This is an ethic of aesthetics in gestationBank balance sheets have changed in natureBut the truth of a day is not that of the next dayCompromised last July with the highest euro to 1Implicit default rates are still too highVivendi in 2002 it was in fact 35 billion euros of debt and lossesOnly 20 of our fellow citizens are mobilized on this issueNicolas Sarkozy should push to pragmatismWe will grant three new blocks to exploreA slope and a return to the previous levelThe Ministry of the economy struck in extremis, yesterday, and "by reason of exceptional circumstances", the Economic Commission of the nation, traditionally invited each fall to comment on the economic situation and the growth forecasts. Time is not, clearly, in the discussion. The scenario drawn up by the Government in the draft Finance Act, which provides 1 growth next year, appears to be already obsolete anyway, so the acceleration of crisis mortgage now any analysis of short term. Yesterday morning however, the 15 economists consulted by Bercy in preamble to the CEN has it reunited in a "surreal" atmosphere, according to a participant. "It was all shifted", said another.
A deficit to 3.2
In fact, the forecasters are limited to the traditional exercise of comments of forecasts adopted by the Government several weeks ago. They have still criticized assumptions considered overly optimistic, such as those on the consumption of households ( 1.9 next year), investment of companies ( 2) or, especially, the public deficit. While the deficit of the State is established at 67.6 billion EUR, degradation of 3.8 billion euros from the same date last year, according to data released yesterday by the Ministry of the Budget, economists expect on average to a public deficit to 3.2 of GDP next year, half a percentage point above the official forecast of the Government.
"It is petrifying."
But on the merits of the macroeconomic diagnosis, the debate, however, was short. "The risks are so great that they are difficult to quantify." No "one can for the moment into a central scenario that can be a real financial crash", summarizes Karine Berger, Director of studies of Euler Hermes SFAC. At the same time, yesterday morning, other economists, including Jean-Paul Fitoussi, Elie Cohen or Jacques Sapir, debated the Socialist Party for the consequences of the crisis. "There is a real difficulty in analysing the situation in real time," also reported Xavier Timbeau, Director of the Department of analysis and forecast at the OFCE, who participated in the debate. "Nobody is very equipped to appreciate the risk of a systemic liquidity crisis." Assess the consequences, is petrifying.
Additional illustration of the volatility of the situation, economists learned from their respective meetings, the decline in the rate of interest by the European Central Bank (see page 2). "Everyone is taken on its head all time", summarizes Eric Heyer of OFCE. "Nobody had, for example, incorporated this reaction of the monetary authorities in its macroeconomic account." And economists have, anyway, probably not anticipated nor the reactions of the stock markets to this drop in rates. "The ECB cuts rates and nothing suits: it means that there is more than short-term solution", observes Karine Berger. "We are as in 1993 where it had dropped", analysis an economist.
Clear message by the IMF
Therefore, a few tenths of a point of GDP forecasts nearly do have great meaning. The international monetary Fund's message is, him, much more clear: the new growth forecasts for next year (read page 3), published yesterday, show a drastic downward revision. The French economy would thus limit its growth to 0.2 in 2009, either a forecast down 1.2 points compared to July. Economists are also beginning to draw black scenarios that build on a decline in domestic product gross year next in France.
