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France: Further Thoughts on the Rubik’s Cube of French Politics

We are still few days away from the second round and the key highlight of the first round was abstention at a record 52.5%. At the presidential election, we saw the emergence of 3 blocks, while at the current parliamentary election, we see 2 blocs (Listen further here).

At this point, several possible scenarios:

  • Ensemble! Macron’s coalition wins a majority above the required 289 seats at the National Assembly. Macron’s government will rely on the kind of vote called “playmobile”. Macron can rely on it to expedite reforms on pensions, fiscal commitments to the European treaties in order to bring the budget deficit back to 3%. “Playmobile” is a term used in French politics in reference to the readymade regulations and laws that can be quickly expedited. It’s a derogatory term mainly used by the opposition, whichever side of the spectrum it comes from, to describe how debates on specific laws are not really happening. Yet, with the Front National gaining the ability to form a parliamentary group projected within a range of 23 to 45 seats and the newly found power of the NUPES (projections of 161 to 210 seats), expect a lot of hardening in the debates. These two groups will use whatever opportunity they can to disrupt that “playmobile” process that characterized Macron’s first presidential mandate.
  • Ensemble! Macron’s coalition wins a relative majority or even a thin majority: Macron will then have to rely on Right Wing Les Républicains. It will still be possible for Macron to expedite his reforms but on a case by case basis and probably on a much harder line than in the previous scenario. However, the left wing NUPES will also rely on its large number of seats (161-210) to create opposition and harden the debate. Despite Macron’s ability to rely on the right wing Les Républicains, expect very hard debates, leading to a tense social climate, that some already call the “Fourth Round”.
  • Left Wing NUPES wins a relative majority or Left Wing NUPES wins a majority above the required 289 seats at the National Assembly. In that case, it’s a whole new political universe that could have wider implications for European bond markets. We will talk about it further in the coming days.

So these are the possible scenarios. But they are still based on assumptions that remain irrelevant. So much can still happen. Such projections do not mean anything at this point. These are 577 single elections.

In any case, the probability that France will be difficult to govern with a grid-locked National Assembly looms high on the horizon. Pension reforms, spending cuts, to just name a few, will be very difficult to pass.

Between now and Sunday, there are several variables that can still play a role:

  • The abstention; it was the highest among the younger generations (60% to 70%). Should they decide to go back to the voting booth, they will benefit Mélenchon’s NUPES.
  • The reserve of votes; They are more favorable to Ensemble! which can better rely on the right wing voters whose candidates could not pass the first round.

That’s what I wanted to share with you,

Let me know if you have questions and I look forward to hearing your thoughts. Feel free to comment.




France: After the First Round of General Elections

The left wing during this first round of the general elections in 2022 is not all similar to 2017. Back in 2017, the left wing was disorganized and had no coordination. That’s not what happened this time in 2022, (listen further here).

La France insoumise (LFI), the Socialist Party (PS), the French Communist Party (PCF) and Europe Ecologie-Les Verts (EELV  ) managed to unite under a single banner.  And we have to admit that the result of this first round is quite promising: the New Popular Ecological and Social Union (Nupes) got results which are equal to those achieved by presidential coalition, Ensemble! (Together!), with 25.7% of the vote, for both coalitions.  This is allowing the left wing Nupes to qualify for the second round in more than 500 constituencies.

Although Jean-Luc Mélenchon cannot claim that he can be chosen as Prime Minister, these results reveal that this new left wing coalition was well received by voters. It is ultimately placing Jean-Luc Mélenchon as the main opponent to President Macron, a role that he is snatching from Marine Le Pen, who came second at the Presidential elections a few weeks ago.

NUPES and RN are expected to be directly confronted on June 19: There are 59 direct battles between the left and the far right. The question now is about the recommendations that the presidential party Ensemble! is expressing. Few weeks ago during the presidential election, the left wing advised its voters that not a single vote should go to the far right. This largely contributed to Macron’s victory. Now, the left wing NUPES expects the same favor. Ensemble! is also expressing the same recommendation but on a case by case basis.  And this is triggering some controversy. The Ensemble! the presidential coalition does not want to be perceived as supporting the NUPES explicitly. It could undermine potential connections and agreements with the other right wing party Les Républicains, especially in the case of direct confrontations where NUPES is opposed to Les Républicains. To be continued …

In the end, this is only the first round and all projections for the second round may not mean much. Most polling institutes are projecting that the left wing coalition can expect between 170 and 220 parliamentary seats. Compare this with the results achieved in 2017, when the same left wing parties only reached around fifty parliamentarians seats.

For Ensemble!, the presidential party, the projections are at 258 to 298 seats for the second round. This is barely 8 seats above the 289 majority needed for President Macron to implement his platform comfortably.

However, as an external observer, you might also wonder why the projections in seats for the second round are so different while both coalitions, NUPES and Ensemble! are  at the same level, percentage wise.

To make it short and straightforward, as much as I can, there are 2 reasons that explain that discrepancy. First, in the first round, a vote is deemed valid only if it reaches 50% or more of the votes expressed while at the same time these votes must represent at least 25% of voters registered in the voting lists. As a result, there can be a large gap between the results of a party at a national level and the local results. The second reason has to do with the way projections are done by polling institutes. Indeed, in the case of a direct confrontation between the Ensemble! coalition and NUPES, during the second round on June 19, the polling institute will generally assume that the result will turn out in favor of Ensemble! This assumption alone makes the projections highly volatile. It is important to take them with a pinch of salt and to read them very carefully.

That’s what I wanted to share with you,

Let me know if you have questions and I look forward to hearing your thoughts. Feel free to comment.

When the causes that the people are behind are more important to them than the system, then the system is in jeopardy



France: Countdown to General Election, June 12

Here we are a few days away from the first round of the general elections in France. As you know, we had presidential elections at the end of April which reelected President Macron for a second 5 year term (listen further here).

Now we have to go through general elections which are meant to renew the lower house which is called the National Assembly here in France. This election is especially important because it will allow the newly re-elected President Macron to rely on a majority that will allow him to implement his program.

This election is becoming even more important since the length for the presidential mandate has been reduced from seven years to five years and has started to coincide with presidential elections. Prior to the 5 year mandate, presidents would stay 7 years in power. So the general elections at the National Assembly would not necessarily coincide with the Presidential Elections. Prior to that 5 year mandate, France was used to witnessing a majority that was shaping itself according to the more traditional left/right political streams of influence. This new mandate is shattering that traditional way of political practice.

Moreover, this year’s presidential election revealed a surprising fragmentation of the political pillars of influence. Rather than the traditional left and right pillars both closer to the center, the second round of the presidential election showed three clearly defined forces with a distinct polarization for a radical form of action, to the left and to the right. The third man of the election to the left, Jean-Luc Mélenchon, realized that the new context at the National Assembly is offering an opportunity for a left wing coalition to garner the needed 290 seats for an outright majority. The latest polls confirm that the left wing coalition, also known as NUPES, is very close to achieving such a result. This is indeed where we are heading, only one week ahead of the first round of the General Election.

Let me know if you have questions and I look forward to hearing your thoughts. Feel free to comment.    (listen further here)


“Cinema, a Weapon of Massive Emotions to Awaken our Consciousness”(III)

One of the images that struck me the most in the movie HOME by Yann Arthus-Bertrand is when witnessing the declining levels of rivers and water tables. Only to learn that the water feeds oranges or other fruits. In order to increase the level of hard currency reserves, the water of many rivers or lakes has to be shipped away through oranges, avocados, fruits and so on.

Indeed, you can apply it to so many other examples; avocados to be exported for the sake of increasing revenues in hard currencies, potatoes to be exported for the sake of increased revenues in hard currencies, kiwis to be exported for the sake of increased revenues in hard currencies, fancy tropical fruits to be exported for the sake of increased revenues in hard currencies, and I can go on and on.

That aha moment was a shock for me. All of a sudden, I started to see any field of fruits or produce anywhere in the world, as a displacement of water. When I take the train here in France and look out through the window at the landscape, all I see are these vast farming fields that are just water to be shipped away far to other lands in the world. And all that displacement of water has only one single goal: to increase revenues in hard currencies in order to improve that country’s ability to pay for its oil or gas bill.

No wonder food production and agricultural production is going through massive standardization for the sake of increased profits and efficiencies. That is reflected in the form of larger and larger farms all around the world. Large-scale land acquisitions are indeed on the increase in the last few years. This race towards the creation of larger commercial farms at the expense of smaller facilities is indeed hurting smaller communities. Many of these projects are initiated precisely to create more efficient channels of exports that will bring larger revenues in hard currency. At the same time, these larger farms have a tendency to impact the distribution of water to smaller communities. Indeed, while the larger farms expand their footprint, smaller communities then find it harder to cohabit and access water supplies. Hence the need for entire populations to move and migrate.

You see, there is a chain of cause and effect between all these moving pieces, from reserve currencies to food production. From food production to water supplies. From water supplies to climate change. From climate change to migration. From migration to war. On and on and on. And so goes the cycle.

Frankly speaking, our economic thinking right now is much closer to the Confucius warning centuries ago.

“When a wise man points at the moon the imbecile examines the finger” ― Confucius

And I must admit, we’ve all been acting like imbeciles all these last decades and centuries, trying to act smart, when the broader picture is a lot bigger.

That’s what I wanted to share with you.

Let me know if you have questions and I look forward to hearing your thoughts. Feel free to comment.

“Cinema, a Weapon of Massive Emotions to Awaken our Consciousness”… (II)

We talked about four movies in my previous post. And now you might be wondering where the fifth one is.

The fifth one is ARRIVAL which came on the screens in 2016.

It shook my perception of the world as well and probably will leave a long lasting mark for quite a while. Since 2016, I actually saw it 10 times. Now you might be wondering why it is related to economics.

Well, I don’t want to spoil it for you, but the central theme of the movie is about time. Especially linear time. I myself come from a financial background professionally, and finance is all about time. But I won’t too much here beyond what I really need to say to make my point. What this movie helped me realize is how our whole society, its monetary systems and its institutional paradigm are all organized around a linear perception of time. Even more, it’s not just linear, it’s exponential…Exponentially linear.

There will come a point in the future when we will look back at this movie and realize how this single movie helped us realize how humanity’s commitment to a linear progression was a mistake.

That’s all I need to say for the time being, because you need to watch that movie first before we can talk further.

That’s what I wanted to share with you.

Let me know if you have questions and I look forward to hearing your thoughts. Feel free to comment.


“Cinema, a Weapon of Massive Emotions to Awaken our Consciousness”… (I)

For the next few days, I am inviting you to a movie exploration. The kind of exploration that you probably have not heard about anywhere else.

The five movies I am about to elaborate around have made a major impact on my understanding of the world that we live in. Of course, there are many more movies that impacted my life, but I am focusing on these five especially because of the specific realizations they triggered inside my mind through the lens of economics and history. In hindsight, I am now realizing how they provided a bedrock for the worldview that shaped my perception of the world around us.

At the beginning of the eighties, I was walking down the streets of Paris, on my way back home, after a well deserved day during my internship as a student in business and economics. And then I saw a giant poster with a title on it; KOYAANISKATSI (1981). The movie was showing at a very special movie theater then, called the KINO PANORAMA of Paris, a special place in the history of cinema, but that will be a later topic of discussion. The cinematic experience I then felt watching KOYAANISKATSI that day comes very close to what the President of the Jury at the Cannes Festival described during his opening speech this year, few days ago. Vincent Lindon, in the current context of war, wanted to remind us about the special role of movies, and he declared that “cinema, is a weapon of massive emotions to awaken our consciousness.”

That’s exactly what KOYAANISKATSI did to my mind. And I have to admit that to this day, there is a lot about the world and the economy that I would not have understood if I had not watched that very special movie. The ideas and emotions that I felt that year were reverberated by BARAKA, a little more than 10 years later, that I watched in New York City. Both movies are non narrative and shown as documentaries. Thanks to a mesmerizing soundtrack, every single image in both of them pulls you into a multidimensional universe made of speed, acceleration, disjunction, dysfunctionality and disconnection. The emotional whirlwind of emotions created a permanent state of disruption, the very disruption that I was precisely bathed into during those formative years where I was starting my career as a financial analyst in the Middle East, Paris, Frankfurt and New York for leading financial institutions. It just so happened that the very state of overwhelming confusion stood right at the heart of what a famous economist, called “creative destruction.” Every single text of economic theory at that time was hailing it as a mantra of righteousness. Every single politician and policy maker had to make a lateral reference to that creative destruction, because it was a promise for the future that justified the very sacrifice that nature and societies had to endure in the present moment. Saying otherwise was absolutely tabou. No government, institution, project initiative, could get financing if it didn’t bear that implicit seal of rightful thinking.

Right at the time KOYAANISKATSI was released, another important movie came up, ROLLOVER (1981). I did not get to see it until later in the early 2010’s, as if it was meant to act as a book end to a transition that would lead us to where we are now in the world. From ROLLOVER, I learned about how  nature’s gifts and resources get to be transformed into a simple piece of paper that represents money. We can now say that the transformation into paper money is now represented by digital bits, electronic blips that only exist in cyberspace. Nature, our natural world, ends up into digital bits. It is vaporized through the power of powerful computational machines, transforming the present into promises made of electronic blips, all stored into silicon chips extracted from Mother Earth.

The transformation of nature into money, Chief Seattle already had a vision of it, more than a century ago; “Only when the last tree has died and the last river has been poisoned and the last fish has been caught will we realize that we can not eat money.”

Indeed, are these electronic blips going to feed us when everything disappears?

In the documentary HOME (2012), that’s exactly was we are witnessing;  water transformed into $’s, air transformed into $’s, trees transformed into $, mountains transformed into $. The whole documentary shows us right in our face how we are converting nature into money. You know how sometimes, when we are training our puppies to not pee and poop all over the house. Sometimes, the most efficient way to train them is to grab them nicely by the collar and put their face right in front of their misdeed. That’s what Yann Arthus-Bertrand did in that movie. The scenarist of that movie ended up writing a book all about “symbiotic economics” (“Symbiotic Economics” by Isabelle DELANNOY).

And finally, my list also includes ONCE UPON A TIME IN THE WEST (1971). That movie revealed its essence only after several viewings over several years. I then could see through a fictional story inspired by reality, how money can spread from one area to another. As the saying goes, “If you want to be rich , build a road”, and I can see how this movie, over the years, can help get a lot better perspective of what is happening in the world nowadays…

So as you can see, there was a kind of premonition in these five movies. A premonition that goes far beyond the kind of control or manipulative hidden hands that would be too easy to fall into.

That’s what I wanted to share with you.

Let me know if you have questions and I look forward to hearing your thoughts. Feel free to comment.