I don't like that headline, France hasn't surrendered to anything except maybe reality.
Following on yesterday's post linking to Politico.eu's article wherein the French President said:
...Macron also argued that Europe had increased its dependency on the U.S. for weapons and energy and must now focus on boosting European defense industries.
He also suggested Europe should reduce its dependence on the “extraterritoriality of the U.S. dollar,” a key policy objective of both Moscow and Beijing....
And via ZeroHedge:
By Michael Every of Rabobank
De Gaulle of the man!
Good Friday’s slightly stronger-than-expected US payrolls print saw the market reprice in a further 25bps rate Fed hike in May, albeit not stopping the meme that we are close to the cycle peak. Indeed, new BOJ Governor Ueda just provided no sign he is set to tighten policy, while the Aussie financial press ask ‘Is the RBA a dove or a chicken?’, noting Governor Lowe’s only justification for an April pause was “We’ve already done a lot, let’s pray it’s enough,” and that he’s said he’s “prepared to have a slightly slower return of inflation to target than other central banks… to preserve many of those job gains that have been delivered in the last few years, that’s a better outcome.” As Ben Picton points out, the RBA even has the gall to assume productivity rises ahead to counter low inflation. In short, the white flag is being waved in two places, but not the US.
Make that three, as the IMF’s latest World Economic Outlook expects a return to ultra-low interest rates, with Fed Funds back comfortably below 1%. That’s a big call with struggling supply chains, overheating services, an ageing population acting as a secular push on wage rates, the Wall Street Journal saying ‘The US is back in the factory business’, a return to industrial policy --and mercantilism-- and the Fund not even calling for a global recession first! And let’s not forget the global angle, as some EM think about barter not dollars, OPEC+ slash output, and money waits in the wings to leap back into speculative commodity trades again.
Actually, make that four white flags. President Macron’s red-carpet visit to China, where VDL was ushered in via the tradesman’s entrance, saw another big meeting at a big table --with ‘random’ Chinese citizens cheering Macron, not burning down his favorite restaurant-- but mocked by national-security experts as “one of the greatest blunders by a major European power since the end of the Cold War,” because “flattery works”; and ‘to Macron’ is now defined as “to deliberately increase one’s dependency on China whilst lecturing European partners about naivety and the need to boost EU strategic autonomy.”
Indeed, Macron signed many China investment deals, a new Airbus plant, promised Huawei fair treatment, and snubbed VDL’s call for China supply-chain ‘de-risking.’ In doing so, despite saying the use of force to change the Taiwan status quo was “unacceptable,” Macron implied no French economic consequences for China, even adding, “I am neither Taiwan nor the US.” While he was there, Beijing said it would inspect cargo vessels entering Taiwan and stepped up major military exercises encircling it, seen as a warm-up for a potential blockade by some in uniform. Today, by contrast, the FT argues ‘Why Taiwan matters to the world: a dangerous rise in tensions with Beijing is a price worth paying to protect a flourishing Asian democracy.’
Monday then saw a Politico story with Macron quotes the site had to stress: “were all actually said by the president, but some parts of the interview in which the president spoke even more frankly about Taiwan and Europe’s strategic autonomy were cut out by the Elysée.” What they could report was Macron stating: “Europe must resist pressure to become America’s followers”; the “great risk” Europe faces is getting “caught up in crises that are not ours, which prevents it from building its strategic autonomy”; Europe had increased its dependency on the US for weapons and energy, and must focus on boosting its defence industries; and the EU should reduce its dependence on the “extraterritoriality of the US dollar,” because “If the tensions between the two superpowers heat up … we won’t have the time nor the resources to finance our strategic autonomy and we will become vassals.” De Gaulle of the man!....
....MUCH MORE
It is probably good to keep in mind that the term exorbitant privilege (privilège exorbitant in French) referring to the U.S. dollar's position as the international reserve currency was originated by a very, very French man, Valéry Giscard d'Estaing, when he was the French Minister of Finance before ascending to the Presidency.
Here's the introduction to a post written the day after Russia invaded Ukraine:
Reminder: "One thing and one thing alone enables global dominance...."
Following up on "The Alphaville Long Read On SWIFT and Russia (and reserve currency status)", the reason I threw the "reserve currency" bit into the headline is: any attempt to exclude Russia from SWIFT effectively de-dollarizes their external transactions and leads to the implementation of alternative payment messaging systems.
Although the U.S. currently has reserve currency hegemony, both the EU and China want to be the next currency hegemon and some very bright people understand that beyond the headlines are some profound effects on world power.
As a side note on effects behind the headlines, if the reader is curious as to why Justin Trudeau reversed his decision to use the Emergency Act, even though he had just won a (party-line) vote ratifying his initial action, my guess is someone very high up in the ultimate corridors of power, meaning Toronto rather than Ottawa, explained what capital flight meant, both in theory and in practice.
Anyway, I digress. Here is Charles Hugh Smith at his Of Two Minds blog taking a different angle of attack to get to the essence of the reserve currency issue. January 19, 2022:
Choose One, But Only One: Defend the Billionaire's Bubble or the U.S. Dollar and Empire....*****For our purposes that's really all there is to it. For at least the last 500 and more likely the last 5000 years the reserve currency was as much a source of power as it was a reflection of it.
Or as Valéry Giscard d'Estaing said when he was de Gaulle’s finance minister, it's an "Exorbitant Privilege".
And no one likes giving up their privileges.
I am guessing the "de Gaulle" in the the sub-head has something to do with the facts we put out in this 2018 post introduction:
Is President Macron Channeling General de Gaulle?
When the Président de la République called for a European Army on November 5 and said "We have to protect ourselves with respect to China, Russia and even the United States of America," my first thought was "That's something de Gaulle would have said" as he politely asked the U.S. to get the hell off French territory and then withdrew from NATO's command structure.
Actually the big man did say almost exactly what Macron said, and did so repeatedly over a period of years.
But then on the 14th President Macron said “it was not a rejection of NATO or France’s alliance with the United States, but a guarantor of France’s ‘sovereignty’ so there goes that idea, even though again, that was the same spirit that the General evinced. But no, de Gaulle was a nationalist and Macron a Rothschild banker globalist so it couldn't be.
But....President Macron said “I do not do policy or diplomacy by tweets,” and I thought "By jingo, that's exactly what de Gaulle would have said."
Had twitter been invented in 1966.
And then I woke up and went back to the Claremont Review of Books for Boston Uni's Emeritus Prof. Angelo Codevilla's take on Professor Julian Jackson's new biography of de Gaulle. TL:DR....
