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The EU’s economic war on Le Pen The market’s attack dogs are targeting National Rally

Le Pen and Eric Ciotti, head of Les Republicains, at yesterday's 'programme' launch (Chesnot/Getty Images)

Le Pen and Eric Ciotti, head of Les Republicains, at yesterday's 'programme' launch (Chesnot/Getty Images)


June 25, 2024   6 mins

With France bracing itself for the first round of its snap parliamentary election this Sunday, the near-certain prospect of victory for Marine Le Pen’s National Rally (RN) has sent French and EU elites to their panic stations. Reeling from their bruising defeat in this month’s European election, the bloc’s entire machinery is being mobilised to neutralise the “populist” threat.

First came the market’s attack dogs. As soon as Macron called the election, a massive sell-off of French government bonds began, causing the “spread” between French and German government borrowing costs to rise to the highest level since the euro crisis. This has been described as a “natural” reaction of financial markets to the prospect of a RN-led government — and the “fiscally irresponsible” economic policies many expect it to pursue.

While the party hasn’t published a manifesto for the upcoming election, in the 2022 election Le Pen’s RN campaigned on a strongly interventionist-welfarist economic platform: it included reducing to 60 the retirement age (which Macron last year raised to 64, amid massive protests) and raising minimum pensions, increasing welfare support for families, massively subsidising energy bills, boosting healthcare spending and renationalising the highways. It represented a radical break with the neoliberal orthodoxy.

Back in 2022, the Institut Montaigne think tank estimated that Le Pen’s policies would increase France’s deficit, which currently stands at around 5.5% of GDP, by around €100 billion a year — hence the widespread accusations that a RN-led government would cause France’s deficit and debt to “spiral out of control” and potentially plunge the country into a fiscal crisis. Markets, we were told, are simply acting upon legitimate concerns about the sustainability of France’s deficit.

There are, however, several problems with this narrative. Most obviously, financial markets have no reason to be concerned about a higher deficit. Such concerns would only be justified if there were a real risk of France defaulting on its debt, but this is extremely unlikely: for the simple reason that the European Central Bank (ECB) would never allow it to happen, as it would mean the end of the euro.

Even more importantly, all this talk of “the markets” ignores the fact that the spread is ultimately determined by a central bank — in the EU’s case, the ECB — which always has the power to bring down interest rates by intervening in sovereign bond markets. We saw this clearly during the pandemic: despite France’s budget deficit ballooning to nearly 9% of GDP, bond yields on French government bonds actually fell below zero — as the ECB bought up all the new debt issuance. Indeed, even during the decade prior to the pandemic, France registered a relatively high deficit on average — well above the EU’s deficit-to-GDP limit of 3% — but very low bond yields, thanks to the ECB’s post-euro crisis quantitative easing (QE) programme.

Moreover, in 2022, despite the tapering of its pandemic emergency purchase programme, the ECB launched a new “anti-fragmentation tool”, the Transmission Protection Instrument, explicitly aimed at keeping spreads under control by allowing the central bank to purchase the government bonds of countries whose interest rates diverge excessively due to speculation. What is currently happening on the French bond market perfectly fits this scenario. The ECB could close the spread and put an end to the panic with the press of a button. In fact, one could argue this would be particularly justified: with all the talk of electoral interference, it’s hard to see why financial markets should be allowed to manipulate elections by spreading unwarranted panic.

Yet the ECB has so far refused to take any action. “What we are seeing is a repricing but it is not in the world of disorderly market dynamics right now,” said Philip Lane, chief economist of the ECB. His comments were backed by ECB president Christine Lagarde. “We’re continuing to be attentive, but it’s limited to that,” she disclosed, signalling that the bank sees no reason for activating its bond-purchasing instrument.

Taken at face value, such comments would have us believe that the ECB has taken a technical decision based on arcane economic parameters. In reality, however, the ECB’s decision not to intervene has nothing to do with economics — and everything to do with politics. By looking the other way, the ECB is using the “bond vigilantes” as proxies through which to scare voters — and send a message to Le Pen. Adam Tooze has likened this “agreement” between bond markets and the ECB to that of “state-sanctioned paramilitaries delivering a punishment beating whilst the police look[s] on”. But look beyond the smokescreen, and it becomes apparent that it’s not the markets interfering in the French elections; it’s the ECB.

This isn’t the first time the ECB has engaged in financial and monetary blackmail to coerce governments into complying with the EU’s political-economic agenda. Former ECB president Jean-Claude Trichet made no secret of the fact that he effectively engineered the European “sovereign debt crisis” of 2009-2012, by refusing to support bond markets in order to pressure governments into consolidating their budgets and implementing “structural reforms”. But over the years, the ECB has gone even further than simply turning a blind eye to market speculation. On several occasions, it has engaged in speculation itself, engineering sell-offs of the bonds of certain countries, or other comparable actions, in order to plunge hostile governments into fiscal crises. Most recently, Giorgia Meloni and Lagarde have clashed on various occasions, with the latter often using the spread to turn the heat up on the Italian government.

What is playing out today in France, then, is nothing new. And yet, there is something unprecedentedly brazen about the ECB’s latest attempt at electoral manipulation. What we are witnessing is effectively an unholy alliance between an increasingly discredited national elite and the supranational institutions of the EU against the common “populist” threat. The strategy should be clear by now: the EU creates an artificial financial panic and national elites then use that to scare voters away from the “wrong” candidate. As an MP from Macron’s party told Le Figaro: “First and foremost, we need to scare people… to show the consequences and financial risks of the [National Rally’s] proposed measures.”

“The EU creates an artificial financial panic and national elites then use that to scare voters away from the ‘wrong’ candidate.”

Thus, Macron was quick to seize onto the turbulence in the markets to paint Le Pen as an economic menace and invite voters to rally against the National Rally. Meanwhile, his finance minister, Bruno Le Maire, has made the spectre of a financial disaster his main campaign argument. “I would like to know who is going to pay the bill of the Marxist programme of Marine Le Pen,” he said in an interview. (The news that Le Pen is a Marxist will, of course, come as a surprise to many on the French Left.)

As mentioned, the goal of this strategy is twofold: to scare voters and — should that fail — to send a message to the next government. While such fear-mongering appears to be failing on the first front — Le Pen continues to surge in the polls — it is definitely delivering on the second. Over the past week, the RN has backpedalled on many of its flagship economic proposals, in particular the idea of reducing the retirement age to 60 for some categories of workers.

Yesterday, the party’s young and charismatic president, Jordan Bardella, made clear that his party’s programme would be far from radical: the RN would focus on “realistic” measures to curb inflation, he said, primarily by cutting energy taxes. On Sunday, meanwhile, Jean-Phillipe Tanguy, the RN favourite to head France’s finance ministry, pledged that his party will not “let the deficit run out of control”, and that it will stick to the EU’s fiscal rules. The party has also shifted away from its longstanding Gaullist and anti-American stance, rowing back on its previous promise to pull out of Nato strategic military command.

The party’s “normalisation” has left many on the French Right feeling that Le Pen has gone too far in her bid for power. “Bardella has already sold out completely. It is not the patriotic economic model that I wanted,” said Bernard Monot, once the party’s chief economic strategist. “He’s changed the party’s position on fundamental positions. He’s pro-Zelensky and pro-Nato, just like Meloni. He is entirely compatible with liberal Atlanticism.”

But accusations of selling-out ultimately miss the point. This has little to do with Bardella, but instead is a consequence of the inevitable constraints that the euro system places on governments. The reality is that even if the RN manages to win an absolute majority, they will be forced to toe the EU-Nato line on economic and foreign policy if they want the ECB to play ball and keep the French bond market afloat. After all, all it takes to engineer a fiscal crisis is for Lagarde to look the other way as bond vigilantes do the dirty work.

Indeed, only last week, the EU hinted at what this might look like after it opened an “excessive deficit procedure” against France, along with six other member states. This means that the next government will be forced to rein in the deficit — or face disciplinary action. While it is true that France’s deficit exceeds the bloc’s 3% borrowing limit, this has been the case for a very long time — and yet the Commission has often let France off the hook in the past, provided pro-EU governments were in power.

But now that a Le Pen majority looms on the horizon, the EU’s economic police force is suddenly sounding the alarm. As with the ECB’s refusal to intervene in the French bond market, this is a wholly political decision aimed at pre-emptively tying the hands of a future RN-led government. As Politico put it, saying the quiet part out loud: “It’s one thing to let off a pro-EU, statesmanlike leader for the type of reckless spending that endangers the economic stability of the eurozone. It’s quite another if it’s carried out brazenly by a nationalist firebrand.”

The implication is all too clear: within the eurozone, “populists” such as Le Pen and Bardella may very well come to power — but radical change will always be beyond their reach.


Thomas Fazi is an UnHerd columnist and translator. His latest book is The Covid Consensus, co-authored with Toby Green.

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T Bone
T Bone
29 days ago

Every time I get down on Fazi, he does stuff like this…and totally redeems himself!

Absolutely fascinating. You have the Globalist Open Society folk controlling the EU monetary system and any Nationalist leader becomes hostage to seemingly random “reflexive” market forces. Except they’re not not random at all. Like ESG its an interconnected monetary system of forced compliance.

Bob Downing
Bob Downing
29 days ago
Reply to  T Bone

I dunno about that, being merely a financial ignoramus with deep suspicions of how ‘money markets’ get away with what they can do. But it certainly reinforces my instinct -based on reading rather than experience – that the EU is a bad place to be inside, and that the entire elitist-governed machinery of global capital should be revolutionised. Or scrapped, banned and a kinder, more morally responsible structure imposed. The ever-more appalling reports of the ICIJ (https://offshoreleaks.icij.org/) seem to back up that idealist view!

Andrew Fisher
Andrew Fisher
28 days ago
Reply to  T Bone

Fazi, a Marxist, “redeems himself” with this piece of absurd magical and wishful thinking? So in your view, state pensions can be increased indefinitely and the age of which they can be obtained remain the same for decades, with an ever-aging population?

Of course the EU has its thumb firmly down on the scales – that’s obvious. However politicians such as Marine Le Pen have demonstrated inconsistent and incoherent views for years. First she opposed EU and then Euro membership – but then completely backtracked from those positions.

Our own dear Brexiteers (and I am one!) did not have a coherent view amongst themselves about Britain’s economic and political future. Nigel Farage was at one time endlessly advocating the “Norway option” (which later transmorphed into a treacherous soft brexit BRINO!). They glibly assured the British public that leaving an economic and monetary union that we had been part of 40 years would all be a cinch, rather a process likely to go on for years as indeed it is doing. Whatever possible future trading arrangements there might be – and there isn’t a brilliant record so far – the majority of our trade at that time was with the EU. (In the long run we are all dead of course!). Okay, the EU played hardball – but what an earth did we expect them to do?

Victor Orban talks a great post liberal nationalist game, but Hungary is supported in doing so by vast subsidies from the EU. And this is a common pattern – nearly all the national populists have flaky views especially on economic issues, because so often ALL they aspire to be is popular.

RA Znayder
RA Znayder
28 days ago
Reply to  Andrew Fisher

Much of what is deemed impossible by fiscally conservative people was pretty already reality during the postwar consensus. On the one hand we now have different (age) demographics on the other hand our tech and capacity to automate have improved. In fact, Keynes might have been right predicting that we could all be working 15 hours by now, it is just that we fill the rest with speculative nonsense and BS jobs as Graeber argues.
Why would we not just try to radically change a 50 year old financial system that failed on so many accounts? Because a bunch of oligarchs insist that we need to ‘keep the budget under control’ while they demand their next trillion dollar stimulus?

Charles Hedges
Charles Hedges
28 days ago
Reply to  Andrew Fisher

The problem was that the British used people no good at hard ball. I would have employed quantity surveyors/contracts managers from large international firms.

Jim Veenbaas
Jim Veenbaas
29 days ago

We must crush any interlopers who dare try to prevent the EU and its member countries from circling down the drainpipe of irrelevancy. Slow clap for the self indulgent technocrats.

Katharine Eyre
Katharine Eyre
29 days ago

Absolutely unsurprising – but at the same time very risky. And I am not at all sure the bureaucrats in Brussels/Frankfurt have a full understanding of the feeling on the ground which could result in things getting out of control.
I’m thinking of Juncker’s very kind offer to “help” Cameron with the Remain campaign, as well as Dave’s polite rebuff. Cameron knew that such a move would almost certainly lead to more people voting to leave. Juncker was oblivious.
I can’t find the link now, but I read an article in Die Presse a few weeks ago (I think it was by their EU correspondent Oliver Pink) which mentioned that there are still people in Brussels who believe that Juncker’s help on the ground would have swung the vote in Remain’s favour.
I mean, you have to be pretty resistant to reality and out of touch to still entertain that thought, right?
If that is the kind of mentality which forms the basis to these decisions by the ECB, then there’s a clear risk of things blowing up in their face. And I bet the EU won’t be able to resist its instinct to humiliate. Whereas the British responded with passive aggression – the French might actually burn the joint down.

Lancashire Lad
Lancashire Lad
28 days ago
Reply to  Katharine Eyre

The EU used to rotate on a German/French axis. No longer, due to overexpansion and complacency. If the Eurocrats think they can inveigle the French populace by seeking to neuter their rightward drift in the face of the threat from immigration to their culture, they haven’t been watching the same threat playing out in Germany. Not so much an axis now, as an axle with the wheels coming off.

Katharine Eyre
Katharine Eyre
28 days ago
Reply to  Lancashire Lad

The attempts to keep that going are becoming embarrassing. Macron, Scholz and several other EU leaders thought they’d just exclude Meloni and go off in a huddle and divvy up the top EU jobs and present the decision to the rest of them like a fait accomplis: https://www.ft.com/content/2afa6c37-3e21-4ff7-bfce-f345fdfdad10
For two politicians who got an absolute drubbing at the EP election to blatantly sideline the lady who is doing pretty darned well was first and foremost an indictment of their own entitlement and lack of political nous. It also stank of desperation: two drowning, flailing establishments clinging onto each other for dear life as they go down.

Walter Marvell
Walter Marvell
28 days ago
Reply to  Katharine Eyre

Yes. Arrogance and detachment so reminiscent of the pre Brex shunning of Wet Dave. Darker rumblings of hidden hands and sabotage by either markets or progressive forces within the State is intriguing. Its easy to dismiss as conspiracy theory. But a calm appraisal of the fight from within the Progressive State/Civil Service here is necessary. Partygate was Young Civil ServantGate. The Fool Johnson led formal leaving parties. Poor Rishi walked into a work mtg with a cake in middle. The BBC and Cummings spun the idea of mad discos by Tories and it stuck. More sinister are the many political assassinations for ‘bullying’ ((of the weedy lefty crybaby lefties)) by Patel Raab Suella- and the role of senior civil servants in the defenstration of the Fool Johnson. When will they break the omerta??? More murky still – what was the Bank of England doing triggering a huge QT sell off just before the Truss budget? Was she made aware of it? She certainly was ignorant of the underlying LDI problem – the regulatory enforced crisis caused by pension funds having to buy bonds at near zero rates for a decade…and so gamble with derivatives to be able to meet their obligations. Shady shady stuff. God knows what shenanigans Jordan is going to face!!!

Norfolk Sceptic
Norfolk Sceptic
28 days ago
Reply to  Walter Marvell

The Truss interview on the YT Triggernometry channel is very revealing.

Charles Hedges
Charles Hedges
28 days ago
Reply to  Katharine Eyre

Schuman designed a Bureaucratic Oligrachy not a democracy.
Schuman Declaration – Wikipedia
Robert Schuman and Jean Monnet created a system controlled by civil servants to prevent the election of communists or nazis with absolute power. Civil servants were always to have the power to limit the power of politicians.

AC Harper
AC Harper
28 days ago
Reply to  Katharine Eyre

Quite so. But the bureaucrats being ‘out of touch’ with their populations is an insignificant matter for them. The real job of the bureaucrats is to look after the best interests of big business and the wealthy Global Elite.
From the European Coal and Steel Community to the European Economic Community to the European Union the expressed goal was a supranational foundation that would “make war unthinkable and materially impossible”… but in practice it became a modern day Hanseatic League for the protection of trade.

John Dellingby
John Dellingby
29 days ago

Ugh, Legarde is such an awful excuse for a human being. Fail people upwards, that’s the EU way!

On a serious note, I am so glad that we aren’t in the EU anymore after reading this. Sure, our institutions would react in a similar fashion if say, Reform looked like winning, but the problem would be easier to deal with afterwards. In the EU, you would be reliant on at least a majority of countries leaning the same way as you to do anything about the ECB.

Simon Blanchard
Simon Blanchard
28 days ago
Reply to  John Dellingby

Not sure it would be any better here if “The Markets” decided to punish a UK govt they didn’t like. These forces are supranational, aren’t they?

Ian Barton
Ian Barton
28 days ago

The Markets can provide earlier a lighter – and earlier – punishment for over-spending. This is surely better than building up an ever-increasing debt to a questionable overlord.

Heather T
Heather T
28 days ago

Did they not already do that with bond sell off before liz truss’ mini budget announcement which was then blamed for “crashing th economy”?

Walter Marvell
Walter Marvell
28 days ago
Reply to  Heather T

See above. Answer is yes..but a mega sell of the QE bonds by the ‘I see No inflation risk after 2 years of lockdown’ Fool Bailey right before the budget does warrant a look too…

Hugh Bryant
Hugh Bryant
28 days ago

They already did it to Liz Truss.

Simon Blanchard
Simon Blanchard
28 days ago
Reply to  Hugh Bryant

This is what I mean. There’s an all-seeing eye that ultimately yays or nays the policies of democratically elected governments. So powerful now, that no corrective measures can be put in place; regardless of the urgency.

DenialARiverIn Islington
DenialARiverIn Islington
28 days ago

It does seem existential for the EU now, the situation in France. Yes, yes, I know it’s been said many times before and that the EU seems to have an amazing ability to keep chugging along but surely a fiscal debt crisis in France is the extremely large straw that will break the hidden contingent liabilities back of the ECB?

The odd thing is that it must be obvious to everyone that if you keep spending significantly more than you earn then bankruptcy is the only possible ultimate endgame? It usually takes a crisis to bring the stark realisation of the situation to people’s eyes.

Does this not look like a seriously brewing crisis?

Peter B
Peter B
28 days ago

But this is what the countries who chose to join the Euro signed up for. They all voted to hand over sovereignty and power to unelected and unaccountable technocrats like the ECB.
And there is no sane world in which the markets don’t react when obviously unnaffordable policies like lowering the French retirement age back to 60 are proposed. Of course, France should be free to pursue such policies if it so chooses. Provided they are prepared to pay for them and accept the consequences.

UnHerd Reader
UnHerd Reader
28 days ago

I don’t know; as much as I don’t like the EU I think it’s a bit of a stretch to accuse the ECB of causing (or threatening to cause) a financial crisis by not buying up all the debt (i.e. QE) that a fiscally irresponsible national regime issues to fund it’s “populist” policies.
Yes, the EU did that during the pandemic but those were considered emergency measures in a crisis. Expecting the ECB to effectively bail out every crack pot populist spending spree is hardly reasonable. It’s all very easy to be popular when you promise to spend a lot more than you are going to tax (just as Liz Truss did) but why should the markets or the ECB bail you out?
Plus there’s the issue that more QE is hardly what Europe needs at the moment while still battling with inflation.

Mike Downing
Mike Downing
28 days ago
Reply to  UnHerd Reader

This is a variation of the ‘fines’ against Poland which mysteriously disappeared when Tusk became PM. As Auntie Ursula said to Meloni; ‘Vee have zee tools’.

Ian Barton
Ian Barton
28 days ago
Reply to  UnHerd Reader

I suspect that the ECB will do whatever the EU Commission instructs it to do in order to keep its colonies in line.

Steve White
Steve White
28 days ago

What should cause people in European nations to be upset is their own nation and politicians having absolutely no real sovereignty. In other words, you have to suffer with inflation, not being able to afford your food or your electricity. You have to face the crime of the 3rd world, or send your children to fight the wars based on the narratives you are told. You have to get the jabs and wear the masks and eat the bugs, because we say so. If you get out of line we’ll blow up your infrastructure, we’ll destabilize you. There is a global thug and then there are these lesser vassal thugs, and both layers of the thugs use, hate and oppress and ultimately desire to control and replace the ordinary citizen and traditional culture. As far as the UK establishment thugs, they have lost control. Narrative control can never ultimately defeat truth. Truth is incontrovertible. Lie, spin, deny, manipulate, scare and nudge all you want, eventually the truth wins. The truth cannot be killed, it is indestructible, and it stubbornly sits there with a greater gravity, pulling everyone and everything back to it.

Tyler Durden
Tyler Durden
28 days ago

They’re neo-Fascist anyway, the Le Pen. I don’t care a jot about them- there is already enough violence against the Jews of France, with record numbers emigrating to Israel over the last two decades. The Left has taken up the mantle from the Salafists now while this crew are only effective in a bloc in the European Parliament. The question of Macron’s neoliberal successor is an interesting one, however- whoever is to be anointed as the new Dauphin in the next couple of years.

Mike Downing
Mike Downing
28 days ago
Reply to  Tyler Durden

Keep up Tyler; they’ve completely changed the demographic they appeal to and are allies against Muslim anti-semitism. They’ve even got a large percentage of gay voters and young voters on side now.

Klive Roland
Klive Roland
28 days ago
Reply to  Tyler Durden

Don’t forget that Jordan Bardella is Jewish himself.

Richard Calhoun
Richard Calhoun
28 days ago

Excellent article .. but could the ECB ultimately force the break up of the EU as more populist govts come to power?

Ian Barton
Ian Barton
28 days ago

I’m guessing that would be the equivalent of turkeys voting for Christmas, so probably not.

Walter Marvell
Walter Marvell
28 days ago

So far the EU has soaked up all the blows. The Greek debt crisis. Gerd. And they have kept a total grip on the economy in Italy, letting Georgia sound off and take the lead in the culture zone. This is a separation of powers they could live with. But things are different now. France is in both political AND financial crisis and it is not clear or certain that the Market Gnomes and Mandarins in Brussels can keep control of events. The scale of popular revolt against the degrowth and open border progressives cannot be contained if Holland, France Italy and the Eastern EU states all reject its core ideologies.

P Carson
P Carson
28 days ago

Both parties are on a trajectory to bankruptcy. Macron, the ultimate Davos man vs LePen promising to give people money the government doesn’t have

Malcolm Webb
Malcolm Webb
28 days ago

Thought provoking article. I am so glad we very luckily escaped from the EU prison and its punishment guards. Thank you David Cameron, for without your misjudgement of the public mood it would not have happened. I wish the French well in their attempts to also break free.

However, equally, I am reminded how French right wing policies differ from my view of what constitutes right wing economics. More welfare, more handouts, more subsidies, more borrowing , more nationalisation ??? Really??? Feels rather Socialist to me. French National Socialism I suppose . “Vive la differance” – maybe.

0 0
0 0
28 days ago

The EU excessive deficit action is as important as the ECB’s. And together they force the RN to take in the bloc whether theyre minded to or not.

And it’s a high risk game for those occupying the high seats. It’s been obvious from the beginning that the Euro’s rentier terms of reference would sap the EU economies once the single currency buzz wore off. The left said they’d do something about it but never got the support together. Now reality has sunk in and German power pegged back by the Americans, the right can take up the mantle and claim the credit. And it won’t be the centre right. Their mindset is part of the problem.

andy young
andy young
28 days ago

Yet another demonstration of why debt is bad, & why, on a personal level I avoid it like the plague.
It’s very simple. The people who lend you money control you. Obviously, on a national scale, the situation is far more complex. But the principle remains the same.

Susan Grabston
Susan Grabston
28 days ago

Most interesting factoid to pass my eyeballs this week (single data source so could be wrong and haven’t checked): GB is on the hook for its proportion of EU debt until 2026 (10 years from point of referendum). In the same spirit as Fazi’s article, wouldn’t surprise me if there’s a major crisis requiring bail ins before that date.

Ian Barton
Ian Barton
28 days ago
Reply to  Susan Grabston

I suspect that is debt not relating to the Euro – but not sure.

Alex Lekas
Alex Lekas
28 days ago

In other words, democracy is a ruse. The banks run things and they are open about it.

UnHerd Reader
UnHerd Reader
28 days ago

Yes, it’s about time it was stopped! Look at Liz Truss. It doesn’t matter whether you thought she was a lettuce or not, the fact that the market conspired against what would normally be seen as conservative aspirations meant that even if she’d been Einstein, she would have got nowhere.
Countries need someone who will stand up to the market oligarchs and say do your worst!
The whole system badly needs a reset, even if it costs us, our grandchildren will thank us in the end for not selling them into the global market slavery.
This is the real war that needs to happen.
Sadly the human race is busy worrying about the rights of men who want to be women and other assorted nonsense whilst our rights as free humans to determine our own destiny is trampled into the dust.
Oh how they must all laugh; like the gods of Olympus they play with us for their sport.

Cristina Bodor
Cristina Bodor
28 days ago
Reply to  UnHerd Reader

I am more hopeful- I doubt that the human race is busy with the assorted nonsense the media is intoxicating it with. the result at the voting booth on June 9 th seems to show we haven’t lost all brain cells yet.

Dennis Learad
Dennis Learad
28 days ago

Wake up you EU countries get out of this foul corrupt institution, take back your sovereignty your independence. Take back your own currency, the Franc the Mark the Guilder a currency that commanded respect. The Brussels unelected corrupt institution will destroy your industries will make your citizens poorer each year they are in charge. European Central Bank (ECB) is working with Macron and other European ex leaders after the recent elections they are NOW FEAR MONGERING!! and France you still think the corrupt EU institution cares for your democracy CALL THEIR BLUFF you once had as a Nation respect under Macron you are despised in Africa the Southern Hemisphere, you are a vassal state of the USA and NATO warmongers you are a YES BOY!!

Kevin Gardiner
Kevin Gardiner
28 days ago

This is wrong on so many levels it’s hard to know where to begin.

Andrew Fisher
Andrew Fisher
28 days ago

As so often Fazi writes a quasi plausible political account which one can have some sympathy with – but despite his complex smoke and mirrors arguments which he only half understands, he then seems to seems break with all economic and common sense and enter the real of magical thinking. In his world every single decision of every kind is entirely political, and there is essentially no economic reality. Surely we have enough cases from history to know that this must be nonsense. Ok let’s tax the multinationals and billionaires more (165 of them in the UK), but since these people are very mobile and with inevitable competition between nations (eg Ireland) which I believe that Fazi generally supports, that isn’t as easy as it sounds. Nor is it going to generate anything like as much revenue as Marxist Leftists like Fazi might claim.

The idea that with an aging population the French state can indefinitely guarantee state pensions over decades of retirement, rather than the few expected years that would have been actuarially the norm in the 1960s, is completely absurd.

I presume that Macron and his centrists, however elitist, arrogant and unlikeable they undoubtedly are, would actually refer to be popular by doing popular things for the electorate, if only to maximise the chance of their political movement lasting longer than it is actually likely to. Instead, like so many governments across the political spectrum, whatever their initial intentions (eg. Mitterrand), he is desperately trying to reduce the burden on the French state and of course the productive taxpayers. And, yes, (possibly unlike customers!) voters can be wrong – or at least all too easily to be encouraged to believe that there are no hard choices at all – as the disastrous foray into magical economic several years of covid response policy demonstrated.

Scandinavia has been known for its excellent public services – but also its eye-wateringly high taxes, paid by ordinary people. Presumably also then there was absolutely no need for the British Labour government, with its several major working class ministers and typical left of centre socialist beliefs, to seek help from the International Monetary Fund in 1976. This kind of conspiratorial wishful thinking is just beneath someone of Fazi’s talent. The CCP is not instigating a welfare state in China for precisely these kinds of reasons – and Fazi ought to get real.

Christopher Barclay
Christopher Barclay
28 days ago

As usual Fazi is not as clever as he thinks. France is a net contributor to the EU. The EU would have a major hole in its budget if France stopped paying into it. (That was why the EU was so opposed to Britain leaving the EU in a way that it wouldn’t have been had Spain decided to leave).
It is also true that a central bank can always intervene in the government bond markets to suppress interest rates. The cost of doing this however would be the risk of its currency collapsing, capital flight and a lift off in inflation. This is as true for the ECB as it is for the Bank of England.
What is missing in Fazi’s article is any consideration as to what are Le Pen’s and Bardella’s plans for changing the EU. Of course they could both be idiots who are going to give in as soon as the ECB flexes its muscles in the financial markets. Alternatively, they could simply implement their policies and issue bonds at the levels demanded by the manipulated market, while challenging the role of the ECB in European affairs. The losses from a collapse of the Euro would initially at least fall mostly heavily on the German banking system.

RA Znayder
RA Znayder
28 days ago

Both deficits and central banks buying bonds is basically just money creation. Deficits have to be run through the private sector and there are good reasons to assume that this actually creates much more inflation than the central bank simply creating the FIAT right away. The bonds are usually bought with created money, either FIAT but usually credit money created by private banks.
If too much private debt accumulates we very commonly get into trouble as Minsky’s financial instability hypothesis explains nicely. This is when central banks have to step in anyway and so in the end we have created much more money and inflation than was necessary.
And even that is only part of the story. When central banks buy a huge amount of bonds and securities (QE) it creates a lot of money. One would expect this to cause inflation, the FED did too. However, they got their own accounting wrong and failed to see that this capital would mostly accumulate in the asset market while not doing much in the real economy. This is why stocks, gold, real estate and some other assets blew up while wages and prices did not move much. If currencies are actually collapsing this is usually due to debt in foreign currencies.
Much of the economy is power play and, quite frankly, class warfare. It’s hard to understand the system but fiscal conservatism is often not in the interest of the 99%.

RA Znayder
RA Znayder
28 days ago

Good article. It is hard to ignore the signs, the West seems to function as a corrupt crony oligarchy. This was almost too obvious after 2008 when no one was held responsible. In fact, those who destroyed the economy were rewarded.
Fast forward to today we can clearly see who still represent the oligarchs. The centre left or right. Macron was literally a banker, Sunak too. Lagarde came from a well known consultancy/law firm. Indeed, in and outside government, you will find the same brands of big financial interests everywhere.
The financial system is their weapon and those who want another status quo better understand this. Selective fiscal conservatism is mostly nonsens. Ever since the neoliberal attack on the middle class this has been the case. The misunderstood deficits are a common method. Fundamentally the middle class and even some of the upper class could pay far less taxes if we could tax big capital properly and if we could just stimulate the economy directly from central banks properly as well. Also I think this would produce a lot more growth, innovation and better living standards. At least if we also bring back production because much of big capital does not do much more than speculating and rent seeking.
In our current system we are forced to run high deficits, which the private sector generally buys with credit (money created by banks), which in turn produces a lot of speculative Ponzi bubbles based on private debt. At some point these private debt bubble pop as we saw in 2008. And lo and behold, the central bank has to buy everything anyway while the real economy is subjected to austerity. And who ends up with most of the money every time? Big capital.
This is also precisely the reason why entire markets like much of the Western housing markets are completely stuck. It is unfortunate that it has come to all these extreme politics, it can be dangerous. But it is understandable that people look for alternatives when politicians clearly do not serve the people’s interest.

IATDE
IATDE
28 days ago

“We’re continuing to be attentive, but it’s limited to that,” she disclosed, signaling that the bank sees no reason for activating its bond-purchasing instrument.
So says Lagarde.

The ECB saw reason to intervene in sovereign bond markets when the shock was external and unpredictable.
This shock, assuming a fiscal blowout, would be internal and self inflicted.

Methinks the ECB would be hard pressed to bail out a country who did this to themselves.

David Harris
David Harris
28 days ago

Project Fear. Now where have I seen that before….?