Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench

Philippe Herlin : France Loses its AAA Rating !

IMG Auteur
Published : November 23rd, 2012
466 words - Reading time : 1 - 1 minutes
( 2 votes, 5/5 )
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
0
comment
Our Newsletter...

 

 

 

 

So Moody’s has decided on Monday night to downgrade France’s AAA rating. This comes as no surprise, since the agency had already announced that the rating was under surveillance. It is following in the footsteps of Standard & Poor’s, almost a year later, which had downgraded France’s rating in January 2012. Fitch remains the sole agency with a rating of AAA for France’s bonds. As long as two of the three agencies were still rating France worthy of the highest rating, France was de facto considered AAA by the investors. But from now on, this is no more the case. The downgrade from the highest level is real, and it will certainly mean the end of these interest rates.

There are already a number of regular clients who will stop buying France’s bonds, in particular those who, by statutory obligations, can only acquire financial assets that have the best possible ratings. In essence, those are the pension funds, because they have to provide retirement on the long term and are not allowed to take on any risk. Also, banks owning France’s bonds in their accounts didn’t have, up to now, to hedge them because they were considered 100% safe. But it is not the case anymore : the bonds being now considered a little more risky, banks have to put aside some liquidities to cover that risk, in conformity with the Basel II, and soon Basel III, rules. And freezing cash always represents costs, so France’s debt will be less appealing.

There is another element we have to take into account : the european help funds are noted AAA because they are, to a great extent, guaranteed by Germany and France. France’s downgrade is likely to affect those funds, meaning that the whole buidup of bailout plans for the endebted countries will become more fragile and costlier. The FESF, actually, just cancelled an issuing of funds.

Beyond these mechanical effects, global worries will grow. Just one week after The Economist published a special piece on France, a time Bomb at the Heart of Europe, Moody’s downgrade acts as a severe confirmation. A core country of the Eurozone, between the virtuous North, close to a balanced budget, and the lazy or laxist South, France is looking less and less like the former and more and more like the latter.

A French debt crisis would jeopardize all of the Eurozone. And we arrive at this conclusion for a very simple reason : all of the governments are just showing themselves incapable of really tackling the problems, making structural reforms and reducing public spending. By patching things here and there with budget tricks, they were able to maintain the illusion, but now it’s over. Up to now, the slide down was a progressive one... it should be accelerating now.

 

 

Thanks to Philippe Herlin from www.goldbroker.com
Data and Statistics for these countries : France | Germany | All
Gold and Silver Prices for these countries : France | Germany | All
<< Previous article
Rate : Average note :5 (2 votes)
>> Next article
Philippe Herlin is a researcher in finance and a junior lecturer at the Conservatoire National des Arts et Métiers in Paris. A proponent of extreme-risk thinkers of the Austrian School of Economics, he brings his own views on the actual crisis, the Eurozone, the public debts and the banking system. He is also contributor at www.Goldbroker.com
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
Something has Changed in Gold St...
06 Febneville
No nothing strange has happened in GOLD stocks....absolutely nothing.....The fact of the matter is that you byrne have been playing the man and...
The Revisionist Theory and Histo...
05 Febovertheedge
"The key is in the hand of the U.S. government. It is the same key that was used to lockthe U.S. Mint to silver in 1873, and to gold sixty years la...
First Report since April, 2014
05 FebS W.
Here I was just 2 days ago thinking whatever happened to that evangelical silver guy. Low and behold up he springs, like some spirit from the g...
LBMA Silver “Price”: A Perfect S...
03 FebS W.
There is no doubt that the Comex can be used as a casino for those who want to trade Silver up/or down or maybe some just wish to take a small punt...
LBMA Silver “Price”: A Perfect S...
30 JanOzSILV1
Bron refuses to EVER admit this market is a Casino and the disconnect between Paper and Physical is a big clue to this
LBMA Silver “Price”: A Perfect S...
30 JanS W.
Usually I enjoy Bron's take on things,but to be perfectly honest, I can't understand 95% of what he his on about here. I get the feeling that h...
ANOTHER NAIL IN THE U.S. EMPIRE ...
30 JanDemosthenes0
Very naive and pretentious article! The author thinks he knows everything and yet knows next to nothing. Shale gas producers are neither stupid n...
LBMA Silver “Price”: A Perfect S...
30 JanOzSILV1
I'd say that this was More than a Farce , 5,000 silver futures contracts within a minute or two !!!!! ( some charts indicate NO increase in Vo...
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS
Mining Company News
Lara Expl.(Cu-Zn-Au)LRA.V
Revised Resource Estimate Report Filed for Maravaia Copper Gold Deposit
CA$ 0.34+1.47%Trend Power :
Corporate news
Black HillsBKH
Black Hills reports 4Q loss
US$ 50.90-0.59%Trend Power :
Corporate news
Kinder Morgan(Oil)KMP
Midstream Companies Were above the 20-Day Moving Averages
US$ 102.03+1.98%Trend Power :
Corporate news
Kinder Morgan(Oil)KMP
Midstream Companies Were above the 20-Day Moving Averages
US$ 102.03+1.98%Trend Power :
Corporate news
Devon Energy(Ngas-Oil)DVN
Gasoline Inventories Rose Last Week despite Fall in Production
US$ 24.85-6.44%Trend Power :
Corporate news
United States Steel(Fe-Sn)X
U.S. Steel (X) States Ratification of Labor Agreements
US$ 7.94-3.64%Trend Power :
Corporate news
Black HillsBKH
4:34 pm Black Hills Corp beats by $0.04, misses on revs; guides FY16 EPS below consensus
US$ 50.90-0.59%Trend Power :
Corporate news
Black HillsBKH
Black Hills Corp. Reports 2015 Fourth Quarter and Full Year Results
US$ 50.90-0.59%Trend Power :
Corporate news
Transcanada PipelinesTRP.TO
TransCanada to Sign Substantial Agreement to Benefit Québec Economy
CA$ 48.65+0.16%Trend Power :
Corporate news
Devon Energy(Ngas-Oil)DVN
4Q15 Crude Oil Prices: Fallout for the Energy Sector and SPY
US$ 24.85-6.44%Trend Power :
Corporate news
Comments closed