The French government is in tatters after a number of the more enlightened members of parliament resigned as a protest against the mindless austerity that Hollande is imposing on his nation, which is causing the already desperate unemployment situation to worse. Le Monde ran a story (August 25, 2014) – La dernière chance du président (The last chance for the President) and said that the political season just became explosive for the President and the Prime Minister as a result of some of his senior ministers walking out in protest over the austerity obsession that Hollande has imposed on the French government. Despite all the scaremongering that financial markets love austerity and see it is a move to stability, the ‘markets’ appear to be rejecting austerity and voting for growth. We will see.

The Bloomberg Op Ed article (August 19, 2014) – European Austerity Is a Myth – is about as flaky as it gets. The author is intent on justifying the article title by examining changes in government spending (as a per cent of GDP). He produces what he claims is “more appropriately called the ‘graph of the decade'”, which would mean it was some graph, but in reality tells us very little and does not provide the basis for his conclusion that rising government spending since 2007 is evidence that austerity has not been imposed. Oh dear! Some points need to be made.

According to data just published by the French National Institute of Statistics and Economic Studies (INSEE), its national statistics agency, the French economy has stalled in the second-quarter 2014. In its – Informations Rapides, Principaux indicateurs 14 août 2014 – n°186 – we learn that the “le PIB en volume est stable”, which is a cute French way of saying that real GDP growth was zero, building on the zero growth from the first-quarter, which means their terminology that it is “stable” is accurate but an understatement. The latest data from Eurostat (August 14, 2014) – GDP stable in the euro area and up by 0.2% in the EU28 – show that the three largest economies in the Eurozone (and Europe) are either in recession (Italy) or teetering on recession (France, Germany). The French Finance Minister reacted to this news by calling for a rethink of economic policy in Europe with a shift in emphasis to growth. He indicated that the French government would reduce its deficit in its own time without undermining new stimulus measures aimed at kickstarted domestic growth and reducing the unemployment rate. It is looking like 2003 all over again.]

Last week, the Chief economist at the Deutsche Bundesbank, Dr. Jens Ulbrich gave a rather extraordinary interview to the German Magazine Der Spiegel. The interview was recorded in the article – Breaking a German Taboo: Bundesbank Prepared to Accept Higher Inflation. The sub-heading said that this marks a “major shift away from the Bundesbank’s hardline approach on price stability” and my profession apparently “hailed the decision as a ‘breakthrough'”. I wouldn’t be so sure. The Bank has a long track record of ignoring the plight of German workers and the workers elsewhere in Europe. The imposition of its ‘culture’ with its disdainful disregard for responsible economic policy on Eurozone political elites has created so much slack in Europe that even it cannot deny the mounting evidence that there is a deflationary problem. But this support for workers’ wage rises won’t last. As soon as the inflation rate exhibits the first uptick – the Bundesbank will be out there berating all and sundry about the dangers of profligacy! Leopards don’t change their spots.

Apparently, the mangy cat that was the Celtic Tiger is about to become the Celtic Tiger again. One of many reports that suggest Ireland is about to have a “here we go again” boom – The mauled Celtic Tiger is ready to roar again (UK Telegaph, July 5, 2014) – claimed last week that while “few Western nations suffered more than Ireland” as the GFC unfolded, it is now “perhaps” about “to stage a convincing recovery”. This statement followed the release of the “latest GDP rebound, driven by a 1.8pc rise in exports over the first quarter and an inventory turnaround”. I am not yet convinced nor should I say was the journalist in question. The so-called recovery is very tentative and domestic demand remains weak. Further, as before the crisis, a substantial portion of the growth is being repatriated offshore to foreign owners of capital. Moreover, a new phenomenon has crept into the picture – the so-called ‘tax inversion’, which makes it harder to disentangle what is actually happening with the Irish National Accounts.