Financial Crisis? The View From France

You are not alone Americans. In these stressful economic and financial times the French are sharing and feeling your pain.

The only problem is that they are blaming you for it.

Well, maybe not you, Bonjourparis readers, but certainly American politicians and bankers and, often, the whole free-market operating ethos of the American economy.

It is hard these days, to read a single article, or hear a single commentary on French radio or television that doesn’t finger the Americans and their runaway, too loosely controlled capitalist system as the source of the world’s current financial and economic crisis.

What’s more, although they’re cheered by Washington’s visible efforts to restore order in the financial markets, they’re not even looking first and foremost to America to set things straight.

Instead many French are pinning most of their hopes on the non-stop efforts of their own President, Nicolas Sarkozy—who happens also until year’s end, to be President of the European Union—to forge a worldwide rescue effort to restore global economic credit and confidence.

Ever since right-of-center Sarkozy, was elected in May, 2007, for a five-year term, he has faced constant criticism in France from his defeated left-of-center political adversaries for just about everything he says and does.

Although they keep trying, it has been increasingly hard for them, however, to fault Sarkozy’s energetic fireman efforts since September when the worldwide banking and economic crisis that began in the United States with sub-prime mortgages spiralled out of control.

Among world leaders he has been foremost on the scene to militate not just for individual national rescue programs but for an energetic and coordinated international effort to set things right.

In rapid succession he has organized top-level reunions of the chiefs of Europe’s biggest economic powers, of the countries of the European Union, of the nations utilizing the Euro as their common currency, then another with the Americans included. Finally, he obtained agreement from U.S. President George W. Bush to host still another international coordinating meeting in mid-November. That, in principle, will include, for the first time, new major emerging economic powers such as China, India and a middle-eastern participant, perhaps Egypt.

What’s more, Sarkozy keeps insisting publicly that he will do all in his power to ensure that these meetings won’t simply be talking sessions but will wind up taking concrete measures to restore worldwide economic order.

He has been just as energetic on his own home front, where, with its own economy sputtering and unemployment surging upward from the ripple effects of the U.S. crisis, France really is feeling America’s economic pain.

By American standards a relatively small percentage of French citizens have their savings invested in the stock markets. Most thus are not affected directly by those markets’ daily the ups and downs. They have a government-run program that ensures them at least a minimal retirement income and a nation-wide health care system that guarantees them medical help if needed in extremis even though that system is heavily overloaded in practice.

But the rebound effects of the banking crisis in terms of economic slowdowns across the board already are being felt strongly

As in the United States, France’s auto industry, spearheaded by the giant producers Renault and Peugeot, has been forced to cut back production programs drastically. The buyers simply aren’t there. In a lethal ripple effect, three giant steel mills in France whose production goes mainly to the auto manufacturers have called a production halt from November until early in the new year.

The French are hoping that a sensibly strengthened U.S. dollar may help boost the numbers of Americans still game to take vacation trips to France. However, in the nation which normally boasts the world’s leading number of foreign tourists each year, hotel rooms are going begging and empty tables are appearing in even the most popular restaurants.

Even more telling, as one French news report put it, a new American term and custom—“Ze lunch box,”— has been making its appearance in French business offices. That’s where employees traditionally have switched off their computers and headed for the company canteen or a favorite nearby restaurant to enjoy a substantial and typical French mid-day meal with several courses, wine and coffee included . Not in these belt-tightening days.

So what is Sarkozy doing about all this?

Well, in normal times, Sarkozy indeed could be called a liberal in the French sense, namely someone inclined to let the market resolve its financial and economic problems by itself. In fact, that’s why his Socialist party adversaries like to refer to him, sarcastically as “The American,” or as an “economic liberal.” For French Socialists, “liberal” is a dirty word.

But these are not normal times and Sarkozy is, first and foremost, a practical politician ready to do what is necessary and what works whether or not if fits in with right-or left-wing ideology.

That explains why, in these crisis times, his actions have paralleled and often exceeded those of the Bush administration in the United States. There also, despite a preference for letting market forces rule the economy, the government has been forced to step into the picture with a massive bailout program.

In fact, scarcely a day has gone by since September without Sarkozy announcing new salvage programs. Particular stress has been put on

those providing government guarantees and exhortations to French banks in order to loosen up their virtually frozen credit procedures

Sarkozy has accompanied his calls to the banks—one could call them orders—with severe warnings that the government will watch closely to ensure that the credits extended to them by the state really will be used to ease credit accessibility for private businesses. If they are not, he has promised, the government will withdraw them from recalcitrant banks and place them elsewhere.

In addition, he has shown no hesitation about launching a

program to create thousands of state-subsidized jobs. In doing so he has blithely ignored the fact that his government up until now has devoted massive efforts to criticize and eliminate a similar subsidized job program put in place by the country’s Socialist party when it was in power.

All this is highly unsettling to Sarkozy’s left-wing political opponents because his crisis-resolving measures openly involve a degree of government involvement in the economy that many Socialists would love to have to their credit.

As is the case around the world, despite all the programs and all the high-level meetings, however, it is going to take time—probably a long time—to achieve a return to economic and financial stability in France.

It’s a “Vaste programme,” as war hero and former French President Charles de Gaulle was fond of saying.

So it is. But no one (although his political adversaries will think of something for sure) can say that Sarkozy isn’t trying to accomplish it.