To Young French, London Means a "Gateway to Globalization"

This week's Economist describes the cross-section of French who pull up stakes and move to London, seeking work, adventure and the chance to master English. 

The archetype of this exodus, explains the piece, is the French "banker with children at the Lycée Francais in [the upscale neighborhood] South Kensington... who misses the food and weather of home." Indeed, The City's status as a global financial and business hub, not to mention its lower tax rates on income and personal wealth, make it an enticing destination for ambitious French who have money or want to make it. Many London-based French complain of the strictures of their often upper-class social codes and expectations, which they are free to customize or discard completely through a new life in the British capital. 

The international smorgasbord of London offers an intoxicating feast to those seeking cultural and culinary adventure. "It's hard to go back once you have tasted the internationalism here," explains one Gallic expat. A senior official from the French consulate likewise dubbed the city a "gateway to globalization"  for mobile and willing French professionals. Some of these are fleeing the economic doldrums of Ireland, where they had gone to launch business and careers; reluctant to head home, they're giving themselves a second chance in the UK. And language is a key draw for French of all social strata, and many lower-middle- and middle-class strivers elect to work summers or longer stints as waiters, au pairs and odd-jobbers in exchange for increased fluency in the language of Shakespeare.

One detail of the article's Franco-centric globalization deserves underscoring: In the 2012 elections there will be for the first time a representative in France's Assemblée Nationale -- equivalent to the U.S. House of Representatives -- for all French citizens living in the UK and Northern Europe. The capital for the French diaspora in this part of the world is London by overwhelming numbers: the same French consulate approximates the Hexagon's population in London as some 400,000, perhaps the capital's largest minority nationality.

Watch this space for more on the French député for London and European points north, as well as Franco-British developments on either side of the Channel.

Krugman's US-Euronomics

Consider this an info-dump of Nobel Prize winner Paul Krugman's latest postings at the New York Times. If this seems like something of an antidote to EurAmerican's atypically hawkish and euroskeptic posts from this week's Wall Street Journal, so much the better. Balance in partisanship -- that's what we like!

Krugman's pieces grow from the spark provided in this piece, also from the NYT, which takes the pulse of the current "we told you so" debate going on between Europe's solvents and debtors. It traces the germinations of the euroskeptic debate back to an obscure 1992 report from the Financial Times. In it the politologue Ed Balls observed a crucial and possibly disastrous difference between the nascent euro currency project and the environment of the US, another continent-wide monetary zone. The report concluded, to borrow the NYT piece's shorthand, that "Europe lacked the type of federal taxes and transfer payments used in the United States to ease economic divergences among its many states." 

Courtesy The New York Times

The NYT piece goes on to juxtapose prominent voices from the euroskeptic and the pro-EU antipodes. Speaking about the current troubles, Norman Lamont, the former Conservative chancellor of the exchequer, had this to say about the euro in the near future:

“I have always said that the euro will break up,” Mr. Lamont said in a recent interview. “Not after the first crisis today, but after the second crisis, which could be 10 years away. This is, after all a political project, not an economic project.” 

In contrast, Jerzy Buzek, the current head of the European Parliament, used with these words during December's opening of the Europe House, headquarters of the European Union delegation in London:

“We remember what happened in the last big crisis — it was something horrible, and such a threat is always waiting for us... Let us answer by having more solidarity. Overcoming history is an imperative for us.” 

It bears noting that Buzek's tone on the euro crisis -- which is far from finished ravaging great swathes of Europe and the world -- suggests that the "last big crisis,"  as he puts it, is already past, and belongs to history. These pictures provide a markedly more compelling argument that the euro crisis is both ongoing and far more serious the Buzek's seemingly clueless tone would indicate.

Hewitt on Europe and Youth in 2010

Gavin Hewitt of the BBC has posted a wrap-up of the year 2010 in Europe. I'd like to underscore his recurring theme of the beleaguered status of European youth. He begins with three sketches of young people down on their luck: seemingly intelligent and educated young Spaniards queuing for unemployment benefits; a roomful of raised hands when Hewitt asks trade school students if they anticipate emigration; young Italians ready to riot at the broken promises of their government and the generation in power. 

Hewitt goes on to describe their lives in the crushing uncertainly of economic souring, and the new civic religion called "austerity" that most accept only begrudgingly -- because they see no other choice. The year 2011, according to Hewitt, portends to be no less bleak.

"Youth unemployment and austerity are a dangerous cocktail that will play out on the streets of 2011. Austerity challenges a deeply-held idea of a European way of life where the state offers layers of protection. Old certainties are being swept away. Social contracts snapped. An ever-expanding public sector is being pruned. Europe, in the long term, may benefit from a smaller state sector, but no one should underestimate the shock of the new. [...]

In 2011 the orthodoxy of austerity, I suspect, will be challenged. The Greeks are tiring of the lean years that seem to stretch out before them. A new government in Ireland may try and renegotiate the terms of the EU/IMF loan. Increasingly voices question the fairness of it all. In Ireland the banks' debts were taken onto the government's books and the country headed for insolvency. A proud country [and in Ireland's case, an overwhelmingly young one] has sacrificed its independence - that's how many in Ireland see it.

It is a fair bet that in 2011 one or more country will restructure its debt.

Increasingly, when one returns from the streets of Greece or France or Italy, Brussels seems a side-show. While the unemployment lines lengthen for young people Europe's elite is preoccupied with institutions, with their place in the world. They have strategies for growth - but in the distant future. The discussions too often appear inward-looking. Occasionally there is a flicker of reality. The European Parliament, for instance, led the way in challenging bankers' bonuses. [...]

Euro Crisis: Calling the Little Dutch Boy

Ireland's financial house is on the brink of collapse, the transatlantic media is incessantly telling us. If the floodgates are to be held back indefinitely, Europe will need to coordinate both a stability plan and a mechanism by which the Eurozone never again finds itself prone to being swept away. 

Ireland's troubles began at roughly the same time as every other beleaguered state in the eurozone, following the financial crisis in 2008 that spawned the generalized, global economic downturn that persists today. The country formerly known as the "Celtic Tiger" for its stellar growth and market conditions -- including a business-attracting 12.5% corporate tax rate, far below the 35% rate in the U.S. Ireland has since fallen from high up the totem pole of Europe's most robust economic performers. 

A major element of the current worry over Irish finances is that the instability it has caused within investment markets will spread to other at-risk countries in the eurozone, namely Spain and Portugal. The 16 European countries that comprise the bloc all face serious exposure to a currency sapped of investor confidence; if market professionals decide en masse that the euro is a fool's bargain, the EU faces a nightmarish self-fulfilling prophecy by which dimmed hopes on the euro will fuel a sell-off of eurozone assets, which will depreciate their value, which will further dim investors' hopes, which will lead to more selling and more depreciation... The trick will be to stanch this vicious-circle psychology before Ireland and other precarious countries bring the entire eurozone to rock-bottom.

To combat this, European leaders have adopted a common and steely demeanor by which they hope to hold off full-fledged exodus from eurozone markets.  The Prime Minister of Spain, Jose Luis Rodriguez Zapatero, declared through what seemed like gritted teeth that “I should warn those investors who are short-selling Spain that they are going to be wrong and will go against their own interests," as quoted in the FT on Nov. 28.  

Zapatero “absolutely” ruled out any need for a rescue. But his words came just one week after Irish Prime Minister Brian Cowen caved to pressure from fellow eurozone senior officials and requested a bailout from the IMF. Cowen had initially denied the need for an Irish bailout, and the dustcloud kicked up by Cowen's reversal of words has triggered demonstrations, feelings of betrayal among Ireland's citizens and further tumult on the waves of international finance. 

It seems Cowen, Zapatero and others are scrambling to play the proverbial Little Dutch Boy, who in sticking his finger in the dyke was able to prevent a large-scale flood of his entire community. European leaders have in the last days all put their fingers in, but the levee doors are straining and leaking both confidence and political capital--neither of which the eurozone can afford to lose. 

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For more on the intra-Irish politico-economic situation, see this article from The Economist. Gulf Stream Blues provides a good big-picture summary. And the FT's Wolfgang Munchau ponders the formerly "unthinkable" moves still available to the eurozone, namely, in his own turn of phrase, "fiscal union or break-up."