My dear impertinent ones, dear impertinent ones,
I invite you to take the time (it lasts 20 minutes) to listen to Jean-Claude Trichet, the former governor of the ECB to hear all of his reasoning and points of view, but the essential in my opinion is in three major points.
The difference between the dollar and the euro.
The tax burden in France, which is the highest among developed countries, is a point that you know by heart and which I will not develop in this text!
The fact finally… that France is not at all immune to a debt crisis, which is an obvious fact against which I warn you, for the coming weeks and months which risk seeing the materialization of a situation which is to be feared for all savers.
The difference between the euro and the dollar.
David Jacquot asks JC Trichet, why wouldn’t we do like the Americans, letting our deficits slip by 7% per year for example? Here is Trichet’s response which is very clear. “We are all under external constraints, not the Americans for the moment, it is not the privilege of the dollar as they say, the euro is worth the dollar in terms of currency if you want the success of the euro currency is even absolutely remarkable the problem is that it is a completed political federation and therefore they only have one signature it is the signature of the American Treasury as a benchmark of the whole if you want while we have it in all cases certainly 4 5 6 which claim to be very good
markets and of course the French OAT is very important and the German Bund, and the Italian Treasury and the Spanish Treasury and unfortunately all that gives us as a result the fact that we have liquidity and depth of our
weaker markets.
France is not immune to a financial crisis.
For JC Trichet, “France is at a crucial point, now one of two things: either it takes decisions which will allow it to avoid finding itself in the situation of the five countries that I mentioned or else it doesn’t make decisions
to avoid it and then in this case in fact it will be the crisis which will do the work for it because in the crisis there is no more discussion if you want”. He was talking about the crisis that hit the euro more than 10 years ago now during the Greek crisis under the Mario Draghi era and which almost took away the euro zone. Greece, Spain, Italy, Portugal the “PIGS” remember had to be supported by a massive intervention from the ECB.
Then JC Trichet will add… “It is a question of avoiding finding ourselves in the situation of Italy, Spain, Portugal, Ireland virtually all the elements are there so that when the time comes a detonator if you want which may be a European detonator a global detonator a geostrategic problem which arises which scares everyone and in this case then we are very likely to be in a pack a very small pack of countries which will be attacked”… I lets you watch the current news and look for what the “detonators” could be! Unfortunately, there is no shortage of possibilities!
Then JC Trichet releases his bomb. “Spain was not a small country. Italy was a member of the G7 and it had an outstanding debt in proportion to GDP, unfortunately for it, considerable so no I think we cannot reason like that France is not immune France is obviously not not immune to a debt crisis it’s obvious it’s blinding but it’s good to remember it and moreover. Even so, our risk premiums, if you like, that is to say the spreads compared to the constellation of other countries, continue to deteriorate, it’s not very glorious to have 5 basis points at 10 years at least. above Spain even less glorious 30 basis points above Portugal not to mention 40 basis points above Ireland”
You understood it.
Everyone understood it.
Although it was unthinkable, a financial crisis affecting France has not become certain or probable. It has become possible and it is already serious enough.
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I detail all these weak and strong signals which show the dramatic state of our public finances. I also share with you the measures to take to avoid losing everything. You will also have as many notes and flashes as necessary depending on the evolution of the financial situation of our country and the discussions in the National Assembly on the budget and therefore the tax developments which will hit our wallets. I will be at your side in these complicated times to help you better understand what is happening, what is being decided and how to adapt and protect each of your hard-won “hoards”, big and small. For everyone you have the video of the week’s attic news dedicated to this subject and the analysis of what Fitch has just written about our country.
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It’s already too late, but all is not lost.
Get ready!
Charles SANNAT
“Insolentiae” means “impertinence” in Latin
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