Amusing Froggie Nonsense

French policymakers were angered last week when Standard and Poor’s, a ratings agency, threatened to downgrade eurozone nations — including France — if leaders did not act urgently to address the single currency crisis.

But in an interview with Le Télégramme, a French regional newspaper, Mr Noyer said the downgrade did not appear “justified in regard to the economic fundamentals”.

“Otherwise, they should start by downgrading Britain which has more deficits, as much debt, more inflation, less growth than us and whose credit is collapsing,” he added.

Yes, and Brtiain also has it\’s own printing press. So we cannot in fact run out of money. We do not have to default: we can inflate the debt away.

Agreed, the creditors will still lose their money but that\’s not quite what the ratings agencies are measuring.

That the Head of the Bank of France doesn\’t get this (or chooses to not let on that he does) shows one of the problems that the whole eurozone has. The denial of basic economic truths.

13 comments on “Amusing Froggie Nonsense

  1. Control of aggregate demand is the “real” story here.

    To a foreign investor, any situation which resulted in direct monetization of fiscal spending is probably not one where you want to be left holding gilts; it would likely result in such a grand loss of confidence in Sterling that you’d suffer a default by devaluation.

    But British AD is determined by British monetary policy, so we should never *get* into a situation where we have to directly monetize fiscal spending.

    French AD is determined by a combination of German/Bundesbanke monetary policy, and the degree to which German uber-competitiveness can suck capital flows out of the rest of the Eurozone. What’s to like?

  2. He probably does get it. He just lives in a world where such things are done by stitching up deals between class mates from ENA. One would be Finance Minister, another the government of the Central Bank, another head the ratings agency. So they would have a chat and that would be that.

    Certainly no one’s incompetence would be allowed to leak to the plebs.

    Time for the Army to leave the barracks and take over. If only they had someone of the stature of De Gaule.

  3. And this bollocks from the Europeans at the same time they’re asking us to put £40Bn in via the IMF – you have to admire the size of their elephant balls…

  4. Apparently Bernard Henry Levy (BHL, fellow orgiast of DSK) had a rant in The Daily Beast yesterday which provoked howls of derisive mirth, but the article seems to have been pulled.
    Anyone know where it can be found?

  5. I think the other point worth bearing in mind is that England/the United Kingdom has an excellent historical record on sovereign debt; a couple of coupon renegotiations aside, you have got back what you lent to the government in full and on time for the last 300 years or so. Inflation has generally been mild. This is definitely not the case for our European friends. See this fascinating paper for more – http://www.nber.org/~wbuiter/cr2.pdf

  6. Thanks Georges and Tim.
    Article not as mad as I’d hoped and expected, apart from the last paragraph.
    Nothing to see here.

  7. Aha, so that’s Ambrose Evans-Pritchard’s main source for his excellent piece in the ‘Daily Telegraph’ on the EZ crisis … Thank you, Tim!

    BlokeinFrance & others: never let it be forgot that BHL is the ‘philosopher’ who fell for Frédéric Pagès’ Jean-Baptiste Botul scam which launched genius philosophe, Botul – fons et origo of ‘le botulisme’ – on the French intelligentsia (& a few less intellectual types, self included, who merely pee’d themselves laughing). Although I can’t recall whether or not BHL claimed to have read JBB’s most celebrated work (on Immanuel Kant’s sex life. Sic).

  8. Tim a question.

    Why does France still have something called a “Central Bank”? The role of a Central Bank is to control the money supply and act as a lender of last resort to the banking industry. The role of a banking regulator is to prudentially regulated the banks.

    The fact that France still call their bank ing regulator “central bank” when it is in fact merely a banking regulator leads me to a couple of potential conclusions:

    (1) they don’t understand the difference?

    (2) they do understand the difference but are too proud to admit they don’t actually have a central bank having passed that responsibility over to the ECB?

    (3) they have kept the Bank of France just in case one day they might need to print off a few francs?

    Which do you think it might be?

    If David Cameron were feeling particularly malicious he might reply to mr Noyer along the lines of “a French Central Bank? A quaint notion for a country which lacks its own currency, unless of course France wishes to be prepared to print Francs in the future?”

    That ought to give Sarkozy apoplexy.

    Of course the same thing goes for Germany.

    Tim ads: A very amusing idea indeed. But legally they’re branch offices of the ECB.

  9. Well you only stop learning when you are dead so thanks for reminding me I am alive today (although it doesn’t feel like it unfortunately)

  10. Pingback: That the Head of the Bank of France doesn’t get this (or chooses to not let on that he does) show.… at cloudsoup

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