So gauche

France’s presidential election is tearing its left apart

If Benoît Hamon finishes fifth, it could be the end of the Socialist Party as we know it
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BACK in 2002, the French Socialists suffered such a stinging defeat at a presidential election that it gave birth to a new noun. Un 21 avril, referring to the date that their candidate, Lionel Jospin, was evicted in the first round, became a term used for any shock political elimination.

Today, ahead of the first round of this year’s presidential election on April 23rd, the Socialists are bracing themselves not just for elimination from the run-off, but for a far greater humiliation, one which could call into question the party’s very survival.

Current polls put Benoît Hamon, the Socialist candidate, in a dismal fifth place. He trails not only the nationalist Marine Le Pen, the liberal Emmanuel Macron, and the traditional right’s François Fillon. In the past fortnight, Mr Hamon has also been overtaken by a far-left firebrand, Jean-Luc Mélenchon (pictured), who promises a “citizens’ revolution”. A one-time Socialist now backed by the Communist Party, the fist-clenching 65-year-old has surged to 15%, against just 10% for Mr Hamon.
 
This puts him only a couple of points behind Mr Fillon, and in a position—just possibly—to overtake the Gaullist candidate too.
In the campaign’s second televised debate on April 4th, it was the wisecracking Mr Mélenchon who delivered the memorable lines. When Mr Fillon argued that industrial relations should be decentralised to firms, Mr Mélenchon snapped: “I am not in favour of one labour code per firm, just as I am not in favour of one highway code per road.” It was a difficult debate at which to shine. All 11 official candidates took part: the five front-runners plus six others, including a Ford factory worker, a Trotskyist high-school teacher, and a former shepherd. Each had a total of 17 minutes to speak, spread over three hours. In a poll, voters judged Mr Mélenchon the most convincing, followed by Mr Macron.

In some ways, Mr Hamon’s disastrous campaign is surprising. An outsider, he seized the party’s primary in January with a handsome 59% of the vote, easing out a moderate former prime minister, Manuel Valls. His recent rally in Paris was packed. Backed by Thomas Piketty, an economist who worries about inequality, he has a programme which—though its finances do not add up—is based on creative thinking about the future of work and society in an era of automation. Mr Hamon promises, for instance, to bring in a universal basic income, which in time would pay out €750 ($800) a month to everyone, partly financed by a tax on robots. He promises a “desirable future”, in which consumerism, production and working hours are curbed, greenery flourishes and happiness, long scarce in France, breaks out everywhere.
 
Yet as Matthieu Croissandeau of L’Obs, a left-wing magazine, put it, since Socialist primary voters “were convinced they would lose the presidential election…they chose an ideal rather than a programme of government.” The closer voting day gets, the less workable Mr Hamon’s ideas seem, even to some of his white-collar constituents. A poll suggested that only 7% of voters think Mr Hamon has “presidential stature”. Gilles Finchelstein of the Fondation Jean-Jaurès, a think-tank, argues that Socialist support has not collapsed: it is just not behind the party’s candidate. Fully 42% back Mr Macron; 15% support Mr Mélenchon. By positioning himself on the left of his party, Mr Hamon has scared off centrist voters, while failing to sound combative enough for those on the far left.

Mr Hamon has lost the loyalty not just of Socialist voters, but of Socialist politicians. His protracted (and failed) efforts to do a deal with Mr Mélenchon exasperated the moderates. A former backbench rebel, he has refused to say anything nice about the past five years of Socialist government, dismaying ministers. Mr Valls and Jean-Yves Le Drian, the Socialist defence minister, have both thrown their support to Mr Macron. The upshot is a bitterly divided party. The Hamon camp called Mr Valls’s defection “pathetic” and “shameful”. It is a “very strange campaign”, says a Socialist parliamentarian loyal to Mr Hamon; party activists “don’t feel connected”.

Mr Valls’s defection, says Guillaume Balas, a member of the Hamon team, implies “the death of the Socialist Party as conceived by (François) Mitterrand”. The party, which has supplied French presidents for half of the past 36 years, has long tried to bridge the differences between its moderates and its left wing. In the 1970s, Mitterrand managed to unify the left; he went on to serve as president for 14 years. Now, under the joint pressure of Mr Macron and Mr Mélenchon, old fractures are pulling it back apart.


Soaring Global Debt Sets Stage For “Unprecedented Private Deleveraging”


The UK’s Telegraph just published an analysis of global debt that pretty much sums up the coming crisis. Here’s an excerpt with a couple of the more hair-raising charts:


Global debt explodes at ‘eye-watering’ pace to hit £170 trillion
Global debt has climbed at an “eye-watering” pace over the past decade, soaring to a fresh high of £170 trillion last year, according to the Institute of International Finance (IIF). 
The IIF said total debt levels, including household, government and corporate debt, climbed by more than $70 trillion over the last 10 years to a record high of $215 trillion (£173 trillion) in 2016 – or the equivalent of 325pc of global gross domestic product (GDP). 

 
It said emerging markets posed “a growing source of concern” to financial stability and the global economy as debt burdens in these countries climb at a rapid pace.  
Growing vulnerabilities 
The IIF data showed the increase was partly driven by a “spectacular rise” in emerging markets, where total debt stood at $55 trillion at the end of 2016, or 215pc of total emerging market GDP. 
Debt has risen from $16 trillion in 2006 and $7.4 trillion in 1996. 
The body, which represents the world’s top financial institutions, said a wave of maturing debt this year presented a “growing refinancing risk”. 
It estimates that more than $1.1 trillion of emerging market bonds and loans will mature this year, with dollar-denominated debt accounting for a fifth of all redemptions. 

 
The Bank of England’s Financial Policy Committee (FPC) said on Tuesday that credit in China continued to grow at a “rapid” pace. 
Corporate credit in the world’s second largest economy has climbed to 166pc of nominal GDP. 

The IMF at the end of last year warned of broader risks to the global economy. 
While the global economy appears to be turning a corner, the Fund said there was a risk that low growth, high debt and weak banks could push the world in a dangerous direction. 
It said the “sheer size of debt could set the stage for an unprecedented private deleveraging process that could thwart the fragile economic recovery”.  
Governments lead advanced economy debt rise 
The increase in debt in advanced economies has been led by rising public sector debt, according to the IIF. 
Outstanding government debt in the US and UK has more than doubled since 2006, data shows, while Japan and the eurozone have seen a 50pc increase.

These numbers are astounding. Emerging market debt was $7.4 trillion in 1996, and today it’s $55 trillion. US and UK government debt has doubled – from already historically-high levels — since 2006.

And there’s no end in sight. Japan just passed a record-high government budget, 35% of which will be borrowed. The US added $1.3 trillion to its federal debt in 2016 and is debating massive increases in defense and infrastructure spending. China’s corporate debt alone exceeds 170% of GDP.

Which leads to three inescapable conclusions:

1) Interest rates can never rise because rolling over this much debt at historically-normal rates would blow up the budgets of both the developed and developing worlds.

2) The only solution – if you can call it that – is massive currency devaluation to make these debts manageable.

3) Since the debt binge has apparently gone parabolic, the reckoning is fairly close at hand.

2018 might be one for the history books.


Regional Security and the Islamic Military Alliance

The formation of a “Muslim NATO” may actually encourage jihadism.

By Kamran Bokhari

 

Cooperation between Muslim-majority states has always been an aspiration that has failed to materialize. The fate of a Saudi-Pakistani initiative to form a NATO-style military organization for the Muslim world will not be much different. In fact, the “Islamic Military Alliance” is based on Sunni-versus-Shiite geopolitical sectarian logic that has produced intra-Muslim conflicts for centuries. This tactical alignment between certain Sunni Muslim nation-states is unlikely to come together in a coherent form, much less achieve its stated goal of successfully combating jihadists who have pursued a more strategic project of pan-Muslim unity.


Pakistan has asked Iran to respect its decision to play a lead role in Saudi Arabia’s initiative known as the Islamic Military Alliance, The Express Tribune reported on April 4. A day earlier, Tehran’s ambassador to Islamabad said that while the Pakistanis had taken the Iranians into confidence on the move, Iran maintains serious reservations on the matter. Nevertheless, Pakistan’s defense minister on March 29 confirmed speculation that the country’s recently retired army chief, Gen. Raheel Sharif, had been given permission to assume the post of commander of the 39-nation military coalition. The defense minister added that discussions were underway to deploy a Pakistani combat brigade in the kingdom.


Pakistani army chief Gen. Raheel Sharif, center, attends a change of command ceremony for U.S. commanders at Resolute Support headquarters in Kabul, Afghanistan, on March 2, 2016. RAHMAT GUL/AFP/Getty Images
 
This is not the first time that Pakistan has deployed forces in the Middle East under a bilateral security arrangement. In 1970, Pakistan sent forces to Jordan to help the Hashemite kingdom defeat an insurrection by the Palestine Liberation Organization. Pakistani forces were also sent to the kingdom to dislodge renegade Salafist militants who had seized the holiest Muslim mosque in Mecca in 1979. Twelve years later, Pakistan sent 20,000 military personnel to Saudi Arabia during the 1991 Gulf War. But this time is different because it would be the first time Pakistan is committing troops to an alliance and not for a specific battlespace that had a specific objective.

Historically, Pakistan has had a close defensive relationship with Saudi Arabia. In addition to deploying troops, Pakistan has provided training assistance to all three services of the kingdom’s armed forces. In return, the Saudis have extended financial assistance, crude oil at concessionary rates and diplomatic support. Such is the extent of the relationship that Riyadh has had considerable influence in domestic Pakistani political struggles, especially the one between current Pakistani Prime Minister Nawaz Sharif and the country’s last military dictator, President Pervez Musharraf.

More recently, in 2015, Pakistan tried to resist pressures from Saudi Arabia to join the latter’s geopolitical sectarian struggle with Iran. Islamabad politely declined Riyadh’s request to join the Saudi-led coalition involved in the war in Yemen. A large apex-level civil-military delegation traveled to the kingdom to explain to the king that its troops were stretched thin between the eastern border, where tensions have been high with India, the western border with Afghanistan, and domestic counterinsurgency operations against Taliban rebels. However, the Pakistanis pledged to provide forces if the monarchy’s sovereignty were threatened, as it is now. This threat would explain the decision to have Pakistan’s most respected general head the military bloc and deploy a brigade reportedly along the Yemeni border, where the Saudis have faced attacks from Yemen’s opposition forces led by the Iran-leaning Houthi movement.

So far, Pakistan is the only large Muslim military power that has committed to this Saudi-led military bloc announced in October 2015. Pakistan is also an extra-regional player sitting outside the Middle East. What is significant is that the two major and more proximate military powers – Turkey and Egypt – have both steered clear of this alliance.

The Turks see themselves as the regional hegemon and are in competition with the Saudis for the leadership of the Sunni-majority Muslim world. While engaging in its own competition with Tehran, Ankara does not share Riyadh’s ethnic and sectarian loathing of the Persians. Although it has been dependent on Saudi and Gulf Cooperation Council financial support, Egypt is also not interested in seeing its military forces entangled in Saudi wars, especially when it has much deeper problems at home and in its neighborhood. Given its location in North Africa, Egypt does not have the same concerns as the Saudis regarding Iran and the Shiites.

This general lack of interest among key Muslim states explains why the Islamic Military Alliance has not moved much beyond the conceptual stage. So far, only three things about it are clear: A retired Pakistani army chief will be heading it, Pakistan is committing a brigade to the force, and its headquarters will be in Riyadh. Its size, which of the 39 states will provide troops, and its mission have not been sorted out.

The Saudis have very little experience in managing their own national armed forces, let alone putting together an ambitious project like a Muslim NATO. They are likely to pay for these issues, which will be sorted out by the Pakistani commander once he formally takes over. Riyadh hopes to retain its control through its signature financial lever. Even if the fundamentals of this joint command are sorted out, the question of political control will prevent it from being a coherent force.

Like all multinational entities, the Islamic Military Alliance will be coherent to the extent that its member states will be willing to share power. At a time when the European Union is disintegrating and NATO’s relevance is being seriously questioned, it is unlikely that the proposed Muslim (read Sunni) military alliance will be able to function where the divisions among member states are both wide and deep. Pan-Islamic solidarity is a notion that is romanticized in the Muslim world, but no state within the Ummah is willing to actually invest in it. The nearly 50-year history of the Organization of Islamic Cooperation underscores how the nation-state trumps religious solidarity.

In the case of the Islamic Military Alliance, it is from the start a sectarian project given that it excludes Iran and is geared toward fighting Tehran's Arab allies. In essence, it is by design aimed at addressing the Middle Eastern reality that Geopolitical Futures identified as the hollowing out of the Arab world since the start of the 2011 uprisings. Saudi Arabia is the only Arab power in the region, but it derives its strength from its financial muscle fueled by being the world’s largest producer of crude oil. It does not have any military capability of its own, as is evident from the outcome of the ongoing war in Yemen. Depressed oil prices have created a domestic crisis for the Saudi political economy, which coupled with the increasing chaos in the region is gradually undermining the security of the kingdom itself. Therefore, the Islamic Military Alliance is primarily designed to protect Saudi national security at a time when the kingdom cannot count on its historical security guarantor, the United States.

From the U.S. perspective, as long as the Islamic Military Alliance fights the Islamic State and acts as a bulwark against other destabilizing forces in the region, it is helpful to American national interests. It has the potential to relieve Washington from doing the heavy lifting on regional security. To a great extent, the U.S. has had to engage in costly interventions because regional pro-Western states have lacked collective security capabilities. Washington would like nothing more than countries like Turkey, Pakistan and others to take the lead in the fight against IS and other jihadist actors, as well as in containing Iran.

However, these countries are having troubles on their respective domestic fronts – not to mention that they have competing and often divergent national interests. Even more alarmingly, IS is pushing its transnational agenda that seeks to take advantage of the increasing power vacuums in the region to establish its caliphate. In many ways, the Islamic Military Alliance is a response to IS’ efforts to forge Muslim political unity. That this Muslim NATO is unlikely to succeed will strengthen the jihadist position that the current regimes are a cause of Muslim disunity.

The Islamic Military Alliance is not designed to be a pan-Muslim alliance. Even at the intra-Sunni level, very few states have shown interest. In addition, the Sunni camp is so divided that it is unlikely to challenge the jihadists. On the contrary, its sectarian architecture will only exacerbate jihadism.


Economy Will Miss That New-Car Smell

Slowing car sales may not be replaced by other consumer spending, which would weigh on the economy

By Justin Lahart
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     A General Motors Chevrolet dealership in California Photo: David Paul Morris/Bloomberg News        



If Americans don’t buy so many cars and trucks, will they buy other things instead? The answer could matter a lot for the economy.

The auto business is shifting into lower gear. The annual pace of light-vehicle sales fell to a seasonally adjusted 17.2 million in the first quarter from 18 million. That the decline has come despite generous incentives from car companies and still-low gasoline prices suggests that sales are past their peak.

The upshot is that the deferred purchases that helped bolster business coming out of the recession have been made, and it will be up to replacement demand and a slowly growing population of registered drivers to fuel auto sales. If car makers are lucky, sales might stay on their recent level. If they aren’t—and the recent drop in used-car prices raises that prospect—the trend could be lower.

In either case, autos might count as a negative for consumer spending and the industry, a big driver of economic growth, could be an outright drag on the economy for the first time since 2009.

Still, if consumers take the money they might have spent on cars and used it elsewhere, the overall economy would be unaffected. But recent trends argue otherwise.

Even as the job market has improved since the recession, Americans have remained much more reluctant shoppers. So just because they’re not heading to the auto dealership doesn’t mean they will be going to the mall. Instead, they are more likely to save or pay down debt than spend.

Another big change is the incredible growing terms of auto loans, which means people can still be paying off a car seven years after they bought it. In the fourth quarter of last year, 32.1% of new car loans had terms of 73 to 84 months, according to Experian, versus 20.1% three years earlier and a negligible level before the financial crisis. Average monthly payment costs are also rising, and in combination with an increase in other types of consumer credit costs, are taking a bigger bite out of paychecks. In the fourth quarter, consumer debt payments reached 5.6% of after-tax income, according to the Federal Reserve—the highest level since the second quarter of 2009.

The glut of cars on the market won’t help either. Morgan Stanley predicts that used car prices will fall 20% by 2021 in its base case scenario, and will fall 50% in a bear case. With all of those bargains out there, car buyers can stay on the used car lot.

Auto sales have buoyed the economy in recent years. They could be a drag in the years to come.


Why Deep Breathing May Keep Us Calm

By GRETCHEN REYNOLDS    
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Credit Getty Images                    

 
For generations, mothers have encouraged children to take long, slow breaths to fight anxiety.
 
A long tradition of meditation likewise uses controlled breathing to induce tranquillity.
 
Now scientists at Stanford University may have uncovered for the first time why taking deep breaths can be so calming. The research, on a tiny group of neurons deep within the brains of mice, also underscores just how intricate and pervasive the links are within our body between breathing, thinking, behaving and feeling.
 
Breathing is one of the body’s most essential and elastic processes. Our breaths occur constantly and rhythmically, much like our hearts’ steady beating. But while we generally cannot change our hearts’ rhythm by choice, we can alter how we breathe, in some cases consciously, as in holding our breath, or with little volition, such as sighing, gasping or yawning.
 
But how the mind and body regulate breathing and vice versa at the cellular level has remained largely mysterious. More than 25 years ago, researchers at the University of California at Los Angeles first discovered a small bundle of about 3,000 interlinked neurons inside the brainstems of animals, including people, that seem to control most aspects of breathing. They dubbed these neurons the breathing pacemaker.

In the years since, though, little progress had been made in understanding precisely how those cells work.
But recently, a group of scientists at Stanford and other universities, including some of the U.C.L.A. researchers, began using sophisticated new genetics techniques to study individual neurons in the pacemaker. By microscopically tracking different proteins produced by the genes in each cell, the scientists could group the neurons into “types.”
 
They eventually identified about 65 different types of neurons in the pacemaker, each presumably with a unique responsibility for regulating some aspect of breathing.
 
The scientists confirmed that idea in a remarkable study published last year in Nature, in which they bred mice with a single type of pacemaker cell that could be disabled. When they injected the animals with a virus that killed only those cells, the mice stopped sighing, the researchers discovered. Mice, like people, normally sigh every few minutes, even if we and they are unaware of doing so. Without instructions from these cells, the sighing stopped.
So for the newest study, which was published recently in Science, the researchers carefully disabled yet another type of breathing-related neuron in mice. Afterward, the animals at first seemed unchanged. They sighed, yawned and otherwise breathed just as before.