Crisis

Germany has raised over a quarter of its total EFSF obligation of €211 billion by way of what is essentially magic. The Telegraph reports that “Germany is €55bn richer than…

For the French government, it is more than ever urgent to convince everyone that the State deficit is moving in the right direction and the public debt is sustainable. In the context of an uncertain future for the French credit rating triple A note, the present debate on the budget of the State for the coming year and the austerity measures it includes became a really hot issue. The initial project of budget for 2012 has been already adopted by the Financial Commission at the French National Assembly and is now being discussed by the deputies.

European governments are under pressure to shore up the banking sector in the face of growing worries about the industry’s capital levels, access to funding and earning power in the context of global crisis. Indeed, weakened by their bad sovereign debt holdings, several banks are scrutinized by the credit rating agencies and two of them, the French Société Générale and Crédit Agricole have recently been downgraded by Moody’s.

The eurozone’s third-largest economy is being sucked deeper into the sovereign debt crisis, since one of the major credit rating agencies downgraded yesterday its credit rating. S&P downgraded Italy to “A/A-1” from a “A+/A-1+” grade because of “Italy’s weakening economic growth prospects”, with a negative outlook, meaning further downgrades are possible. The move – S&P’s first downgrade of Italy since 2006 – places S&P’s rating on Italy three notches below that of Moody’s, the rating agency that many had expected to cut first.

Suspected to be too vulnerable because of their “Greec holdings” two of the biggest French banks, Société Générale and Crédit Agricole have been downgraded by the credit rating agency Moody’s.

The French bank BNP Paribas published a disclaimer to this article signed by our Director of development Nicolas Lecaussin and published in the Wall Street Journal. The paper is mentioning the difficulties of some of the French banks, including BNP.

It seems that the forecast of a 3.5% decrease in Greece GDP in 2011 was too optimistic. The finance Minister Evangelos Venizelos said last week that the output is likely…

This article first appeared in the Wall Street Journal

Markets always make good scapegoats. When they do well, they are populated by profiteers. When they do badly, they are accused of causing trouble for everyone else.The denizens of the Dow, Nasdaq, CAC and DAX floors may be speculators and myopics. Yet it’s hard to find even the most reckless private participant who behaves as though his credit is limitless.

The world is probably going to change after the recent downgrading by Standard&Poor’s of the US debt rating from triple A to AA+. Beyond the disturbing loss of the landmark Treasuries represented for global finance, what is important here is the awareness that even the biggest world economy is not allowed anymore to do just anything with public spending. The message is clear. The current crisis is actually giving the opportunity to put the political genie back in the bottle. It is now time to grasp this chance, but will political decision makers have the will to do it?

Standard&Poor’s, one of the three major credit rating agencies downgraded on Friday the USA credit rating, previously noted AAA, the highest possible level. The new rating AA+ is translating the worry of experts about the sustainability of US public finances, in the context of ever increasing public spending and public debt above $14.3 trillion. The debt deal signed by the Congress is projecting savings of $1.2 trillion, which S&P estimates to be insufficient.