Speech by M. Nicolas Sarkozy, President of the Republic (excerpts)

Paris, 25 September 2008

I wanted to speak to the French this evening because our country’s situation demands it. I realize the responsibility which rests on my shoulders in the exceptional circumstances we find ourselves in.

GLOBAL FINANCIAL CRISIS

An unprecedented crisis of confidence is rocking the global economy. Major financial institutions are threatened, millions of small savers in the world who have invested their savings on the stock market are seeing them melt away, day after day, millions of pensioners who contributed to pension funds fear for their retirement, millions of modest households are being put in a difficult position by the rise in prices.

Like everywhere in the world, the French fear for their savings, fear for their jobs and fear for their purchasing power.

…

The French want the truth, and I am convinced they’re ready to hear it. If, on the contrary, they feel we’re hiding things from them, then doubts will grow. If they are convinced we’re not hiding anything from them, they’ll find in themselves the strength to overcome the crisis.…Telling the French the truth means telling them that the current crisis will have consequences in the coming months for growth, unemployment and purchasing power…

Basically, a certain idea of globalization is biting the dust with the end of a financial capitalism which had imposed its rationale on the whole economy and contributed to corrupting it.

The idea of the all-powerful market which wasn’t to be impeded by any rules or political intervention was a mad one.

The idea that the markets are always right was mad.

For several decades we created conditions in which industry operated with the aim of achieving short-term profitability.

The growing risks people were forced to take to obtain increasingly exorbitant profits were concealed.

Remuneration systems were put in place which drove dealers to take more and more absolutely reckless risks.

People pretended to believe that by pooling the risks they made them disappear.

Banks were allowed to speculate on the markets instead of doing their job which is mobilize savings for economic development and analysing the credit risk.

The speculator rather than the entrepreneur was financed.

The rating agencies and speculative funds were left totally unsupervised.

Firms, banks, insurance companies were forced to write down the value of their assets in the accounts at market prices which go up and go down at the whim of speculators.

Banks were subjected to accounting rules which provide no guarantee on the proper management of the risks but which, in the event of a crisis, contribute to exacerbating the situation instead of cushioning the shock. It was a madness for which we’re paying the price today!