Chart usGOLD   Chart usSILVER  
 
Food for thought
When it's raining gold, reach for a bucket, not a thimble
Warren Buffet  
Search for :
LATEST NEWS  :
MINING STOCKS  :
Subscribe
Write Us
Add to Google
Search on Ebay :
PRECIOUS METALS (US $)
Gold 1294.35-0.31
Silver 19.620.00
Platinum 1408.00-1.00
Palladium 794.000.00
WORLD MARKETS
DOWJONES 16409-16
NASDAQ 40969
NIKKEI 144180
ASX 544532
CAC 40 443226
DAX 941092
HUI 220-2
XAU 90-1
CURRENCIES (€)
AUS $ 1.4805
CAN $ 1.5202
US $ 1.3812
GBP (£) 0.8226
Sw Fr 1.2196
YEN 141.4500
CURRENCIES ($)
AUS $ 1.0723
CAN $ 1.1006
Euro 0.7240
GBP (£) 0.5955
Sw Fr 0.8828
YEN 102.3700
RATIOS & INDEXES
Gold / Silver65.97
Gold / Oil12.38
Dowjones / Gold12.68
COMMODITIES
Copper 3.050.02
WTI Oil 104.540.78
Nat. Gas 4.740.21
Market Indices
Metal Prices
RSS
Precious Metals
Graph Generator
Statistics by Country
Statistics by Metals
Advertise on 24hGold
Projects on Google Earth
Philippe Herlin : France Loses its AAA Rating !
Published : November 23rd, 2012
466 words - Reading time : 1 - 1 minutes
( 2 votes, 5/5 ) Print article
 
    Comments    
Tweet
Keywords :   Bailout | Europe | Eurozone | France | Germany | Global | Hedge | Ratings |

 

 

 

 

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
Tweet
Rate :Average note :5 (2 votes)View Top rated
All articles by
Philippe Herlin
Next article by
Philippe Herlin
Receive by mail the latest articles by this author  
Latest comment posted for this article
Be the first to comment
Add your comment
TOP ARTICLES
MOST READ
TOP RATED
MOST COMMENTED
Editor's picks
RSS feed24hGold Mobile
Gold Data CenterGold & Silver Converter
Gold coins on eBaySilver coins on eBay
Technical AnalysisFundamental Analysis

Philippe Herlin

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
Philippe Herlin ArchiveWebsite
Most recent articles by Philippe Herlin
4/17/2014
4/10/2014
4/4/2014
3/27/2014
2/5/2014
All Articles
Comment this article
You must be logged in to comment an article8000 characters max.
 
Sign in
User : Password : Login
Sign In Forgot password?
 
Receive 24hGold's Daily Market Briefing in your inbox. Go here to subscribe or unsubscribe.
Disclaimer