On January 22, 2012, French presidential candidate François Hollande shook up the banks: “It has no name, no face, no party, it will never be candidate, it will therefore never be elected, yet it governs: that enemy is the world of finance,” he said. It “freed itself from all rules” and “took control of the economy, of society, and even our lives.” He’d fight it, he said, and promised some tough reforms.

But as the private sector in France sank deeper into an economic and fiscal quagmire, his words, designed to endear him to the left wing of his Socialist Party, were swept under the rug. And you’d think that since becoming President of France, he has been tutored by JPMorgan Chase CEO Jamie Dimon.

A year later, Dimon had some choice words himself, while at the World Economic Forum in Davos, Switzerland, where bankers, business leaders, politicians, and whoever was able to get in were hobnobbing for the better of the world.

Dimon lashed out at regulators and their feeble, slow, and confused efforts to rein in the banking industry so that it wouldn’t shove the world into another crisis. They were “trying to do too much, too fast,” he said. He defended inscrutable megabanks with their meaningless financial statements. “Businesses can be opaque,” he said. “They’re complex.” A word that in a financial crisis excuses everything, even massive bailouts that will haunt generations to come. “You don’t know how aircraft engines work, either,” he mollified us, based on the logic that we still get on a plane and fly across the Pacific.

And so the CEO of America’s largest TBTF bank, recipient of the Fed’s bailout trillions, praised the Fed because “they saved the system.” Indeed, they not only saved the system that had shoved the world into the financial crisis, but they also bailed out and enriched those who were, and still are, integral part of it—who now, according to Dallas Fed President Richard Fisher, “believe themselves to be exempt from the processes of bankruptcy and creative destruction.”

This is the world Hollande declared war on, back in the day. But now, France is sinking into a new crisis, and this time it’s the already diminutive private sector that is gasping for air and shedding jobs—and moving overseas, along with the rich and not-so-rich for whom the fiscal and rhetorical climate has become too hostile.

Not a day passes without another confirmation or a new indication. Today, the statistical agency Insee released its monthly Business Climate Index, which, after a soupçon of an uptick, has deteriorated again in the categories of Industry, Wholesale, Construction, and Retail. Only Service saw an improvement. The index, at 86.75, is down from 87.02 in December, and below where it was in October 2009, during the financial crisis.

Given this scenario, what happened to Hollande’s “enemy” and the reforms to rein it in? It’s not that he didn’t try—though there simply isn’t much appetite around the world for confronting the banks. For example, even the highly anticipated Basle III liquidity rules that were supposed to make global banks more stable and another financial meltdown less likely, well… A couple of weeks ago, after years of negotiations and intensive lobbying by the banks, the rules were finalized. In watered-down form. And implementation was delayed until 2019. A huge win for the banks.

Nevertheless, Hollande’s vow to separate the banks’ retail operations from their speculative activities coagulated into a proposal for a law that was presented to parliament last December. The government prided itself that it was the first in the EU to put banking reform on the table. Four years after the financial crisis. As Dimon said: “trying to do too much, too fast.” The proposal, of course, came with such huge concession to the banks that effectively not much will change.

And his vow to impose a tax on financial transactions? It has also turned into a proposal, and the EU just issued its blessing for the tax. The 11 countries, including France and Germany, that are considering such a tax are now free to impose it. Against a wall of opposition from the banks. Nothing will happen in Germany before the election later this year. But in France, which is dying for additional revenues, the tax might pick up momentum.

These days, tangled up in a real war in Mali, Hollande no longer declares war on the financial world. In fact, he already has the first taxpayer-funded bank bailouts under his belt, including the €7 billion bailout of Banque PSA Finance. He’d “saved the system,” Dimon would say, because when push comes to shove, citizens and taxpayers, and their kids, are the ones who pay, not bank investors. And it doesn’t matter who is president.

France’s economic foundations are cracking. Unemployment is rising incessantly. The private sector is comatose. Car sales sank 13.9% in 2012, from a lousy 2011; sales by its native automakers plunged even more. Now home sales are grinding to a halt. And the finger-pointing has already started. Read….  The Next Shoe To Drop In France.

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.