Do not like the sounds of this if it is true

Melinda is once again ahead of the game re: France:

The French banking stocks were hit hard this morning as the CDS spreads versus the German Bund spiked. A downgrade of French debt would be a severe blow to the Eurozone and would put France in the same category as Portugal, Spain and Greece.

Posted by: glasater

France default risk up, euro drops vs dollar

Source:[Huliq.com] Time:[GMT Jun 4 2010 4:59PM]

The euro is under pressure again today the exchange rate reaching an intraday low of 1.20 euros vs the dollar on fears of a downgrade of French Government bonds due to a higher default risk. The French banking stocks were hit hard this morning as the CDS spreads versus the German Bund spiked. A downgrade of French debt would be a severe blow to the Eurozone and would put France in the same category as Portugal, Spain and Greece. French banks, such as Societe Generale, have suffered large derivatives losses and present another risk for their fragile balance sheets. France has quietly struggled with a high debt/GDP ratio since the beginning of the crisis and will need severe austerity measures in order to resolve their solvency issues. French banks may need another bailout, similar to the Spanish bailout of CajaSur last month. In light of the recent events, the euro cannot find a stable support level vs the dollar and may fall into a fast and furious downward spiral towards 1.10. That would be a seven year low and could be sustainable if fiscal and monetary policies are implemented and strictly enforced across the Eurozone. Europe also needs to implement a large financial regulation package and it is unlikely that the two Herculean efforts will be completed in the next few months as it continues to struggle to find common ground among its two main economic forces: France and Germany. Jean-Claude Trichet, Chairman of the ECB, remains silent which indicates that the Central Bank is no longer supporting the euro but rather opts to let it run its own course. Traders and market makers have shunned the euro for several weeks now but were frustrated with the artificial support and intervention in the free markets. That support has now come to a halt and the euro is at the mercy of the inter-currency markets, which will show a continued and steeper decline of the euro in the months to come. Written by Nick Doms © 2010, all rights reserved

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