This page has been archived and commenting is disabled.
French CEO About Ratings Agencies: ‘We Have To Shoot All These Guys’
Wolf Richter www.testosteronepit.com
"We’re experiencing the beginning of the repercussions of the financial crisis,” said Michel-Edouard Leclerc on Wednesday during an interview on Europe 1, France’s largest radio network. He is the CEO of the second largest retailer in France, E. Leclerc, a privately owned cooperative association with 555 stores—mostly hypermarkets—in France and 117 stores in other countries.
Sounding like a CEO one minute and like a populist presidential candidate the next, he emphasized that his company has done relatively well in 2011, sales being up 5%. Strategy: offer deals and cut prices. The whole industry, he said, “ate up inflation” with their margins, but his stores were particularly aggressive as shoppers have become less spontaneous and much more concerned about price. In his 30 years in the industry, he has never seen so much “rational behavior among consumers” and so much “fear of getting screwed.”
Until now, the financial crisis of 2008 has touched mostly the financial world, he said, but in 2012, it would impact the real economy. “I’m very worried,” he said. All the "stupidities" going on before the financial crisis, the speculative building bubble in the suburbs of Madrid or in Florida, or the "Madoffs" all over the place, there was so much waste, but... “It’s always the people who end up paying.”
How? “Higher VAT, higher taxes on drinks, on garbage collection, all that will go up. And then there is inflation. This year, we haven't seen too much of it, but it’s still about 3%.” Yet salary increases haven’t kept up with it, so it hit household purchasing power.
“Inflation in 2012 is arriving ominously,” he said. “Suppliers, who couldn't pass on their price increases because we opposed them, are coming back to us” and demand higher prices because their costs have gone up, in some cases by 20%.
“Companies have been bled dry,” he said. “Banks are making them pay more for their loans. Price pressures have built up in the supply chain. And everybody will try to unload price increases on the French.” The loss of purchasing power would be a major threat in 2012 and could push consumer spending into a recession, he said.
And what would he tell the next government after the election in May? “Stop listening to this financial world, these ratings agencies.” The government has to keep control of its strategy, he said. “According to the ratings agencies, it would be necessary to put France on a diet. But if there is no growth, we'll never be able to pay back our debt.”
“We have to shoot all these guys that come to give us lessons,” he said. “I believe that’s the real combat of our society. We, the actors in the real economy, must regroup so that we won’t be eaten up by these guys.”
"It wasn't the Italians that threw out Berlusconi, it was the ratings agencies. That's not normal. And it's not normal either that Monti was ‘non-elected’ by the ratings agencies. We have to master our own destiny once again. That’s the job of all of us.”
On the other side of the Rhine, the solution to the crisis is focused on reducing debt and repairing budgets—the dictate of M. Leclerc’s beloved ratings agencies. Amidst these tensions, Beatrice Weder di Mauro, member of Germany’s Sachverständigenrat—a council of economic experts for the government—was asked if the euro would break apart in 2012. "That would be bad for all involved,” she said, “but it cannot be excluded."
Oops. And in Germany, companies are getting ready for the end of the euro. Theoretical exercises for a hypothetical scenario, they call it. The latest was Herbert Hainer, CEO of Adidas, second largest sportswear maker in the world. Adidas, he said, “will be prepared to go back to local currencies if necessary." But now the public is told to prepare for the demise of the euro, too.... When the Previously Unthinkable Becomes a Planned Event.
Belgium is already teetering. To bail out its banks, it guaranteed €138 billion in debt—35% of its GDP! For that whole debacle, and why finally someone is getting sued, read.... CEO of Dexia: ‘Not A Bank But A Hedge Fund’.
»
- advertisements -
Yep, that's why Americans, by and large, loved the tech bubble until it came crashing down. Same for the housing bubble, no one disliked the banks when they were getting to partake in the spoils.
Be careful what you wish for you French Cunt!
Get real, Sewer Mouth. The dude is just trying to run a retail chain. He has no control over input costs beyond threatening to find a different supplier. Fuel and transportations costs: He has no leverage.
Wages and payroll costs: No leverage, the French govt mandates everything.
Utilities, insurance, building costs...no control. And if he raises prices, his customers will go to the grocery in the next arrondissement.
There is Finance and then there is French Finance.
He may want to think about the shooting comment as others may think he'd be a good target.
Isn't having the value of the euro..."torpedoed"...for lack of a better term...what the PTB of Europe really want? I mean don't bother saying yes cuz I know all you euro-philes will SAY no...so instead just "nod and hum" cuz I know all of you agree with me. Obvioisly this version of "yes" as enormous implications for the price of gold (falling.) It has had equally enormous implications for the cost of PUBLIC credit. (collapsing!) my take based on this article is this: first off never believe a Frenchman when he complains about inflation cuz unlike you or me "he has France"'and all he is complaining about is "that thing he really wants he can't afford" and not "he's being bled dry" as is claimed here. Second "to the Victor goes the spoils"--and that I think is the crux of the concern over "the euro"'once you cut through the crap as they say. Namely the USA insofar as Europe is concerned truly has "come, seen and conquered." I'm still trying to digest the PRIVATE sector implications...prima facie it should be catastrophic since Europe to me is THE destination for final demand--and now it is obvious that for the forseeable future this will not be. Instead the impact of an imploding EU has basically been negligible. Extraordinary if you actually think about it. Anywho just some thoughts going into..a New Year indeed.
from the indications so far, greece, italy, spain, etc., the cost of public credit for the more indebted (ex)members of the eurozone is likely to go up even as the value of their (new/old) currency falls, at least initially.
it's not really the ratings agencies' faults, imo, when they downgrade increasingly risky debt (unlike their role prior to and during, say, 2008). more the too big to fail banks and the pathetic "sovereigns" (u.s. included) that ran up such astronomical debt, at all levels (including corporations and individuals) during what certainly now looks like the prosperous times, leaving little reserve for the time of famine.
we are left with the contradiction of keynes on his head: achieving debt relief through fiscal austerity during a deflationary depression while central banks attempt to ameliorate by monetary expansion. i'm guessing stagflation with a vengeance (and lots of defaults eventually) with gold/interest rates up. the u.s. treasury's rates may be among the last to rise but rise they will. at the long end we are a lot closer to the bottom of the historical range (2-3%) than the top (16%). short end too (modestly negative to 20%).