The upheaval in France brings to the fore an economic debate taking place in many countries: whether to launch deficit spending to exit the wake of the global financial crisis, or whether to stick with budget-balancing austerity. In France the issues are not as clear-cut as, say, in the USA. The Japanese 20-yr sag has been studied less seriously across the pond than here.

A French or Euroland anti-deficit hard-line amounts to accepting the policy of Germany's Angela Merkel (AKA Bismarck) while higher government spending (including for social programs which have no stimulus impact on growth and may interfere with it) is considered to be more purely French or European. More spending is the platform of the Socialist left-wing in my countries.

M. Montebourg also added to his red appeal by public attacks on French and foreign business leaders, mostly gratuitous. An element of the French population hates either business or foreigners or both. So populist left and far-right (like Marine Le Pen) like to show how ant-business they are.

In Paris, to criticize balanced budget belt-tightening as leading to renewed recession is not just an economic judgment; it is also a political statement. That is why Arnaud Montebourg had to be removed from the cabinet on Monday in a 2^nd switch for 2014 under unpopular Pres. François Hollande.

However, offsetting that move toward hawkishness in France was the statement by European Central Bank president Mario Draghi calling for more stimulus and growth in Euroland. He made these remarks at the Jackson Hole bankers' conference, but they herald new policy in the EU. Lower interests rates, a proto-QE policy of buying longer-term bonds, and above all, a drive down of Euroland exchange rates will offset the rules “Mme. Bismarck” has imposed on the ECB. It will also help businesses which export.

If Draghi's ECB starts buying bonds, particularly longer-term ones, so as to lower borrowing costs and weaken the euro, this should boost business without the capitals, like Paris, having to get into deep deficit spending as Montebourg wants. The ECB can make policy on behalf of the entire euro-block of countries, including Germany, where business surveys show that the outlook is poor despite Merkel's popularity.

Countries facing lower output or negative growth include Italy, France, Cyprus, and (ja) Germany. Annualized H1 growth of 0.1-0.2% (a statistical error?) was reported by Finland, Belgium, and Austria. For the EU as a whole growth in H1 was 0%, down from 0.2% a year earlier. It did not meet the lowball consensus estimate of 0.1%.

Leaving it to the Draghi at ECB depoliticizes stimulus, while removing the temptation to use the money to reward supporters. In France that would mean unions which help finance the Socialist Party of Pres. Hollande. It can prevent rewarding regions or sectors with boondoggles for political ends which might defeat the stimulus being sought. It may even allow a cross-party coalition govt. It will also make some traditional alternative investments more appealing.

Apart from European stocks, on which our writer Harry Geisel is working, we also think that the trend favors more Euroland buying of the classic alternative to stocks and bonds and protector against currency falls, gold.

Quarterly report from France, Canada, Brazil, Israel, Ireland, Mexico, Switzerland, and Britain. There will be no blog on Friday as I am off for the weekend for a family event, and no blog next Monday which is Labo(u)r Day in the US and Canada.

*I takes some credit for the strong reversal of pricing at Portugal Telecom on Monday which picked up speed today on huge volume for PT. I received one set of the vital proxy documents, covering my IRA, but not the ones for my regular account from e-trade. Given the importance of the vote, which requires a 2/3 majority for ADR and Portuguese shareholders, you should make sure you get your proxy too.

*Canada's Bank of Nova Scotia on Monday reported on its Q3. BNS is a way to use Canada (with its serious regulatory system) to invest in banking in Latin America; as Scotiabank it is increasing its global presence (and cross-selling) in trade finance, global payments and transactions for business plus primary banking, wealth management, and insurance for customers. It reported net income of C$2.4 bn, or C$1.8 bn excluding an capital gain from hiving off CI Financial, CIFAF, up 8%. This comes to eps of C$1.4, up 9% y/o/y, but missing the average analyst forecast by 1 loony penny. Revenues rose 9% from Q3 2012-3, excluding the gain and other non-recurring items.

For shareholders, BNS bought back 2 mn shares and also boosted its divvie by 2 cents to 66 loony cents per share.

Expenses rose 7%, below revenues and income, a good sign, despite spending for growth and adverse exchange rate moves. BNS also raised by 200 basis points its Basel III common equity tier 1 ratio, very strong, again because of the total exit from CIFAF which we own separately.

International banking net income from the Caribbean, Latin America, and Asia rose 3% over last Q3 mainly from higher lending and deposits, up 11% and 12% respectively. Moreover income form the ancillary business of global wealth management and insurance is growing by leaps and bounds, both sequentially and vs the last Q3, to C$846 mn vs C$345 mn in Q2 and C$310 mn a year earlier, again despite the CIFAF sale. Global banking net rose 8% y/o/y but was nipped by higher expenses, mainly for performance-linked compensation to the bankers and tech investments.

The positives are global but the negatives are Canadian where revenues were up 7% sequentially and up less than 2% y/o/y. However profits were essentially flat. While Canada operations were boosted by higher credit card and car loans, this was offset by lower reversals of provisions on commercial and retail loans reflecting higher loss rates, and lower mortgage levels from the spinoff of Tangerine. So expenses grew faster than business inside Canada.

*Britain's GlaxoSmithKline is up on Independent Data Monitoring of results from its Phase III trial with Genmab (called Prolong) of Arzerra (ofatumumab) in patients with relapsed chronic lymphocytic leukemia who responded to treatment. Using the drug for maintenance therapy lowered the risk that the disease would progress in these patients. The uptrend may also mean that some nibbles are being received over its mature drug portfolio which is for sale. Or maybe it reflects that China has moved from investigating GSK to investigating Volkswagen.

*Novartis CEO Jim Jiminez is reported by FiercePharma blog to be less than wild about opportunities for its Sandoz generics arm in biosimilar drugs. NVS's boss expects there will be little movement as long as antibody biologics retain their patents, which means ther will not be a lot of biosimilars until 2020 at earliest. He spoke to journalists at NVS HQ in Basel. Sandoz may be growing biologics at 20%/yr but that is from a low base. US regs require more testing than within Europe and there will be more delays with our FDA. Contain your enthusiasm.

*This also applies to Teva of Israel.

*Alkermes is enrolling patients in a new phase I trial for its ALKS 7106 pain treatment. 7106 is new class analgesic which works in a novel way of working in the brain via the opoid modulation platform. It may work at a vastly lower does than drugs like morphine and avoid the high risk of abuse, loss of potency over time, or overdosing. ALKS is not merely a way to play the appeal of Ireland for tax inversions. On Monday, it filed with our FDA for a monthly injection for schizophrenia.

*Agrium is buying control of Texas's Agricen, a biotech firm producing sustainable and efficient plant nutrition products under the AGU Loveland brand, Accomplish and Titan, 2 trademarked biologically-or microbe-derived fertilizer efficiency enhancers. Price was not disclosed.

*Barrick Gold is getting rid of high-priced mines having sold its Kainantu gold-copper mine which it valued at zero and which is unlikely to impact its valuation according to Bank of Montreal. As bond-owners it may help us, however.

*Vale is one of the beneficiaries of a lighter Zambian tax system covering copper exports. Exporters no longer have to provide certification from importers of Zambian copper to prove that value added taxes had been paid, which hurt those using intermediary agents. Lusaka has backed off the new rule intended to stop tax evasion on exports.

*Also up is Cosan, CZZ, which may relate to Brazilian political polls.

*News that it will report on its Q2 results has hurt Delek Group, DGRLY. It plans to release the numbers and hold a conference call on Sept. 1 which is Labor Day in the US and Canada. So people figure there is something to hide.

*Who would ever have thought that our taste for Covidien plc stock was shared by House Speaker John Boehner and Ways and Means Committee chair Dave Camp. They both sold COV about when we sold half after the offer from Medtronics came in. I sold the other half too soon. They didn't act until the offer was made for tax avoidance reasons.

*Fund news. Fibra Uno yesterday announced that it is not entering the housing market. The REIT is invested in commercial property, hotels, offices, and factories. FBASF.