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Michel Sapin faces the challenge of convincing the EU and Germany that France should get more leeway for tax cuts and other measures to boost the economy and lower unemployment. He has been through difficult situations before when following approval of the Maastricht Treaty the French Franc came under speculative attacks by investors betting France could not implement the Treaty. At the time he was finance minister in the Mitterand government. As labor minister since 2012, Sapin implemented Hollande promises in the elections- for government sponsored jobs for young people, creating contracts to bind young and older workers in the workplace, and reform of professional training schemes.

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The euro approaches parity with the U.S. dollar by November 2016, with the surge in the dollar following the U.S. presidential election of 2016. The euro closed at $1.058 on Nov 17, 2016. It was down 4% following the election. The euro was down in early 2015. This time it is chiefly down against the dollar. This time both monetary and fiscal policy is expected to diverge with the EU, and inflation expectations are up in the U.S. Analysts expect parity to be reached in 2017. 

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German chancellor, Angela Merkel, speaking to the German parliament, the Bundestag, in Berlin, on December 2, 2011. She talked about the need for early agreement on changes in treaties that would place strict controls on budgets. Merkel said she sees the process of resolving the debt crisis as a long one, saying "this process will take years." At the same time she continued to emphasize the future of Germany in the European Union- "The future of the euro is inseparable from European unity. The journey before us is long and will be anything but easy. But I am convinced it is the right path. It is the right path to take to reach our common goal: a strong Germany in a strong European Union that will benefit the people in Germany, in Europe." Merkel compared the process to a marathon run, with efforts being particularly difficult at the 35 kilometre mark, making it helpful to know this at the beginning of the race. She ruled out common eurozone bonds as "unthinkable." Instead of agreements, Merkel expressed the need for "legally binding regulations," saying this was the time to "fix the mistakes of construction" by founders of the eurozone....

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Many of the 255 Comments on this article in the NYT say it is misleading or grossly misleading title. Michael Crowley of NYT quotes Wertheim for his conclusion that there seems to be a sense that the world is out of control, there is chaos under president Biden. This is subtly presented and clearly wrong. Wertheim is the author of a book that questions America's exceptionalism, and says "isolationism" was somehow concocted by policy makers such as Eisenhower and Dulles, both Republicans for a postwar world built on American supremacy. What Crowley and Wertheim do is put their very idea of asking questions about policy which is a part of the discussion into misrepresenting through misinformation about what happened. Biden has acted with courage to close wars no other president not Reagan/ Rumsfeld who started the conflict with Iran by arming Iraq's unprovoked war on Iran, not Bush who initiated the war in Afghanistan, not Obama and Trump who did not close the war in the mountains around Kabul that is a "graveyard for Empires" - the Maratha Empire in India in the 1700's that opened the door to British rule in India, not the British Empire wisely staying out of it, the Soviet Union beginning its decline there, and the US mired in it similar to the Soviets. Crowley/Wertheim are only making things worse- Netanyahu was emboldened by the former president and made a major security failure. Putin miscalculated in Ukraine, Biden simply acted in the way any wise American president would -strengthened NATO with Finland and Sweden, providing reasons for Russian restraint yet without escalating the conflict. To say this is chaos is to misinform and misrepresent, and favor the very Supremacy that former president Trump proposes as policy based on US power. By contrast Biden' approach is peace through strength from building close relations between partners in Europe and Asia, not provocation or supremacy. Wertheim is only one voice in a larger discussion not the authority he is presented as. For Wertheim to say "isolationism" was a bogey and point to 1950 as the point when it was created is simply wrong. It existed in some form from the early days of the Republic. Washington was an advocate of not involving the fledgling Republic in foreign entanglements of France even though it was an ally. It is not that response to isolationism is the cause of America embracing the role of leading the Free World as it is now. It is simply the situation leaders faced. Truman faced it when Soviets planned insurgencies in Turkey and Greece which would not exist as democracies today without Truman. And across Eastern Europe Hungary 1956 Ike acted cautiously. Czechoslovakia 1968 LBJ Johnson acted cautiously already in the wrong war with Vietnamese nationalism.  ...

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Francois Hollande becomes the first Socialist candidate to be elected president of France since Francois Mitterand 17 years ago.

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A sense that the policies of Hollande in France are better aligned with the Obama administration's position on economc issues.

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German chancellor Anglea Merkel selected her chief economic advisor, Jens Weidmann to head the Bundesbank, the German central bank. Weidmann replaces Axel Weber. Merkel prefers the quieter demeanor of Weidmann to the outspoken behaviour of Weber. Weber was Weidmann's tutor at the university, and at 42 is the youngest Bundesbank president. He headed the monetary analysis department at the Bundesbank and did a stint at the IMF, before joining Merkel's circle of close advisors. Weidman has a sense for markets and politics, and a close understanding of Merkel's policies. This would help Merkel as Germany sets the eurozone on a new path of reforms to build a firm foundation for the euro.

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How German political leaders view the Euro currency and the European Union. German history and the need for fiscal discipline and the European Union. The constant between Chancellors Adenauer, Kohl and Merkel- a sense of European unity as part of the fabric of the new Germany. A desire to find a way through the sovereign debt crisis of 2010-2012, by introducing fiscal discipline into the structural framework and preserving the hard won gains for the Euro currency and the European Union.

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Merkel tells a Davos meeting in January 2011, that "the euro is much more than a currency, it is the embodiment of Europe today." The idea of the euro as needed for the political and economic integration of Europe is accepted. Merkel also says "that "solidarity and competitiveness are two sides of the same coin." Suggesting that the slower economies in Europe will have to remake their economies, just as East Germany did when it joined a reunified Germany. Mathias Dopfner, CEO of Axel Springer, says Merkel knows from personal experience the traumas faced by a bankrupt economy. At the time of reunification the deutsche mark would become the national currency, even though the value of the mark reflected productivity levels and the strength of the economy of the western part. East German businesses were priced out of the job market. About 14,000 businesses were shut down and 4 million jobs were lost in the first five years after formal reunification in 1990. Unemployment jumped to 20% in East Germany in 2005. After the fall of the Berlin Wall two million people of the 16 million living in the East moved west, most of them younger people. For West Germans there was a price also. Germany has raised 1.7 trillion euros through an income tax "solidarity surcharge" for modernizing East Germany. Volker Perthes, director of the German Institute for International and Security Affairs, says Merkel knows what resistance and what dangers come with structural adjustment programs. And she has to sell the programs and insist on strict conditions for German aid to Portugal, Spain and Greece. After many years the project has paid off. The unemployment rate in the east is 11.7%, much closer to the 6.4% in the west than before, and the growth rate in the east is 2.7% compared to the 3.6% in the west. The antiquated industrial base in the east has been replaced with a solar power sector and new chemical engineering and microelectronics industries....

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The European Union was faced with a baseline tariff of 10% which after slow progress on negotiations is up now to 15%. EU frustration is evident in this story in the WSJ. But this could also be just a negotiating tactic of the EU. Bottom line the EU needs the US as Germany faces an assertive Russia. Germany is aware that France and Britain are further away than Germany from Eastern Europe and Russia.  Under chancellor Merz there is  much more rapport with the US than ever existed under the Merkel government or the Scholz government. Merz has disagreed with the sale of stake to COSCO in Hamburg port and many decisions from the Merkel period on immigration, being more aligned with the US in spirit. This was evident in the visit and meeting of DJT with Merz at the White House. DJT says even of Starmer of Labour that "I like him a lot." This could easily be said about the relationship between DJT and Merz. The decision by DJT on Patriots to replenish German supplies and by Merz to finance this and shift Patriots in Germany to Ukraine is a clear example of the path chosen by the two leaders for cooperation. German decisions will be driven by Merz in the direction of economic cooperation with the US with none of the condescending attitude that Merkel and even Scholz showed towards the US out of a lack of grasp of what is happening both inside Germany and the US, the need to rebuild the US and Europe after the trade disasters and lack of investment in the home base of 30 years. ...

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The BBC's Political Editor, Laura Kuenssberg, says there are significant hurdles to reaching an agreement in talks between Conservative Party leader Theresa May and Jeremy Corbyn of the Labour Party. Labour seeks some assurance on Britain remaining in the customs union. Ironically the very reason Brexiteers such as Mr. Davis and Mr. Rees-Moog oppose the Theresa May deal - the arrangement on the Irish backstop a way for keeping the borders open between the two Irelands - is the reason Labour could find a way to support an agreement with Theresa May. For the Brexiteers this is unacceptable because it would keep Britain indefinitely in the EU.  There are two other obstacles. Theresa May has promised to resign after negotiating a compromise with Labour Party. Would her successor including possibly a Brexiteer such as Mr. Boris Johnson, support the agreed to deal with Labour. This is highly unlikely. Another obstacle is that a majority of Labour party members of parliament favor a second referendum, a ratificatory referendum, or a confirmatory referendum whatever you call it.  A related article today on this issue in BBC News by Katya Adler describes the person on the other side, the person who heads Germany's ruling CDU Party, and who is likely the next chancellor. This is AKK, Anne-Margaret Kampbrauer. She wrote an article in The Times about a month earlier with other German leaders saying she would love to see Britain change her mind and stay in the EU. She is in favor of a second referendum. Parts of the Conservative Party also support a second referendum- those Conservative MP's who are boxed in between the extreme Brexiteers who care for nothing except their vision of Britain outside the EU as a Franco-German arrangement, and the MP's who left the Conservative Party or now support a second referendum.  Kuenssberg says that necessity is the mother of invention and something could come out of the talks between May and Corbyn- but the obstacles she mentions may not be overcome leading to a new popular vote as the best option. ...

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Krugman comments on the Swiss National Bank's decision to give up the peg of 1.20 to the euro made in 2011, and reduce interest rates to a negative 0.75% on Jan. 14, 2015. He points to the dangers of complacency about the deflationary trend in Europe, Japan and the U.S., and deflationary pressures in China in the first quarter of 2015.

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In a couple of weeks one can expect a digital Covid certificate that allows freedom of travel within the European Union countries. The European parliament and member states have agreed on setting this up. The travel pass will be a QR code on a smartphone or printed on paper. By accepting the travel pass EU states will drop travel restrictions such as further testing and quarantines unless necessary. With only 10% of EU citizens fully vaccinated there was concern about fairness but as vaccination speeds up in Germany, France and other EU states, this is giving way to the need to make travel easier during the summer.

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The Gallois Report commissioned by the new government in France to restore France's manufacturing competitiveness. Louis Gallois is the former head of aerospace firm EADS. It calls for a 30 billion euro cut in payroll taxes to help French companies compete in global markets. Gallois proposes 22 main measures to "stop the slide and support the economy." He called this a "competitiveness shock." Gallois points to France's 70 billion euro trade deficit in contrast to booming German exports. The cost to the economy was 2 million French jobs over 3 decades, says the report. Unemployment today is around 10%. Measures suggested include the payroll tax cuts of 1.5% of GDP for salaries upto 4900 euros a month, and employee representatives to sit on board of directors of French companies similiar to Germany.

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The COE-Rexecode study warns about the loss of French competitiveness in manufacturing.

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Euro which ws 82 cents to the USA dollar in 2000 has fallen by 35 cents to $1.27 in 2008. But say analysts it has a lot further to fall as European economies contract in 2009.