Forest Ent,

Je viens de lire votre article et vous en félicite. Outre qu’il est bien écrit, il allie la force de la forme et la réfléxion de fond.

Juste pour pour souligner que le Ministère de la Parole que vous décrivez a ses limites d’effet, qui arrivent vite, je vous livre pour information cet article que je viens de trouver dans la rubrique « éditoriale » de mon journal local anglophone.

Il semble que l’idylle entre la BCE et Nicolas Sarkozy soit fini et que l’investissement de ce dernier sur ce terrain soit arrivé aux frontières du possible réel.ce n’est pas moi qui l’affirme ou un opposant à Nicolas Sarkozy, mais un spécialiste financier américain réputé !!!

En plus des on titre caustique, l’auteur, un citoyen américain, semble se moquer des deux « Titans » français que seraient Jean-Claude Trichet et Nicolas Sarkozy....Se gausserait-il des tailles différentes des deux hommes ?

Aux dernières nouvelles ( de ce matin-heure locale), sur l’affaire avec la Lybie, la France passe maintenant pour, je cite, un autre article de mon journal local (taiwanais), « la cocue de l’histoire », avec un Lybie qui se sent « trahie » et une Bulgarie qui a libéré immédiatement les « otages », expulsés ou extradés, selon la version de Tripoli.

Le contrat industriel franco-lybien prévu paraît mal parti aussi pour d’autres raisons.

La parole est une chose utile comme l’idylle « européenne », mais les faits concrets ne suivent pas le Président français.

Merci en tout cas pour votre travail d’information.

Bien cordialement vôtre,

PS : l’article est en ligne sur www.taipeitimes.com/News de ce jour 30 juillet 2007

Rising rates and Nicolas Sarkozy : the ECB’s honeymoon is over

By Melvyn Krauss

Monday, Jul 30, 2007, Page 9 The honeymoon for the European Central Bank (ECB) is over. Because European interest rates are no longer clearly out of whack with the fundamentals of the euro-zone economy, monetary policy has become more complex.

At the same time, France has given a strong mandate to its new president, Nicolas Sarkozy, who is without question the most formidable political adversary the ECB has had to face in its brief history. Sarkozy stands ready to pounce on any mistakes the ECB makes in this more difficult policy environment.

With European interest rates up 200 basis points since late 2005 and the euro near a record high, Sarkozy wants the ECB to stop raising rates now. ECB President Jean-Claude Trichet and the Governing Council strongly disagree.

At the ECB press conference early this month, Trichet signaled at least one more rate hike — either in September or October. Some Council members are known to support two more rate hikes before year-end.

What makes monetary policy tricky at this point is that the German economy — which has been Europe’s locomotive during the current cyclical upturn — may be reaching a turning point.

Surveys of business and investor confidence have softened — the respected IFO index of German business sentiment fell from 107.0 to 106.4 this month and the so-called « hard data » — industrial production, retail sales, etc — has been mixed. Second quarter German GDP has stalled after a surprisingly strong first quarter.

The jury is out, but there is reason to be concerned. The euro is at record levels, oil prices are surging and interest rates are expected to go higher. The euro-zone economy — including Germany’s — is not bulletproof, though the hawks in the Governing Council often talk as if it were.

Just as last year when there was unwarranted growth pessimism in Europe, this year there is unwarranted growth euphoria. Many Germans, in particular, are in denial that the cyclical upturn may be coming to an end.

Were the Governing Council to miss the coming turn in the European economy while blithely raising interest rates, they would be portrayed as drunken sailors on a rate-raising binge. The roar for greater political control over Europe’s central bank would be deafening — and not only from France.

The political costs for the ECB of making this type of mistake could be exorbitant. This is why the ECB must be very prudent as it considers whether to maintain the current pace of rate hikes, in which case it would raise rates by 25 basis points in September, or slow the pace down a bit, in which case the next rate hike would come in October at the earliest.

In the current political environment, the dangers to the ECB from outside political interference are much greater from raising rates too fast than too slowly. If it goes too slow, the ECB has earned sufficient credibility as an inflation fighter to make up for it in the future with little if any economic or political cost. But if it goes too fast, the political cost could be substantial and irreversible. Politicians will push for more control and probably get it, Maastricht Treaty or no Maastricht Treaty.

Waiting until October for the next move up is like buying insurance against a catastrophic loss.

But will the ECB see it this way ? As a matter of principle, the hawks refuse to consider the political costs of their actions. In earlier times with no formidable adversaries in the political arena, this was a harmless affectation. But it is an extremely dangerous attitude with people like Sarkozy ready, willing and able to impose high political costs upon the bank should it stumble.

There is more interest in Sarkozy’s populist ideas about currency intervention and adding a new political dimension to monetary policy decisions than is commonly realized.

The hawks also suffer from what can be called a « catch up » complex. No matter how high rates go, they think they’re behind. They want to go in September so that they can go again in December, even before knowing the data — and they won’t stop there either.

Even the doves might support a rate hike in September to counter-act the charge that they are being bullied out of a September hike by Sarkozy. There is no doubt that Sarkozy’s attacks on the ECB are having a counter-productive effect in this regard. They are pressuring the ECB to raise rates sooner than later.

But a September rate move also serves Sarkozy’s interests, as it will give him more ammunition to portray the ECB as out of control and in need of political disciplining. For the ECB to protect itself from such charges, far better to wait until October when the bank can go to the public and say in effect : « Look, do you see how reasonable we have been. Now we must raise rates. »

In the final analysis, whether the next rate increase comes in September, October or whenever — and it looks like September notwithstanding current warning signs that suggest a possible slowdown in the coming months — the data will determine how far the ECB goes with its rate hikes if the bank is savvy enough to keep the politicians at bay. But this is a big if.

The fight is on between the two French titans — Trichet and Sarkozy — with the fate of Europe’s central bank hanging in the balance.

Melvyn Krauss is a senior fellow at the Hoover Institution at Stanford University.