Why are facts so similar to what was expected? Why do politicians react so late when facing the evidence? Why is it they continue to believe that there is no problem that a lack of solution will not eventually solve? Why is it that they always try to solve problems known for years at the last minute?
In fact, the core problems of France are neither in Greece, as it is said for months now, nor in Italy, as you’ll hear soon, but in France; and it is up to France to solve its problems.
And first of all to rethink the 2012 budget, already outdated. And if we persist on voting it as it is, it is clear that the country will lose its rating, entering a very dangerous downward spiral.
Some then will put into perspective the rating of France: first, because the rating agencies were discredited by their past mistakes. And then because never before has the US government borrowed cheaper than since it has lost its triple-A. The same will not apply to France, whose currency is not a global reference currency, issuable without limit. And if the French State loses its triple-A, it will lose its ability to borrow for a cheap price, further aggravating the cost of its debt; in addition, the European Financial Stability Facility (EFSF), that we are trying to transform into a bank, will not be able to use the share of France in its capital to base its loans, which will be reduced all the more, worsening the threats on the survival of the euro zone.
In fact, the risk for the French Government of losing its rating is not only about the current level of public debt, which is still relatively tolerable, compared to the asset value of the country. And which would not be so serious if the State could say in a credible way that it would bring it down. But this is not the case, and its momentum is appalling and its future commitments are considerable.
First, the 2012 GDP growth forecast by the Government (1.75%) is absurdly optimistic resulting in a totally distorted budget forecast. It will not probably be greater than 0,75 and with this the deficit will not decrease, contrary to what the budget says. France will be the first borrower in 2012 in the euro area (a loan of 190 billion euros at least). And at the current rate, public debt will reach at the end of 2012 90% of GDP.
Then there is the recapitalisation of banks (starting with DEXIA which will cost 33 billion euros), new commitments for pensions, CADES (Sinking Fund of the Social Debt) ) and Europe, particularly what is promised to the European Financial Stability Facility (158 billion euros). In total, these future commitments increase the debt by more than 30% of GDP and then will exceed the 120% of GDP.
It is therefore urgent to rethink the 2012 budget. Otherwise, the events will force the government and the parliament to do so, and long before the presidential elections.
In addition, it is not by building a pyramid of loans on the base of debts of each European country, by transforming guarantees in imaginary equity, that we will solve the issue of European debt. It is by recognizing that the euro area itself has no debt, and that it can become a borrower as such, on the condition of becoming a federal power, raising their own taxes. and able to prevent all countries of the area from making the worst mistakes, especially in France.
Thus the problem is not to accept or refuse the abandonment of sovereignty. It will take place. The question is to choose if we will give up our sovereignty to markets or to a European federal entity. It is dumbfounding to see that a solution so simple, so positive, and so exciting, has not been decided a long time ago. And that ultimately it will be put in place when it will be too late.