Sarkozy vows reform after France downgrade
Sarkozy -- who hosted crisis talks with his top economics ministers at the Elysee on Friday -- reportedly told allies last month: "If we lose the triple-A, I'm dead."
He had staked his re-election bid on convincing voters that he was the only candidate with the stature and experience to save France from economic meltdown. Sarkozy justified pushing through two austerity packages as necessary to defend France's triple-A rating.
An IFOP poll on Thursday showed that in the first round of the election in April, Hollande would take 27 percent of the vote, followed by Sarkozy at 23.5 percent and far-right National Front leader Marine Le Pen at 21.5 percent.
Friday's downgrade left a sizeable hole in Sarkozy's reelection campaign. "It is the end of the myth of the protecting president," said Le Pen.
The downgrade added to already bleak economic figures for France.
INSEE, the national statistics office, says it expects France to fall into a brief recession, with the economy contracting 0.2 percent in the three months to December and another 0.1 percent in the first quarter of 2012.
S&P said the downgrade of France "reflects our opinion of the impact of deepening political, financial, and monetary problems within the eurozone".
Euro Falls After S&P Strips France of AAA, Reduces Eight Others’ Ratings
Sovereign debt, accumulated from rich, underfunded social programs, and military adventurism is some cases, combined with bailing out a chronically insolvent banking system, is knocking the stuffing out of credit ratings of half the nations in the EU.
While loss of the Triple A rating is no cause for panic by itself, the trend is very clear. Chronic deficit spending has produced structural spending problems that are politically difficult to address.
We are now three years past the 2008 financial crisis and must ask what have the powers that be done to address its root causes?
Banks are taking great risks with high leverage once more, and governments have provided an explicit guarantees to permit business as usual. Risks have been transferred from banks to each national government. As debts mount, credit ratings decline, and interest payments balloon. The destination is clear on this European debt train - bankruptcy and collapse of the Euro.
The first casualty will like be Greece by April 2012.
Expect Ireland, Portugal and even Italy to follow soon after.
Sarkozy -- who hosted crisis talks with his top economics ministers at the Elysee on Friday -- reportedly told allies last month: "If we lose the triple-A, I'm dead."
He had staked his re-election bid on convincing voters that he was the only candidate with the stature and experience to save France from economic meltdown. Sarkozy justified pushing through two austerity packages as necessary to defend France's triple-A rating.
An IFOP poll on Thursday showed that in the first round of the election in April, Hollande would take 27 percent of the vote, followed by Sarkozy at 23.5 percent and far-right National Front leader Marine Le Pen at 21.5 percent.
Friday's downgrade left a sizeable hole in Sarkozy's reelection campaign. "It is the end of the myth of the protecting president," said Le Pen.
The downgrade added to already bleak economic figures for France.
INSEE, the national statistics office, says it expects France to fall into a brief recession, with the economy contracting 0.2 percent in the three months to December and another 0.1 percent in the first quarter of 2012.
S&P said the downgrade of France "reflects our opinion of the impact of deepening political, financial, and monetary problems within the eurozone".
Euro Falls After S&P Strips France of AAA, Reduces Eight Others’ Ratings
The euro dropped Jan. 13 before S&P lowered the top ratings of France and Austria one level to AA+, with “negative”outlooks, while affirming the ratings of countries that included Germany, Belgium and the Netherlands. The company also downgraded Italy, Portugal, Spain and Cyprus by two steps and cut Malta, Slovakia and Slovenia by one level. S&P had put the ratings of 15 euro nations on review on Dec. 5 for possible downgrades.My view:
The loss by France and Austria of their AAA credit ratings may erode the firepower of the euro-region’s bailout fund that’s needed to tap markets to finance aid for Greece, Ireland and Portugal. The European Financial Stability Facility owes its AAA rating to guarantees from the euro region’s top-rated nations.
“There could be panic around the world on contagion as sovereigns have difficulty acquiring credit,” Axel Merk, president and chief investment officer of Merk Investments LLC in New York, said Jan. 13 in an interview on Bloomberg Television. “We need clarity on the reform process, and that causes uncertainty and then you just get downgraded step by step, and that’s not a rosy outlook.”
Sovereign debt, accumulated from rich, underfunded social programs, and military adventurism is some cases, combined with bailing out a chronically insolvent banking system, is knocking the stuffing out of credit ratings of half the nations in the EU.
While loss of the Triple A rating is no cause for panic by itself, the trend is very clear. Chronic deficit spending has produced structural spending problems that are politically difficult to address.
We are now three years past the 2008 financial crisis and must ask what have the powers that be done to address its root causes?
Banks are taking great risks with high leverage once more, and governments have provided an explicit guarantees to permit business as usual. Risks have been transferred from banks to each national government. As debts mount, credit ratings decline, and interest payments balloon. The destination is clear on this European debt train - bankruptcy and collapse of the Euro.
The first casualty will like be Greece by April 2012.
Expect Ireland, Portugal and even Italy to follow soon after.
Interesting lawsuit filed. just FYI PW
ReplyDeleteLOS ANGELES (CN) - JPMorgan Chase routinely fabricated documents to deceive bankruptcy judges, going so far as to Photoshop documents to "create the illusion" of standing "in tens of thousands of bankruptcy cases," according to a federal class action.
http://www.courthousenews.com/2012/01/17/43098.htm
http://www.scribd.com/doc/78562631/JPMorgan-Class-Action
Why does this not surprise me?
ReplyDeleteWhat next, stealing from pension funds?
Oh, wait, Timmy Geithner has beat them to it.