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Subject We're Getting Close To A Real Freakout About France...

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[quote:Anonymous Coward 24752407:MV8yMDA1MDA3XzMzNjg4NzU1XzU2QTMzQTk3]
I have long stated the eurozone will breakup. Historically speaking, no currency union has ever survived in the absence of a political union.
 
Moreover, in It's Just Impossible I noted
 1.The Bundesbank said there should be no banking union until there is a fiscal union.
 2.Angela Merkel said that there should be no fiscal union until there is political union.
 3.François Hollande said that there should be no political union until there is a banking union.
 4.The German supreme court will not allow a political union nor a fiscal union, nor a banking union without a German referendum.
 
Mathematically Speaking
 
Mathematically speaking, I also fail to see how the eurozone can stay intact.
 
Specifically, please consider point number nine of Michael Pettis: Long-Term Outlook for China, Europe, and the World; 12 Global Predictions

9. Disruptive European Politics

European politics will become much more difficult and disruptive. The historical precedents are clear. During a debt crisis the political system becomes fragmented and contentious. If the major parties don’t become radicalized, smaller radical parties will take away their votes.

Remember that the process of adjustment is a political one. We all know someone has to pay for the massive adjustment countries like Spain must make. The only interesting question is about who will be forced to take the brunt of the payment – workers in the form of unemployment, the middle classes in the form of confiscated savings, small businesses in the form of taxes, large businesses in the form of taxes and nationalization, foreigners, or creditors.

Deciding who pays is a political process, and because the stakes are so high it will be a very bitter process. This means, among other things, that politics will degenerate quickly, and of course if Europe doesn’t arrive at fiscal union in the next year or two, it probably never will. This conclusion is also the reason for my next prediction.
 
That prediction was made by Michael Pettis, and I am in complete agreement.

But what if I am wrong?

Read more: http://globaleconomicanalysis.blogspot.com/2012/09/what-if-i-am-wrong-about-europe.html#ixzz283oZhuTB
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Original Message We're Getting Close To A Real Freakout About France...

In the last several days, the chatter about the dismal situation in France has grown much louder.

Today's PMI reading doesn't help. In case you missed it, it was a cliff dive. See the blue line.

Then of course there was Hollande's new soak-the-rich austerity budget that has people wondering whether all the rich will flee, undermining the whole thing. In fairness to Hollande, the "cut benefits to the poor" austerity budgets of other countries haven't exactly worked wonders either.

Ambrose Evans-Pritchard declares: Another domino falls as Hollande pushes France into depression.

Meanwhile, even Roubini declared that the situation in France was getting more and more grim, and that even social unrest was starting to be a worry.

Deteriorating data, a President whose popularity is on the decline, a tax slap at the elites... here we go.

Read more: [link to www.businessinsider.com]

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