France

The bank that Napoleon created, and which will very shortly be in every major newspaper's headlines,  certainly believes in the ideology of Keeping It Simple Stupid. Presenting the Banque De Paris Org Chart.

It's just getting plain idiotic in France and Europe. After last week the global stock market soared (then crashed) on two separate micro-occasions (since everything is now measured in HFT time) following rumors first from the FT then from someone we don't even remember who, that French banks would be recapitalized, here comes the strawman reset for the next 24hours. From Reuters: "French banks are solid and can face any risk from their exposure to Greek sovereign debt, the head of the Bank of France, Christian Noyer, told a French newspaper, adding that there was no secret plan in place to recapitalise them." Well, no, they are not. Just ask the Chinese. Or Siemens. But at least this latest refutation gives France hope that when BNP, SocGen and CA are all down 15%, leaking this same rumor for the third time, may provide a short-term temporary boost. Alas, not even the vacuum-tube controlled market is that dumb.

Update: NO CONTAMINATION FROM EXPLOSION AT FRENCH MARCOULE NUCLEAR SITE - FRENCH POLICE: RTRS... hopefully the accuracy here is better than at Fukushima

The following story is very fluid and we are following closely. Minutes earlier shares of french EDF have come under selling pressure following broad headlines of a explosion at a French nuclear power plant. Here is what we have found so far...

Two weeks ago when expanding its debt monetizing vehicle, the SMP, to include the debt of Spain and Italy, one of the few appeasements offered to the public by "Europe" was the resolute demand that a transaction tax, aka Tobin, be enacted immediately if not sooner. Today, about two weeks later, the same behemoths of European structural stability, Germany and France, hoping the general public has largely forgotten all that was said in mid-August, has come out with the generous announcement that... they will propose a financial transaction tax. It is unclear if sometime between the first proposal and today's, Merkozy dropped the demand for Tobin Taxation, in order for it to be priced in once again as an indication of the fiscal prudence of the European leaders. And if so, will the market respond like it did last time around and plunge by 5-10%?

Earlier today, German financial regulator Bafin roundly smacked down Christine Lagarde's Jackson Hole proposal to use the EFSF as a bank recapitalization vehicle (as we noted over the weekend, it already has its hands full with merely keeping Italy afloat). Now it is France's turn to be indignant:

• BANK OF FRANCE'S NOYER SAYS DOES NOT UNDERSTAND IMF LAGARDE'S RECENT CALL FOR EU BANK RECAPITALISATIONS
• BANK OF FRANCE'S NOYER SAYS MAYBE LAGARDE WAS BADLY INFORMED BY IMF STAFF ON BANK RECAPITALISATIONS
• BANK OF FRANCE'S NOYER SAYS SEES NO REASON TO WORRY ABOUT FRENCH BANKS
• BANK OF FRANCE'S NOYER SAYS SPECULATION ABOUT POSSIBLE FRENCH DEBT DOWNGRADE IS AN "ABSURD RUMOUR"
• BANK OF FRANCE'S NOYER SAYS CONSTITUTIONAL DEFICIT LIMIT WOULD BE COMMON SENSE

Kiss the free market goodbye. Spain's and France's regulator have both just announced that the short selling ban, which was supposed to expire tomorrow, has now been extended until the end of September 30, and November 11, respectively. Add to this Belgium and Greece whose regulators announced they will lift its own short selling ban "when conditions allow", or some time in October, in and we can pretty much be confident that the European market rout seen earlier is due to someone leaking the news that price discovery in Europe is now officially over.

As we predicted earlier, following the disappointing announcement out of the SNB overnight, now it is the Swiss government's turn to make it clear that nothing good will happen for USDCHF and EUCHF longs following a 9 sigma move higher in the past week. As a result, the EURCHF promptly took out another 200 pips in the past hour and tumbled as soon as Switzerland's Widmer-Schlumpf said that the Franc is a matter for the SNB, not a matter for politicians, and that it is up to the SNB to decide on the CHF target, throwing the ball of responsibility back in Philipp's court, and making sure that all the CHF pairs retest all time lows in the very near future. Because, just as eurobonds are the last ditch option for the eurozone, so a CHF peg is the last option for the SNB before ongoing pressures in the eurozone push the CHF to parity with the EUR, in the process bankrupting the CHF, and destroying the country's export sector.

Stop the presses. Barely did we have time to report that European regulators failed to impose a coordinated short selling ban, that Bloomberg reports that the countries most impact by the market plunge are about to impose standalone short-selling bans. These are Belgium, Italy, Spain and France. In other words, it really is on and the 2008 Lehman PTSD flashbacks may now resume. Until we get a headline that says it isn't. The rescue of the Borsa Italian is now more schizophrenic than that of Greece. As a reminder, in the previous post the FT quoted Abraham Lioui, a professor at the Edhec business school in France, who said “It is the worst thing to do right now. This would signal to the market there may be something fundamentally bad that is happening."  He is correct. Something is fundamentally very wrong and about to break.

Here is the next installment of the public evidence of a bank run in France. This is literally a carbon copy of Bear Stearns/Lehman Brothers, just on a larger scale. Listen to that sucking sound. It's the illustion of liquidity hitting the hard wall of reality! You heard it hear first.

The easy way out of turning to bigger, more solvent governments for bailouts has run its course.

So it begins, the unraveling of the great Pan-European Ponzi Scheme!

While the legal case against DSK in New York may be ending shortly, a new one, and possibly the first of many if the man's reputation as a womanizer is indeed valid, is about to be launched against him in France. From Reuters: French writer Tristane Banon will file a legal complaint on Tuesday over an alleged rape attempt by former IMF chief Dominique Strauss-Kahn in 2002, her lawyer told Reuters. David Koubbi, Banon's attorney, said the complaint would relate to an incident that took place when she went to interview Strauss-Kahn in an apartment in Paris. She was 22 at the time and has already publically discussed the incident. "Tristane Banon will file a complaint on Tuesday for attempted rape in Paris," Koubbi said." It is unclear if the case will be civil or criminal although considering statuse on limitations on these kinds of things for a criminal trial is hardly 9+ years, we are confident the weakest for of allegation against DSK will be filed. Of course, this is to be expected when one waits 9 years to actually lodge a complaint against something that should have been brough to the authorities' attention immediately.

As expected. Just sent out from Lagarde's twitter account: "The results are in: I am honored & delighted that the Board has entrusted me with the position of MD of the IMF!" Now can the symbolic IMF and its double symbolic head please step aside and leave the real bailouts to China, please?

There is a curious email floating around (allegedly sourced here), which is supposed to represent a communication from France's La Banque Postale to its clients, notifying that beginning August 1, 2011, the bank will lower the weekly ATM withdrawal limit by anywhere between 33% and 50%. In brief, according to the terms of the of the bank's statement, the top tier of credit card holders, the Visa Premier, will see their weekly withdrawal limit reduced from €3000 to €1,500, while the next two tiers, MasterCard and Bleue Visa, will see their weekly withdrawal allowance lowered from €1,500 to €1,000. Lastly, the lowest tier will see its cash withdrawal drop from €1,000 to €800. Naturally if confirmed, this would not be a good sign as pertains to the bank's current liquidity situation: traditionally cutting the withdrawal cap is an indication of a substantial cash on hand scarcity. We hope some of our French readers can confirm or deny this peculiar development out of a country that has so far rarely made the "financial woes" headlines.

Call it Eyjafjallajokull part two, or, more pronouncedly, Grimsvotn part one. Just like last year, when the unpronounceable Icelandic volcano erupted and covered Europe in ash, grounding flights for about a week, so the 2011 vintage of Icelandic pyroclastic goodyness, contrary to "expert" predictions, is about to cause widespread havoc within European air traffic control. According to Eurocontrol, The European Organisation for the Safety of Air Navigation, whose twitter account is about to become all the rage all over again, "By 08:00 CET #gromsvotn #ashcloud to cover Scotland." In other words, expect massive plane delays, outright cancellations and another round of completely unexpected losses for airline carriers.