France is a frustrating place. She ought to be the richest country in the world. She boasts a beautiful climate, a perfect location at the heart of Europe but looking out to the Atlantic, a wide range of natural resources, more signature products than any other nation, a global image that is associated with sophistication and prestige, a population prepared to seek their fortunes beyond her boarders, good international contacts leftover from her days as a colonial power, and a cultural tradition with tangible cash value.

The latest evidence of that last asset is the proposal to build a theme park near Paris celebrating the life and times of the Emperor Napoleon I. If that sounds eccentric, consider two facts. First, France already makes huge amounts of money from its history and art, from the Louis XIV at Versailles through the Impressionist painters to Asterix the Gaul, who already has his own theme park, the success of which has encouraged the Napoleonic investors.

Second, the Napoleon name is already one of France’s – many – successful brands. The Emperor has, amongst other things, a pastry and numerous cognacs named after him – which is ironic because he was noted for his moderation in eating and drinking, at least by French standards. A chicken dish named after one of his battles, Marengo, has a slightly better claim to a genuine connection, and there are a number of sites and events associated with the great man which attract the many people, often high-achievers and therefore high-spenders, from around the world who like to think of him as a role model.

Yet, although Napoleon is a business success story, he may also be a fitting symbol of the reason why France is not as wealthy as the sum of her assets suggests she ought to be. The French have always admired strong rulers – Richelieu, Louis XIV, and Napoleon, among others – and the ostentatious centralised government they impose. It is no coincidence that the word dirigisme – meaning state direction – comes from France. While this has had some positive advantages in terms of keeping a diverse nation together, the negative side is that it has prevented the natural entrepreneurial abilities and inclinations of the French people from developing to their full potential.

Intelligent people in France have long seen the dangers of this. The last two Presidents, Chirac and Sarkozy, were both elected on a ticket of reform, but both became bogged down in a war of attrition with the vested interests of the ruling bureaucracy, and both lost their nerve when they were put to serious tests. However, for all Mr Sarkozy’s failings, and there are many, there can be no hope for France in the probability that he is about to be defeated by a man who believes his country’s problems can be solved by a 75% tax rate.

Perhaps it takes a Napoleon to run France – but France needs a Napoleon who understands basic economics.

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.