Posts tagged 'France'

The euro crisis and the French Revolution

There are lots of good reasons to study history, but perhaps the best is to avoid being misled by people who claim to have “learned the lessons” from the past when they don’t actually know what they’re talking about. For example, the policy mistakes exacerbating the euro crisis may have been partly caused by a profound misunderstanding of the causes of the French Revolution.

The thought occurred to us while reading The Euro and the Battle of Ideas, an intriguing new book we reviewed in this weekend’s FT. Two of the authors, Markus Brunnermeier and Harold James, are academics at Princeton. The third, Jean-Pierre Landau, was Deputy Governor of the Banque de France from 2006-2011 after a long career in the French Treasury and the International Monetary Fund. Consider the following passage, from pages 256-7 in the hardcover, emphasis ours: Read more

The zombification of corporate France?

He walked into my office and threw the manuscript on my desk with a thud.

“It’s called Thankful For Zombies. A zombie story where…”

“Nope,” I said.

His face deflated like a balloon. “But I didn’t even…”

“Zombies are overdone,” I said.

“But this is a zombie story with a twist!”

“Zombie stories with twists are super overdone.”

Scott Alexander, Dec 7

And he has a point. BUT he didn’t mention the French corporate sector. A large mistake exposed by BofAML’s Gilles Moec, who revels in the narrative freedom that mistake implies. Read more

Euro area divergence more about regions than countries

Take a good long look at this map:

 Read more

‘Made of plastic and frankly revolting’

You judge. Here’s Andy Street, managing director of John Lewis, picking up his World Retail Congress trophy in Paris this week.

 Read more

Germany vs France on the euro, part deux

A brief follow-up to this morning’s post in response to a question we received on Twitter…

Below is a chart showing the full history of French household indebtedness data. It only goes back to 1996 but provides some additional context about the changes that occurred after the introduction of the euro: Read more

Deutsch-Rückhalte and le malaise français

With a hat-tip to our friends at CreditSights, check out the starkly different paths of household indebtedness in France and Germany since the introduction of the euro:

(Sources: Bundesbank 1 and 2, Banque de FranceRead more

Eurozone stops, waits for ECB

Germany shrank, and France stagnated in the second quarter. Italy we’ve all agreed not to talk about until Matteo Renzi waves his magic liberalisation wand, right? Here’s the FT:

The data from the currency bloc’s two largest economies came as the embattled French government said the disappointing growth meant it would miss its budget deficit this year and halved its gross domestic product forecast for 2014.

Germany’s economy, which provides more than a quarter of the euro area’s output, shrank 0.2 per cent between April and June, according to official figures. The French economy recorded zero growth during the period.

 Read more

European repo is on the decline

According to the latest bi-annual European repo survey by ICMA, released on Wednesday, the market for repo in Europe shrunk to €5.5tn in December 2013 from €6tn in June 2013 — a sharp decline by any means.

As the ICMA press release notes: Read more

TCI vs… la France

Worth reading — the letter from TCI telling Tom Enders to flog the EADS stake in Dassault Aviation. This would likely have to be sold over the objections of the French government:

 Read more

France sallies forth into pari passu case, shows more esprit than Washington surrender monkeys

Quelle blague with the pari passu saga, sometimes.

You go to all this effort to scare off the IMF from so much as bleating some tame reservations to the Supreme Court about how a ratable payment of holdouts by Argentina might hurt global ‘policy’ on sovereign debt restructuring. Despite ‘policy’ being something many expected the fund to look at.

Then you watch the French swoop in anyway. And they’re much fiercer than the IMF was going to be. Read more

We go live to Fitch’s Paris office…

Here’s the full text of Fitch Ratings’ one-notch French downgrade, which makes it the last of the big three agencies to remove AAA ratings from France. A key bit of the rationale:

Fitch now forecasts general government gross debt (GGGD) to peak higher at 96% of GDP in 2014 and decline only gradually over the long term, remaining at 92% in 2017. This compares with Fitch’s previous projections in December 2012 of GGGD peaking at 94% (and 92% when it first revised the Outlook to Negative in December 2011), and declining more rapidly to below 90% by 2017…

 Read more

Crisis, what crisis etc

Bond yields in the eurozone are hitting new lows not seen since 2010…

 Read more

Small graces: French flash PMI edition [updated… now with less grace and more PMIs]

Depressing eurozone and German prints below. The eurozone composite was bleakly steady at 46.5 while the German comp hit 48.8 from 50.6 in March — its worst level in six months. The only real good news is that this might increase the chances of an ECB refi cut in the near future.

But since France came out first…. Read more

Thanks for letting the team down, France

From Credit Suisse on Thursday morning:

BREAKING NEWS: Stronger-than-expected euro area flash PMIs in Januaryexcept for France

 Read more

An actual consequence of France’s downgrade?

Not many people seem bothered by France’s overnight downgrade by Moody’s. The euro shrugged and French bond yields crept upwards at a snail’s pace.

But one place the downgrade might have a real and lasting impact is within the Swiss National Bank. They have a predilection for core eurozone bonds and the downgrade might just prompt them to ditch what holdings they have and/or stop loading up on French debt.
 Read more

Moody’s cuts France’s Aaa rating, may want to check if its next baguette explodes

Moody’s has cut France to Aa1 from Aaa, maintaining the negative outlook originally conferred in February.

Pierre Moscovici, French finance minister, was stoic at pixel time. “Moodys is now giving France the same rating as Standard & Poor’s, which has allowed us to live with low interest rates for many months,” he told Reuters. S&P cut its AAA rating for France back in January. Read more

The eurozone in recession in ‘all senses of the word’

As expected, the eurozone economy shrunk in the third quarter. But, fortunately, not by quite as much as expected.

Thursday’s data did, however, confirm that the debt crisis in southern Europe is hitting the ‘core’ economies in northern Europe, and analysts seem in agreement that it’s going to get significantly worse. Read more

The peripheral threat to France

Compétitivité is a big deal in France right now.

The country’s loss of competitiveness is a serious issue, especially as its crisis-struck neighbours push on with wage cuts and labour reform.

On Monday, Louis Gallois, former head of EADS, is going to publish his report on the issue, and he’s expected to call for a “competitiveness shock”. He’s already said that he wants to see somewhere between €30bn-€50bn of taxes from the payrolls transferred to broader-based taxes, such as VAT, much to the delight of business leaders. Read more

This eurozone PMI record appears to be broken

Another day, and another confirmation that the eurozone economy is struggling to gain traction. And it’s not just the small peripheral economies that are seeing factory activity slowing.

From Reuters:

Markit’s Eurozone Manufacturing Purchasing Managers’ Index (PMI) fell to 45.4 in October from September’s 46.1. The October figure was just up from an earlier reported flash reading of 45.3. The index has been below the 50 mark that divides growth from contraction since August 2011.

 Read more

France now has two words for entrepreneur

George W. Bush famously (and reportedly) opined that:

“The problem with the French is that they don’t have a word for entrepreneur”

 Read more

And from confusion sprang ugliness… it was ever thus

That’s the FTSE 100 down 1.2 per cent:

 Read more

Eurozone PMIs: from still bad to worse

Let’s start on a positive note on the volley of Markit PMI released Monday.

Spain’s PMI rose during August to 44, versus 42.3 in July… Read more

Floating points and French GDP figures

Germany and France both beat expectations for GDP growth in the second quarter, while the eurozone and wider group of 27 European countries saw an anticipated quarter-on-quarter contraction of 0.2 per cent.

The figures, released on Tuesday morning, revealed some resilience in the German economy, with 0.3 per cent growth. Economists had expected the quarter-on-quarter figure to come in at 0.1 per cent. Read more

France is a lot like Greece − or is it, really?

Is France facing a future Greece-style debt crisis? Er, maybe — so long as you ignore the difference in their government bond yields and just use debt-to-GDP projections made in a working paper from 2010. But we’ll get to that later. For now, it’s over to John Mauldin of Mauldin Economics in his weekly newsletter who’s going to tell us why France is a ticking time bomb run for your lives:

Don’t look now, but the lion that lies hidden in the grass is France. Yes, the France that is supposedly a big part of the solution to eurozone woes and Germany’s stalwart partner in guaranteeing all that debt. AAA France. Rated that way by the same people who turned the nuclear waste of subprime CDO squareds, composed 100% of the worst sort of BBB junk, into gold. Read more

Taux négatifs

The latest sovereign to borrow at negative yields — France.

 Read more

“They haven’t got a handle on what is happening in the Länder.”

We take our headline from Sharon Bowles MEP.

The Member of the European Parliament was talking to Public Service Europe about this ominous move in transparent sovereign accounting: Read more

Some ‘cru’ on Sequana…

We were having problems confirming this at pixel time (all enquiries were directed to a fax machine) , but it seems a shame not to share it given the ‘usually knowledgeable’ status of the source… Read more

Hollande win, Greek deadlock – the analysts react

It’s a Bank Holiday Monday in the UK so analysis is pretty thin on the ground. But here’s the best of what we have so far. A quick recap: François Hollande won the French election, while the Greeks rejected the country’s main austerity focused parties, opening the country to political uncertainty.

From Kit Juckes at Societe Generale: Read more

Look, quickly, some not disastrous eurozone auctions!

Both Spain and France managed to get decent debt sales away this morning and although yields did jump in Spain there was at least some solid demand to provide solace. Not bad considering it was Spain’s first auction since the country’s rating got cut by S&P last week. The steady demand will also provide reassurance as the ECB’s LTRO effects start to wane.

French borrowing costs actually fellInterest rates on the €1.6bn of nine-year paper sold fell from 3.29 per cent previously to 2.85 per cent while those on the €3.3bn of 10-year bonds dropped by 2 basis points to 2.96 per cent. Read more

Goodwill in France, plus bonus data quality pop-quiz

On Friday morning when a report landed in FT Alphaville’s inbox with the headline “Lagging Corporate France… The French – at least their brands are popular”, our interest was piqued. It’s a one-pager from independent equity research firm AlphaValue. It contains interesting snippets about how French companies have a lot of goodwill booked on their balance sheets when compared to their European peers.

As Investopedia tells us: Read more