Skip to main content

France Vs. England -- An uneasy relationship

On new years eve 2000 I was celebrating the "new" millenium with my family in southern France -- we would watch the new year celebrations on the hour every hour as each time zone celebrate the new year (BTW I am fully aware that the new millenium only starts at the end of 2000 -- so don't point it out).  French television was effusive when the French capital did its "show" with the Tour Eiffel being the spectacular center piece of the new year celebration (it was such a hit that the lights that were installed for that event are still there today).  An hour later it was London's turn; the Brits really pulled out all the stops and the fireworks were spectacular.  The French commentator was so pissed-off that he started bad mouthing the British economy and social framework (at 1:30 am!).

Well we had a repeat last night.  It appears that the head of Banque de France (Christian Noyer) was being interviewed in a regional newspaper, where the issue of France's AAA rating was discussed (and the risk of downgrading).  His point was that the rating agencies are imbeciles, and the proof is that the UK has not been downgraded, in fact it should be downgraded (here) .

Ok, first off, politically what Christian Noyer said is never (ever) done.  The head of a central bank doesn't speak badly of his economy, but also doesn't go out of its way to attack that of a neighbour; and this attack was unprovoked.  There is no doubt that following last weeks fall out between France/Germany and the UK relationships are more than frayed.  More importantly, the Banque de France's desire to change the conversation away from its own very serious problems is a damning indictment of the scale of the problems faced by Europe. 

Finally, for all its faults, the UK has one serious advantage that weighs a great deal (with the rating agencies).  All of the UK's sovereign debt is issued in sterling -- the UK is in control of its currency.  The same cannot be said for France.  Moreover, the UK is well aware that the problem it faces are extremely serious; and the government is trying to address its massive deficit.  France not so much!


The basic beliefs underlying this social, political, and economic trade policy are also, one may point out, ironically similar to those of Thomas Carlyle, whose French Revolution stands as the epic poem of the destruction of the ancien régime and the old order.

Popular posts from this blog

Trucker shortage? No a plan to allow driverless rigs

There are still articles on how America is running out of truckers -- and that its a huge problem, except its not a problem, if it was a problem salaries would rise to so that demand would clear. Trucking is one of those industry where the vast majority of participants are owner/operators and therefore free agents.

Salaries and cost are extremely well know, "industry" complains that there are not enough truckers, yet wages continue to fall... Therefore there are still too many truckers around, for if there was a shortage of supply prices would rise, and they don't.

What there is though is something different; there is a push to allow automatic rigs to "operate across the US", so to encourage the various authorities to allow self driving rigs you talk shortage and hope that politicians decided that "Well if people don't want to work, lets get robots to do the work" or words to that effect.

This has nothing to do with shortage of drivers, but every…

Every punter says oil prices are on the rise: Oil hits $48/bbl -- lowest since September 2016

What the hell?

How could this be, punters, advisors, investment bankers all agreed commodity prices  in general and oil prices in particular are on the rise...its a brave new era for producers and exporters -- finally the world is back and demand is going through the roof, except not so much!

What happened?  Well energy is complicated, the world operates in a balance -- 30 days of physical reserves is about all we've got (seriously) this is a just in time business.  So the long term trend always gets hit by short term variations.

Global production over the past 12 months has risen by somewhat less than 1.5% per annum.  As the world market changes production becomes less energy intensive (maybe), but the reality is that the world is growing more slowly -- America Q4 GDP growth was around 1.9% (annualized) Europe is going nowhere fast (the GDP growth in Germany is overshadowed by the lack of growth in France, Italy, Spain (lets say 27 Euro members generated a total GDP growth of 1.2…

Paying for research

This morning I was reading that CLSA -- since 2013 proudly owned by CITIC -- was shutting down its American equity research department -- 90 people will be affected!

Now the value of a lot of research is limited, that is not to say that all research is bad. In fact, I remember that GS's Asia Aerospace research was considered the bible for the sector.  Granted, there was little you could do with the research since the "buy" was for Chinese airlines...that were state owned.  Still it was a vey valuable tool in understanding the local dynamics.  It seems that the US has introduced new legislation that forces brokers to "sell" their research services!  Figures of $10,000 an hour have been mentioned...

Now, research can be sold many times; if GS has 5000/6000 clients they may sell the same research 300x or 400x (I exaggerate) but this is the key -- Those who buy the research are, I presume, prohibited from giving it away or selling it, at the same time the same rese…