Phrase Congratulation Forwedding

Bankruptcy Greek aid of France

One wonders severely in World and Moreover, the effects of degradation of the rating of government debt by rating agencies.

In this notation, we can not mean much, since it involves the application of valuation methods opaque to the public accounts even more opaque, which would increase Enron for a model of rigor and integrity. We remember for example that 3 years ago, the Greeks decided to become richer 25% overnight by the grace of creative accounting: integrating an estimate of the underground economy in GDP. This single story speaks volumes about the value of the Greek government accounts. Since Enron, there remains only the truth of the cash flow to judge in these circumstances: while the Greek state is afloat, so it all goes well. For the rest, it is not just not. Although some manage to pay handsomely to their ignorance.

This is, cons, sure is that The World wrong to pay, as usual, in the tragic record of deficit-that-will-take-all-we-especially-if-you -must-pay-in-more-for-Greeks. For now, all that is favorable to the French State and its debt.

Why? The reason is simple: there is plenty of liquidity in financial markets. Even if fear is not what it was, the flight to quality has not ceased: investors want of course. And of course, this remains the state public debt seriously. But France is a country seriously. Thus bond prices of the French state has dropped significantly last fall as financial players sold securities unsafe (private) to buy safe government debt, including the French.


The same mechanism is currently taking place: the larger the debt of Greece is risky (as well as some other countries), the more it turns away more investors are moving toward what he are more secure: the debt of states like France.

The interest rates on bonds of the Greek state are negatively correlated with those of French government debt.

thing more astonishing, the current crisis of confidence does not benefit more to Germany than to France. Generally, in such circumstances, the German state is the big winner: nothing seems safer than him. If you buy more French debt, we buy more of the German and the gap between the two interest rate increases, lowering one more than the other. That's what happened in September last year, until January. Here, nothing such spreads even tend to decrease.


Financial markets are certain of one thing: France does not shoed bankruptcy. This is great news: we can continue to finance our debt on the cheap. Let's be optimistic, perhaps even that this will convince them that France is not about to go bankrupt. If financial markets are willing to lend to the interest rate the lowest in decades, is that they must know what they are - not ?