This past week saw the geopolitical situation in France descend into dark days not seen in decades. The French Interior Ministry announced that the four week long nationwide demonstrations had grown into 125,000 people this past Saturday. Fully 1,385 individuals were arrested and 975 of these put in prison. According to the interior minister, this was “mission accomplished.” Meanwhile President Emmanuel Macron offered congratulations to his army of 90,000 police and military responders battling from armored vehicles and in complete combat outfits who put down fairly ruthlessly the demonstrations that turned violent and destructive.
Scenes of Parisian cars burning, main street shops smashed up and looted, downtown streets trashed, and the Eiffel Tower defaced have shocked the world. The protesters have angrily called Macron “the president of the rich” and accused him of being hopelessly out of touch with working people and uninterested in their struggles. Now the so-called Yellow Vest protests have spread to Northern Europe in Belgium and the Netherlands. They show little signs of losing potency.
Europe is on fire and with it some of the largest and most interconnected economies in the world. This threatens global economic stability quite seriously. It is an ever-present reminder of why gold makes sense in an IRA. Now is past time to pick up some IRA-approved gold and learn about the Gold IRA rules and regulations.
France On the Verge of Meltdown Begs the Question: What Went Wrong?
It is no exaggeration to claim that the presidency of Emmanuel Macron has descended into chaos and crisis. It took only four weeks for the frustration and rage-driven fuel demonstrations of the yellow vest protesters to wreak havoc up and down the country of France.
What began as a fairly peaceful demonstration against the upcoming fuel tax increases and new carbon tax policy of the French president quickly evolved into a broad and deep anti-Macron government protest. Protesters had many legitimate grievances including the painful economic reforms, increasing costs of living, and apparent lack of interest by Macron in the middle and working classes of the nation. The demonstrations soon became not only violent but destructive riots.
The French government first tried to delay the upcoming fuel tax increase, then backed down completely and canceled it. Protesters were not satisfied by the responses and the angry, mob-like scenes extended into the past weekend. The leaders of the nascent and loosely organized movement claimed it was already too late for economic change.
Finally the embattled and deeply unpopular Macron took to the television waves following destructive scenes throughout Paris from Saturday. He admitted he was at least partly to blame in the souring public mood, with:
“At first it was anger against tax and the prime minister responded by cancelling and removing all rises planned for the start of the new year. But this anger is deeper. I feel it is fair in many ways. I may have given you the impression that I didn't care, that I had other priorities. I know I may have upset some of you with my words.”
Yellow Vest protest coordinator Thierry Paul Valette warned reporters Saturday that Macron's overtures were a case of too little and too late, with:
“[Macron] must provide answers. They are late, unfortunately, they are late and the reality is that when he presents these measures some yellow vests will go home as they will be satisfied, but right now there are a lot of people who simply want the president to resign. It's too late, the game is set, and those people will stay on the streets.”
Macron's troubles began when he decided that he should model his France on Germany's fiscal discipline to pursue what he saw across the northeastern border as unrivaled economic success. To this effect, he rolled out extremely controversial reforms of the labor market and fiscal policy. Macron was yielding to German pressure to maintain a stable budget deficit at under three percent of national GDP as part of an effort to balance the country's budget.
Unfortunately for all concerned, his loosening up of the labor market rules did not boost the labor market in France. October's unemployment rate stubbornly remained a high 8.9 percent, good for fourth highest in the entire 27 nation European Union (and only behind the troubled nations Greece, Spain, and Italy).This chart below shows how unemployment has barely improved on Macron's watch, and is no better now than at the beginning of 2018:
Worse, the unemployment rate was broadly the same as a year prior. Youth unemployment across France stands at a devastating 21.5 percent, about four times higher than Germany's. No wonder the French people are so angry.
Avowedly uninterested in popularity ratings and polls, Macron ignored to his peril his plunging approval ratings that reached a shocking 21 percent. He powered on, continuing to ape Germany with higher fuel taxes that would help the country remain under their self-mandated deficit limit.
The environmentally friendly tax policy proved to be the proverbial straw that broke the camel's back. With this final blow, Macron managed to unify all of his most vocal opponents against him, with middle class, high school students, and trade union militants all finding common ground against the French Republic.
French President's Response Puts France In A Dangerous Financial Position
French commentators have pointed out soberly that the stunningly visceral protests represent “a violent rejection of Macron and his government.” The Yellow Vests were effective in their goals in any case, for finally Macron caved in and began to announce generous financial improvements to the ordinary lives of working people. He has declared minimum wage and overtime raises as well as tax cuts.
This is a fair response to the protesters' demands, yet the decision will have dangerous repercussions for France fiscally. Economists have already observed that it will significantly strain the budget deficit limits and probably lead to tensions between the French government and the European Commission.
Specifically, the minimum wage increase will be 100 euros (or $114) each month. Overtime pay will no longer be either taxed or charged for social welfare. Any individuals making under 2,000 euros per month will have their tax increases on pensions reversed. Macron even leaned on French companies, encouraging them to provide an end of the year bonus that will also be issued tax-free.
Consequences of the Yellow Vest Protests for France and Europe
French economic growth will also show a hit over the chaos and destruction that reigned for four weekends so far. Finance Minister Bruno Le Maire has called the nationally disruptive protests an “economic catastrophe” for this the second biggest economy in the euro zone:
“It's a catastrophe for business, it's a catastrophe for our economy.” The state will react with “the greatest firmness” to looters and vandals.
Le Maire then went on to declare in a tweet that these protests will reduce the economic growth by .1 percentage point from the quarterly growth. This may not sound like much, but the French economy only expanded by .4 percent in quarter three versus quarter two.This concerning situation has EU neighbors worried as Macron had been one of the two powerhouse leaders of the block, alongside Germany's Angela Merkel.
Meanwhile the Italian populist government has been taking shots at their rival in France. Deputy Prime Minister Matteo Salvini declared Macron solely to blame for the outbreak of violence and die-hard protests. Brussels has watched nervously as copycat protests swept through the Belgian country. Turkey's President Erdogan could not resist the temptation to name France a hypocrite for calling out Turkish human rights abuses when now French policemen were firing tear gas and spraying protesters down with water cannons to disperse them from the streets.
Gold Is the Ultimate Secret Weapon Against A Destabilizing France and Europe
Few are betting on the chances of President Macron's political survival, much less recovery these days. Even if he does overcome the huge odds and hold on to his office of president of France, the damage to France's finances is already done. It remains to be seen if he will have to give away still more fiscal concessions in a bid to quell the angry mobs who still want him to resign. If he does quit, the populists led by Marie Le Pen are gleefully waiting in the shadows to take over and pull France out of the euro zone at least and potentially the EU altogether (ala Brexit).
Gold is what your portfolio needs to stabilize it against a rapidly destabilizing France and European Union. As if U.S. and global stark markets did not have enough troubles to unsettle them already, today they have the world's largest trading block and GDP economic output group to worry about too. Now is the time to review the top five gold coins for investors. Thanks to the IRS loosening up their strict storage rules, you can keep your safe haven metals in top offshore locations for your IRA gold.