Debt linked to Covid-19: Arnaud Montebourg pleads in favor of cancellation

Arnaud Montebourg, former Minister of the Economy and Productive Recovery of François Hollande, has just published “the Commitment” at Grasset, a work in which he sets out, in a very personal style, his solutions to the crisis.

One of the basic reasons for the crisis would be the priority given to the reduction of public deficits and indebtedness?

ARNAUD MONTEBOURG. A policy that focuses on reducing debt and deficits actually produces unemployment and has, in experience, no chance of paying down any debt or reducing any deficit. This is what happened during the Hollande presidency. We have had fiscal austerity coupled with an increase in unemployment, the double penalty for the popular classes! But, in addition, neither debt nor deficits have been reduced. In the Covid-19 crisis that we are experiencing, we have learned the lessons of the financial crisis of the years 2008-2010. This point is positive. All these European rules relating to deficits and debt that have been inflicted on us for ten years, and which have unnecessarily prolonged the suffering of the peoples of Europe, have just disappeared by magic in the Covid crisis, demonstrating their complete uselessness and dangerousness .

Yet will this debt be well repaid?

The amount of current public and private debt is such that it is humanly impossible to repay it by usual means, that is to say by tax deductions. Because otherwise, we would have a revolution and anti-tax jacqueries oh so justified throughout Europe.

How will the creditors react?

There are two kinds of debt. First of all, those taken out with creditors and that must be repaid. And there is the public or private debt linked to money creation. And this debt has no reason to be repaid, it is not seriously repayable in human terms. This debt, it is the European Central Bank which buys it on the market of the securities of the Public Treasury and it represents today for France approximately 400 billion euros in its balance sheet. The public debt of all countries has just exploded in the crisis: in France, it is the billions allocated to health and social spending such as short-time working, billions intended to support the economy, through loans to companies and, finally, loans from the European Union.

READ ALSO> Covid-19 crisis: Macron facing the wall of debt

But how do you cancel such a debt?

If the European Union puts us back on a trajectory of fiscal austerity, that is to say obliges States to raise taxes to repay this debt, then Europe will jump like on a social volcano. What Europe must do is house the Covid debt, that of States and private companies, in a defeasance structure, have it bought by the Central Bank and then have it canceled on its balance sheet. Better to use our money and our efforts in investments, essential for the ecological reconstruction of industry and agriculture, creators of growth and jobs, than in the repayment of the debt.

Will there be any harm to savers?

This will not entail any prejudice to either creditors or savers since it is the debt born of pure monetary creation at the initiative of the banks and the Central Bank. It is on this point that the European Union will or will not ensure its transformation and will play its survival. Many economists, investment funds and even, I tell you, the Treasury services are working discreetly today on a scenario of debt cancellation by the European Central Bank. The only possible creditors who should be despoiled, from my perspective, should be the Chinese as they are responsible for the spread of this destructive pandemic. Their responsibility will have to be engaged.

How to convince the financial system to abandon part of its debts?

We are going to enter a semi-managed economy. This implies regaining control over part of the banking system. The 130 billion State guaranteed loans which are today in the balance sheet of companies, this is what will kill companies slowly because the State by indebted them has transformed them into zombies, promising them by dozens of thousands out of business. The banks that have the receivables will never want to write off their debts. Then it will be up to the state to take directive measures.

Should we challenge international treaties, erect protectionist barriers?

To defend our independence, we will have to reduce the exchanges we have with the rest of the world and start producing at home at a price that allows us to compete, amplify “made in France”. This relocation work will not succeed without protectionist measures behind which we can rebuild our industry and our agriculture, which are being left to die. Free trade, globalization as it existed, is over! Now we must rebuild a more balanced, more moderate world. Because globalization is extremism.

Is debt cancellation the only way to avoid social anger?

Of course ! The two creators of the yellow vests are François Hollande and Emmanuel Macron (Editor’s note: with the carbon tax that triggered the movement and the CSG on retirees) because they have unduly made the middle and popular classes pay the price of the crisis, by inflicting on them a tax bludgeon that is as unjust as it is incomprehensible. Let us know not to take example from their mistakes.

You talk about France like a pressure cooker …

We are on major alert on the explosion of unemployment and poverty. Requests for food aid have jumped by 30%, people totally unknown to relief associations take the direction of soup kitchens. Many of our compatriots no longer accept the economic and financial system as it (dys) works, and I approve of this refusal. I note a deep divorce between the ruling class which imposed ten years of austerity on the French and made the choice to abandon them, and the people, who turned away from their rulers. This is the stake of future political decisions: are we acting for the multitude and the greatest number or for a small dominant and arrogant oligarchy?

In your book, we feel a certain energy but also anger and disillusion with the political world. Have you turned the page?

I created small fair food businesses in which I implemented the ideas I defended: made in France, ecological transition. My real party is made in France, whether in my public or entrepreneurial life. In a way, France has never left me. One subject worries me: how are we going to recover this sagging country. The question of my future commitment will arise from this yardstick, although I do not yet know the form. We’ll talk about it again if you don’t mind next year …

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