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!
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