« | »

French Downgrade Rumors Spark Sell-Offs

From the UK’s Evening Standard:

Markets fail to rally after France downgrade rumour

Jim Armitage
11 Aug 2011

Stock markets this morning failed to bounce back from the massive sell-offs yesterday despite strong denials of the rumours about France that triggered those falls.

Although share indices rose as much as 3% earlier in the session, by 11am those gains had all but petered out to nothing.

Nicolas Sarkozy, the French president, demanded new cuts from his ministers to stave off rumours of a downgrade in its credit rating, but the action had little impact.

How bizarre. Maybe Mr. Sarkozy should have demanded that France increase its debt instead. That’s what Obama did.

France’s CAC-40, which crashed 5.5% yesterday, fell further into negative territory just before lunchtime, falling 25.93 to 2977. The FTSE-100 Index, which peaked for the day at 5125, was up just 1.75 points at 5008.91.

Lloyds TSB economist David Page said: "With high levels of uncertainty politically and economically wherever you look, this is a market that is primed for falls."

Ironically, and despite what we are hearing from the Obama administration and their minions in the news media, all of this ‘uncertainty’ is almost certainly helping the US economy.

If it wasn’t for this European ‘uncertainty’ would anybody be buying our Treasury Bills (aka our debt)? Would they be buying US stocks? – In as much as anybody is buying US stocks.

Société Générale, which was the biggest target of yesterday’s rumour mill, falling more than 20% at one stage, continued its slide today after a short-lived rally. Its shares were down 2.4% at lunchtime with BNP Paribas, also targeted yesterday, down 5%.

Analysts are calling for strong action from German political leaders to strike a strong political fix to the eurozone crisis. Effectively, an extension from Germany of the European Financial Stability Facility is what many investors are now seeking.

As one bond strategist said: "It will cost Germany, and France, a massive amount – possibly even resulting in credit downgrades for both. But at least then we’d have some certainty. What this market needs more than anything is clarity."

In truth, the European markets are probably going through the floor because of too much "clarity." The reality that socialism doesn’t work is finally starting to sink in.

This article was posted by Steve on Thursday, August 11th, 2011. Comments are currently closed.

One Response to “French Downgrade Rumors Spark Sell-Offs”

  1. proreason says:

    My eyes are fuzzy this morning.

    I thought I read that a Frenchman demanded spending cuts.

    I need new glasses.

« Front Page | To Top
« | »