France Finance Minister calls critics full of crap

The French Trade Minister Christine Lagarde lashed out at critics of the French labor and political policies, saying: 

"I don't want the crap," Lagarde said. "It annoys me when France is portrayed as an awkward, backward country. It is not." While reform is needed in the labor market, French commerce is on firm footing and the economy strong, Lagarde said.

Here's the facts:

– Unemployment in France is 9.9%, a five year high. This level of unemployment is twice as high as the U.S. figure of 4.7%, which is a 4 1/2 year low.

– Unemployment for those under 25 is twice as high as the overall figure, representing 800,000 people under 25 who don't have jobs.

– Consumer confidence in France has plummeted as the amount of purchasing power the average French consumer enjoys has fallen as a result of inflation and more taxes being taken out of their paychecks (at least those that have jobs).

I really don't think anyone is portraying France as a "backward" country, but in terms of public policy, tax policy, and labor, there are some serious and tough reforms that need to be undertaken and nobody in the French political aristrocracy seems to have the backbone to follow through with them.

For Trade Minister Lagarde to suggest that all is well in the economy is pure nonsense. Also, to admit that reform of the labor markets is required without then commenting on why it is not being done is a dereliction of her responsibilities.

France enjoys a highly educated and productive workforce, but with the weak political leadership, labor market uncertainty, and declining confidence it is a futile effort on her part to come to the Valley and ask local companies to invest in France, or to have the audacity to lobby French entreprenuers to start companies in France when they left France to begin with because of many of the issues that Lagarde's government can't muster up the will to fix.

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California Taxes and Apple Moving to Nevada

Apple itself isn't moving to Nevada, but the investment vehicle they just established is based in Reno. Braeburn Capital will benefit from favorable tax treatment in Nevada compared to California. It's interesting that the linked Businessweek article also points to Intel Capital as another example of corporate investment funds, interesting because Intel Capital like the newly formed Braeburn Capital is not based in California where their corporate headquarters are located, Intel Capital is a Cayman Islands entity.

Of course I want to be careful to point out that I fully endorse these strategies because the legal avoidance of taxes is a responsibility of management to the shareholders. Well run global companies take advantage of every opportunity possible to minimize their tax load and maximize their investment returns, and considering that California has the 9th highest total tax per capita load in the country, there are no doubt many options for smart companies to look out of state.