I thank all those interposed by email, responded to our previous posts on this topic because this blog is not open by choice comments.
The issue is still the equal of our two previous posts in 2010 and 2009 on this subject Crisis: How to stop doping in monetary and fiscal policy without causing too severe a withdrawal that would kill in the bud Recovery?
http://lejournaldesalgret.blogspot.com/2010/01/la-crise-suite-et-poursuite-de-la.html
http://lejournaldesalgret.blogspot.com/2009/09/leconomie -va-a-little-better-but-the-crise.html
For brevity, reconsider the issue from three angles covered in our two previous posts: Employment , banks, Public Debt .
The job
Unemployment fell from 0.2% in the second quarter of 2010 for the first time since the beginning of the crisis ... There were job creation in the market sector with strong support from the interim use.
However, it still lacks 518,000 jobs to go at the beginning of 2008!
The recovery is still fragile ... It is the massive use partial unemployment as well as appeals to possibilities of adjusting schedules offered in the 35-hour that mask insecurity. This has therefore resulted in a highly stagnant productivity. A productivity gap that companies will catch up by hiring little ...
In addition it will decrease the programmed subsidized jobs . Moreover, 31,000 posts will be removed in public (including more than half in Education).
In addition, local whose tax revenues will be limited and the budgetary transfers blocked state, may begin to turn to remove posts . The Public Employment overall (government, hospitals, local authorities) may well go down ...
Between July 2008 and July 2010, the number of registered job center increased by 1.1 million. With 4.6 milllion registrants, an active six, the record in 1997 is broken! Job seekers are certainly and strictly speaking 3.7 million last July, but it is well of 4.6 million registered job center who live precarious . Instructions were given to job center to as many people out of the Class A , which remains by far the number of unemployed most commented in the media, figure "politics." It also does not count here, the plaintiffs unregistered employment and discouragement of unknown exactly how many.
Banks
banks are less profitable and so much the better. The set of new regulations that will be implemented soon limit the leverage of banks, ie their ability to go into debt to play with volumes of money, especially on the derivatives markets , sophisticated financial products that were highly speculative .
If these new regulations work well (?) , these new tools regulatory could intervene in case of slippage of the growth in loans for speculation and prevent bubbles can install .
Public Debt
How did we get here?
From 67% of GDP in 2008, the public debt peaked in the first quarter of 2010 as we had expected, on this blog in January 2010.
Henceforth, the public debt reached 80.30% of GDP or gross
1 535 billion euros!
This explosion is directly related to widening public deficit with Crisis . From 3.30% of GDP in 2008, reached 7.5% of GDP in 2009!
Paradoxically, if the State had not squandered the deficit, the recession was deeper. When activity drops, the gap is widening automatically, since the state saw its revenue decline, including the Corporation tax and VAT . This, while social expenditures remain stable or increase with unemployment compensation or social minima.
To this, we must add the expenses of Recovery Plan. This
Recovery Plan hollow so the public debt, but that it has been squandered just replace the deficiencies of the application of private agents to absorb the shock wave that shook the economy .
However, Crisis is not the only cause as rising public debt is nothing new. Yet the state is unable to systematically cause . For it is not the explosion of government spending that strike her budget and the State is not necessarily a spendthrift It is especially fierce ... the revenue side of the rub: beyond the weak growth, policies of tax cuts implemented last ten years have in fact contributed to increase the burden of debt.
Should we worry about this drift?
French debt is certainly high, but it is not out in Europe. The average debt in the euro area is 78.7% of GDP ... Germany 73.2%, 96.7% in Belgium, 115% in Italy, without speaking, outside the euro zone, Japan: 189% of GDP or U.S. 85% of GDP! Spain and Ireland with debt defined respectively to 53 and 58% of GDP are more pitiable than us ... Indeed, the sustainable level or not public debt does not only depend on its level, but also the dynamism foreseeable economy.
It is often said that it is necessary to reduce the level of debt on behalf of the burden we bequeath to future generations. In reality, it is today's taxpayers, not their grandchildren who pay annually the interest on that debt. And those who receive these payments are party beneficiaries of tax cuts that have contributed to widening deficits and growing debt to the Public Administrations. Wealthy households earning it both ways: savings on the tax form they can get rich by investing in securities of the Public Debt. From this point of view, debt is a redistribution mechanism upside down, low-income households, who pay many taxes, including indirect, to the wealthy, who receive such interest. This transfer of wealth, hardly justifiable, is a major reason why it should reduce public debt.
How to Reduce Debt?
We joined him, the question is, three times of introduction to our last three notes on this blog, about the Depression: how to end the monetary and fiscal doping without causing withdrawal too violent would kill the recovery in the bud?
We ask ourselves the question since May 2009. This is an opportunity to conclude this post ... Want
quickly reduce deficits, as envisaged by the government is taking the risk of breaking the weak recovery enjoyed by the French Economy. Weakening in growth, such a policy paradoxically widen deficits and would, ultimately, the more difficult the goal of stabilizing the debt. It is urgent not be too hasty.
Beyond that, there are two ways to reduce deficits : reduce spending or increase revenues .
The Government, in its Stability Programme submitted to the European Commission, mainly based on expenditure restraint, which would save 45 billion euros in three years. This can be done by cutting the budgets of social welfare ... Such cuts will weigh
the purchasing power of the poorest households, ie on those who have the highest propensity to consume and therefore on economic activity.
In contrast, giving priority to increasing taxes for the rich would likely consequences of reducing their savings rate, which is in France, one of the highest in the world.
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