Merde hitting the fan

So everyone knows by now about Christian Noyer, the governor of the Banque de France, arguing Britain’s credit rating should be downgraded in the wake of the eurozone crisis. This comes as France faces the prospect of being the next country to receive a downgraded S&P credit rating, which experts predict will leave it at AAA or even, gasp, the dreaded AA.

So Britain is feeling the backlash of being the cheese that stands alone, France is scrambling not to come off as the perpetual financial loser, and Germany… Well Merkel’s definitely not having a good time of it either.

MarketWatch commentator David Marsh had some things to say about the situation. In a recent blog post, he wrote that France is finally realizing what a terrible decision it was to jump on board the euro… uh… train:

“Because France no longer has control over its own currency, it can no longer bluff or bludgeon others to get its way, as was often the case during the 1980s and 1990s. Because France does not run the European Central Bank, as it hoped it would earlier on, it cannot inaugurate the kind of quantitative easing to protect local bond markets that has been enacted in the U.S. and U.K. Because France is shackled together with Germany and 15 other countries in EMU, its credit rating and the performance of its bond markets are linked to the prowess not of the strongest but the most feeble in EMU.

Finally, because the Germans have rediscovered the seemingly lost arts of Bundesbankism under the central bank’s young and surprisingly hard-headed president Jens Weidmann, France finds itself trapped in the same vice of German orthodoxy and obduracy from which it thought it had escaped with the establishment of the euro in 1999.”

Strong words, but the man makes a point. What do you think? Should France have ditched the franc?

Read more about the euro and other monetary woes in the Carnet Atlantique.

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