When economic reality meets socialist delusions, it's pretty clear who wins.

Ambrose Evans-Pritchard tells it like it is.

Paris has a strange atmosphere right now. It is hard to get a table at the bistros of Saint-Germain, yet people have a sense of foreboding.

They know austerity has hardly begun. The press is full of stories that the biggest property bubble ever known in France has begun to deflate. Yet the party goes on. Perhaps this is what it felt like in May 1931, avant le déluge.

Germany took its medicine with the Hartz IV labour reforms eight years ago - under a Social Democrat, nota bene - when the world was humming and EMU competitors were merrily inflating their way into varying degrees of fixed exchange rate Hell.

France will have to take its medicine in less propitious times, somehow clawing back 20pc in unit labour competitiveness against an austere Germany.

It is not easy to see how France can pull this off. Little has been done so far beyond repeal of the infamous 35-hour week. Labour rigidities - employment protection, high tax wedge and minimum wage (SMIC), etc - are among the most entrenched in the OECD club. The unreformed French state takes 55pc of GDP.

Another comment on this from Market Ticker.

Hat tip: Small Dead Animals.