France Staggers Toward Political, Financial Crises
Bruno Le Maire's concerned.
During an interview with Franceinfo radio, Emmanuel Macron's finance minister took aim not only at France's far-right, but also the country's left, which united this week to form a "New Popular Front."
"Their program is complete madness,” Le Maire said, castigating the likely agenda of the left alliance comprised of the radical Insoumise party as well as the socialists, the greens, the communists and some hangers-on you've never heard of.
The left-wing tie-up fel
[This article briefly said ‘BTP-bund spread’ instead of ‘OAT-bund’ spread. It was corrected two minutes after publication]
I wonder how much of this is fomented by Vladimir. No doubt this plays into his hands swimmingly.
Anne Applebaum has written many dissertations on how autocrats are always scheming to undermine democracy all over the globe. Here is a great example of a piece she wrote about how in 1994 democracy declared victory and immediately took its eye off the ball only to end up where we are today.
https://www.theatlantic.com/magazine/archive/2022/05/autocracy-could-destroy-democracy-russia-ukraine/629363/
I wrote this to a friend who is wondering if this will impact one-month vol:
“Political machinations in the EU hardly matter. Unless they somehow send interest rates much higher. Otherwise ~ If the pro-Russians take over, there will be a deal with Putin which would be MARKET FRIENDLY! Especially for large cap US stocks. No one really cares about Ukraine anymore. ”
Everything is bullish for US “AI stocks” !
I have a hard time believing a Putin deal will be market friendly. I am about 2/3 way through Capital by Pickety. It seems that wealthy people’s financial managers will recognize the systemic ongoing risk a Putin busom alliance poses. Such a geopolitical change occurring just at a time when it seems the west is close to winning on the ground would be a travesty.
Everything is market friendly until it isn’t. Algo’s don’t care about politics, alliances, or the global order. When everything goes south they will sell off the market and buy commodities.
I darkly imagine mushroom clouds over DC, Moscow, Pyongyang, London, etc. The algo’s will transition to investing in rad suit manufacturers, bomb shelter suppliers, and canneries.
We will then become a planet dominated by algos? Sounds like a fun read. Are you fleshing out the concept?
Well if you look through basically any 10-K in the past year, almost every firm mentions a strategic investment in Gen AI and LLM’s. This technology is incredibly error prone but despite those errors, adoption is continuing to grow. Ignoring the red flags is absolutely going to have consequences. And I fear at some point, AI is going to drive market outcomes that will be consequentially negative for investors. But I think there is potential for the Apple/OpenAI partnership to be a step too far. If iOS starts feeding their users bad information, screwing up schedules and alarms, or sending messages that has negative impacts on their lives; Apple will be who pays the price for OpenAI’s mistakes. Given enough of these negative impacts it could cause a societal shift in the view of Gen AI and potentially even technology generally.
Either Earth becomes an algorithm society of code executing meaninglessly as long as machines have power and networks, or humans turn their back on this stage of the tech evolution because they find it less trustworthy than the government. The 2028 presidential campaign slogan “The 10 most terrifying words in the English language are ‘I have a generative AI and it’s here to help'”.
Seeing this comment a few days late but I just wanted to reply: thank you.
As a professional technologist and an avid early adopter and explorer of the capabilities of LL ems, I don’t think I’ve ever seen anything more foolhardy than the recent incredibly widespread hype, including significant financial investment, all for a technology that mostly simply doesn’t work. As you correctly point out, and far too few others do, the error rate is overwhelming and swamps any occasionally subjectively impressive-seeming outcomes from a stochastic process. The confirmation bias required to try to make practical use of these things for any length of time, and yet still believe the current state of the technology is anything but an interesting toy, is beyond anything I’ve seen before.
I like what you wrote below, cannot compliment directly as the thread went too deep it seems.
“close to winning on the ground”? It looks more like Verdun redux to me?
But it’s easy to foresee the narrative that a war-ending deal with Putin would usher in an era of peace, a second “peace dividend” along with resumed energy shipments from Russia which would drive down inflation.
Why pay more for oil than solar power? Peace dividend? I think not.
Vladdy can drink his oil for all I care.
If only we could figure out how to get the sun to shine at nite.
Lucky we an store power. We have been building extremely large batteries for a long time. I once worked in the 1990’s on engineering a project that built a 20 acre battery. The ‘battery’ was to refine copper. Just a matter of time to get the tech right and investment in place.
If replacement leadership in France wants to spend money in excess of existing EU parameters and also wants to curb immigration- this will be very difficult to achieve as part of the EU.
If immigration is going to be controlled- that has to happen at the EU borders in Italy and Greece- where the immigrants first land. The entire EU would have to agree on how this is to be done and how this is to be paid for. Good luck with that!
If a country wants to deficit spend in excess of EU parameters- it is a lot easier to do that with one’s own currency.
I don’t know if I will need them, but I still have some francs saved from when I traveled there decades ago. 🙂
I disagree on the immigration point. Italy and Greece would be happy with the most extreme measures we could take. And, IMHO, should take. Poland, Hungary etc. are also ill-disposed (to say the least) to immigrants. So, on that topic, the people of Europe are pretty united.
Again, I am very much a left leaning centrist/a left wing liberal, though not “woke” (to try and be simple about it). However, on immigration, I agree with the right and basically everybody but the ultra leftist/woke left. We need to control it a lot better and be able to choose who comes in.
I’m against what asylum has become and am against paying ransom to Turkey to stop the flood of Syrians before they hit our borders.
It’s worth noting that the fiscal/spending/budget issue is actually a problem for France. France isn’t a currency-issuing sovereign. So, silly as this is, France does have real, binding budget constraints because they can’t print money.
Yes, that is silly that France can not set their own budget and control their own currency!
So, given the direction that it appears France is headed- is Frexit out of the question?
What an “own goal” by Macron.
French politics may devolve into disorder or populism, but France remains one of my potential escape routes in the event orange becomes the new red, white, and blue.
There is not a better place to be in order to develop one’s skills as a flaneur (one who wanders without purpose, observing society) 🙂
Olympics are going to be lit and not just the torch!