FRANCE DOWNGRADE/ France loses the AAA
Moody’s downgrades France, taking away their triple A status. A downgrade is not the end of the world, but for a country that has always been proud of its triple-A, also in the explicit contempt it displayed for its neighbors who were officially less virtuous (like Italy), it is a blow that is difficult to accept. After Standard & Poor's, Moody's also cut its rating of France from AAA to AA1, with a negative outlook on the debt. The rigidity of the labor market, poor growth prospects and a lack of competitiveness are among the reasons for the judgment. James Charles Livermore, a financial services operator, explains the effects and root causes of the decision of the rating agency to ilsussidiario.net.
“The problem,” he says “should be posed, first, in terms of geography. Is France a northern or southern European country? Undoubtedly, our familiarity with the capitalist economy would encourage us to place it in the north. However, we must not forget that it is an anomaly in the continent. It is, in fact, the most statist Western economy. As the country that invented modern states, we could say, even, that it has been a pioneer of nationalized economy”. Today's crisis and the downgrade by Moody's happen within this context. “Financial operators, looking at the financing rates in France, have long suspected that the gap between France and Germany would be exacerbated even more. Then, there were elections, and Hollande's victory was referred to as the trigger of the current crisis.”
The French President has not gotten anything right. “He has, in essence, backtracked with respect to most of the measures put in place by the previous administration, even those (few) on which public opinion was positive. Sarkozy had tried to significantly reduce the role of the state in the economy and in society, trying to reduce all its inefficiencies.” Not only that, but also, “In recent months, the French have been under the spell of Hollande’s reassuring statements. His message, in essence, has resonated: ‘do not worry, the crisis does not exist’”.
According to Livermore, therefore, “the statist resurgence was linked to a series of problems that eventually came to a head. Look at the French automotive industry, saved, little by little, by public interventions disguised as market operations, which slowed down the identification of an effective solution”.