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  • 2018/09/06
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Paying and earning!

The situation is decidedly delicate. Governing a country such as France is never easy, but sometimes it is France that decides and, above all, sometimes governs. Growth is not as strong as expected and pay-as-you-earn or withholding tax has become an issue, even a problem, and possibly a key debate. Meanwhile, the president is scoring low on approval ratings and is no doubt asking himself plenty of questions. We could talk about the future of the world and future solutions, but having reading Le Figaro économie, our focus here will be on the financial situation. So what exactly did we read and what is our focus?

The current financial situation? “ ‘Just as dangerous’ as when the US bank Lehman Brothers fell in September 2008, according to former ECB Chairman Jean-Claude Trichet, a first-hand witness of the financial meltdown ten years ago. ‘It is now an admitted truth that the massive over-indebtedness of advanced economies was a key factor in the triggering of the global financial crisis of 2007 and 2008,’ Trichet told the AFP press agency.” The financial daily goes on to explain: “Yet today, ‘the growth of debt – and private debt in particular – in advanced countries has slowed, but that slowdown is offset by an acceleration of debt in emerging countries. This is what makes today’s entire global financial system at least as vulnerable if not more so than in 2008,’ said Trichet, the head of the European Central Bank (ECB) from 2003 to 2011.” 

What we have to do, then, is listen to the words of people in the know, such as Jean Tirole, winner of the Nobel Prize in Economics and President of the Toulouse School of Economics, who has sought to learn the lessons of the subprime crisis. “Ten years ago, the Lehman Brothers bankruptcy plunged the global economy into turmoil. The Nobel prizewinner stresses the role played in 2008 by flaws in financial regulation and gives us a few pointers on how to firm up regulation. He also warns against the potential formation of new bubbles and the effects of low interest rates, which, he says, are a ‘drug’ for nation states.” 

A strange end to the summer, a passable economic harvest, and problems supervising the management of the government: as Emmanuel Macron heads into his second autumn as president, the least we can say is that the issue is absolutely not about back-to-school supplies but about men and women able to lead reform.

As for withholding tax, we need to go back to the origins of the initiative. A heady agenda for the autumn, one that will pay only if earned...

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