Posted on 11/07/2011 5:33:57 PM PST by TigerLikesRooster
France cuts frantically as Italy nears debt spiral
France has unveiled the toughest austerity measures since World War Two despite the looming danger of a double-dip recession, vowing to slash borrowing by €65bn over the next five years in a last-ditch effort to save the country's AAA rating.
By Ambrose Evans-Pritchard, International business editor
9:23PM GMT 07 Nov 2011
"We wish to protect the French against the grave problems facing other European countries. Bankruptcy is not an abstract word," said premier Francois Fillon.
The belt-tightening plan -- the second package since August, taking total cuts to €112bn -- include a 5pc super-tax on big firms, a rise in VAT on restaurants and construction, and cuts on pensions, schools, health, and welfare. It is the latest squeeze in a relentless campaign of fiscal tightening across the eurozone.
"It is like the 1930s: imposing austerity on countries already in recession is the way into a death spiral," said Danny Blanchflower, a former UK rate-setter.
Left-wing critics have evoked grim parallels with the "deflation decrees" of Pierre Laval in 1935 when France had to take ever harsher measures to preserve the country's viability on the Gold Standard, a gamble that ultimately set off violent street protests.
France's move came amid a further blizzard of grim data from Europe, confirming that most of the region is already on the cusp of recession. Growth has reached a "virtual standstill", said EU commissioner Olli Rehn.
(Excerpt) Read more at telegraph.co.uk ...
P!
They need to cut spending and the size of government, not raise taxes.
So stealing all that oil from Libya has not helped. Wonder how much money they had borrowed off of daffy. Before the killed him.
They need to do both as fast as possible.
When (not if) Italy hits the wall, France is going to have some real hard choices to make, starting with “will they bail out their banks?”
Over the weekend, the Frogs floated the idea of using the gold in the Bundesbank to collateralize new debt issuance to paper over the impending crisis. Greece is basically over at this point - there’s no way forward without kicking Greece out of the Euro.
With Italy and Spain, however, there is no hope to kick them out and no way to prop them up with the deals such as were made for Greece. The liabilities are simply too large. I think now the Frogs see that they’d better start digging moats and building walls, because there’s a situation of “every man for himself” ahead.
BTTT
In the end, this will be the greatest asset grab by bankers in nearly a century. I must say, very well played.
Obama's Iraqi Oil for Food connection
Mentions a few French banks.
Story was written by a liberal. Who else would claim that RAISING TAXES is "belt-tightening"?
This thread has many good comments and remarks. Question do the posters know how this will affect them eventually? Next question is what are the posters doing at the personal level to protect their family and finances? If one had not taken time to prep time is running out. Food for six months, water just in case utilities are disrupted, firearm for protection are now priority. After those three, precious metals and hard assets to preserve some of your wealth against inflation and loss of buying power as politicians and central banks will kick the can down the road by devaluing the US dollar. Eventually the system will collapse and be reset by all the central banks in the world. My bet is a new currency based on a basket of hard assets such as gold, oil, etc. If you own some of the assets today you can turn it in for the new currency (amount will keep up with inflation) vs turning in useless dollars for smaller amounts of new currency. In other words, middle class will get poorer and poorer because their savings in dollars will be eroded by the inflation caused by excessive printing of dollars to finance ongoing deficits till the system implodes.
They may have bigger problems than that. If/when Italy's credit rating tanks, Italy's massive civil service (some 40%+ of the entire Italian workforce by some estimates) will likely start putting people on the streets. It's possible that this might send a wave of unemployed Italians crashing the border into Provence and points north looking for work -- and France will be powerless to stop them. Oh, sure, they kept the Libyans in Lampedusa out -- but Italy is a fellow member of the EU, and the French can no more refuse entry to an Italian than North Dakotans can keep out South Dakotans.
The Italian expatriates will find few jobs in France. The sudden strain upon France's public welfare system is likely to prove disastrous. And then there's culture shock. Despite TV and the Internet, the culture of Il Mezzogiorno is worlds apart from that of la France profonde, and the French in the south and southwest of the country are much less -- shall we say cosmopolitan? -- than are their countrymen in Paris and the north. Imagine taking 30,000 residents of Washington County, Mississippi, the heart of the Mississippi Delta, and dumping them in, say, Ann Arbor, Michigan. Hijinks would ensue.
For the French, this may be it at last, l'étincelle qui a fait allumer l'incendie. Interesting times, to say the least.
Ping.
Mayhap France is bracing for impact.
France is going to fall like a domino if spain and italy fail. I think France is already getting ready for the fall. They want to fall gradually and slowly over the course of a year rather than in an instant in the middle of the night.
This thread has many good comments and remarks. Question do the posters know how this will affect them eventually?
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The short term effects(as in the next year or two) will be to boost the US dollar and the US economy...I think.
Imagine taking 30,000 residents of Washington County, Mississippi, the heart of the Mississippi Delta, and dumping them in, say, Ann Arbor, Michigan. Hijinks would ensue.
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wouldn’t it be more like dumping 30,000 residents of Ann Arbor Michigan in Washington county Mississippi?
Well, good for the Germans.
And the French should have thought “Golly, the last time we insisted that the Germans give us all their gold... they got into that hyper-inflation thingie, and then the little watercolor artist became a political powerhouse...”
You’d think that the Frogs would remember that. But nooooooo.
The Frogs are simply obsessed with this European integration issue, to the exclusion of simple common sense in so many areas of economics and politics.
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