Monday, March 25, 2013

Random thoughts on Cyprus and Quebec

So a deal was done on Cyprus; depositors with less than Euro 100,000 will see no drop in the value of their deposits; those with deposits in excess of Euro 100,000 watch out!  Strict capital control will be impose (by Cyprus) that will mean that despite keeping the Euro, Cyprus is now isolated from the rest of the Union.  Capital control essentially means the end of the Euro experiment in Cyprus, don't know how the rest of the game will work, but certainly no one will participate in Cypriot bond issues -- especially if the money is frozen in the country.

What happens next, what about Spain, Greece? I just don't know, maybe Cyprus was a special case --turns out that according to the Dutch minister of finance, bank bailout is over in Europe! but it all depends on the next few months, if Cyprus will ends up in a depression then they will not be the it will nevertheless be the blueprint for southern Europe, if they recover quickly I just don't know.  One thing for sure, the Euro experiment in Cyprus is over.

More interesting is what is going on here in sunny Quebec --  the massive influx of French people into the province, virtually every shop in Montreal's CBD has French assistants.  You walk into a shop that was considered an "anglo stronghold"  and now you hear "proper French" all the time.  I know that there is massive immigration, two friends have recently moved from France to Montreal, hearsay is even worse.  In one case, the CEO (owner) of a small french company just packed up his business and is moving wholesale to Montreal -- his children have already been enrolled in Montreal private french school for the 2013/14 school year that begins in September.  He's had enough of the meddling from both the Brussels's and Paris governments.  This is not a large company but could easily (ish) be relocated here.  He's taking with him his engineers and senior management and has left his workers there; the way he tells it (I take it would a grain of salt) is that the union that controlled his workers had become bolder in the past few months with additional demands that increased his labor costs by 30-40% (probably a lot less but still).

He is currently working with his clients to stockpile products so that he can shut down at the end of the summer.  He believes that he will be up and running by January 2014.  The sad part is that his workers now are working very hard because of the contracts they have to fullfil, they don't know that by the end of September they will be told that the company is shutting down for good.

The way he tells it, by 15 september his machine shop will be boxed and ready for shipment to Canada, that one month later it will be installed and that final adjustment will take until the end of December.  After that he's ready to go.  His sales force is already at work getting orders for January 2014.

Quebec's gain and France's loss!

N.B.  it has been pointed out to me that even when a company goes bust or is closed in France its not the end of it all.  There are still liabilities and the concept of bankruptcy in France is complex (it really didn't exist until a few years ago).  So that the liabilities of our "French CEO" could still be large.


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