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Game Theory Over: Bank Of France's Noyer Says Britain Should Be Downgraded, Not France
To anyone who doubted that the gloves are now fully off between France and Britain, we bring you exhibit A: Speaking in an interview with local newspaper Le Telegramme de Brest to be published later on Thursday, Bank of France head and ECB member Christian Noyer said that a downgrade of France's AAA credit rating would not be justified and ratings agencies are making decisions based more on politics than economics and questioned whether the use of ratings agencies to guide investors was still valid. "In the arguments they (ratings agencies) present, there are more political arguments than economic ones," said Noyer, the head of the Bank of France and a member of the ECB's governing council. "The downgrade does not appear to me to be justified when considering economic fundamentals," Noyer said. "Otherwise, they should start by downgrading Britain which has more deficits, as much debt, more inflation, less growth than us and where credit is slumping." The bolded sentence confirms two things: i) that the Nash equilibrium in Europe is now fatally broken, because when you have the head of one central bank doing all he can to throw another central bank under the bus, that's pretty much game (theory) over; and ii) when he said that "the agencies have become incomprehensible and irrational. They threaten even when states have taken strong and positive decisions. One could think that the use of agencies to guide investors is no longer valid." it proves that this amateur has no more understanding of basic finance than your generic Reuters blogger, both of whom apparently fail to comprehend that there are several hundred thousand bond and loan indentures in the real world, not the world of "S&P has no credibility so ignore it", which are loaded with covenants discussing springing liens, rating indexed interest levels and collateral thresholds, all of which are based on a sovereign and corporate rating, and all come into play in a completely unpredictable way (hint AIG - the reason why AIG imploded was because a rating agency downgrade unleashed a terminal margin call) when there is a rating downgrade. Such as that of France in a few hours to days top.
So, please, spare us: let us at least assume you are a bunch of finance hacks who have no idea what is going on when it comes to corporate credit ratings and keep your mouth shut, than open it, and prove us right. That goes double for members of the ECB who are apparently so blinded with chauvinistic rage that they have forgotten the most elementary things about modern corporate finance. Or perhaps, far morely likely, they never really knew it...
Which, incidentally, explains why we are all about to enter the latest and greatest global cataclysm (to borrow a word from Alain Juppe).
And lastly, if it is indeed Britain who ends up being downgraded, and suddenly every bond vigilante in the whole world comes sniffing and asking questions about those trillions and trillions of rehypothecated "assets" sloshing around within the terminally unregulated and abysmally lax framework of the isles, only to find just how shockingly deep the rabbit hole goes, who does France think will be nuked from financial orbit first?
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Or you know its one of those underground kinky finance porn flicks ...
Regards,
Cooter
Gentlemen, please watch your language! Seriously. You’re degrading ZH. Is that what you want?
There are occasions when it’s justified to use the ‘F’ of ‘C’ words. But the repetitious, tedious, unthinking use of ‘bad’ language that has taken over these posts does, after a while, lesson the impact of a really good ‘FUCK!” – when it totally is needed.
I’ve been reading ZH for a while but now tending to turn-off & scroll- over the boring, unintelligent use of expletives that is becoming the norm here. And that’s a shame, because there are some really bright people posting. Shame to see standards diminishing & more people falling into the same slack use of language. It’s really just a cop-out, the lazy man writing and hoping/assuming the reader is just as lazy.
BTW & FWIW, I’m ex- Navy, ex- Police and not a religious prude: seen, heard & done it all, and more. When I do go off, you have never heard such language, trust me.. But in regular conversation, whether on-line or in person, I try to use the appropriate adjective rather than an expletive, to make my point.
PS A zero response to this post would be the best response. At least take it on-board. But I expect the usual asinine & ‘witty’ replies. Go for it. Degrade ZH even more.
I was discussing my throbbing portfolio earlier...
lol
http://www.youtube.com/watch?v=26UA578yQ5g&feature=results_main&playnext=1&list=PLC17EDB8CF935D37E
Are they going to do the English siege of the French castle scene from "Monty Python and the Holy Grail"?
http://georgesblogforum.wordpress.com/2011/11/02/the-daily-climb-2/
France: "They did it too!"
**Announcer's reverb** Bold or Stupid? You Decide. **reverb off**
"But, but, zese Anglo people, zey hate us. Zis is an Anglo conspiracy."
Now you know what English speaking Canada has had to put up with for so long.
Noyer, face facts:
- English is THE international language of commerce, not French!
- The Eurozone is going down!
France has been weighed, measured and found wanting. On which planet did you think S&P would downgrade the UK before France?
Hey if you junked me and you're from Quebec, stick this in your pipe and smoke it!
http://www.thestar.com/news/canada/article/782673--quebec-a-poor-little-rich-province
"Its [Quebec's] debt is at 94 per cent of its gross domestic product, just ahead of Japan, Italy and Greece, whose debts exceed their GDP, according to numbers calculated by the provincial finance ministry."
http://business.financialpost.com/2011/11/24/economists-warn-quebec-needs-to-act-on-debt-quicker/
I junked you.I'm from USA,not quebec.Lived in ontario long enough to know how you loove quenie and all things Brit.
Sure, you're entitled to your opinion.
Don't really love "queenie and all things Brit", but am fed up of the incessant whining of the French because no one wants to buy their "vision" of the world/EU. They refuse to admit that they were at least as bad as or worse than the Brits when it came to treating people in their colonies. They have to be among the worst hypocrites on the planet!
And I'm tired of subsidising Quebec (QC). The introduction of their stupid Bill 101 in the 70s establishing French as the official language of QC led to Montreal losing top spot to Toronto as far as business went. And now we have to bail them out on a yearly basis? They take CAD 8 bn from the rest of Canada every year, but whine and moan about how French is not given "proper" status.
I applaud the following statement from the Alberta Finance Minister:
"After Alberta's finance minister, Ted Morton, delivered a deficit budget last month, he vowed to visit university campuses and tell students, "You and your parents are spending a bunch of money to help Quebec, and they're paying half the tuition you are."
http://www.thestar.com/news/canada/article/782673--quebec-a-poor-little-rich-province
The worst part - good talent from Western Canada is not considered for government positions. Why? Because they aren't French speakers. The irony is that most affairs in government is conducted in English. But we need to have bilingual people, so that we can pacify QC. So they take the money but don't allow Western Canadians to enjoy the benefits.
QC has to face it - they're either part of Canada or not. And that means accepting that Canada has two official languages - English and French. Ask Anglos in QC how they feel about their treatment.
And if you think I'm angry, ask people in Newfoundland and Labrador what they think about the electricity distribution from the Churchill Falls project. It won't be pretty.
Sorry about the QC rant, but I hope now some understand why people in Canada have massive issues with QC. I guess it explains why I understand the Germans' anger towards Greece. In a way, what Merkel is doing is right - about time Greece and Italy got its shit together.
Noyer is a disgrace. The French banks used every dirty tactic to avoid raising enough capital (see article below)
http://online.wsj.com/article/SB1000142405297020448530457664156154026649...
Difficult to feel any sympathy.
The Uk should be downgraded hey? Of course it should. But it is not on the hook for bailing out the PIIGS. Both France and Germany should be downgraded, and will be. In addition it has exactly the same malaise that saw S&P downgrade the US ie policy incompetence.
Game theory still works.
The payouts have changed. Thus, the Nash equilibrium is changing, too.
Fuck the British, i say.
Thumbs up for France and Sarkozy telling to Brits to fuck off and mind their own business.
Downgrading France?!
Britain has by far the biggest debt to GDP ratio in the world, it's only because of their American friends who control
rating agencies that they are not rated pure junk.
Max Keiser said it best when he commented on UK and Cameron: " Just go back to your little island country and shut up"
You clearly do not read Tyler Durden's comments much. Not long ago he said Britain should be downgraded but that would be to start with the last domino instead of doing it in order. By all means downgrade Britain but what does that mean for French Banks ? The Insolvent Gallic Credit Machine which has blown up Greece, Spain and Italy not to mention much of Central Europe. The fact that Mme Lagarde was the one begging Hank Paulson to rescue AIG to save the French Banks from Armageddon rarely gets mentioned, but the true bankruptcy of France should be recognised - as they used to say TIME FOR ANOTHER REPUBLIC - would that be The Sixth ?
lol, touché, the sixth will be run like the fifth, with the ENA mandarins playing their eternal stupid games. In a command economy contolling 50% of GDP, NOBODY and I mean NOBODY knows how to calculate the true COST price of each and every state sector transaction. Whether its health, pensions, infrastrucuture investment, rails, planes, nuclear; whatever, and what the cost effectivenes of that is compared to similar services provided in the private sector. Its layers upon layers of bureaucracy, and all comparative advantage is obtained not by encouraging productive efficiency; as that would cut back on the bureaucracy jobs, (they do vote all six million of them); and better return on government investment but TAX CUTS. So you cheat on what it really costs and then you cheat again on its effectiveness by giving it special tax status so that its inefficiency gets hidden under the tax carpet. Problem solved! The french banks have grown, to stay at par with anglo saxon banking, on balance sheets expanded hugely since ten years in the context of globalisation, without any equity. As de Gaulle so aptly said in defense of his vision of the fifth republic : Our financial policy is not defined by the Bourse but by the Ministry of Finance! So for thirty years these banks grew with state patronage of their protected Oligarchical status, fostered and led by the same Mandarins who ran government, with their activity centered on home market, protected in those times. Then came Reaganomics and globalization. SOmebody forgot to tell them that the international market, where they now grew, was not like the home market; totally regulated to their advantage. Voila, now they are running like LAdy MAcbeth, shouting "out, out, damned spot!"
Having said that their sins appear Relatively minor, (I may be wrong), in comparaison with the PONZI of Anglosaxon financial sector, if you include the shadow banking shenanigans. (I am assuming the shit pile of synthetics, if it implodes, will hurt the US banks beyond the OFFICIAL debt as it appears on their current BS, estimated at 40% GDP compared to 300% for France). The French banks are now inextricable part of world finance and their imminent demise will bring the whole caboodle to rock bottom. In the UK, if the city collapses, there is NO alternative source of national wealth. Alas, it can be said the same of current USA, where WS financials dominate GDP ominously, and which benefits from additional advantage of reserve currency status; exorbitant privilege, will it last forever??
As that famous punch line in Visconti's The Leopard movie said it : Everything must change so that nothing changes.
Vive la sixth republic!
To come back to the gist of the Article and Noyer : War between UK City interests and Euro group was declared by Cameron in the recent Brussels summit. Noyer is now officially recognising this and using sniper tactics to "start psychological war" in media circles with these S&P shills; as with the City. Sorry, I know they, the notationals, are powerful as TD points out, but they are WS/GS surogates; docile servants to the hand behind the curtain who pays their bills. It will get ugly no doubt about it, the Euro Oligarchs now openly hostile to CIty shenanigans, perceived by them as creaming the EU sovereigns. When "theives fall out" is the song I will forever sing; I don't take sides between Oligarchs on rampage. Nobody at ZH can pretend there is a moral heirarchy of who is more corrupt and guilty in this whole shooting match. Its the broken, manipulated market that will decide which domino falls first. The rest will be what will be...But we know where it started and who is top dog in this show : Its WS and DC. The buck eventually goes back there. Pax Americana bitchez!
What about a Third Kingdom?
After 3 republics in a row ... maybe it's time for a real change??
Best analysis I've heard for a very long time.
You should start a blog (and post the details here), if you haven't already.
I like writing novels; its more time consuming and enjoyable. It means delving deeper than blogging.
--duplicate deleted--
+1 on insight to the command economy. Are you French?
This said, l'ENA and the écoles produce serious talent. I wounldn't say the French have anything to be taught about financial derivatives for example.
What one has to realise of the French is that it is a meritocratic but sollipsistic culture. The unwritten contract is this: the talented 10% produce
and the 90% enjoy their 2 hour meals, drink their wine and celebrate them. It's like the Tour de France: you can try to break from the peloton,
but if you are mediocre its inertia will drag you back with a vengeance. At the upper echelons, it's a lot more competitive than Americans suspect.
"l'ENA and the écoles produce serious talent."
Correction - the ecoles may produce serious talent, but NOT ENA! Many French people feel that ENA has led France into this mess that they are in.
I see ENA as equivalent to Harvard Business School - perceived to have a strong reputation, but its products are utter failures.
Since the Revolution its been a closed club. In fact, it goes back to Philip Augustus and MAgna Carta days; the french chose centralised absolutism then. And they have not changed. When the Borgias, the Orsinis and the Medicis destroyed the Papal church by their infighting, they created the ersatz of the nation state right there in the Papal palace. Machiavelli saw it and brilliantly predicted, in The Prince, the rise of the NAtion state built on that model; where, as God had died, the nation state (Dieu Etat) would replace Him. Kings would be as ruthless as the Borgias, as given word meant nothing, à la Césaré Borgia.
Charles V of Spain learnt his lesson incorporating in his kingdom the church institutionalised as the spanish Inquistion. They didn't need the Pope anymore. But it was the French after their religious wars, and Henry IV, who cut and pasted the Borgia heritage into Absolutist France, making french monarch Pope of temporal world without any counter power. Two cardinals in red built that nation state for Le Roi Soleil, his grand-son. After its decadence, as absolute power corrupts, after Danton, then Robespierre who spoilt it all, Bonaparte resurrected the Absolutist state and built the Mandarin class meritocracy. De Gaulle did the same with fifth republic. So there is a continuity in this absolutist belief, where Montesquieu's heritage has ALWAYS been neglected. No separation of powers, no intellecual heretic to challenge the king. Absolute tragedy for a nation, as hubris then runs the country. Seemless and efficient government like under the Ottomans, without a soul, a critical head, as all devoted to Dieu- Etat, symbolised by elected monarch; today Sarkozy. Where is the necessary will to challenge the ONE TRACK minded construct, thus exercise Voltaire's and Montesquieu's legacy? There isn't!
The State is God and its work is done by the meritocracy unchallenged. However talented they be, the fact that nobody questions them makes them so corrupt, they don't know what corruption means. They think they are doing God's, MArianne's work, and should never be questioned. Like the white Friars of the Inquistion. I am sure Bernard Gui thought he was doing God's work....Ask Bernard Delicieux, and you'll know he, Bernard Gui, was the scum of the earth. Ask Abelard and you will find the same reply; Blind certainty of Bernard of Clairvaux who declared " we can't lose on Crusade" was the greatest recurrent disaster that the French faced, as epitomised by Saint Louis himself; at Mansourah and then at Tunis. It's an old story this, as during the hundred years war when the English would shoot the horses from under these powerfully armoured knights, with their long bows; fighting clever, fighting ugly. When the LOgic of Power makes you certain of your own bigotry/veracity/superiority, and you forget the essence of western man's reasoning : DOUBT.
The French meritocracy never doubt their decisions, as in Bernard de Clairvaux's time. More fool them. The Brits learnt from MAgna Carta to share power with nobility, then in Parliament with people. They fought their wars badly, like strung together by shoe laces; stodgy and stubborn like, they won ugly; the french Crusaders and the Hussars of NApoleon fought brilliantly. But they lost because they always believed they were unbeatable. Hubris is a deadly sin. Even for those brilliant ENA bureaucrats. They run those french banks....I rest my case. France needs centralised governance to fulfill its motto : liberte, egalite etc. but more open market oriented innovation; as civil liberties, creativity of its population are so under-utilised, and less brilliant navel gazing by its bureaucrats. Voltaire and Montesquieu are France's greatest heritage. Along with Alexandre Dumas, Victor Hugo, Bordeaux and Burgundy and a bunch of cheeses.
I'd also include the following as part of the great French heritage:
Descartes
Poisson
Curie
Laplace
Poincare
Pasteur
Camus
TGV
Concorde
I will give the French credit where credit is due. However I'm also fed up of their whiny BS.
I like much that guy, Max KEISER, he speaks pretty frank and he does have the gut to point his fingers to the right direction. Btw he occasionally appears in RT.
the revolution is begining.
http://news.yahoo.com/blogs/sideshow/armed-gang-steals-millions-dubai-royal-family-143315536.html
"The downgrade does not appear to me to be justified when considering economic fundamentals," Noyer said. "Otherwise, they should start by downgrading Britain which has more deficits, as much debt, more inflation, less growth than us and where credit is slumping."
But as Noyer knows very well, unlike Banque de France, the BoE can print money...
And whatever he says won't change that. So this isn't throwing anyone under any bus - more likely it's standing shoulder to shoulder with his political masters to put pressure on the UK to play the Euro(pean) game.
"But as Noyer knows very well, unlike Banque de France, the BoE can print money..." and that's why the UK has higher inflation.
Yep - and why the pound weakened more, earlier than the euro. The UK got it's competitive devaluation in first... Arguably the one piece of 'smart' monetary policy the BoE has pulled off since independence - if the definition of smartness exludes grinding savers and pension funds into dirt.
France is now run by a German Head, A Hungarian jew and his Italian wife
Frenchmen & women have met their Waterloo
Them sounds like duelin' words to me Frenchie!
Uhh, hello? Downgrades?
Japan, anyone?
We've spent the best part of the last 1000 years annoying the French. Why changethe habit of a lifetime?
In effect, they hate anything Anglo Saxon, and that includes you pesky Yanks as well.
We got it right, we just generally piss them off all the time. Great sport in the power corridors of Westminster.
good book, "1000 years annoying the French", I really enjoyed it
"hate anything Anglo Saxon" is a bit harsch, be "annoyed" is more on the target, methinks
careful with Anglo Saxon, by the way, it has racial connotations nowadays and get's easily misunderstood in the US - use Anglophone for clarity...
True, many french mistrust the Yanks, but also fall in love with weird bits of it's culture like Harley Davidsons, line-dancing, revolving credit, property bubbles, massive bank deposit leverage, etc., etc.
While we still see the ratings agencies downgrades as important in North America, they might not have much meaning in Europe. If the S&P really were to downgrade European based banking, then for absolutely certain this is a reflection of assets more to do with the U.S. banking system.
Certainly ratings agencies carry more weight in the UK. So these comments are not without any merit. I would call this a mis-quote, to be straightened out later. Anxiously misquoting the French is a strange habit of the English culture.
We're still awaiting the next MF Global to hit, and we probably saw the collapse of gold futures trades with the latest decline in the gold price.
French whining aside, Britain should be downgraded since Britain's banks are the most indebted in the world, holding over 1000x GDP according to some credible and independent sources. As we know, official sources are not to be believed and it should surprise no one since the City of London is the first port of fraud; Lehman's, MF Global, ext, ext. It all comes through here.
True dat. When confidence in the UK banks vapourizes, the capitalist debt-game is over.
Socialist mentality. But look at UK's total debt to GDP. It blows the others away, particulary on the banking side,
http://confoundedinterest.wordpress.com
5 year old 1: You shut up.
5 year old 2: No, you shut up.
5 year old 1: No, you shut up!
5 year old 2: I'm rubber you're glue everything you say bounces off me and sticks to you.
Do these people play this game to give relevance to the rating agencies or something?
All countries will lose their AAA ratings eventually. The only interesting thing will be see who is first to regain it.
The phrase "Garlic eating surrender monkey..." comes to mind ......
So Pepe Le Peux syas on one hand Ratings Agencies make political snd not economic decisions (true), and on the other that the UK should be downgraded because they are nasty, smelly Anglos whose "mothers are hamsters and fathers smell of elderberries". Nice one!
The rating agencies dare not to touch the Britain coz it hosts The City of London, the Twin Babel Towers of financiers together with NY City. One should ask who own those rating agencies?
That two centers should be plotted to be the last standing entities amidst any tsunami. The two last imperiums which rig the entire mankind down to the holes of hell!