FRANCE CAN GET IT UP, BUT THE US CAN'T?

FRANCE: HOW TO NATIONALIZE, HOW TO SHOCK AND AWE. USA: HOW NOT TO.

France had, so far, only one insolvent bank, the Franco-Belgian Dexia (because it invested in US subprime). Dexia got ten billion dollars at 10 am, half from France, half from Belgium. By 11 am the top managers had been fired and physically removed from the company's grounds. That's the way to do it.

The Paulson-Geithner way has been to give the money to the bank managements that had made their banks insolvent, without getting anything in return. Then the failed managements did what they have always done in the USA in recent memory: they used the money for themselves: some for acquiring other companies and destroying them, some for outright theft.

France is doing its own "shock and awe", preventively. France is investing 42 billion dollars for 1,000 "shovel ready" projects (construction that was supposed to be financed after the year 2009, and now has been advanced to right now). Examples are reinforcing the jetty on Marseilles' port, repairing the metal works on cathedrals (Notre Dame got 3 million dollars right away for the works, out of a schedules 15 millions), or new buildings on university campuses, roads, trains, research (synchrotron light source) etc... 15 billion dollars is supposed to be given this week (first week of February).

Technically (differently from Germany or Britain), France is not yet in recession. Moreover, all big European economies have their economic stabilizers kicking in big time as the economies go down (they enforce mandatory economic activity to serve the less advantaged). They should limit, and ultimately block, the downslide. So there will no "catastrophe" (Obama's word) in Europe (except if the US Congress declares a protectionist war on the world, as in 1930!).

In the USA, economic stabilizers are not kicking in, because help to the poor is actually diminishing (I read in the news this week). That's because local states see their revenues going down, so they cut spending (according to balanced budget mandates).

California has instituted an anti civilizational mandatory reduction of days of government work of 10% (rather than instigating a modest rise of the gasoline tax, although gas went down quickly from five dollars a gallon down to two dollars per gallon!). Thus social services are 10% down in California (roughly speaking). The State of California has decided to shrink by 10% (and that is baffling because a reasonable gasoline tax would have allowed to avoid this). It is depression on command! Apparently, the beast feels surrounded, so has decided to commit suicide.

Tax cuts, or more exactly collapse of State revenue due to a non cooperative plutocracy and an obsolete, inappropriate taxation, and the resulting shrinkage of the State, is how Rome went down. Excruciating details can be found on my other sites ("Small State, Great Depression"). It took five centuries for Rome to collapse, but Rome had no rivals (until the end, when she got too weak to defend herself). It's going to go much faster for the USA, which has plenty of rivals. So drastic measures are not taken right away. .

The analogy with how the Roman empire went down are thrilling, were it not so scary. Hubris will do that to imperially overstretched plutocracies.
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Patrice Ayme
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Note: Maybe it's time to think about what to do to get out of deflation...
The USA got out of deflation with a command economy in 1942. Roosevelt and Galbraith decided what people would be working on, and work they did.
The Great depression in the late nineteenth century was much longer (although it also ended with a sort of world war, the Spanish-American war). Maybe because no huge command economy was put in place.
Notice that the European economic stabilizers of the social programs should act like a command economy... If things get worse.
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http://patriceayme.wordpress.com/
PA

AMERICAN ECONOMIC IDEAS ARE EXPLODING.

If worst comes to worst (and we are getting there very quickly), the USA will turn into France. France is a capitalist country with stronger social and financial regulations. The USA has turned into a creditist country with a ravenous plutocracy. The USA has a class of hyper rich people that buy elections, but average people are so bereft of capital, they have to borrow for everything, They borrow at usurious rates, making the rich richer.

But there is hope. Indeed, looked at it another way, the present crisis denotes the unwillingness of average people to keep on overpaying for their ownership of homes (then, through huge leverage, this avalanched in a giant credit crisis).

The USA got into this in a bipartisan way: a lot of the present excess went out of control under Clinton (Bush only encouraged it further).

The Titanic sank because its rivets were of poor quality (there was a shortage of high quality material to make them, so the hyper rich builder cut corners to build Titanic and its sister ships). Under pressure of scrapping along the iceberg, the rivets lost their heads, so the ship opened like modern tin can do.

Many of the leading socioeconomic ideas of the USA are characterized by a carefully designed poor quality, so that the rich can rule and prosper more, and now that the pressure has come, they are losing their heads.

Fortunately, some ships are better sunk. And what's so bad about France anyway?

Patrice Ayme
http://patriceayme.wordpress.com/