest here hit you yet?). Hollande had his own political ambitions for the French presidency though as well as a mistress that was a journalist for a major French newspaper. This mistress ripped Royal to shreds in that election every chance she got while hyping Hollande to the moon. The American equivalent of this would be say Hillary ran for president in 1988, Monica Lewinsky was a top-notch national journalist on CNN that attacked Hillary every chance she got, Hillary lost, it comes out Lewinsky and Bill Clinton were sleeping with one another, and Bill goes on to win the election in '92.

[Edited on August 26, 2014 at 9:26 PM. Reason : /]

8/26/2014 9:17:08 PM

Damn, didn't know that about hollande. It's hard to think of a more French origin story than that.

Germany has all the power but they have to realize: they are gonna have to take some lumps if they want the EU to survive, the fate of their economy is closely linked to their neighbors and it's starting to falter anyways

8/27/2014 7:46:54 AM

Quote :

"Weird. I've never seen overhyped news on Zero Hedge before."

haha

8/27/2014 8:44:10 AM

Quote :

"Damn, didn't know that about hollande. It's hard to think of a more French origin story than that."

Gets even better. Apparently he elevated his journalist mistress, Valérie Trierweiler (the one Royal tossed him out of the house for) to First Lady of France. Then, they broke up back in January, and she moving out of the Elysee. This happened after the tabloids discovered that Hollande was having an affair with actress Julie Gayet. I suppose that's a way to provide some distraction from the hobbling economy.

[Edited on August 27, 2014 at 10:24 AM. Reason : .]

8/27/2014 10:20:03 AM

but does he play golf

8/27/2014 10:49:21 AM

^^it makes lying about hiking the App trail or texting cock pics seem pretty tame. Crazy

8/27/2014 7:19:55 PM

Got to give credit to the French, when their senior politicians do sexual scandal, they do it in style. We seem pretty crude or amateurish in comparison.

8/28/2014 10:22:13 AM