Spectators watch as French President Emmanuel Macron speaks to the nation about extending the ... [+]
Emmanuel Macron is a Brexiteer!
Wait, nope...he is an anti-EU right winger!
Speaking in the (pro-EU) Financial Times this week, French president Emmanuel Macron said that if the European Union cannot band together on how to unilaterally fund a relief package for companies and individuals sickened by a global pandemic, then the EU as a “political idea” is at risk.
Macron mimics similar sentiments felt in Italy, which first called for a euro bond (they called it a coronabond) to fund a pandemic rescue package. Germany has balked on the issue so far, but has indicated some willingness to bend on other matters, such as running a deficit, as the EU faces its worse economic crisis since World War II.
“If it’s a political project, the human factor is the priority and there are notions of solidarity that come into play,” Macron told the FT in an article published April 16. “The economy follows on from that, and let’s not forget that economics is a moral science,” he says.
Tens of millions are out of work in the EU due to forced government shutdowns designed to slow the spread of the new SARS coronavirus. Over 17,000 people have died of COVID-19 in France, the new disease caused by the fast spreading virus.
France is pushing for the creation of a fund of about 400 billion euros in addition to more emergency assistance from the European Central Bank and other EU institutions to be doled out to those most in need.
When asked if failure to agree on a relief package meant the collapse of the eurozone, Macron told the FT, “Yes. And also of the European idea.”
He fell short of saying the European Union would lose member states, suggesting he does not think that is in the cards. He was not pressed on that matter.
Macron said entire sectors of his economy are being nationalized.
“That’s what we’re doing. All our economies, including the most economically liberal are doing that. It’s against all the dogmas, but that’s the way it is,” he says.
So far, Germany and The Netherlands have both rejected giving extra financial assistance to those hardest-hit nations in the south. Those economies are already heavily dependent on the state and have different sets of fiscal circumstances than the richer north. To the Germans and the Dutch, they’re just bailing out bad business, and bad social policies that for years have hindered economic growth in southern Europe.
Last week’s efforts to reach an agreement on common financing failed to produce anything, hence Macron coming out in the FT.
Italy’s complaints can be lodged as something you’d hear from Greece, and therefore ignored as typical gripes by the lazy. But France is, at least, considered to be more serious than the Italians. And Macron is a firm believer in EU togetherness.
Yanis Varoufakis, former Greek finance minister: Be prepared to hold the European Union hostage for ... [+]
Yannis Varoufakis, Greece’s former finance minister, said on his personal blog last week that unless there is a unified euro bond designed to fund economies and workers severely wounded in the war with the coronavirus, “the Eurozone will either die or become a cruel cage of austerity in which our people will languish.”
Are Eurobonds feasible? Yes, says Varoufakis, but only if the Italian, Greek, Spanish and French prime ministers are prepared to veto everything in the European Council unless a Eurobond of at least 1 trillion euros with a 30-year maturity is issued.
That’s a hostage warning.
The Vanguard FTSE Europe ETF (VGK) is down 23.31% so far this year, underperforming the Dow Jones Industrials Average, down 17.5%. Despite massive central bank support, Europe has the bigger headwind of a disjointed approach to bailing out labor and the private sector.
Greater government control of the private sector is unlikely to please shareholders of companies being forced to relinquish control as the economy crashes.
EU leaders are supposed to hold a conference call on Thursday, April 23, to discuss the fund and other emergency measures.
If that produces nothing for the market to chew on, European stocks will fall further behind their American counterparts and may give European fund managers a better reason to be invested here, than back home.
