More Than Words: Austerity in France (Europe‪)‬

Dr. Doom has spoken: Europe is in for a storm, and it's not just the infamous PIGS - the acronym used to refer to Portugal, Ireland, Greece, and Spain, the four European economies most exposed to the debt crisis--but a true heavyweight: France. Nouriel Roubini, the new star of the economic world due to his accurate prediction of the economic crisis, has set off alarms in the French press by describing the state of France's debt as little better than that of the PIGS. This is a surprising charge for the Eurozone's second largest economy, whose deficit this year amounts to just 7.7 percent of GDP compared to 9.3 percent for Greece and with a sovereign debt evaluated at 77.5 percent of GDP compared to Italy's massive 115.2 percent. Indeed, more orthodox pessimists have pointed at Italy, rather than France, as a likely target of bond vigilantes following assaults on the PIGS. Roubini's charge is particularly troubling given the fact that France was largely spared the real estate bubbles and bank failures which exploded Spanish and Irish deficits. For Roubini and like-minded deficit hawks, however, the concern isn't about the current debt levels but rather the lack of reforms aimed at reducing ballooning deficits. Whereas the Italian government has severely restrained its budget over the course of the financial crisis, French President Nicolas Sarkozy has pushed stimulus measures, significantly increasing spending figures. Of deeper concern for Roubini, however, was Sarkozy's inability to deliver on promises of important structural reforms and the improbability of any such reforms passing in the near future. Indeed, whereas austerity has been the buzzword in European governments from debt-stricken Greece to model student Germany, French leaders have refused to so much as utter the word, preferring to speak instead of accepting responsibility. Euphemistic acrobatics aside, it appears that by weakening the omnipresent Sarkozy, the fiasco surrounding this year's pension reforms may allow more efficient deficit-reducing measures to pass.