Fitch downgrades the French rating: IMF supervision soon?

2023-05-02 05:15:57

Indeed, last Friday, April 28, 2023, the rating agency Fitch announced the lowering of France’s rating. And France Info to continue, “now, the French debt is rated AA−, a bad economic and political news. Indeed, this sounds like a warning from the financial markets to the executive. The press release published on Friday is clear: in addition to the “(sometimes violent) social movements” mentioned by Fitch, the agency points to a “political impasse” which will weigh on France’s ability to reduce its deficit and its debt. Fitch points out that the government has failed to get these reforms accepted and that the current context undermines our credibility to carry out future reforms. This mention of “political impasse” is almost more serious than the note itself. This highlights the reality: Macronie no longer has much leeway, even the markets know it. ” The fear of a ” Greek scenario ” ” We must not take lightly the 3,000 billion in debt that we have to finance. While there may be differing opinions about the financial system, no one should take these numbers or this warning lightly. What consequences for France? Don’t panic for now. Investors continue to seek French debt. It’s been ten years since France lost its prestigious triple A, but finance and politics are sometimes a matter of dynamics. If tomorrow, our creditors doubt, they will ask for more guarantees. The fear of being let down by the markets is real. Prime Minister Elisabeth Borne recently admitted to us: “A Greek-style scenario is possible. If we say we don’t care about reforms, it can happen to us. “The Covid and whatever it costs that was necessary, unlike the generalized confinement which could clearly have been avoided, and therefore the much lower cost for public finances, have considerably increased France’s debt and we have gone from 2,400 billion to 3,000 billion in debt, with a government and a minister of the economy more busy writing his sexual fantasies in books than making credible economic forecasts. According to Bruno Lumière de Bercy, we were going to repay the Covid debt thanks to growth… and the groundhog puts the chocolate in the aluminum foil. Impossible and everyone knew it. It is therefore the Fitch agency, which draws first, but the others will follow, and our sovereign rating will be increasingly downgraded, reflecting the state of our public accounts. When a country’s rating goes down, its borrowing costs go up dramatically (rates go up) and no one wants their old debts that don’t pay out anymore, and we have billions of debts issued cheaply (bond crash) . In the middle are the savers and in particular the holders of life insurance! Degraded France is a threat to life insurance! With 2,400 billion euros saved by households in life insurance, the deterioration of France is not at all good news for funds in euros and for the preferred investment of the French. Yields have been falling for a few years already, but here it is the very stability of French debt that will be a subject of concern. I therefore devoted the Flash Strategies for the month of May precisely to concerns about life insurance in a file entitled “Concerns about life insurance, what asset strategy”. This file is online in your readers spaces for download. For those who want to subscribe to learn more and make the right decisions, all the information is here. We are entering a very delicate and quite unpredictable phase of the economy. I explain everything to you in this flash, between the banking crisis which has only just begun and the return of sovereign risk and the debt crisis, we are not at the end of our troubles. The crisis has not yet occurred. She comes. It is already too late, but all is not lost. Prepare yourselves !
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