France: The Fire Next Time

Everyone is thrilled, happy, ecstatic and cheering lustily now that the wicked witch has been defeated. Marine Le Pen, embodiment of everything the chattering classes despise, went down to ignominious defeat in yesterday’s French presidential elections.

Boy wonder Emmanuel Macron is readying himself to assume leadership of a great nation. Of course, this assumes that he will be able to govern… a very optimistic assumption, indeed.

But, people are roaring from the rafters now that nationalistic populism or is it populistic nationalism has been defeated. The wicked witch Le Pen, the embodiment of racist hatred and all such horrors has been dispatched by the French people. Serious thinkers are thrilled. You would have thought that Donald Trump had suddenly resigned from the presidency and that the Messiah—Barack Obama—had risen from political oblivion. No more wars against Islamic terrorism. We can go back to fighting the good fight against Islamophobia. Hip, hip, hooray!

Speaking of witchcraft, the French people will now have a woman who, when she was a married forty-year-old, seduced a fifteen-year-old male student. Lucky that the French are more sophisticated than the rest of us.

At a time like this, we should curb our enthusiasm and to cast a cold eye on reality. It will come as a shock to many, but Macron’s election seems more like the calm before the storm— or better, the eye of the hurricane—than the dawning of a bright new day.

As the old adage, from the Gospels, goes: seek and ye shall find. I was looking for a slightly discouraging word about the Macron election, one that does not belabor the fact that this junior Oedipus married his mother. And, then I found a reflection by money manager William Blain in his blog, Blain’s Morning Porridge. Since Blain has skin in the game, he is not just someone who is shooting his mouth off. I found this post through the Zero Hedge blog. I am grateful to those who can see through the miasma of celebratory joyousness.

Blain throws caution into the mix:

The papers and financial blogosphere are full of positivity – France is fixed, therefore the Euro is safe and its all great news. Put yer buying boots on.. And on the back of Friday’s very strong US numbers.. don’t worry that bonds continue to rally in the face of a likely Fed Hike..

Please. the only thing good about the French vote is the least bad candidate won.

I question the grand expressions of upside the market is calling for. France has dodged a bullet, perhaps, but they aint solved the crisis – which boils to down to being the wrong economy using the wrong currency and absolutely no control of monetary or fiscal policy to fix it.

Macron has a head full of supply side policy cliches about sorting the labour market, and some catchy soundbites on Franco-German European hegemony – including the sacrifice of a fraction of the bloated state payroll. For all the hype, he’s a compromise of compromise candidates.

Blain predicts that Macron will disappoint. As has often been noted, on this blog and everywhere else, Macron does not have a political party. To govern effectively, to be more than a figurehead, he will need support from the French Parliament. If he does not win enough seats in the upcoming elections he will have a problem governing.

Blain predicts:

I’ll make a grand prediction: Macron will prove a disappointment. His lack of power base from which to actually effect long term change across France means we'll get one or other of the Le Pens in 5 years time.

Although he will no doubt trade on his youth and popularity – don’t be surprised if the lustre quickly fades. A number of blogs say he’ll quickly build a coalition of the willing.. I doubt it. He's going to struggle to form any kind of working government in the face of the established parties, and hostility from right and left.

Of course, Macron has some advantages. The French economy is moving in a positive direction. For that he will surely take credit:

On the upside, the numbers are moving in Macron’s direction. The state isn’t in the same perilous debt position pre ECB intervention. A wee bit inflation will massage the numbers nicely. There are no immediate risks on the horizon. Unemployment is trending down (slowly), and is likely to boost his popularity. Merkel looks a shoe in for the German Election (very strong showing at the weekend in Danish Germany).

And yet, Blain continues, nothing has really been fixed. And nothing is likely to be fixed:

When Europe looks calm and sorted, its not. Nothing is actually fixed.. For all the happy posts this morning about Euro strength, which stocks to buy on the basis of French recovery, and the rest… I doubt it.

Although there is apparently nothing to worry about in Euroland anymore – we’ve still got the festering pustule that is Italy, episode 47 of the Greek Crisis on our doorsteps, and the who knows what coming from the Brexit negotiations. Europe will continue to amuse, fascinate and frustrate.

And, lest we forget, the problem of France’s unruly Muslim population has not been solved. One hesitates to mention it but it will not be solved by vanquishing Islamophobia. The same is true of Germany where the Great Welcomer, who opened her country and her arms to over a million invading Muslims, looks like an easy winner in her upcoming election.

Just because you have beaten down the bad doesn’t mean that you are going to wake up the next morning sharing a bed with embodied goodness. Recent defeats of the hard right have simply given the nation’s elites yet another chance to submit. Or, to delay the inevitable confrontation.

It recalls another adage: “God gave Noah the rainbow sign. No more water, but the fire next time.”