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Egan Jones Downgrades France From AA- To A; Negative Watch, Sees Debt/GDP Rising From 91% to 117% By 2013

Tyler Durden's picture


Only the first of many French downgrades, this time by the rating agency which is always ahead of the pack. And like in Italy's case, EJ sees a soaring French debt/GDP, rising to 117% in 2013 from 91% currently.

Summary note:

Disastrous trend and the worst has yet to come. Over the past two fiscal years, the Republic of France's debt has grown by 21% from EUR1.32 trillion to EUR1.59 trillion. Meanwhile, FYE GDP declined slightly from EUR2.13 trillion as of 2008 to EUR1.93 trillion as of 2010. As a result, debt to GDP rose from 61.8% in 2008 to 82.5% in 2010 and is near 90% currently. As the EU growth slows, and France's unemployment rises, budget pressures will rise. An item which is hard to quantify but is a growing concern is the health of France's banks; the assets of the three largest banks equal 240% of France's GDP. Given France's propensity for supporting its banks, France might soon be confronting a substantial additional liability.


For the most part, over the past 18 months France has been exempted from the rise in funding costs. However, as the crisis evolves, we expect that France will be pressured. The deterioration in France's credit metrics combined with the needed supported for France's banks are likely to pressure the country. A major catalyst is likely to be the year end financials for France's banks; watch for a significant support program to be announced over the next couple of weeks.

Full note - link


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Wed, 11/30/2011 - 15:12 | 1931652 Stagflationary
Stagflationary's picture

Ahead of the pack? Can you please show me their track record and how they've been better at predicting default probabilities or changes in spreads? From all I've seen so far they just seem like the rating agency of TTP. 

Wed, 11/30/2011 - 16:16 | 1932007 SokPOTUS
SokPOTUS's picture

Egan-Jones is the shit. 

Wed, 11/30/2011 - 17:38 | 1932569 Stagflationary
Stagflationary's picture

Making an incorrect decision faster than others doesn't make you better. 

Wed, 11/30/2011 - 15:13 | 1931653 Hungry For Knowledge
Hungry For Knowledge's picture

snails, bitchez!

Wed, 11/30/2011 - 15:21 | 1931714 dtwn
dtwn's picture

next to the towels and waffle makers.  Black friday 2012!

Wed, 11/30/2011 - 15:13 | 1931654 c'mon man
c'mon man's picture

TD - Did you hear Pisani's comments about Egan Jones on this??

Wed, 11/30/2011 - 19:12 | 1932990 knukles
knukles's picture

Vive la FrAA-nce.
Er, FrAnce

Soon to be FraBBBance (Rhymes with Provance)

Or FraCance (Rhymes with NoChance)

I mean, this shit is really getting to be an awfully expensive runt of humor for the Europeans.  Particularly once they're all rated Below BBB thus truly becoming EuroTrash.

Wed, 11/30/2011 - 15:13 | 1931657 Comay Mierda
Comay Mierda's picture


Wed, 11/30/2011 - 15:14 | 1931659 Robot Traders Mom
Robot Traders Mom's picture

How can you tell a Frenchman has been in your backyard?

Your garbage cans are empty and your dog is pregnant.


-Chris Chambers, brother of 'Eyeball'

Wed, 11/30/2011 - 16:31 | 1932101 Hippocratic Oaf
Hippocratic Oaf's picture

From FrAAnce to FrAnce. 

Now how 'bout FranCCCe?

Wed, 11/30/2011 - 15:15 | 1931666 RobotTrader
RobotTrader's picture


So far, having no impact


Cyclical stocks like X shucking it off,  up 12% today.

Retail stocks like HD and WMT near 52-week highs

New world record highs on PM and MO.

XRT within a few dollars of all - time highs.

Where's the "bear market"?

I don't see it.

Wed, 11/30/2011 - 15:18 | 1931697 Johnny Yuma
Johnny Yuma's picture

Yeah, those stocks constitute the overall market sentiment, lol!!! Never mind that the global central banks had to conduct a coordinated effort to make another stick save. 

Wed, 11/30/2011 - 15:20 | 1931706 Tsar Pointless
Tsar Pointless's picture

The "bear market" is in the same place as is the depression/recession.

In my house.

If everything is so damn great, RoboTrader, then why am I and nearly 3,000 other employees at my company set to be dismissed within the next month or so?

Until and unless the S&P gets over 1240, I'm seeing this up move as a rally within a downtrend wave.

If it doesn't, my next price target is 862. By next Friday.

Wed, 11/30/2011 - 15:58 | 1931896 distopiandreamboy
distopiandreamboy's picture

I can hear the margin calls already! Really, 862? I guess time will tell

Wed, 11/30/2011 - 16:24 | 1932055 centerline
centerline's picture

Sorry to hear about the impending layoffs. Eventually the dominant real-world trend (deflation) will crash over us like tsunami. Doesn't matter what the monetary trend is really - except in how one hedges against reality.

Wed, 11/30/2011 - 16:40 | 1932155 fuu
fuu's picture

Don't look at the chart.

Wed, 11/30/2011 - 15:24 | 1931728 somethingisrotten
somethingisrotten's picture

MoMo Lizard, how do you like the bull market in NFLX, FSLR, GRPN, all banks, etc ?????????

You dumb fk.

Wed, 11/30/2011 - 15:26 | 1931746 CvlDobd
CvlDobd's picture

Uh XRT is underperforming and the recession is in X.

It's only down 60% YTD. How the fuck is that bullish?

Wed, 11/30/2011 - 15:38 | 1931801 SheepDog-One
SheepDog-One's picture

RoboTarder only looks at 5 minute charts!

Wed, 11/30/2011 - 16:05 | 1931937 homersimpson
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I highly doubt he can pay attention to a stock chart that long, let alone remember his stock picks for that length of time.

Wed, 11/30/2011 - 16:15 | 1931999 SokPOTUS
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It all tastes better if you put a little "Tarder Sauce" on it.

Wed, 11/30/2011 - 15:42 | 1931813 KenShabby
KenShabby's picture

"I don't see it."

That's what happens when your head is stuck firmly up some banker's ass.

Wed, 11/30/2011 - 15:43 | 1931817 fuu
fuu's picture

It's like 2009, again.

Wed, 11/30/2011 - 15:55 | 1931860 The Fonz
The Fonz's picture

Robo is right about this. The market cares nothing for this downgrade (currently), not even a twitch, on a day so massively up that it should be easy to tick off a few points.

 I just got through being hammered stupidly discounting mondays movement upward, thinking there was no reason for it do so. I will not make that mistake moments after learning the lesson.  If the markets moved up without reason due to leaked info, then it can fail to go down based upon leaked info as well. This was already known. If that is the case then there may be a very strong arguement for the market to continue upward. If I knew of this downgrade coming and remained bullish I would  have ruled out the negative consequences that it will imply as a follow on. Could this lack of a reaction imply the plan to deal with the euro is further along than we know, and that it is a bullish outcome?

Wed, 11/30/2011 - 16:14 | 1931992 ActionFive
ActionFive's picture

What part of 100% to GDP with low interest rates even suggests paper "markets" should be traded as real?

Wed, 11/30/2011 - 15:15 | 1931668 Irish66
Irish66's picture

margin call again?  every downgrade has consequence

Wed, 11/30/2011 - 15:15 | 1931674 rambler6421
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I bet the MSM guys will start ripping Egan Jones again.

Wed, 11/30/2011 - 15:17 | 1931692 c'mon man
c'mon man's picture

Right on cue...Pisani just discounted Egan Jones entirely and said to only pay attention to the Big (corrupt)  3

Wed, 11/30/2011 - 15:25 | 1931736 dtwn
dtwn's picture

haters gonna hate.  hate the game.  not the player.

Wed, 11/30/2011 - 15:54 | 1931871 bbq on whitehou...
bbq on whitehouse lawn's picture

Its the Players that make the game.

Thu, 12/01/2011 - 00:08 | 1933839 ItsEvolutionBaby
ItsEvolutionBaby's picture

haters gona hate
potatoes gona potate 

Wed, 11/30/2011 - 15:16 | 1931682 common_sense
common_sense's picture

Downgrade everything bitchez!!  'cause everything is very large shit !!


New year, new FED "PROMISE" QE...HO HO HO HO HO...

Wed, 11/30/2011 - 15:18 | 1931699 vegas
vegas's picture

So what? The HFT's will buy everything in tandem and ES 1500 by 12/31. Since GS isn't long, it could happen. Stolper, please make an equity call!

Wed, 11/30/2011 - 15:19 | 1931702 YesWeKahn
YesWeKahn's picture

Bernanke will bail them out

Wed, 11/30/2011 - 15:21 | 1931710 Mike2756
Mike2756's picture

That's what i wondered, will this accelerate the dumping of EU zone debt?

Wed, 11/30/2011 - 15:23 | 1931722 hugovanderbubble
hugovanderbubble's picture

Next Country to lose AAA






Wed, 11/30/2011 - 15:24 | 1931725 Peter K
Peter K's picture

And the Germans will have to raise the French farm subsidy under the CAP. Always good for a few FrF in the national kitty:)

Wed, 11/30/2011 - 15:24 | 1931730 Snakeeyes
Snakeeyes's picture

We can't save Europe from overspending and too much debt. Look at Italian Industrial Production for a snapshot from why none of this will work.

Global Central Banks “Last Tango in Paris” – “Fire up the printing presses, gang!” Or at Least Lower Swaps Rates 1/2%

Wed, 11/30/2011 - 15:30 | 1931764 darteaus
darteaus's picture

It's going to be higher than 117% because the GDP is going to shrink by more than they are willing to publicize right now.

Wed, 11/30/2011 - 15:34 | 1931778 Meremortal
Meremortal's picture

Hey all, newbie here. Been lurking for a while. I wonder how bull and bear even applies these days. Got lucky and got out of TZA a few days ago with a small profit. Whew. Still sitting on a Small SDS position that's in the red due to today. France downgraded and DOW up 386. OKayyy. This latest coordinated money toss says we're ALL in trouble, doesn't it? Rock on, players.

Wed, 11/30/2011 - 15:40 | 1931800 Everybodys All ...
Everybodys All American's picture

This is a Federal Reserve rally that has no correlation to the economy. That said the rally is risk on in price of virtually everything and yet sadly no real conviction yet in volume. This is an inflation rally for sure as well. Inflation might be good to erase debt but it sure will not be an economic solution.

The desparation of the central banks move today will eventually expose who was rescued by today's events as well. Enjoy today though and yes this is a bear market rally and yes it is quite normal for a bear market to rally even this hard. Caution your enthusiasm.

Wed, 11/30/2011 - 15:41 | 1931811 falak pema
falak pema's picture

Hey citizens of USA, just have a look in the mirror. Not that I don't approve your trend to Euro Bashing. Its necesary and salutary. As long as there is a sense of balance. Both the USA and Euroland are guilty as hell in this fake economy.

Wed, 11/30/2011 - 20:58 | 1933327 Hulk
Hulk's picture

We must be related somehow...

Wed, 11/30/2011 - 15:52 | 1931855 RobotTrader
RobotTrader's picture

Lots of anger here.


I can understand why most here are pissed off.

They keep shorting stocks and getting the rug pulled out from under them.

Everyone here trying to get rich off of Armageddon that never happens.

"Gold bitchez!"

"TZA bitchez!"

"FAZ bitchez!"

"This is It!!"

Hey, its not too late to change your attitude, learn to enjoy life, and quit worrying about the end of the world.


Wed, 11/30/2011 - 15:55 | 1931881 bbq on whitehou...
bbq on whitehouse lawn's picture

Do you think gold has been a poor investment choice?

Wed, 11/30/2011 - 16:07 | 1931950 homersimpson
homersimpson's picture

You'd probably see less anger if we all knew these stock runups weren't fueled by US taxpayer dollars..

Wed, 11/30/2011 - 17:31 | 1932507 foxenburg
foxenburg's picture

Droll but quite correct. Thus far, at least. There was a Jim Cramer clip a few weeks ago in which he laughed at all the intellectual assessments that everything was about to tank. He said something like We're here to make money, not to be a smarty pants. 

Wed, 11/30/2011 - 15:55 | 1931876 english serf
english serf's picture

Who gives a fuck about the french? As homer said - cheese eating surrender monkeys

Wed, 11/30/2011 - 15:57 | 1931891 Dick Darlington
Dick Darlington's picture

11-30 14:48: IMF's Lagarde says we have to find an urgent resolution to...


In other words: They got NOTHING!

Wed, 11/30/2011 - 16:02 | 1931916 GeneMarchbanks
GeneMarchbanks's picture

Was it ever in doubt? It only gets worse from here...

Wed, 11/30/2011 - 16:05 | 1931930 Dick Darlington
Dick Darlington's picture

Nope. It's just sad to listen to the endless lies. I say let it burn!

Wed, 11/30/2011 - 15:59 | 1931903 junkyardjack
junkyardjack's picture

Does this explain the emergency liquidity fund?  S&P to downgrade shortly?

Wed, 11/30/2011 - 16:03 | 1931921 UK debt marsh
UK debt marsh's picture

But they've got wine and cheese and cognac, and women who know how to dress well, and ski resorts and St Tropez, and TGVs, and champagne....and and 

Egan-Jones is a jealous puritan.

Okay, so they haven't balanced a budget since 1974.......but I still wouldn't go hiring Egan-Jones' yacht.

Wed, 11/30/2011 - 16:12 | 1931958 bbq on whitehou...
bbq on whitehouse lawn's picture

OT. If you take out life insureance and buy a 20' sailboat and sail to Africa to live with the mountain apes, does the insureance pay off?

Its a thought maybe liveing in a cave for 50 years is a wize life style choice. And to see your funeral on youtube has to be a plus.

Would sailing to Africa in a 20' boat be considerd suicide?

I would look further into it but that would raise questions.


France is long over do for a downgrade. S%P should follow in 6 months.


Wed, 11/30/2011 - 16:20 | 1932026 Bam_Man
Bam_Man's picture

Sailing to Africa from where on a 20-foot boat?

From Gibraltar, it's a piece of cake.

From East Coast of the US, probably suicide unless your boat is at least a 33 footer.

Wed, 11/30/2011 - 16:15 | 1932004 TooRichtoCare
TooRichtoCare's picture

Dude...Egan Jones and all the rest of these twits are soooooooo last century.

The fact that these people, perpetually behind the 8-ball and perpetually late to the party are just NOW downgrading all the disastrous entities that we've all known about for so long is a joke. If anything, this is a sign that the bottom is in.  Everything they're saying has already been long long long ago priced in. They are the best reverse indicator ever, going back over the last 20 years. Seriously...maybe display a chart of it if you can get one, with all their various pronouncements, how much the downgraded stock had already sold off pre-downgrade, and where it traded subsequently.

Wed, 11/30/2011 - 16:34 | 1932114 Georgesblog
Georgesblog's picture

That was a quick ice - breaker. Now, we can watch the fur fly, when S & P, Noody's jump on the train wreck. The week was starting to quiet down. Watch for what the UK and the Fed respond with.  This could turn into crack whores on parade.

Wed, 11/30/2011 - 16:56 | 1932257 lolmao500
lolmao500's picture

Or you know, the FN could be elected and France could leave the Eurozone...

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