France’s Debt Gets Warning as S&P Downgrades in Unscheduled Move
France Gets Debt Warning as S&P Downgrades in Unscheduled Move
alephnerd•3mo ago
It's clearly the latter. Someone was apparently hurrying to enjoy their Friday.
Not French leadership though. This is a very bad sign.
hshdhdhj4444•3mo ago
It’s meaningless. S&P downgraded the US in 2013 or so and it had no effect.
S&P (and other) ratings are very useful for many things, but they’re rarely useful for major sovereign countries because all medium to big firms already have tons of resources invested in researching these nations.
S&P has no new or secret information about France that hundreds of other firms don’t already have.
alephnerd•3mo ago
> S&P downgraded the US in 2013 or so and it had no effect
The difference is USD denominated debt can be furnished in USD, something which the United States has control over.
Not the same with the Euro and France.
And the downgrade the US had did have a real impact on borrowing rates that the US could leverage.
I also think you undervalue the impact the S&P has from a risk profile perspective. A number of funds do in fact take S&P ratings (along with Fitch and Moody's) into account when assessing risk due to compliance reasons.
The reality is France needs to choose to cut down on one of the three below
1. Military Capacity - not realistic given the threat much of the EU faces.
2. Post-2008 Welfare Expansion - not realistic for political reasons
3. Industrial Subsidies - not realistic given that it is the only reason most French even have a job at this point
Yet someone will have to take the sword and make the hard decision. Either of these choices will make the party and all their politicans who make this choice toxic for a generation, but the can cannot be kicked forward any longer.
JPLeRouzic•3mo ago
Given the generational discontent, likely deliberately fueled by those in power, a tax on retirees will solve the problem.
The 2026 budget proposal includes an increase in their tax burden, which may not be passed by Parliament.
I suspect this is just the beginning: more and more people between the ages of 25 and 60 are holding down two jobs, and are increasingly wondering whether they will get a substantial pension.
rngland•3mo ago
The solution is to buy Tomahawks for Ukraine from the US, buy overpriced LNG from the US and increase EU payments to Poland in return for refusing to clear up the sabotage of the co-French owned Nord Stream pipeline and in return for mocking the owners.
hshdhdhj4444•3mo ago
Or maybe they shouldn’t have invested in a pipeline designed to increase dependency on a nation that has shown a very clear desire for military driven expansion since the late 90s at least.
gnabgib•3mo ago
Bizarre title (by Bloomberg), France's what?
France’s Debt Gets Warning as S&P Downgrades in Unscheduled Move
France Gets Debt Warning as S&P Downgrades in Unscheduled Move
alephnerd•3mo ago
Not French leadership though. This is a very bad sign.
hshdhdhj4444•3mo ago
S&P (and other) ratings are very useful for many things, but they’re rarely useful for major sovereign countries because all medium to big firms already have tons of resources invested in researching these nations.
S&P has no new or secret information about France that hundreds of other firms don’t already have.
alephnerd•3mo ago
The difference is USD denominated debt can be furnished in USD, something which the United States has control over.
Not the same with the Euro and France.
And the downgrade the US had did have a real impact on borrowing rates that the US could leverage.
I also think you undervalue the impact the S&P has from a risk profile perspective. A number of funds do in fact take S&P ratings (along with Fitch and Moody's) into account when assessing risk due to compliance reasons.
The reality is France needs to choose to cut down on one of the three below
1. Military Capacity - not realistic given the threat much of the EU faces.
2. Post-2008 Welfare Expansion - not realistic for political reasons
3. Industrial Subsidies - not realistic given that it is the only reason most French even have a job at this point
Yet someone will have to take the sword and make the hard decision. Either of these choices will make the party and all their politicans who make this choice toxic for a generation, but the can cannot be kicked forward any longer.
JPLeRouzic•3mo ago
The 2026 budget proposal includes an increase in their tax burden, which may not be passed by Parliament.
I suspect this is just the beginning: more and more people between the ages of 25 and 60 are holding down two jobs, and are increasingly wondering whether they will get a substantial pension.