Why France's Hollande might want to avoid the mailman

French President Francois Hollande  delivers a speech as he inaugurates the Mucem (Museum of Civilisations from Europe and the Mediterranean) in Marseille, southern France on Tuesday.  (GERARD JULIEN/AFP/Getty Images)

Lately, high-placed French officials have sent nasty notes to President Francois Hollande, criticizing how he is handling the flailing French economy.

France is in a double-dip recession. The bread-basket of Europe is being downgraded left and right by ratings agencies and high unemployment remains a constant problem.

Edouard Carmignac, founder of France’s largest independent asset manager, fired off an open letter to Hollande in April, warning “time is running out” for France, according to CNBC.

The economy lacks competitiveness and public spending accounts for 57 per cent of GDP but only 90 per cent is covered by tax receipts, Carmignac wrote, adding that not cutting the public sector is “suicidal.”

The French nanny state is one of the most generous in Europe with exceptional maternity benefits, low-cost child care and an exceedingly large and well paid civil service.

Then there’s the missive from Christian Noyer, the governor of the Banque de France, or, the French Central Bank.

This one is my favourite.

Sent on May 27, Noyer chastised Hollande for high labour costs, flagging competitiveness, a low retirement age and he recommended slashing civil service jobs, according to French author Gaspard Koenig, writing for the U.K.'s Centre for Policy Studies.

As Koenig points out, “for once, a senior figure of the French Republic has raised the alarm on the unsustainable weight of the state in the French economy.”

But here is the kicker -- the French Central Bank employs 13,000 people at a cost of 1.5 billion euros each year, Koenig notes, adding only 6 per cent of the staff is under 30 and 32 per cent are older than 55.

By contrast, the Bank of England employs 1,955 people with a staff cost of 155 million euros. Not that the British economy is a shining example of wealth and efficiency and should be casting stones from a glass house, but, I digress.

So … what exactly are those French central bankers doing and how much are they making to do it?

Apparently, this situation is not their fault. It is French law. Koenig says there is a 1946 statute that practically makes it illegal to fire a member of the French civil service. A special act of parliament is needed.

Ah, France.

Plus ça change, plus c'est la même chose.

Tanya Talaga is the Star's global economics reporter. Follow her on Twitter @tanyatalaga

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France's very difficult year. Will it continue?

Tax crusader coaxes Canada to address murky practise of tax transfers

A May 23, 2013 photo of mining trucks parked at the Barrick Gold Corp.'s Pascua-Lama project in northern Chile. (AP/Jorge Saenz)

John Christensen is a Canadian mining company's worst nightmare.

As head of the U.K.-based Tax Justice Network, Christensen has spent years travelling the world, sound the alarm about the murky but legal practise of tax transfers, where companies minimize their tax exposure by shifting profits from cash-strapped developing nations to subsidiaries in tax havens.

Christensen, a former economic adviser to Jersey, a well-known tax haven, and now a critic of secretive havens, has been campaigning for change for a decade, telling The London Guardian in 2004 that its actions would lead Jersey to become "an overpriced ghetto for the very wealthy."

Today, Christensen has many reasons for optimism -- except when he looks at what's happening in Canada.

"Public finances are crumbling across the world," Christensen said in a phone interview from Ottawa. "Not only in the obvious cases like Greece and Portugal, but in some of the world's leading nations, austerity programs are failing, deficits are widening, and there's a recognigition that the inability to tax capital is a significant part of this problem."

Over the past years, Christensen said, it's like a switch has gone off in the governments of the developed world. 

An amendment to the new Dodd Frank Act in the U.S. will take effect as soon as next year and force any company listed on the U.S. stock exchange to publicly report any and all payments made overseas. That amendment should impact about 100 Canadian-based oil and mining companies.

The European Union has passed similar legislation.

A private member's bill in Canada, C-300, would have introduced similar requirements here but failed to win enough votes. Mining companies coaxed mayors and other politicians in towns where Canadian mines are based to pressure local MPs to vote against the bill, somehow convincing them it would mean local job losses, Canadian MP John McKay said in an interview.

Nevertheless, Christensen said there will be no escape for Canadian firms, particularly after the G20 countries in April agreed to support an effort to stop international tax evasion by urging governments to systematically share bank data.

That effort is moving forward in spite of Canada's resistance, Christensen said.

"Canada needs to catch up here," he said. "The other laggard on this within the G8 is Russia. That says it all. Canada had promoted keeping as the standard a system called tax information agreements, where information was offered on request."

Automatic information exchanges, however, should dramatically speed up the amount of time it takes to pursue investigations.

There is a flurry of examples of large multinationals under scrutiny for its tax-shifting prowess. Earlier this month, for instance, a U.S. senate subcommittee accused Apple of using subsidiaries in Ireland to minimize its taxes. One affiliate, Apple Sales International (ASI), reported sales income of $74 billion over four years but paid hardly any tax. In 2011, ASI had pre-tax earnings of $22 billion but paid $10 million in tax, a rate of 0.05 per cent.

Google has been accused of employing similar tactics.

Christensen says mining companies are among the most aggressive at shifting taxable revenue and figures Canada's tepid approach to tax reform "reflects a powerful banking and mining lobby.

Rick Westhead is a foreign affairs writer at the Star. He was based in India as the Star’s South Asia bureau chief from 2008 until 2011 and reports on international aid and development. Follow him on Twitter @rwesthead

Sex or the smartphone: what do Italian women want?

Protesters gather in Rome's Piazza del Popolo to demonstrate against Italian Prime Minister Silvio Berlusconi in Feb. 2011, saying his sex scandals have hurt their dignity and reinforced outdated gender stereotypes. (Alessandro Bianchi /Reuters)


Some think rock ‘n roll is better than sex. Others opt for chocolate. But smartphones?

Well, si. If you’re an Italian woman. According to a survey of 3,000 European women by alfemminile.com, some 29 per cent of Italians – close to one-third – admit to checking their phones during sex, according to a report in the Italian news agency ANSA.

And not only that. Eighty-three per cent of those polled confessed to being “exceedingly attached” to their phones to the point of addiction.
 
Furthermore, nearly one-quarter of them “cannot withstand being separated from their devices for more than an hour,” compared with 14 per cent of their European sisters. That’s far more, statistically, than stay with their husbands once they’re married – little more than 50 per cent.

In or out of the bedroom, the survey says, about 23 per cent of Italian women check their phones every half hour, compared with 18 per cent in Europe. And men who date them can expect that 54 per cent of their inamoratas will spend the evening with their eyes, and hands, on their keyboards.

But does this say more about the women – or their partners?

The study, in fact, could be the worst blow to the image of the Italian lover since the death of womanizing Fascist poet Gabriele D’Annunzio.

And it’s a far cry from Stendhal’s contention that in Italy, “one must only make love; other pleasures of the soul are cramped here…anywhere else is only a bad copy.”

But things have moved on since the early 19th century. 

Or could it be that like former Prime Minister Silvio Berlusconi, Italian men have fallen victim to their own overblown publicity?

With near-total control over the Italian media for more than two decades, Berlusconi flamboyantly promoted a role for women as sex kittens, striptease artists and burlesque queens, at the service of domineering (but irresistible) men. He invited high profile guests to “bunga bunga” parties supplied with very young women, with himself as the director and star.

The media onslaught rolled back some of the gains won by Italian feminists and made male chauvinism “normal” again. Sexual harassment was shrugged off as flirtation and women complained of increased hassling on the street.

But they had more overwhelming problems too, as the economic meltdown heaped disaster on discrimination. The female unemployment rate rose to up to 54 per cent, and the World Economic Forum’s 2011 Global Gender Gap Report placed Italy at 74th in gender equality, below Ghana and Bangladesh. Not surprisingly hundreds of thousands of women took to the streets crying basta.

Is it any wonder that they’ve also taken so fiercely to their obedient mechanical major domos – which they know will always be under their thumbs?

Olivia Ward has covered conflicts, politics and human rights from the former Soviet Union to South Asia and the Middle East. She was the Star’s European bureau chief from 1997-2002.

Paintings, jewels hit record sales. What austerity?

Jackson Pollock's Number 19, 1948, sold for $58.4 million. (AP Photo/Alastair Grant)

Art and jewelry sales hit record high prices today as a stack of paintings and stones sold for a total of almost $1 billion at auctions around the world.

A contemporary art sale at Christie’s in New York sold $495 million worth of paintings, including Jackson Pollock's "Number 19, 1948," which sold for $58.4 million. Christie’s said in a statement the sales showed “a new era in the art market." Which is another way of saying there are a lot of very rich people out there who can pay a lot of money for some art.

But in recent years art sales records keep breaking. 

The second most expensive painting ever sold was in 2006. Again, it was a Pollock. "No. 5, 1948" sold for $140m. Hollywood magnate David Geffen reportedly sold it to Mexican financier David Martinez although Martinez denied it.   

The third most pricey was Willem de Kooning’s "Woman III" which was sold in November 2006 to billionaire (he would have to be) Steven A. Cohen for $137.5 million. Geffen owned that one, too.

But the Qatari royal family blew everyone out of the water when they purchased Paul Cezanne’s "The Card Players" for $250 million in 2011. It is the highest ever paid for a work of art.

Or maybe diamonds are more your thing?

Across the pond in Geneva, Christie’s held a jewels sale, where a pile of sapphires, pearls and diamonds sold for more than a million dollars each.  Jeweler Harry Winston bought a 101.7 carat, pear-shaped diamond for $26 million. The company renamed the gorgeous stone ‘Winston’s Legacy.’

“A stone of this calibre and rarity is the perfect continuation of Mr. Winston’s legacy as the King of Diamonds,” the company’s CEO Nayla Hayek burbled in a statement. 

All this begs only one question, really.

What austerity? 

Hamida Ghafour is a foreign affairs reporter at the Star. She has lived and worked in the Middle East and Asia for more than 10 years and is the author of a book on Afghanistan. Follow her on Twitter @HamidaGhafour 

Bangladesh and us: outsourcing poverty

Walmart, Las Vegas in 2006. The world's largest retailer was cutting costs to counter a sales slump. It has held out against signing a fire and safety agreement for Bangladesh, saying its own inspections are more efficient. (AP Photo/Jae C. Hong)

After the darkest week in decades for Bangladesh’s workers, glimmers of light are appearing on the horizon. But like all glimmers, they may be an illusion.

Some -- and only some -- of the big brands whose cheap-chic clothes are produced in Bangladesh are ready to sign accords on boosting the appalling safety conditions. And after 1,100 of its underpaid citizens died under tons of rubble in the Dhaka factory collapse, the Bangladesh government is pledging a wage hike.

That wouldn’t be hard, you’d think, with a minimum wage that averages $38 a week.

But think again.

One reason those wages are so abysmally low – and likely not to change very much -- is because wages in the West have also sunk or stagnated while the richest few have burst their metaphorical piggy banks.

That’s created a vicious circle of demand for cheaper goods among the poor and shrinking middle class, increased the pressure from Western-based corporations to keep down costs in their outsourced factories overseas and redoubled efforts of Bangladesh (and other low-waged countries) to stay “competitive” by downloading destitution onto their workers.

“We’re living at a time of year-round deals,” says economist Armine Yalnizyan of the Centre for Economic Policy Alternatives. “There’s a cut-throat level of competition and we’re moving toward lower and lower prices – but somebody is making the sacrifice.

“The flip side of every low price is a low wage.”  

And not merely in the poorest countries. A new report from the Organization for Economic Co-operation and Development – whose 34 members are from advanced and emerging countries -- shows that income inequality  increased more during the slump years preceding 2010 than in all the previous 12 years. And there’s little sign of a turnaround any time soon.

Even where government welfare programs cushion the blow, the OECD said, there is a threat of “greater inequality and poverty in the years ahead” as austerity programs batter social spending at the time of greatest need.

Among the countries with the biggest equality gap is the U.S. – statistically the world’s wealthiest nation. Canada rates a mediocre 22nd out of 34 on the equality scale.

Meanwhile more workers in “wealthy” countries are in temporary and precarious jobs and minimum wages have fallen behind the rising costs of food and shelter.

What does it mean to Dhaka?

“The next generation (in the West) will be paid less,” says Yalnizyan. “There will be less disposable cash. But there will also be a demand for profits. So the way to feed the beast is to squeeze costs.”

Whether the survivors of the factory disaster reap the benefits of the current sympathy surge is an open question. Whether their children will is more in doubt.

Olivia Ward has covered conflicts, politics and human rights from the former Soviet Union to South Asia, winning national and international awards.
 

The millennials, narcissistic personality disorder and unemployment

Time magazine is making a splash with its recent cover story on the millennials.

Oh, you know who they are. They live in your house and refuse to leave. You pay top dollar for their education and they are the only ones who truly know how to set up all your electronic devices, including the PVR.

The millennials is the term being used to describe those born between, depending on who you ask, 1981 and 2000. Feeling old yet?

Time's cover story screams the: "Me Me Me Generation: Millennials are lazy, entitled narcissists who still live with their parents. Why they'll save us all."

Time's Joel Stein writes:  "Here's the cold, hard data: The incidence of narcissistic personality disorder is nearly three times as high for people in their 20s as for the generation that's now 65 or older, according to the National Institutes of Health; 58% more college students scored higher on a narcissism scale in 2009 than in 1982."

Sure, they are overconfident and a bit entitled, but, the global job market has not been kind. Many are on the couch fiddling with the iPad because they can't find work.

The International Labour Organization released Wednesday global unemployment trends for youth in 2013. No surprise here -- the numbers aren't good.

The global youth unemployment rate is about 12.6 per cent in 2013, that represents 73 million, and it is "close to its crisis peak," according to the ILO study. By 2018, the rate is expected to hit 12.8 per cent.

"The weakening of the global recovery in 2012 and 2013 has further aggravated the youth job crisis and the queues for available jobs have become longer and longer for some unfortunate young jobseekers. So long, in fact, that many youth are giving up on the job search," the 161-page report states.

Instead, youth are increasingly forced to take part-time work, temp jobs or unpaid internships.

Another problem is there skills do not match what the labour market is looking for. Sure, a degree in art history seemed like a great idea at the time, but, "overeducation and over-skilling co-exist with undereducation and under-skilling," the report noted.

So why will they save us all?

Because they can be adaptable. They have confidence and tech savvy ways we can only dream of.  Out of necessity, they'll end up employing themselves and showing the rest of us the way.

Tanya Talaga is the Star's global economics reporter. Follow her on Twitter @tanyatalaga

Even Euro boss has had it with austerity

There was a big meeting of European minds on Monday at the Brussels Think Tank Dialogue.

While no doubt, lots was said on lots of things, some comments by European Commission president Jose Barroso are causing waves in euro newsrooms and in the Twitterverse.

At the austerity and growth debate, Barroso said "we are reaching the limits fo the current policies," according to transcripts.

This is Barroso, former prime minister of Portugal whose tough economic policies helped lay the foundations of an austerity charge in his own nation when he was in power from 2002 to 2004. Portugal continues to struggle under high unemployment and sluggish economic growth and it is one of the most indebted countries in Europe.

While the current policies are "of course appropriate" Barroso said when it comes to addressing the "challenges of unsustainable debt" and the need to put Europe back on sound footing, he mused now may be a good time to turn the page. Try something else.

"So while this policy is fundamentally right, I think it has reached its limits in many aspects, because a policy to be successful not only has to be properly designed.  It has to have the minimum of political and social support."

On that last point, let's look at Exhibit A. For the past few years there have been violent clashes and protests on the streets of Athens, not to mention the rise of far-right extremism. French unions are angry. Immigrants are fleeing Spain to find work elsewhere. The United Kingdom is now getting subtle warnings from the International Monetary Fund to tone down its austerity push. The Italian political system is twisted up in knots.  And if you are under 25 and looking for a job in Greece, Spain or Portugal, well ... one in two of you may find one.

"We need to have a policy that is right," Barroso continued. "At the same time we need to have the ways, the means of its implementation and its acceptance, the acceptability, political and social. This is where I think we have not done everything right ..."

Right.

Politically and socially, one policy that is only seen as austerity, is "not sustainable," he added.

"We need sound fiscal policy. We need deeper reform for competitiveness and we need investment, namely with a social dimension."

Right again. Next?

Tanya Talaga is the Star's global economics reporter.  Follow her on Twitter @tanyatalaga.

 

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People are fleeing Spain, worse exodus since 1940s

A man walks towards the Barajas international airport in Madrid on Monday. For the first time since the 1940s, the Spanish population has dropped as people leave the econmically challenged nation. (Paul White/Associate Press) 

Here is a sad statistic -- Spain has experienced the first recorded population decline since the end of the Spanish civil war.

Reuters reported this morning that according to new figures from Spain's National Statistics Institute, the population fell by 206,000 to 47.1 million and that almost the entire drop is attributed to the flight of registered foreign residents.

Where everyone is going, is anyone's guess. However, a good bet would be Germany, the only European nation that seems to be able to consistently strengthen its economy.

Not since 1946 has Spain seen such a dramatic drop in those deciding to leave the European country.

Spain has suffered through years of economic recession and social upheaval after the global markets crashed in 2008. 

Earlier this month the European Commission, not surprisingly, kept Spain on their list of 13 struggling countries to watch in the EU. In economic parlance, the commission warned Spain is "experiencing excessive macroeconomic imbalances. Although adjustment is taking place, the magnitude of the necessary correction requires continuous strong policy action."

Unemployment in Spain is a staggering 26.3 per cent, according to recent Eurostat data. That is only slightly better than Greece, which sits at 26.4 per cent.

For those under 25, the Spanish jobless rate is a whopping 55.7 per cent. The only nation in the European Union that is worse, is Greece at 58.4 per cent.

And, last week, at the International Monetary Fund's semi-annual meeting in Washington, D.C., Olivier Blanchard, the IMF's chief economist called low growth in the eurozone bad news for all European nations. 

Spain is expected to experience a "substantial contraction" of its economy in 2013 before things start to improve, Blanchard said.

"The process of internal devaluation is slowly and painfully taking place, and most of these countries are slowly becoming more competitive. External demand, however, is just too weak to compensate for even weaker internal demand," Blanchard said on April 16.

In other words: Hold tight Spain. Somebody is going to start spending again, one day.

Tanya Talaga is the Star's global economics reporter. Follow her on Twitter @TanyaTalaga

Europe's most endangered historic sites need urgent help

The Sistine Chapel at the Vatican, London's Tower Bridge and the Louvre in Paris are some of Europe's most fabled heritage sites. Travelling across the continent you'd think the Europeans had no difficulty preserving and promoting their historic monuments which are recognized the world over. For the most part that's true. But there are plenty of places that are falling down and need urgent help.

Europa Nostra, the heritage organization, has come up with a list of 14 most endangered monuments and sites -- ranging from churches to gaslights -- that need quick action. 

In June, the list of 14 will be whittled down to a final seven at Europa Nostra's congress in Athens. A team of heritage specialists and technical experts will put together a rescue plan for the seven sites. Financial experts from the European Investment Bank Group will help come up with a strategy to raise money for the restorations. Not an easy task in these cash-strapped times.

Here is a selection of the 14 most endangered:

St. Paul and Peter Church, Armenia. The church dates back to the 5th century and is one of the first Christian structures. It is damaged because of regular flooding. 

Photo courtesy of Ministry of Culture of the Republic of Armenia

Berlin's gas lights were installed 200 years ago and still work perfectly fine.  A plan to replace them with modern electric version is opposed by residents and tourists who love the romance of the old-fashioned street lights.

Photo courtesy: Bertold Kujath – Gaslicht-Kultur e.V.

This 2nd century Roman amphitheatre was discovered in the 1960s in Durres, Albania. It is threatened by urban sprawl. 

Photo courtesy of the Association for the Development of Cultural Tourism, Tirana, Albania

Conservationists from the Greek Cypriot and Turkish Cypriot communities have come together on the divided island to put together a joint plan to save a 1.5 kilometre historic buffer zone in Nicosia's centre which has been badly neglected. 

Photo courtesy of Cyprus Architectural Heritage Organization

These 17th century fortifications designed to protect the city in the beautiful mountains of Briancon, France are decaying.   

Photo courtesy of Europa Nostra France

See the full list of 14 candidates

Hamida Ghafour is a foreign affairs reporter at the Star. She has lived and worked in the Middle East and Asia for more than 10 years and is the author of a book on Afghanistan. Follow her on Twitter @HamidaGhafour

German states pool their euros, buy CD containing bank deposit details. Swiss authorities are not amused

If you can't beat 'em, buy 'em.

Spiegel Online is reporting German states, fed up with tax evaders sticking all their money into Swiss bank accounts, pooled their resources and bought a CD containing bank deposit details.The Rhineland-Palatinate state and four others bought the info for about $5.2 million, according to reports.

Apparently, the CD had information on 10,000 bank customers and German authorities used it to conduct "raids" on 200 alleged tax evaders, Spiegel Online said.

Rhineland-Palatinate officials have high hopes for their treasure trove. They are expecting to get their hands on about $650 million in back taxes.

Spiegel says customers with bank accounts in Credit Suisse, and the former Clariden Leu AG and Neue Aargauer Bank are affected.

Understandably, Swiss authorities are not amused.

One has to wonder who sold the information to the Germans, and, how the informer obtained it in the first place.

The International Consortium of Investigative Journalists blew the lid off of trillions of dollars hiding in tax havens, last month, when they published stories concerning the release of 2.5 million banking documents.

Nearly 260 gigabytes of emails, documents, corporate files and account ledgers were obtained by the ICIJ's director Gerard Ryle. The information came to him on a hard drive in a big, brown envelope. There has been no suggestion, whatsoever, that he paid for it.

READ MORE: Europe’s economic crisis: How the rich avoid paying their tax bill

Tanya Talaga is the Star's global economics reporter. Follow her on Twitter @tanyatalaga