Quick Hit: France Is Just a Giant Greece

(POST BY MANDOS)

If you thought that France could elect a right- or left-wing populist and then dictate more favorable Eurozone terms in a manner qualitatively different from Greece, you should maybe hold off on making that judgement. Size ain’t everything: It’s the relative size of your interdependency that matters. And France is, to put it mildly, rather interdependent.

Seeing the rapid rise in popularity of a more left-wing alternative in the French presidential elections, Jean-Luc Mélenchon, Olivier Blanchard (yes, that Olivier Blanchard) just published a fictional scenario of the first 100 days of a Mélenchon presidency. It’s in French in Le Nouvel Observateur, but there’s no need for me to translate it for you: It’s the summary of the instruction manual for Syrizifying France. It’s totally believable, starting with an absolute German rejection of Eurozone reform demands from Mélenchon, the intentional and perfectly designed Chinese finger trap of deliberate fiscal crisis will ensue. As the French are still not ready to accept mass immediate suffering for departing the Eurozone, Mélenchon will end up inevitably, not merely like Hollande, but like Tsipras. What Blanchard is telling you is that they’ve already charted out, in great detail, what to do to bring an anti-austerity French leader into line.

The heart of this problem resides in German politics. The German public was promised and continues to be promised that the goal of the Eurozone is to make orderly, competitive export-manufacturing economies out of Southern European Urlaubsländer (vacation countries), with the salutary side effect of costing the German taxpayer nothing (they think). A grand favour that can, in fact, only work if Germany pays (appears to pay) nothing for it. Paying no transfer payments is the virtue, the moral soul, the charity in this deal. German politicians have invested too much in this illusion.

Or Blanchard could be wrong, and the French public is willing to endure the Chinese finger-trap. Merkel and Schäuble could have a change of heart? Again, my willingness to give the benefit of the doubt may be excessive.