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  1. #1
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    crippen's Avatar
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    Now France is being dragged into global financial crisis

    Now France is being dragged into global financial crisis as credit rating could be cut
    By HUGO DUNCAN
    Last updated at 11:39 PM on 27th July 2011






    Tightening his belt: Sarkozy advised that spending cuts needed for the country to hit its budget targets in the face of weak economic growth
    France was dragged into the global financial crisis last night with warnings it could be stripped of its top-notch credit rating without ‘more efforts’ to tackle its debts.
    The International Monetary Fund told Nicolas Sarkozy’s government that further spending cuts were needed for the country to hit its budget targets in the face of weak economic growth.
    France is the second biggest economy in the Eurozone and a downgrade to its credit score would wreak havoc in financial markets and plunge the single currency deeper into crisis.
    As stock markets around the world tumbled, Italy was also told to ramp up austerity measures while Cyprus became the latest country in the Eurozone to have its credit score cut.
    With the debt crisis in the United States also raging, nervous investors dumped risky assets such as shares and piled into gold, a traditional safe haven in times of financial and economic woe.
    The panic saw the FTSE 100 index in London drop more than 70 points – losing £19billion of its value – as global stock markets tumbled.
    The price of gold leapt to a new high of $1,628 an ounce, underlining the folly of then-Chancellor Gordon Brown’s decision to sell-off 400 tons of British gold for less than $300 an ounce in 1999.


    Sean Power, an analyst at London-based spread-betting firm City Index, said: ‘We have seen risky asset classes sold off across the board with a clear escalation in investor uncertainty over both the sovereign debt situation and also the deadlock in the U.S. over how to rein in the burgeoning deficit and raise the debt ceiling.’
    The increasing crisis in the Eurozone is bad news for the beleaguered British economy as Europe is the UK’s biggest trading partner.
    The IMF forecast that growth in the French economy would slow from 2.1 per cent this year to 1.9 per cent next year, rather than the 2.25 per cent expected by the Paris government.

    Priceless: The value of gold leapt to a new high of $1,628 an ounce
    It said ministers would struggle to reduce the country’s deficit from 7.1 per cent of GDP last year to 3 per cent by 2013 because of weaker than expected growth.
    ‘Achieving the deficit target of 3 per cent of GDP by 2013 requires further measures,’ it said, adding that France ‘cannot risk missing its medium-term fiscal targets’ because it would jeopardise its AAA credit score and drive up borrowing costs.
    The gloomy outlook was particularly embarrassing for Paris because the Washington-based IMF is now run by former French finance minister Christine Lagarde.


    Read more: Now France is being dragged into global financial crisis as credit rating could be cut | Mail Online

  2. #2
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    The situation with Cyprus reminds me of the Lloyd's LMX debt spiral that ultimately brought Lloyd's of London close to collapse.

    With so many countries in Europe now requiring financial assistance, those countries that have lent money to them are dragged into the ever increasing black hole. It all begins to resemble a gambler continually "doubling up" in the belief he will ultimately get his stake money back.
    I see fish. They are everywhere. They don't know they are fish.

  3. #3
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    Quote Originally Posted by Thormaturge View Post
    The situation with Cyprus reminds me of the Lloyd's LMX debt spiral that ultimately brought Lloyd's of London close to collapse.

    With so many countries in Europe now requiring financial assistance, those countries that have lent money to them are dragged into the ever increasing black hole. It all begins to resemble a gambler continually "doubling up" in the belief he will ultimately get his stake money back.
    Or Nick Leeson.


  4. #4
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    Quote Originally Posted by crippen
    The price of gold leapt to a new high of $1,628 an ounce, underlining the folly of then-Chancellor Gordon Brown’s decision to sell-off 400 tons of British gold for less than $300 an ounce in 1999.
    If Brown had spoken with Socal first...this would never have happened. Socal could be a KGB or something by now. He would have saved Britain and the empire... if only.....
    Let me be the first to congratulate Socal on his predictions for gold....

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