Yellow Vests Tell Macron Where to Stick His Taxes

Don’t worry about the recent market sell-off, one veteran trader told CNBC.

The analysts over at UBS (a US investment bank) said it was a ‘buyers’ boycott’.

By that, they mean buyers were sitting on the sidelines. And with little volumes, or less than usual, it’s the sellers that have dictated where prices will go.

I saw one pundit talk about the computer programs. They put on and get out of positions, making the most noise possible.

The majority is focusing on the US yield curve, which is a sloping line that represents yield on US 2–30-year government bonds.

But none of that matters now. Not for France, anyway.

Stocks in the world of cheese and wine are heading lower — like all other stocks, it seems.

But unlike Trump, French president Emmanuel Macron isn’t blaming central bankers for the ills of his economy.

No, stocks are the last thing on Macron’s mind.

He’s too busy thinking about the people in yellow vests. And how to get them off the streets.

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Carbon tax is killing people today…

Everyone can get behind a good idea.

It’s only when you propose measures to achieve that idea that disagreements happen.

Whether you believe what the pundits say about climate change or not, who doesn’t want clean air, water and a healthy environment?

I don’t know anyone that wants to live in a smog-filled city, with brownish water coming out of their tap.

It’s why a couple of people thought it would be a good idea to have the Paris Agreement.

It’s a vague sort of agreement that’s trying to tackle climate change. Or what we today think is climate change.

The reason I say it’s vague is because there’s no quota or restrictions on CO2 emissions to follow.

The aim is to keep global temperature below 2°C above pre-industrial levels, while also increasing funding for greener energies.

But it’s hard to find any specific recommendations on how to get to this level.

If you remember, the mainstream was in an uproar when Trump decided to exit the Paris Agreement. During his campaign, Trump said exiting would help American businesses and workers.

More recently Trump tweeted that US taxpayers ‘shouldn’t pay to clean up other countries’ pollution’.

So without him, other nations — including France — have soldiered on.

They’re serious about the environment. They care about the world’s future generation. And they’re willing to take real measures to achieve their goal.

One of those measures was to tax fuel.

It was a carbon tax and increased the price of vehicle fuel.

Easy way to prevent more cars on the road, which are creating CO2 emissions, right?

Yet the carbon tax, thought to save future generations, is killing people today.

The French are some of the most taxed people in the world

You might already be aware that taxes are high in Europe. The government offers a lot of stuff for ‘free’.

Education. Medicine. Retirement.

A lot of it is paid for or subsidised by the government.

Of course, none of this stuff is actually free. Taxpayers are the ones who pick up the bill.

The last thing I thought a highly taxed country would want is more taxes.

According to the OCED, the French are some of the most taxed people in the world.

Tax revenue continue to increase in the OECD 7-12-18

Source: OECD

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Now add more taxes to that — which the poor can ill afford — and you get mayhem.

The people of France took to the streets. All of them wearing yellow high-vis vests. These aren’t just peaceful protesters either.

They are very, very upset by further taxes.

They are fire-bombing police cars. Beating up officers. Hundreds are injured. Three are dead. And it’s all because Macron wanted to reduce emissions.

Of course, he had no idea such protests would erupt. He would have never enforced the tax in the first place if he did.

But it’s a perfect example of how good people can do horrible things. Striving for a clean environment is all well and good.

It’s only until we start coming up with solutions that everything turns sour.

Macron has backed off after six months. No one wants more riots on the streets. But this might just be the beginning. Yellow vest leader Benjamin Cauchy said:

The French are not sparrows and don’t want the crumbs the government is giving. They want the baguette.

And by baguette I’m assuming he means wealth that the French create for themselves.

They don’t want the government coming in to take half or more of their income. And then to spend it on ridiculous policies.

They want a free society. Free of central control and government intervention. All it took was a gas tax for the French to see it.

Trump did offer some kind (yet backhanded) words. He took to Twitter and wrote:

I am glad that my friend @EmmanuelMacron and the protestors in Paris have agreed with the conclusion I reached two years ago. The Paris Agreement is fatally flawed because it raises the price of energy for responsible countries while whitewashing some of the worst polluters…

Down with taxes!

Härje Ronngard,
Editor, Money Morning

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Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the stories that make a difference to your wealth. Whether you agree with us or not, you’ll find our common-sense, thought provoking arguments well worth a read.

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