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Anorak | Saving the Euro Could Bankrupt France

Saving the Euro Could Bankrupt France

by | 18th, October 2011

THIS saving the euro thing is decidedly difficult you know. The latest news is that if France does what might be necessary to save it, then France itself might go bust .

The U.S. ratings agency said late on Monday it may slap a negative outlook on France’s Aaa rating in the next three months if the costs for helping bail out banks and other euro zone members stretch its budget too much.

The warning, which sent the risk premium on French government bonds shooting up to a euro lifetime high, came as European Union leaders are preparing measures to protect the region’s financial system from a potential Greek debt default.

So here’s what the problem is. So Greece defaults, lots of banks lose money. Boo Hoo. But then maybe Ireland, Portugal will default? Still just Boo Hoo really. But, and here’s the biggie, this then puts pressure on Spain and Italy and if they default then the entire banking system goes down in flames.

Right, we know how to deal with this, we do two things. We stick lots of money in the banks so that they don’t collapse and we also

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Posted: 18th, October 2011 | In: Money Comment | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink