The euro crisis no one is talking about: France is in free fall

[Valin]

CNN Money Talk:

The euro zone's second-largest economy is suffering more than any other member from a shocking deterioration in competitiveness. And it's doing nothing to stop it.

Shawn Tully

1/9/12

 

FORTUNE -- Given investors' confidence in its sovereign debt, and its image as Germany's principal partner in the sturdy, sensible "northern" eurozone, you'd think that France endures as the co-guardian of the endangered single currency. Indeed, the rate on France's ten-year government bonds stands at just 2%, just a few ticks above Germany's. From a quick look at the headline numbers, France doesn't appear nearly as stressed as the derisively titled "PIIGS," Portugal, Ireland, Italy, Greece and Spain. So far, the trajectory of its debts and deficits isn't as distressing as the figures for the PIIGs, or even the U.K. and the U.S.

 

France's vaunted role in the creation and initial success of the euro enhances its aura of solidity. It was President Francois Mitterrand who in 1989 persuaded Chancellor Helmut Kohl to back monetary union in exchange for France's support for German reunification. In fact, France and Germany, along with the Netherlands, dramatized their commitment by effectively uniting the franc and deutschemark in a currency union that held their exchange rates in a narrow band, and heralded the euro's birth in 1999. In the boom years of the mid-2000s, France virtually matched Germany as the twin growth engine of the thriving, 17-nation eurozone.

 

A deeper look shows that France is mired in no less than an economic crisis. The eurozone's second-largest economy (2012 GDP: 2 trillion euros) is suffering more than any other member from a shocking deterioration in competitiveness. Put simply, France's products -- its cars, steel, clothing, electronics -- cost far too much to produce compared with competing goods both from Asia and its European neighbors, including not just Germany but even Spain and Italy. That's causing a sharp and accelerating fall in its exports, and a significant decline in manufacturing and the services that support it.

 

(Snip)

 

 

Nothing To See Here....Move Along Now.

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3 points

A. It's not just Europe that is in trouble.

B. Least you believe this doesn't affect our "recovery", This is a very small interconnected planet....and becoming more interconnted every day.

C. If you are not reading Via Meadia at least once a day...go to your room!