Welcome to the Core..France is jittery and media knows it

As the attention shifts from Greece to Italy, next in lineup is France and its AAA rating. Mainstream media as already started bringing up France’s problems. S&P’s mistaken downgrade of France can’t just be a mistake, something was cooking in there. May be S&P was ready to surprise the markets again, not in this way though, and the news somehow came out in weirdest way. Well, the unintentional surprise sent jitters into the markets for sometime before S&P came up with an apology note. Now it would be interesting to see how markets react to S&P’s next downgrade as investors would look to check if it is real or mistaken update. Whatever it may be, the France mistaken downgrade showed how much afraid the markets are and how much reactive it could be if it actually happens.

Mainstream media has caught the French connection to future problems. Here are the extracts of some articles:

San Francisco Chronicle: France Plans EU7 Billion in Taxes, Cuts to Save AAA Rating

France unveiled tax increases and spending cuts amounting to 7 billion euros ($9.6 billion) for next year to defend its triple-A rating as growth slows and Europe’s debt crisis deepens.
The country will increase some levies on large companies, push up the lower end of its range of value-added taxes and curb welfare spending, Prime Minister Francois Fillon said today.
"French people must roll up their sleeves," Fillon said at a press conference in Paris. "We have one goal: to protect the French people from the severe difficulties faced by some European countries."

Los Angeles Times: Eurozone debt jitters creeping into French bonds

The European debt crisis has gone from bad to worse as Italian government bond yields have soared, threatening the solvency of the Eurozone’s third-largest economy.
But things could go from worse to worst if bond yields keep rising in France, the continent’s No. 2 economy after Germany.
The French government knows it can’t afford for the bond market to turn on it. Paris announced a new round of spending cuts last week aimed at ensuring that the country holds on to its coveted AAA credit rating.
Moody’s Investors Service warned last month that it might put a negative outlook on France’s top-rung rating if Paris made too many commitments to back up its banks or other Eurozone states with tax dollars.
But France’s need to protect itself also raises doubts about its ability to extend help to Italy as Rome’s debt nightmare worsens.

sovereign debt France 2011-11-10


French Government Bond Yields are spiking high with every negative news. Situation may get worst from hereon as Italian yields continue to hover in dander zone. French banks stock prices are on roller coaster ride with every news related to European Debt Crisis, yet the down trend is more evident.

Good Luck, France

Hitesh Anand

I am a post graduate from Newcastle University, UK. I like studying and analyzing economic data and financial health of world.

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