French Fraud

POITOU, FRANCE – “Which is worse? America or France?” The question must be put in context. We were invited to dinner with local farmers last night. Jean-Yves and Arlette live in a modest house in the nearby town – an efficient and cozy place built about 25 years ago. They’ve added a solarium to the back, where we had dinner.


FAF – French-American Friendship. These days it’s a “which is worse” competition… [PT]


Arlette operates a dairy farm left to her by her parents. Jean-Yves runs a cattle and cereal farm that was in his family. A son and his wife moved into the farmhouse in Jean-Yves’ place. Anticipating retirement, he and his wife moved into town.

You have Trump. But we have Macron,” Jean-Yves said. On balance, France probably comes out ahead on that score. Macron is young, smart, and good-looking.

Yes, but he is a fraud,” Jean-Yves continued. “He claims he will change things. But he is mainstream. Besides, I don’t think he can change things even if he wanted to.

Over the years, we’ve commented on many public figures here at the Diary. We can’t remember one we didn’t consider a fraud in some way. And so far, we don’t think we were wrong about any of them.

French President Emmanuel Macron is hardly an outsider or a rebel. He is a graduate of France’s elite École Nationale d’Administration. And he was finance minister under the previous president. So entrenched and unyielding is the French bureaucracy – France’s Deep State – that it would take a real firecracker to change it. Mr. Macron is not that kind of a guy.


The French Macronite. G.W. Bush said it first by the way: “We know that human beings and fish can co-exist peacefully.” Thanks to Macron we now know why: they’re practically brothers and sisters. And don’t forget the trees, with their deep roots. Just don’t cross the French bureaucracy or try to actually do something useful, like working. They’re going to punish you, whether you’re a brother, a sister, or a fish with aspirations to the universal. Your best option is probably to try and become part of that which escapes them… unless you like nightmares of course. [PT]


I wanted to get someone to work on the gardens,” Elizabeth explained.

So I called a guy who has a lawn maintenance company. He said he would cut the grass. But he won’t cut down the trees because that would have to be subcontracted, and that would put his revenues over the allowable level.

You mean he’s not allowed to make more money?

That’s right. If he makes more than a certain amount, he’s required to reorganize his business… and apparently, that’s a nightmare. There must be people in Paris who are spending their time thinking of ways to make it difficult for people to do business.

Nightmare?” Jean-Yves interjected.

Farming is a nightmare in France. We work seven days a week… because we can’t get anyone to help. Or more specifically, we don’t dare get anyone to help. Because if we hire someone, it’s almost impossible to fire him.

It’s worse than that,” Arlette added.

Farming is so hard… with so many directives from the government – from bureaucrats who’ve never actually seen a cow – that young people don’t want to do it. I don’t blame them. I know what’s going to happen.


Typical sleep period of a French farmer’s wife, captured by John Henry Fuseli back in 1781. Plus ça change…  According to a Wikipedia entry, scientific research helpfully suggests that “nightmares may have many causes”. The French bureaucracy is apparently one of them. [PT]


This Too Shall Pass

In France, half the people work hard; the other half try to stop them. But the typical French family is more prudent than its American counterpart. It’s seen governments come and go.

The Third Republic fell in 1940. The Fourth Republic fell in 1958. The Fifth Republic will probably fall in the coming financial crisis. French currencies come and go, too.

When we first visited, many years ago, it had only recently replaced the old franc with the new franc – worth 100 old francs. “That loaf of bread will be 500 francs,” a baker might tell you. Then, in 2000, the French ditched the franc for the euro.


There is one thing French governments have been really good at ever since the French Revolution: utterly destroying the value of the currency in the shortest time possible. They may be complete bunglers otherwise, but they are definitely world class experts  with respect to this particular task. There were occasional attempts to become responsible by anchoring the franc to gold, but these periods obviously didn’t last very long. Nowadays investors can no longer make small fortunes out of big ones by investing in the French franc, but Mario Draghi’s ECB is eagerly trying to recreate this excellent opportunity by running its printing presses with the utmost alacrity. [PT] – click to enlarge.


The French know something Americans don’t: This too shall pass. It has made them cautious. Consumption, especially the conspicuous kind, is not as appreciated here as in the United States. There are fewer malls. Fewer ways to spend money. And less credit.

The government is about as insolvent in France as in the U.S. But the average family carries less debt. France also has another big advantage. It may have a large and costly welfare state, but it has only a small warfare state. The French military still meddles overseas, but on a small scale.


French government debt as a percentage of GDP is actually slightly below the US public debt-to-GDP ratio. It is light years from the 60% ratio stipulated by the Maastricht treaty though and its magnitude is probably already beyond the point of no return by now, as long term economic growth typically collapses once the debtberg becomes this large. Besides, the French economy has been regulated and taxed to death anyway. [PT] – click to enlarge.


The scale of America’s meddling, on the other hand, is colossal. The annual cost of its wars, military spending, foreign aid, and various security agencies and initiatives is almost $1 trillion… and rising.

Here’s President Trump explaining recently to evangelical media mogul Pat Robertson why Vladimir Putin was more likely to favor Hillary Clinton over him in the 2016 election:


“It’s something that you don’t like talking about, but again we are the most powerful country in the world, and we are getting more and more powerful because I’m a big military person.”


Big Military Person, Field Marshal Donald Trump and the US debtberg side by side. This is not a combination that inspires much confidence (mind, we are still glad that war harpy Hillary was deflected by the deplorable voter horde). [PT] – click to enlarge.


Win-Lose Spending

Any military spending you don’t need to defend the country is wasted… at best. Since the U.S. faces no serious enemies, most of its empire budget contributes nothing to either prosperity or security.

It is win-lose spending – from the pockets of the plain people to the pockets of the rich and powerful. Perhaps the Deep State insiders are grateful; perhaps not. It is a shame the president doesn’t read history. At least then he’d put an ironic fillip on the “big military person” phrase.

He would know that every “big military person” in the past – from Bonaparte to Tojo – was either an embarrassment to his country or a disaster… and often both. Excess military spending almost always leads to adventurism, war, and catastrophe.

France… the U.S. Which is worse? It is hard to say.


Charts by: Wikipedia, tradingeconomics, St. Louis Fed


Chart and image captions by PT


The above article originally appeared at the Diary of a Rogue Economist, written for Bonner & Partners. Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.



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One Response to “Which Is Worse? America or France?”

  • Bam_Man:

    At least the French have a culture, an appreciation of art, literature, food and fine wine.
    The typical American is an obese, ill-dressed, drug-addled, grotesquely-tatooed ignoramus.
    I will take France any day and will be there on holiday in less than two months time.

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