French election 4/22/12 and a 100% tax proposal

RedTiger

Jean-Luc Mélenchon is running for president of France. He is polling at about 14%. He proposes confiscating all income above $450,000 USD per year (100% marginal rate for those incomes), and full pensions for everyone 60 and over. While unlikely to garner enough votes to make the run off, Mélenchon may influence the Socialist party to lean left because of the popularity of his proposals. There is also a far-right party candidate Marine Le Pen, who is running primarily on an anti-immigration platform, and polling at about the same 14%.

The leading candidates are Sarkozy (incumbent) and Hollande. First round of voting is April 22. If no one gets 50%, a runoff for top two from the first round is May 6th.

Hollande is favored at the moment. If Francois Hollande, the Socialist candidate wins, on the surface it would seem to be a positive for gold. That is, unless the event has already been discounted since this is now the expected result.

MsMorrisine

why would it be a positive for gold?



II like the 100% tax thing. Punishing success and good ideas is a great way to grow a country.

tneig

Yeah, that's socializm. Didn't work either.....

RedTiger

<< <i>why would it be a positive for gold?



II like the 100% tax thing. Punishing success and good ideas is a great way to grow a country. >>



The Socialist candidate and the front-runner, Hollande is against the German economic program, against more budget cuts and austerity. His election likely means more borrowing, more printing of money, possibly the eventual exit of France from the Euro. You tell me, would those measures be good, bad or neutral for gold?

The first round of voting is 4/22, this Sunday. We will see if the election results nudge gold up or down, or be another non-event.

MsMorrisine

I was just asking because I hadn't heard the guy's story.


At the current time, France's budget is not in question, so lack of budget cuts and austerity there isn't going to affect gold.

Continued French borrowing won't necessarily equal more euro printing right off. It'll likely just mean more borrowing in the future to cover the debts made in the past.


Rejecting the German push for saving the Eurozone and thus the euro, may scare people to the dollar and drive gold down.

jdimmick

Why would one specific country printing of money raise the price of gold in all currencies, wouldnt it simply raise the cost in that countries currency to purchase said amount of gold.

gsa1fan

I think we should worry about the USA!

cohodk

<< <i>why would it be a positive for gold?



II like the 100% tax thing. Punishing success and good ideas is a great way to grow a country. >>




Indeed. All those new wealthy immigrants coming to America will be a boom for our economy. Viva la France!!

jmski52

Learn about the "European Stablization Mechanism Treaty" here.

Europe has more to worry about than just socialism.

RedTiger

<< <i>Why would one specific country printing of money raise the price of gold in all currencies, wouldnt it simply raise the cost in that countries currency to purchase said amount of gold. >>



Like I said, on the surface, Socialists taking power in a major economy would seem to be a positive for gold. Many are looking deeper at the question.

One election result might start a trend of hard left Socialists taking power in other countries. The big domino would be Germany. There are a lot of pieces to the puzzle. If Germany goes hard left, then Euro denominated bonds with no nationality attached are likely to become reality. Would that be good or bad for gold? Is gold better off if there is a stable Euro with reasonable national budgets or if the Socialists all over decide to give even more free money to all their citizens, and do so by printing it? Short term, those moves might be bad for gold as the dollar strengthens. Long term, one might imagine that more Europeans might want gold when they see so much money being printed and handed out. Long term, having one less stable currency would seem to be a positive for gold.

As for the USA comment, the U.S. is 7% of world demand for physical gold. If a person wants to spend all their time analyzing 7% of the market, have at it, enjoy.

jmski52

the U.S. is 7% of world demand for physical gold. If a person wants to spend all their time analyzing 7% of the market, have at it, enjoy

To look at it from another angle, the financial establishment has done a serious number on the concept of gold as real money for about 100 years or more, and if the American Public decides that they've been wrong about "money" that 7% number could easily change.

RedTiger

I am bumping this thread because it looks like some called it right. Socialists took power in France, on a platform of a 75% marginal tax rate, increased social spending, increased government spending and gold went down, because the dollar went up.

So with France going socialist, the Euro looking less and less stable, Israel is mobilizing its Army reserves prepping for their "big one," unapologetic Nazis taking a few seats in the parliament in Athens, and gold keeps going down.

MsMorrisine

The knee jerk reasctions by the Greek voters is killer. I wonder what the future instability inside Greece will be like.

The votes and politics is leading them towards being out of the euro.

they already had haircuts on their past debts,

they are going to have to pay junk rates on new debt

and they don't want austerity.


I'm not sure how they will pay future bills.

I'm not sure where they think the future money will come from.

Until they figure out they need to set their minds on solving their current and future payment problems, I am sure it will be very unpleasant in Greece if they do leave the euro.


And there will be the extremists who blame everyone. Perhaps it's is time for a poll.

jmski52

Socialists took power in France, on a platform of a 75% marginal tax rate, increased social spending, increased government spending

People never seem to learn. Greece is happening right under their noses and they still don't get it.

The knee jerk reactions by the Greek voters is killer. I wonder what the future instability inside Greece will be like.

They want more free credit from Germany. If they leave the Euro behind and can't find a source for more borrowing, it means that anything they buy from outside Greece will be more expensive. It also means that they will either have to become more productive, work harder or accept a lower standard of living.

It means that those on welfare programs, state salaries and state pensions will be pitted against those who actually have productive jobs. If the producers collapse under the heavier loads that all this implies, it may not be long before factions start fighting over the remains. Very sad.

Under those circumstances, I'm not sure whether dollars or gold would be most useful. It would probably be situational.

ricko

We have much to learn from this situation. We could well be heading in the same direction. Cheers, RickO

tneig

<< <i>He proposes confiscating all income above $450,000 USD per year (100% marginal rate for those incomes). >>



Damm, thats the extra spending money I use to buy silver. Hope that doesn't happen here!

Tomohawk

<< <i>We have much to learn from this situation. We could well be heading in the same direction. Cheers, RickO >>



100% agree. This year's election is far more pivotal than the average citizen realizes. And I consider myself an average citizen...

MsMorrisine

<< <i>

<< <i>We have much to learn from this situation. We could well be heading in the same direction. Cheers, RickO >>



100% agree. This year's election is far more pivotal than the average citizen realizes. And I consider myself an average citizen... >>




Idon't think either side has it in them to fix us.

we'll be on here after the 100 days in office report with them proudly announcing the deficit has decreased.

derryb

<< <i>We have much to learn from this situation. We could well be heading in the same direction. Cheers, RickO >>


What we should be learning is that corrupt crony capitalism is making it much easier to sell the socialism thingy. We will attack the corruption and hold the guilty accountable or we too will return to serfdom.

renman95

I was in Paris at the changing of the guard near the Arc de Triomphe by coincidence. My observations: The crowd was quiet and dismally small...and it was a holiday. There were more people to see Palin at my small home town than showed up for the Sarkozy-Hollande hand over. I saw the motorcade go by with Sarkozy waving at a one-deep crowd along the Champs Elysees. Next to me was a young father and his son yelling out "Merci, Merci." I later spoke with the father and his emotional response was telling. He said Sarkozy had his faults but he was very French and full of tradition. Hollande does not embrace his heritage, nor his country he said. He does not like Hollande at all and fears for his son's future. He also said that everyone with money will be leaving so who's going to pay for all these services.

Later I read in FT that the new President will 'ask' wealthy families to 'contribute' up to 71% from 40% if they make over $1 million Euros ($1.3 million)!

derryb

Matt Taibbi : Austerity Can't Be Just for Regular People

RedTiger

Is this a case of "so far so good?*"

Consumer confidence in France rebounding, in part because the Socialist won the election. Yields on the 10 year French bond is at record lows.

* The joke: a man jumps out the window of a 50 floor building, at floor 30, someone yells, "how are you?" The plummeting man yells back "so far so good." Same at floor 10. At ground level, splat. Is there a splat in the long run for hard left Socialist policies or not? Maybe if the French can get the Germans to pay the tab, they can avoid any serious consequences. However, in the long run, economic stunts like getting other countries to pay, can lead to shooting wars.

Coyn

<< <i>they don't want austerity

I'm not sure how they will pay future bills.

I'm not sure where they think the future money will come from. >>



Sound a little too close to home.



<< He proposes confiscating all income above $450,000 USD per year (100% marginal rate for those incomes). >>

They can get around that easily, put all the kids on payroll. Although I'm against government confiscation of wealth I always like the arguement about "discouraging producers".

90% of the top earners produce nothing, They make it the old fashioned way, Returns on Inheritance.

silverstreak

<< <i>

<< <i>why would it be a positive for gold?



II like the 100% tax thing. Punishing success and good ideas is a great way to grow a country. >>




Indeed. All those new wealthy immigrants coming to America will be a boom for our economy. Viva la France!! >>



What would make you think they are coming to america? Much better options out there from a tax standpoint.

cohodk

<< <i>

<< <i>

<< <i>why would it be a positive for gold?



II like the 100% tax thing. Punishing success and good ideas is a great way to grow a country. >>




Indeed. All those new wealthy immigrants coming to America will be a boom for our economy. Viva la France!! >>



What would make you think they are coming to america? Much better options out there from a tax standpoint. >>




For instance?

derryb

The United States is still relatively tax-friendly, with a marginal tax rate of around 27% on average income workers. Switzerland is one of the few (maybe only) developed countries with a lower marginal tax rate at 20%.