October 28, 2008

Sarkozy: The "Dictatorship" of the Market Is Dead,


Politics and the State Are Back in the Game

In a major speech Oct. 23 at Annecy le Vieux, French President Nicolas Sarkozy, announced several measures aimed at protecting the French real economy from the present crash. Interesting to understand his state of mind and his overall intention, is that at the very outset, he launched an attack on the market ideology, emphasizing that since the beginning of this crash, what is good is that the idea that the markets and "experts" would decide on everything, is "dead," and that "politics" is back in the game, as well as the "role of the state" in the economy.

Sarkozy detailed the series of measures he has taken to try to protect the economy. First, there is the urgent problem of the credit crunch threatening to asphyxiate the entire economy. To deal with this the French government redirected the EU22 billion surplus placed in state-guaranteed savings accounts towards credit for companies, and injected EU10.5 billion into the banks which agreed, by contract, they would use it to increase lending to companies by EU75 billion. In order to guarantee that this all will happen, Sarkozy named René Ricol to head up a national effort, involving the prefects and fiscal authorities of each department, in ensuring that the banks will extend the credit lines to the real economy and not use it for other purposes.

Nicolas Sarkozy also announced, that beyond the announced EU360 billion - EU320 billion in guarantees and EU40 billion actual funds - EU178 billion will be extended over three years, in direct state involvement in the economy into priority areas: higher education, research, defense, developing the canal transport system (in particular the Seine/Escaut canal going into Northern Europe), new TGV lines (Lyon-Turin), and renewable energy, including the 3rd generation nuclear power plants and research into the 4th generation.

Finally, in spite of German opposition, Sarkozy announced the creation of a kind of "sovereign fund" whose role will be to intervene to stop predator hedge-funds or other capital, from taking over French companies whose assets have been totally depreciated by the collapse of the stock markets, and to make other investments deemed necessary to the nation. The fund will be run by the Caisse des Dépoôts et des Consignations (CDC), a state-controlled Marshall Plan-type organization which could merge with the Government Shareholding Agency (APE), which combined would have EU200 billion initial assets. While this entire policy will collapse if there is no bankruptcy reorganization of the system through a New Bretton Woods, as LaRouche and Cheminade have stated and restated, the French state institutions are proceeding to do whatever is in their power to protect the essential elements of the French economy.

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