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France's manufacturing production level index declined to 92.1 in March 2012. Bank of France information shows zero growth in GDP for the first half of 2012.

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This Journal editorial says both Hollande and Sarkozy fail to address the issue of competitiveness in the French economy. Much of the election campaign in April 2012 has focussed on taxes on higher incomes and too little on measures that would improve competitiveness. Some of the action taken in recent years such as raising the retirement age to 62 from 60 are being opposed by Hollande, which gives the electon a fairy tale quality says the Journal.

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What the French take for granted today- 99% of the French people are covered by national health care- started when Charles De Gaulle faced rising scial discontent in the postwar period, and accepted a demand for worker protections. During the postwar period Frenchmen are paying higher taxes, but in the first 30 years because French salaries were growing fast this was not noticeable. With slow growth and rising healthcare costs its getting harder to increase these tax deductions for overall social security, which have reached one third of apaycheck at the low end, say for ataxi driver in Marseilles. So you have the government running deficits of $15 billion in 2004, even after increasing co-payments for routine care and doctors visits. Experts say this could reach $40 billion in 2010 and $90 billion in 2020. In 2007 health care cost the government $300 billion, or 11 % of GDP, (OECD numbers) and the bureaucracy and rules are getting more complicated. This 11% is well below what Americans pay for asystem that leaves out about 50 million people. France ranked 8th on the OECD list in cost per capita, the US at the top. And the French life expectancy is higher at 80.98 vs. 78.11 for the USA, higher by about 3 years. For this cost the system is cost effective according to the OECD. And the French find the American debate abouthealthcare public option "altogether surreal", as the newspaper Le Monde put it. To keep the system in viable form the government is increasing copayments, such as the decrease in reimbursements from 80% to 65% for routine care and doctors visits in 2004. As aresult the deficit dropped to $6 billion in 2008. ut the global economic crisis and rising unemployment has made this grow to estimated $13 billion for 2009. Measures under consideration: increasing hospitalization copayments to $28 a day from $22. To fill this substantial gap for routine care and other costs the French system has private insurance companies called mutuals that offer different policies. Which is where the Fench notion for equal treatment in health care gets distorted because different people can have different coverage. The French though compare their system to the British system and say theirs is not as nationalized as it appears and the Brisih one is much more so. The French system though supervised by the government is different from government run health care as in Britain. French people are free to choose their own doctor who is often a private practitioner. ...

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S&P downgrades France's credit rating from AA+ to AA. Government spending at 56% of GDP remains at the second highest level in the EU, second to Denmark. President Hollande has reduced the deficit mainly by raising taxes which is seen as having reached its limit. The French economic growth was at 0.5% for the second quarter of 2013 compared to the first quarter, unemployment is high at 11.1%.

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France's CFDT trade union says both Sarkozy and Hollande have shown agreement with a plan for workers to show flexibility in wages and benefits in return for preserving jobs. This comes at a time when France's trade deficit is widening. It was 69.6 billon euros in 2011. Hourly labor costs in France are 34.20 euros, 14% higher than in Germany, where similiar wage restraint was shown by the unions during the last decade to reduce high unemployment. It is 20% higher than the euro-zone average, according to Eurostat. Now France is looking to adopt some aspects of the German model to improve competitiveness and reduce unemployment.

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The strong showing by National Front leader Marie Le Pen and her focus on the economy in France, and the lack of growth with austerity measures, is likely to change the way the eurozone countries respond to the deficits and German insistence on austerity cuts. Marie Le Pen's economic positions for more government spending to reduce unemployment and provide additional benefits is closer to Socialist candidate Hollande's position. The right wing party in Holland also voiced the same concern recently- that it did not want to hurt Dutch pensioners with austerity cuts- when it refused to support the Dutch government leading to its collapse and new elections.

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Former German chancellor from the SPD party, Gerhard Schroeder, is interviewed by Rayond Zhong of the WSJ. Here he describes his views on the way Agenda 2010 was implemented in 2003 in Germany to gain public support for changes to Germany's welfare state. He also talks about the eurozone crisis and how Angela Merkel has handled the crisis, and the right approach for an Agenda 2020 for Europe. The interview was made at Schroeder's law office in Hannover, Germany. This is a detailed and exceptional interview by Zhong covering all facets of the eurozone crisis and Germany's response. Schroeder says it was right to give Greece more time to make the reforms, so that the Greek people could see that this path would help in a positive way. In doing this he cites his own experience when as the reforms for Agenda 2010 to make Germany more competitive were taking place- including cuts in spending and lower taxes- he turned down his finance minister Hans Eichel's proposal in 2003 for an additional 20 billion euros in cuts to put Germany in compliance with EU law....

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Prime minister Renzi of Italy resigns after defeat in a referendum to change the constitution. Renzi had said he would resign if there was a "no" vote on constitutional changes to make it possible to pass further reforms. The results show the "yes" vote with about 41% of the vote, and 59% saying "no." About 65% of 47 million registered voters voted. The referendum called for cutting the size of the upper house Senate eliminating some constitutional bodies, and increasing powers at the federal level. Renzi may have made the mistake of making the vote for or against constitutional change a vote for his democratic left party, and not understanding the depth of public skepticism of established parties. Parties such as 5 Star M5S  have appealed to a public skeptical of how economic reforms would help bring more prosperity to the middle class, and a desire to try out new options. Virginia Raggi of M5S was elected mayor of Rome recently and Renzi's referendum move similar to the way prime minister Cameron moved for a referendum on an old issue of euroskeptisim, may have failed to grasp grassroots changes. The irony is that in 2014 elections to the European parliament Renzi's democratic left party won 40% of the vote and was seen at the time as a success, and the same size vote in the referendum is seen as a failure. In a referendum all other parties votes are added together from right to left parties and new parties. In the Brexit vote the Labor party "no" vote including Labor voters who never voted added to the votes of Brexit supporters and the newer UKIP party giving Brexit the slight edge needed. The singular feature of the trend is that working class voters are combining with right leaning voters to upset established parties, in the midwestern U.S., in the north of England, and in the north of France. In the medium to long run this means the left parties are likely to move to realign themselves with their base of support. ...

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This editorial in the Economist says Britain's economic recovery will not be complete until interest rates are well above zero and productivity growth is established. Without productivity growth and growth in wages, both lacking in the economic recovery since 2009, tax revenues will not be enough to reduce the deficit, requiring more spending cuts. That means the Bank of England will not raise interest rates, keeping a situation of no rate changes prevailing since March 2009 when the central bank cut rates by 0.5%. In the current situation the Bank of England is not expected to raise rates till 2016, only after the U.S. Federal Reserve increases rates to avoid appreciation in the pound and further deflationary pressure, according to Goldman Sachs. With inflation currently at zero, following the drop in oil prices, and 10% appreciation in the pound since mid 2013 making imports cheaper, there is little pressure to increase interest rates. In 2011 inflation with rising food and energy prices reached 5.2% , but the Bank of England did not raise rates because of the eurozone economic crisis affecting growth. Only since 2013 has economic growth picked up with 1.2 million jobs created since the beginning of 2013, bringing unemployment down from a high of 8.5% in 2011 to 5.6% in May 2015. Throughout the recovery productivity growth is falling behind- 2014 productivity measured by output per hour worked was 1.3% lower than in 2011, and 14% below the pre-crisis trend, according to the Economist....

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Oil prices are up and staying there longer in December 2011. The 12 month rolling average for oil prices for Brent crude oil is at $109, compared to $106 a barrel in September 2008, according to consultants JBC Energy. The situation is worse for eurozone countries because of the declining value of the euro estimated at between $1.16-$1.30 in 2012 depending on how the eurozone crisis is handled. The 12 month rolling average was 70 euros when Brent crude prices were at their high in 2008, compared to 78 euros today. France and Italy are seeing their current account surplus disappear with reduced exports and higher import bill for oil.

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Francois Hollande, Socialist candidate for president in France, has led the Socialist party for many years. He started his career as a junior politician in the Mitterand government, and regards Mitterand his mentor. Another mentor is Jacques Delours, who was president of the European Commission. He has many years of training, and has persevered thorughout with a certain sense of humility in the midst of colleagues and politicians in France with larger egos. That inner strength and courage has emerged in the recent campaign appearances and the final debate with Sarkozy in April 2012. He has shown this in the recent campaign by not overstating expectations as he looks at the long term, and at the same time not understating when courage demanded a stronger statement. He has taken timely and effective positions in the current debate of austerity vs growth, or growth coupled with restraint in fiscal spending vs austerity, that is raging in Europe. He was quick to call the situation in Greece, a failure of governance in Europe, as well as a failure of governance in Greece. With the new voices of Premier Monti in Italy and ECB president Draghi from Italy, pushing for growth coupled with fiscal responsibility, a president Hollande in France, would add another voice to European aspirations for growth in the debate with Angela Merkel's Christian Democrats in Germany. ...

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Compared to precrisis peak in GDP for 2006 the economies of Germany and France are up about 3%, and 1% respectively, with Italy down by close to 10%, and the eurozone down about 2%. Inadequate demand is the largest problem for eurozone companies as the GDP for eurozone increased barely in the 3rd quarter 2014, increase of 0.6%.

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Mario Monti, Italy's prime minister, tells Alessandra Galloni of the WSJ, "Germany will never let France go." French economist Sorman says Americans do not realize that the EU and the Euro were created for political, not economic reasons, and the idea was to bring peace to Europe and especially between France and Germany. He sees the EU countries staying through this crisis together, and France emerging more competitive from this experience.

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France's union and business representatives reach agreement on improving competitiveness by providing new flexibility in labor rules. Unions agreed to cooperate with business in ways similiar to the German "kurzarbeit" program where workers work shorter hours but are guaranteed employment when demand is down. Workers on temporary contracts get health care benefits and incentives are given for businesses to take on more permanent employees.

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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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The WSJ Dollar Index tracks the U.S. dollar's performance against 16 other currencies. It surged by 12% in 2014 with a strengthening U.S. dollar. The rise in the dollar is likely to adversely affect the 15% of U.S. GNP that comes from exports and the $200 billion plus tourism industry in the U.S.

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Francois Hollande is elected French president. Greek voters vote against the austerity measures by giving a majority of the votes to parties on the far right and far left.

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The EU statistics agency Eurostat reported that the eurozone countries GDP declined by 0.3% in the 4th quarter compared to the third quarter of 2011. The decline for Germany was 0.2%. For Italy the decline was 0.7% over the prior quarter according to Istat, the Italian statistics agency. Spain 0.3% decline over the prior quarter. France experienced 0.2% growth over the prior quarter with larger exports by Airbus and more business investment. Italy plans cuts to military spending reducing aircraft purchases, buying 90 instead of 131 Lockheed F-35 fighter jets. Only France and Slovakia showed quarterly growth.

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Yields on France's government bonds turned negative on July 9, 2012. As the pool of bonds from haven countries such as Holland and Germany is shrinking, France with its deep and sizable debt market is benefitting. France was able to sell 3.9 billion euros of 13 week Treasury bills at a yield of -0.005 and 2 billion euros of 24 week bills at an average yield of -0.006.