"France is totally bankrupt': Employment minister Michel Sapin

RobitTV

FRANCE’S employment minister Michel Sapin has admitted the country is "totally bankrupt".

The unexpected news came during a radio interview yesterday and is thought to have sent the country’s business leaders into a state of shock.

“There is a state but it is a totally bankrupt state,” Mr Sapin said. “That is why we had to put a deficit reduction plan in place, and nothing should make us turn away from that objective.”

Mr Sapin’s “totally bankrupt” statement is likely to cause huge embarrassment for President Francois Hollande, who will be left to undo the potential damage to his socialist government’s reputation.

It also calls into further question Hollande’s controversial “tax and spend” policies that have seen numerous entrepreneurs and high profile celebrities leave the country.

The comments came as President Hollande attempts to improve the image of the French economy after pledging to reduce the country’s deficit by cutting spending by €60bn (£51.5bn) over the next five years and increasing taxes by €20bn (£17bn).

http://www.independent.ie/business/european/france-is-totally-bankrupt-employment-minister-michel-sapin-3369477.html

Very scary indeed for France and for the EU. If france goes down the EU is finished. Hopefully things won't be to be bad and a bailout won't be needed. :eek:

You could imagine the consequences it would finish off Greece and Spain and would probably finish off Ireland and nearly finish off Italy and would spread into Britain and Germany almost immidately.

But don't worry hopefully that's a nightmare dream. :cool:

rightwingdub

Hollande is economically illiterate, his 75% tax rate for French millionaires has been a disaster with many wealthy French people leaving France. Oh well what do French people expect when they elect a bunch of lefties who seem to believe that money grows on trees, I remember Hollande in his election campaign was promising to hire 60,000 extra teachers, absolutely laughable given the financial state France is in.

death1234567

In a recession you need a right wing government to promote business and cut spending and in a boom you need a left wing government to ensure people on the margins aren't left behind and to keep business from running wild.
In a recession people tend to vote for left wing parties and in a boom they vote right wing.
Q.E.D.

Sponge Bob

France is unable to balance its books.

http://www.bbc.co.uk/news/business-13366011 see spreadsheet link from which.

General government net lending or net borrowing as a percentage of GDP

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
-1.8 -1.5 -1.5 -3.1 -4.1 -3.6 -2.9 -2.3 -2.7 -3.3 -7.5 -7.1 -5.2

Source: Eurostat

France has been running a deficit since the 1970's - it's debt to gdp ratio has quadrupled in that time - not sustainable. The last time that it had a surplus was 1974.

http://www.oecd-ilibrary.org/docserver/download/5kgdpn1hhc7k.pdf?expires=1359482109&id=id&accname=guest&checksum=8917E8C9371D4A1720E3E10073B09F4B

see page 6

rightwingdub

death1234567 wrote: »

In a recession you need a right wing government to promote business and cut spending and in a boom you need a left wing government to ensure people on the margins aren't left behind and to keep business from running wild.
In a recession people tend to vote for left wing parties and in a boom they vote right wing.
Q.E.D.

A country always needs centre right governments during the good times and the bad times.

In the good times true fiscal conservatives can put tabs on public spending whereas left wing governments tend to let public spending spiral out of control.

Regarding France It has never had a true centre right government when it comes to business, taxation and fiscal rectitude. I would have considered Nicolas Sarkozy to have been a socialist as he maintained an ultra generous welfare state when he was president and did very littel to curtail the power of the unions.

rightwingdub

glasso wrote: »

France has been running a deficit since the 1970's - it's debt to gdp ratio has quadrupled in that time - not sustainable. The last time that it had a surplus was 1974.

Thta is financially criminal in my opinion. I'm a staunch advocate of a balanced budget amendement regardless of economic circumstances.

Godge

rightwingdub wrote: »

Thta is financially criminal in my opinion. I'm a staunch advocate of a balanced budget amendement regardless of economic circumstances.

A budget deficit can result in a decrease in debt as a percentage of GDP if the rise in nominal GDP is greater than the budget deficit.

Example Assume Constant Budget Deficit = 1, GDP nominal growth = 2%


Year 0

GDP = 100, Debt = 100 debt/gdp = 100%

Year 1

GDP = 102 (because of nominal growth), Debt = 101 (because of previous year's budget deficit, debt/GDP = 99%

Year 2

GDP = 104. Debt = 102, debt/GDP = 98%


year 10

GDP = 121.9, Debt = 110.5, magically after ten years of budget deficits, the debt/GDP ratio has fallen to 90.6%.

How does this work? Because states don't have to pay down debt (unlike the likes of you and me), they go on for ever so they roll over debt. The problem arises when these factors reverse i.e. GDP starts to fall and budget deficit to rise, the place where we found ourselves.

Godge

Godge wrote: »

A budget deficit can result in a decrease in debt as a percentage of GDP if the rise in nominal GDP is greater than the budget deficit.

Example Assume Constant Budget Deficit = 1, GDP nominal growth = 2%


Year 0

GDP = 100, Debt = 100 debt/gdp = 100%

Year 1

GDP = 102 (because of nominal growth), Debt = 101 (because of previous year's budget deficit, debt/GDP = 99%

Year 2

GDP = 104. Debt = 102, debt/GDP = 98%


year 10

GDP = 121.9, Debt = 110.5, magically after ten years of budget deficits, the debt/GDP ratio has fallen to 90.6%.

How does this work? Because states don't have to pay down debt (unlike the likes of you and me), they go on for ever so they roll over debt. The problem arises when these factors reverse i.e. GDP starts to fall and budget deficit to rise, the place where we found ourselves.

maybe so, but that isn't what's happening in France!

Tigerandahalf

You wonder where all of this will end up. Austerity cant continue forever. It makes no sense unless you are running an investment in infrastructure programme.

rightwingdub

Tigerandahalf wrote: »

You wonder where all of this will end up. Austerity cant continue forever. It makes no sense unless you are running an investment in infrastructure programme.

Western countries can't keep trying to spend their ways out of recession, its no longer sustainable not that budget deficits ever were sustainable.

Tigerandahalf

Well you cant expect people on the dole to suspend their lives forever. Yes I know people can emigrate but not everyone is in a position. Eventually you are going to have a backlash and it may not be through political means. Governments have a lot to answer for as do voters I guess. We seem to be paying the price for the poor policies for the last 30 years or more.

KyussBishop

Budget deficits are perfectly sustainable for countries with control over their own monetary policy, and who are willing to use that (up to the target level of inflation only; no need for debt/bonds); the problem with the EU is monetary policy being centralized at the ECB, with no mechanism in place for funding investment programs.

Sand

rightwingdub wrote: »

Hollande is economically illiterate, his 75% tax rate for French millionaires has been a disaster with many wealthy French people leaving France.

I hope SF and the various Disunited Left Alliance guys are paying attention - wealth is mobile.

ninty9er

Sand wrote: »

I hope SF and the various Disunited Left Alliance guys are paying attention - wealth is mobile.

Just beat me to it, though unless it was draconian, they'd be forced to go further than the UK, as is the reported primary destination for French wealth. The tax regime there is significantly more painful than ours according to some recent emigrants I know.

GSF

Still got enough money to head off to Timbuktu

G Power

GSF wrote: »

Still got enough money to head off to Timbuktu

shocking isn't it!!

G Power

G Power wrote: »

shocking isn't it!!

it's only doing that 'cos there's 6000 frenchies living there.

RobitTV

France's latest efforts to save money by turning off all the lights

http://www.reuters.com/article/2013/01/30/us-france-lights-idUSBRE90T0HH20130130

G Power

RobitTV wrote: »

France's latest efforts to save money by turning off all the lights

http://www.reuters.com/article/2013/01/30/us-france-lights-idUSBRE90T0HH20130130

this should be done worldwide anyway but jaysus!! :eek:

Cookie_Monster

RobitTV wrote: »

France's latest efforts to save money by turning off all the lights

http://www.reuters.com/article/2013/01/30/us-france-lights-idUSBRE90T0HH20130130

that should be a legal requirement everywhere TBH, the amount of wasted energy and light pollution worldwide must be monstrous.

clairefontaine

If France is bankrupt, does that mean the EU is essentially Germany with bunch of broke nations around it?

AllGunsBlazing

clairefontaine wrote: »

If France is bankrupt, does that mean the EU is essentially Germany with bunch of broke nations around it?

Holland and Finland seem to be doing ok. But pretty much every other EU member seems to be in debt up to their eyeballs.

Eggy Baby!

AllGunsBlazing wrote: »

Holland and Finland seem to be doing ok. But pretty much every other EU member seems to be in debt up to their eyeballs.

Very surprising. I thought Holland and Finland would actually have mountains of debt but its not that high.

crockholm

AFAIK the Dutch government have been planning some minor austerity measures, but what with the coalition so precarious, all cuts must be signed off in a broad agreement between the parties