Tuesday, October 19

La Grève And Astorg

What I don't get about the strikes, as I sit here in Paris across the street from the presidential palace, is why young people are involved (at now, ten of 12 oil refineries have have shut down or are in the process of closing while half the flights from CDG cancelled. Could be me tomorrow). Afterall, the protests about moving the retirement age from 60 (the lowest in Europe) to 62 and reforming the pension scheme which is much needed for its survival. For the yuf, this is a lifetime away - what twenty-year-old thinks beyond next week? Students should be fighting to ensure they get a piece of the pie, ie, pro-reform, instead of a possible insolvency. But I suppose this does not work when the state viewed as the secure long-term career track. By contrast, my free market taxi driver is énervé by the lack of fuel which means he may not work tomorrow. So I hope for Sarkozy's success. Of course the disruptions occur as I am with foreign investors who may committ tens of millions of euros to France. But at least yesterday it was a lovely fall afternoon with the foliage turning orange and the light bouncing from the Seine so, really, where else compares?

Despite it all, France has a powerful economy, which is the fifth largest in the world in nominal terms at $2.1 trillion, behind the United States, China, Japan and Germany and the eighth largest by purchasing power parity. It is the second largest economy in Europe behind Germany and fourth largest behind Germany, United Kingdom and Russia by PPP (World Bank figures). Unemployment at 10% keeps people nervous and the taxes are high no doubt (with UK catching up) but the health care and transportation networks are, arguably, the best in the world for what they provide.

France has produced global leaders in energy resources, retail, manufacturing and other industry. Managements here are clever in a French way - clever like the fox. As for investment, approximately .70% of GDP committed to private equity which is on par with Scandanavia and behind the UK and US, which have over 1%. This suggests room for growth - I have observed through Astorg that French owners have become comfortable with buy-outs as the exit route. It is no longer seen as unusual (compared to m&a or an IPO) as it was in the '90s. In theory the discipline of independent private ownership modernises business and, against popular opinion in some places (see: Germany) preserves jobs. Intuitively, better run companies are less likely to fail, though leverage may put enormous pressure on the operators. In any case, Astorg has done better than most when it comes to transformations - the firm has earned a top spot on the league tables.

Photo from CNN.