In November, soon after France and Belgium were forced to pump another 5.5 billion euros into bailed out lender Dexia, the ratings agency Moody's stripped France of its AAA sovereign debt rating. The interesting bit was that Moody's maintained its negative outlook. The ratings agency reckons France has poor longer-term economic growth prospects and a poor fiscal outlook. According to recent data, the outlook is still just as dim, probably worse.
I would also add that France has a poorly capitalised banking system and a frothy housing market. In my view, it is not inconceivable that after a few more rounds of bailouts and austerity-enlarged deficits, France could be in the 120-130% government debt to GDP range that Italy is now in. And where Italy's problems are related to demographics and...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.