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ORIGINAL FRENCH ARTICLE: Paris et la hantise du AAA

by Clotilde Mathieu

Paris’s Triple-A Obsession

Translated Wednesday 10 August 2011, by Kristina Wischenkamper and reviewed by Bill Scoble

France’s dependence on international creditors and the financial markets is taking on worrying proportions.

In these days of financial globalization and deregulation, the French government has followed the American example and taken up the bad habit of looking to the financial markets for new funds, thus multiplying the number of creditors holding French public debt. Today, almost two thirds (65.2%) of this debt is held by "non-resident investors", according to the latest figures released by the Treasury Agency, a ‘branch office’ of the Economy Ministry responsible for debt management. In ten years this dependence on the outside world has grown steadily; in 2007 it was 58.7%. Only 53% of the German debt is held by non-residents. In France 23% of long-term (10–50 years) State bonds is owned by insurance companies, 15% by banks, and 3% by UCITS (Undertakings for Collective Investment in Transferable Securities Directives) (funds which include investments by individuals).

France might still inspire enough confidence to be lent money, but its dependence on international creditors and financial markets is none the less worrying. Only a fool would think that what happened to Greece or the USA couldn’t happen to France, because everything depends on the notorious triple-A of the credit rating agencies. If the rating is downgraded, investors may refuse to buy French bonds, or impose excessive, unsustainable interest rates. But aside from the tragedy in Greece being played out, this addiction to financial markets and foreign investors limits the scope of the economic and social choices being made. Since 2008, France’s subjugation to the financial markets and the fear of losing its triple-A rating have both grown, inviting ever more unequal and anti-social policies from the Rightist government in power. On 5 May 2010 François Fillon explained it succinctly on TF1: "France is today, along with Germany, the safest economy in Europe. We must do everything to preserve that position”, just before he went on to announce a new phase of the General Review of Public Policies and make us swallow the pension reform.

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