During the Greek debt crisis, which lasted for the best part of a decade, defiance of the EU from Athens was ultimately overridden by the threat to expel Greece from the euro — a move that would have destroyed the value of Greek savings. But expelling France from the euro — or the EU itself — is all but inconceivable. The entire European project has been built around the Franco-German couple since the 1950s. It is much more likely that France would stay in the EU and single currency, but act as a spoiler. That would wreck European cohesion and stability, at a time when the EU is struggling to pull together in the face of the threat from Russia.
asmahan zein’s Post
More Relevant Posts
-
🇩🇪 Germany blocks plans for new joint borrowing The recent results of the European elections followed by the President Macron’s decision to call a snap vote led to unexpected consequences in various areas. According to Bloomberg, the European leaders, gathering this week to consider their top priorities for the next five years, won’t discuss so-called «defense bonds», the bonds to be issued jointly by all eurozone countries. A draft of the EU strategy document seen by the news agency, has no mention of joint borrowing. The idea of the joint bonds is far from new. It first appeared in 2011 during the European sovereign debt crisis, but was realized only once, in 2020, to support the EU member states hit by the COVID-19 pandemic. The main opponent of the joint borrowing idea was Germany, whose constitutional court ruled in December 2022 that joint EU debt for the pandemic could be allowed only as an exception and could not be used to finance political tasks. In March, the French government was pitching the radical idea to issue joint debt, so-called «defense bonds», to pay for increased military spending. The idea was supported by Poland and Estonia, but opposed by Germany, the Netherlands and Nordic countries. Now, when Marine Le Pen's far-right National Rally is leading the polls, the «defense bonds» are swept under the rug. Investors are still cautious about the idea of EU joint borrowing. Just days after the EU election, the indexer MSCI Inc. decided not to include the outstanding EU joint bonds in its sovereign benchmarks. The spread between 10-year EU bonds and equivalent German notes has widened almost 20 bps over the past two weeks, practically erasing the tightening seen since the start of the year. So, it’s too early to say that the joint EU bonds may become commonplace and rival the Bund in terms of a safe asset in Europe. #EuropeanPolitics #Germany #JointBorrowing #EU #DefenseBonds #EuropeanElections #Macron #Investors #FinancialNews #Eurozone #DebtCrisis
-
-
Event: French 10-year bond yields hit 3.03%, matching Greece's for the first time. Political Risks: Budget disputes and potential no-confidence votes against Prime Minister Michel Barnier's government increase uncertainty. Market Reaction: French bonds underperform peers, with yields remaining high and significant investor outflows noted. Budget Proposal: €60 billion in cuts and tax hikes aim to reduce the deficit to 5% of GDP by 2025, but opposition demands revisions. Ratings Concerns: S&P’s rating update due; Fitch and Moody’s cite negative outlooks over fiscal challenges. Comparisons: Greece's fiscal reforms have driven bond yield convergence, while France faces reform delays. Investor Shift: International investors are reallocating funds from French to other European bonds. #FranceBonds #BudgetCrisis #PoliticalRisk #PIGSEconomies #InvestorSentiment
-
France and six other members of the EU, Italy included, are under scrutiny for excessive budgetary deficit. No sanctions are in process though: "The EU Commission recommended to seven nations, including France, that they start a so-called “excessive deficit procedure,” the first step in a long process before any member state can be hemmed in and moved to take corrective action. “Deficit criteria is not fulfilled in seven of our member states,” said EU Commission Vice President Valdis Dombrovskis, pointing the finger at Belgium, Italy, Hungary, Malta, Slovakia and Poland, in addition to France." [...] The French annual deficit stood at 5.5% last year. [...] The International Monetary Fund forecasts that the French economy will grow at a relatively sluggish 0.8% of GDP in 2024, before rising to 1.3% in 2025. And unlike the measures imposed on Greece during its dramatic fiscal crisis a decade ago, he said that excessive austerity was not an answer for the future." #EU #France #Deficits #Growth #Scrutiny
-
Associate Wealth Consultant at deVere & Partners Switzerland SA & deVere Portugal
-
Banker. Investment manager. NED. Board adviser. Funding & origination. Strategic thinker. Value creator. Capital procurer & preserver. r2advisory.co.uk
DAILY DROP Back in 2012, Draghi promised to do "whatever it takes" to contain & reverse the Eurozone sovereign debt crisis. Now, commissioned by Ms von der Leyen, newly re-elected President of the European Commission, Super Mario sets out a 400 page vision for the plan to improve EU competitiveness & productivity, & in doing so drive EU wide moribund growth back to levels where the Bloc might compete with the US & other global trade rivals. Beset by the perennial problems - the rich North doesn't want to continually subsidise the less productive South; Germany is anti combined EU wide debt issuance; trade frictions amongst the Member States continue to blight the effectiveness of the Union; it was ever thus...So how to move forwards? Integration of all capital markets within the Group (a goal more pressing post Brexit & not good news for SKS as he looks to strike a new deal with the EU); develop new common funding buckets; streamline regulation & alleviate intra member trade sticking-points; are just some of the key points raised, but all historically have been thwarted by the counter thrust of individual domestic interests. All point to a need for ongoing closer cooperation on taxation, funding & markets, as well as on energy (weaning off Russian gas was a sure sign it can be done), security & new inward investment from tech, green energy & AI. Improving the Eurozone's competitive positioning all the more important in the face of the growing twin threats of an intensified trade war with China & a more protectionist US should Trump regain power in the US in November. Markets bottom-fished Monday in the US after a long streak of weak days, but with little conviction & underwhelming volumes & stocks traded range-bound in Asia today. Tonight's long awaited debate is the immediate focus, as well as a shift from last week's disappointing employment number on to the CPI later this week - a low number may give comfort to cut 50bp - maybe? In aggregate it seems US investors have tilted towards a more bearish stance with de-grossing of long & short positions bringing aggregate positioning closer to home. Murmurs rather than shouts suggest a cautious optimism that rate cuts (come on Powell) will allow the US to avoid a harsh downturn - or is it too late? Inside the white lines, Sri Lanka handed out a summary thrashing & salutary lesson to England, Nations League footie continues with an away win for the Red Dragon, Dak led America's team to an impressive beat down of the Browns in Cleveland hot on the heels of signing a $240mm deal to become the NFL's highest paid player in history (for now), as Caleb Williams became the 4th member of the club that sees 1st round QB draft picks win their first pro outing, but had D & special teams to thank for the Bears' win. "Good character is not formed in a week or a month. It is created little by little, day by day. Protracted & patient effort is needed to develop good character." Heraclitus
-
Is France the new Greece? The answer is almost certainly not, says Simon Nixon. Greece in 2009 was a pre-modern state that had just revealed a giant hole in its accounts which sent bond yields soaring above 10 per cent, rendering its debt patently unsustainable. France, on the other hand, is one of the world’s richest countries with an effective public administration, a diverse economy, skilled workforce and, even after the latest sell-off, still only faces bond yields of about 3 percent. What’s more, the EU has undertaken wide-ranging reforms of its banking sector and institutional arrangements since the Greek crisis that make a repeat much less likely. Rather than a Greek-style debt crisis, it is this steady evaporation of confidence in Europe’s ability to tackle its challenges that is most dangerous. Last week, I highlighted the risks arising from the extraordinary valuation gap that has now emerged between European and American stock markets. Perhaps rising bond yields will focus minds in Paris. My hunch is that Barnier will get his budget and that his government will limp on for longer than many expect. After all, it is not in Le Pen’s interest to be blamed for triggering a deeper crisis. But that is unlikely to be enough to restore global investor confidence in France or Europe. But, there are three reasons why the situation in France is troubling. Read the article (link in the comments below)
-
-
💬 "We need a strong Europe to overcome the challenges ahead – that is beyond question." With these words, ESM MD Pierre Gramegna opened the latest lecture in the series "Mein Europa", organised by the German Association in Luxembourg. In his speech, “Where does Europe stand? Rising national debt and its consequences for Europe”, Pierre Gramegna emphasised that while European debt poses significant challenges, unity and shared solutions are key to overcoming them. 💡 The speech shed light on Europe’s ability to navigate crises responsibly. Despite the shocks of COVID-19 and the energy crisis, the EU has brought its debt level down from 90% to 83%—a notable achievement compared to China’s 90% and the US’s 120%. Yet, some member states still struggle with high deficits and rising debt 🏛️ It is important to keep a robust fiscal framework. The European Stability Mechanism (ESM), with €500 billion as a safety net, gives the EU the means to handle future challenges. But success depends on adapting these tools to meet the unique demands of each crisis. 🔍 Looking to the future, Pierre Gramegna identified three megatrends—climate change, shifting demographics, and geopolitical fragmentation—that will shape Europe’s growth and its ability to manage debt sustainably. These forces will test Europe’s resilience and its commitment to shared financial responsibility. 🤝 A united and stronger Europe is essential for overcoming these challenges, with shared responsibility for sustainable public finances at its core. 👉 Read the full speech: 🇬🇧 https://lnkd.in/dbwddVxJ 🇩🇪 https://lnkd.in/dkJeKniw #ESMeuro
-
-
Finance nerd 🤓 | Host of The Blunt Dollar Podcast🎙️| Posts about financial markets 📈
France just said, 'France is not Greece' 👀 But here's the thing: Some bond investors aren't so sure. 😅 For the first time last week, investors demanded higher yields to lend to France than to Greece. That's like saying: 'I trust a country that just recovered from a debt crisis over the Eurozone's second-biggest economy!' Crazy, right? 🤔 So, here's what's going on: France's government is trying to push through a budget with €60 billion in tax hikes and spending cuts. But opposition parties are playing hardball. And a no-confidence vote could be around the corner. ⚠️ Investors hate this kind of political drama. Hedge funds are already betting big against French debt. €99 billion big. 🐺 Meanwhile, Greece has been on the rebound. It's got investment-grade credit again, and investors are noticing. But this isn't a total crisis…YET. France's borrowing costs are still manageable. 💸 But the fact that investors even compare France to Greece? That's a red flag. 🚫 If this budget fight drags on, it could shake Europe's financial stability. And let's be real: Markets don't wait for politicians to figure it out. 🙃 So what do you think? Is this a temporary scare? Or could France actually face a debt crisis? Let me know in the comments below! 👇 PS. 🔔 Subscribe to my profile & ♻️ share with your network
-
France’s Years of ‘Fiscal Murder’ Are Catching Up With It Investors are shunning French debt over the country’s political gridlock and budgetary largess. (A problem the U.S. could be facing in the future) France is waking up to a harsh reality: its fall from favor in the eyes of global investors is pointing to a long, painful and uncertain rehabilitation. - A nation whose bonds were historically seen as a proxy for German bunds, the region’s safest asset, now finds itself recast as a poster child for fiscal incontinence. Its debt yields are now aligned with Spain — and increasingly close to those of Italy. - Hamstrung by a hung parliament in the wake of snap elections in June, French officials are warning Brussels that it will take five years just to bring deficits down to European Union limits. An attempt to kick off that task is due on Thursday, when Prime Minister Michel Barnier’s government unveils its budget for 2025. https://lnkd.in/g8rJbc4n
-
🔥 France on the Brink: Lessons from the Edge of Economic Collapse 🔥 As France teeters on the brink of financial catastrophe, comparisons to Greece's 2009 meltdown are growing louder. With public debt now surpassing €3 trillion, borrowing costs are rising, and investor confidence is faltering. France's potential collapse could have far-reaching consequences, destabilizing the Eurozone and global markets. 🔍 Key Indicators to Watch: Interest Rates on French Debt: Rising interest rates on French bonds are a clear signal of investor concern. Watch for any sharp increases, as they could indicate growing fears of a default. Debt-to-GDP Ratio: With the ratio exceeding 115%, further increases without corresponding economic growth could push France closer to insolvency. Political Instability: France's fragmented political landscape hinders necessary economic reforms, exacerbating the crisis. European Union’s Stance: EU moves towards stricter fiscal oversight or discussions of a bailout could be imminent signs of financial distress. 📌 Strategic Actions: Diversify Your Assets: Reduce exposure to European markets and sectors heavily tied to French economic performance. Stay Informed and Agile: Regularly monitor key indicators to quickly adjust your strategy as the situation evolves. Anticipate a Bail-In: Under the Loi Sapin 2, France could restrict withdrawals or freeze assets during a financial crisis. Be prepared for your bank deposits to be at risk if this measure is implemented. 🔍 Anticipate the Turning Point: A bailout may become necessary as debt becomes unsustainable and interest rates spike. The French government could invoke Loi Sapin 2 to stabilize the banking sector, potentially freezing bank accounts or converting deposits into equity. Conclusion: France's economic crisis could have monumental global implications. By staying informed, diversifying assets, and preparing for a potential bail-in under Loi Sapin 2, you can position yourself to not only survive but thrive in the midst of turmoil. #Leadership #EconomicCrisis #France #InvestmentStrategy #Resilience #GlobalMarkets #BailIn #LoiSapin2
-