Although most nations boast of their valour, for sudden reckless courage you really need a Frenchman. This courage is not the everyday steadiness of the Briton – indeed, it may only occur erratically – but, when it appears out of the blue, it is spectacular: France is the nation of Roland, du Guesclin, Joan of Arc, Bayard, Cyrano de Bergerac, d’Artagnan, Murat, Danjou at Camaron, and a rugby team that stood up bravely to the All Blacks.
It is also the nation of Nicolas Sarkozy, who had his own moment of insane courage last week when he admitted that it was a mistake to let Greece join the euro in the first place.
Since this an obvious truth, an objective observer might ask why he deserves any credit for stating it. Yet the Western political Establishment is now being held together only by a complex network of fantasies. The markets are buying into these illusions – literally – because the alternative is collapse. For a President of France, a country whose economy has been based on illusion for decades, to question just one of these lies is to question the whole structure.
That the euro is, was always, and remains conceptually flawed is obvious, but that is just one of several basic truths our leaders are incapable of accepting, at least in public...
1 The latest “deal” on the euro is no deal at all: it depends on the Greek and, now, Italian voters and their representatives agreeing to serious reforms, which they currently have no incentive to accept.
2 In exactly the same way, the “deal” on the US government debt that was agreed earlier this year is unravelling, as this blog predicted, because referring the matter to a committee was only postponing the problem.
3 Government debt, not growth or employment, remains the real problem in the West. The latest American GDP figures confirm another of this blog’s predictions, that, although growth will remain sluggish, a double-dip recession is avoidable. Yet politicians and central bankers have lost focus: in their obsession with “jobs”, they are pushing still more money into the economy – which is the problem, not the solution.
4 Inflation is now a serious danger, again as we predicted.
5 The solution to unemployment is not more injections of cheap money but improving business competitiveness. That, however, is a long, painful, unspectacular process that does not appeal to politicians.
6 The crisis of 2008 was due, first and foremost, to the bankers, but it ended very quickly and the markets recovered from it; the crisis that is now brewing is a new one and one entirely of the politicians’ making.