http://albertpeia.com/anotherpropplop.htm
‘Meanwhile, as Greece continues
to distract the markets, France, the other primary prop for the EU besides
Germany, is now experiencing an economic contraction on par with
that of 2008-2009.
Indeed, France’s September’s
auto sales numbers were worse than those of September 2008 (the month
Lehman collapsed). The country’s PMI reading is back to April 2009 levels. Even
the French Central Bank, which would hold off as long as possible before
unveiling bad news, has announced the country will re-enter recession before
year-end.
Over the past few weeks, an
extraordinary cry of alarm has risen from chief executives who warn that the
French economy has gone dangerously off track. In an interview to be published on Nov. 15
in the magazine l’Express, Chief Executive Officer Henri de Castries of
financial-services group Axa (CS:FP) warns that France is rapidly losing
ground, not only against Germany but against nearly all its European neighbors.
“There’s a strong risk that in 2013 and 2014, we will fall behind economies
such as Spain, Italy, and Britain,” de Castries says.
On Nov. 5, veteran corporate
chieftain Louis Gallois released a government-commissioned report calling for
“shock treatment” to restore French competitiveness. And on Oct. 28, a
group of 98 CEOs published an open letter to Hollande that said public-sector
spending, which at 56 percent of gross domestic product is the highest in
Europe, “is no longer supportable.” The letter was signed by the CEOs of
virtually every major French company. (The few exceptions included
utility Electricité de France, which is government controlled.)
http://www.businessweek.com/articles/2012-11-14/french-ceos-help
We get additional confirmation
that France is in big trouble from its partner in propping up the EU, Germany.
German Finance Minister
Wolfgang Schaeuble has asked a panel of advisers to look into reform proposals
for France, concerned that weakness in the euro zone’s second largest economy
could come back to haunt Germany and the broader currency bloc.
Two officials, speaking on
condition of anonymity, told Reuters this week that Schaeuble asked the council
of economic advisers to the German government, known as the “wise men”,
to consider drafting a report on what France should do…
“The biggest problem at
the moment in the euro zone is no longer Greece, Spain or Italy, instead it is
France, because it has not undertaken anything in order to truly re-establish
its competitiveness, and is even heading in the opposite direction,”
Feld said on Wednesday.
“France needs labour market
reforms, it is the country among euro zone countries that works the least each
year, so how do you expect any results from that? Things won’t work unless more
efforts are made.”
http://uk.reuters.com/article/2012/11/09/uk-germany-france-economy-idUKBRE8A80MN20121109
France will be a bigger problem
than Spain or Italy for the EU?!?! That is one heck of an admission
from a German official. If France deteriorates then it’s game over for the
EU. The current bailouts mean Germany is already on the hook for an
amount equal to 30% of its GDP. If France tanks the amount will balloon
astronomically. At that point it’s game over.
If you’re an active investor
looking for investment ideas on how to play this, I’ve recently unveiled a
number of back-door plays designed to produce outsized gains from Europe’s next
leg down. They’re available to all subscribers of my Private
Wealth Advisory newsletter.
To find out more about Private
Wealth Advisory
(a bi-weekly investment advisory that focuses on the global economy and
outlines which investments will do best in various environments)…’
Best Regards
Graham Summers