Glamorous thirty-something French housing minister Cécile Duflot was subjected to leers and wolf-whistles from her male colleagues as she gave a speech in Paris yesterday. When sexy Cécile stood up to speak wearing a skimpy floral summer dress the men around her couldn’t contain their excitement, showering her with lecherous cat calls. Heckler-in-chief Patrick Balkany insisted that he was “only admiring her looks“, but that Duflot had probably “put on that dress so that we wouldn’t listen to what she was saying“. Ooh la la…
Cameron’s offer to “roll out the red carpet” for French tax exiles fleeing French socialism provoked screams from French politicians, most poignantly expressed above by media mogul Laurent Joffrin, the epic champagne socialist son of the extremely wealthy, castle-owning, yacht sailing and oil company directing Jean-Pierre Mouchard. No surprise that he is telling the readers of the French Observer to “F**k Cameron”, they fear losing enormous amounts of 75% higher rate taxes to be brought in by the newly elected socialist Parliament. Vive la 30% difference!
Guido shorted €uros last night as soon as the Kiwis got to their desks and the currency markets opened. French Socialist Francois Hollande looks set to become President of France and the Dutch government has fallen apart. International investors are not going to look at that kindly, Guido also has a sense that the election of a left-wing president in France who actually implements a left-wing agenda would frighten the bond markets. Hollande will probably tack to the centre once in office, he is after all only a politician making election promises. If however he sticks to the left-wing agenda that his rhetoric promises, the big macro-hedge funds will take the view that French bonds can join the PIIGS (Portugese, Irish, Italian and Spanish bonds) on the sell list. In government Hollande has to choose between his rhetoric and the reality of the bond markets.
The ECB has already dangerously leveraged up support for the PIIGs via Long Term Refinancing Operations (LTRO). Leveraging up the ECB’s capital base has allowed it to put nearly €1 trillion of PIIG sovereign debt on its books, at a massive leverage ratio of nearly 40 to 1. If the ECB were a marked-to-market hedge fund instead of a Central Bank we would say it was investing recklessly, a mere 2.5% market move against it would wipe out all of its capital. The market doesn’t move it against it because it massively intervenes to support its own position.
If however the German Bundesbank decides that the ECB can’t go on literally doubling the chips on the table – up 106% since last year – the €uro as is could be too big to save. That is why all Osborne’s Treasury’s protestations about the IMF always getting its money back count for little. The US and China want to see Germany bet everything on the €uro before they join the rescue party. German politicians – including those of the left-of-centre SPD – expect Hollande to govern from the centre whatever he says on the hustings. British left-wingers hoping for a left-wing surge on the continent sparked by Hollande should be careful what they wish for, it would trigger the end of the €uro. If Hollande abandoned Sarkozy’s deficit reduction programme Germany would probably seek alternative arrangements – a hard-€uro Fiscal Union made up of Northern Europeans who run their affairs like the Germans and a looser soft-€uro of Southern Europeans who overspend. The dream of a united continent of Europe with one currency would be over…
If you ever get done for your taxes then Harry Redknapp provided the get out of jail free card with his successful “I can’t read or write and I’m too rich to bother dodging tax” defence. French socialist letch Dominic Strauss Khan’s is trying an equally ambitious line in his latest sex scandal. In reference to paid-for-orgy allegations, his lawyer, Henri Leclerk, said on his behalf:
“He could easily not have known, because as you can imagine, at these kinds of parties you’re not always dressed, and I challenge you to distinguish a naked prostitute from any other naked woman.”
It remains to be seen if a jury will be asked to accept that challenge live in court…
Sarkozy and Dave’s bromance peaked on a balcony in Benghazi, but hit a new low when the half-pint refused to shake hands after Dave’s veto before Christmas. Well blink and you would have missed their forced man-love in Brussels this afternoon:
Given that Sarkozy claimed last night that the UK “has no industry“, you might have thought Dave would be playing it cool, but he instigated the smiles and bat backs. All ten seconds of them…
Sarkozy’s chances of re-election have taken a battering as France is no longer judged the safest of credit risks. What this means is that the French backed €uro bailout fund is no longer a AAA credit risk. Slovakia, Italy and Austria also got downgraded. Greek debt restructuring talks have broken down and Greek 10-year debt is trading at 20c/€ to face value. Which shows what the market thinks of their chances of getting their €uros back…
Though the economic prospect of a French downgrade is rather scary, the political repercussions are frankly hilarious. Sarkozy is in an election year for one, and his head of the Banque de France has oeuf all over his face. Back in December a mighty row broke out when Christian Noyer said that Britain’s credit rating should be downgraded before them. It was a typical attempt to try to drag us down with them. Well S&P have spoken.
As Lord Nelson might have said “I see no credit downgrade.”
Labour types are scraping the barrel this morning claiming that Newt Gingrich has “stolen” Ed’s much derided “predators” line. Tom Watson is crowing, Political Scrapbook are grandstanding and Guido is laughing. Ed isn’t even the first European leader to develop the theme. Rewind to 2007 and enter stage right French Presidential candidate Nicolas Sarkozy:
Nicolas Sarkozy, the neo-Gaullist favourite, has vowed to “hit predators” with a tax on speculative investments – apparently a version of the Tobin tax, a staple of populist discourse in Europe for years. “We can’t tolerate hedge funds buying a company with debt, firing a quarter of the staff and then enriching themselves by selling it in pieces. We didn’t create the euro to have capitalism without ethics or morals,” he said. Mr Sarkozy is supposed to be the “free market” candidate.
Ed’s line was nothing but a cheap rip off of that…
As the news filtered through yesterday that the former French president Jacques Chirac had been found guilty of corruption Chris Bryant took to Twitter:
Nick Clegg has broken ranks with the political establishment on Trident, telling Nick Robinson “We have to be realistic and candid about what we can and can’t afford as a nation”.
During the Cold War the logic of Trident and […]