The French rooster, the feathers…

The French rooster, the feathers…

There has been much talk in recent months for southern Europe and their debt problems. But now a new issue seems to be currently. France loses, as we have long predicted, momentum and threatens to become a problem candidate.

What’s the matter with France?

Since 2008, the staff costs are rising significantly. Of 31.20 euros in 2008 to 34,20 Euro in 2012 (source: Handelsblatt; average normalization). In Germany standing of this comparison (2012) at 30,40; in Greece, even in the case of 14,90 Euro. The Further the country falls in a significantly rising unemployment rate in Europe. 43.9% of GDP are therefore borne by taxes and social contributions. So are a large part of the GDP, directly or indirectly, from the expenditure of the state-dependent (data source: Handelsblatt). If you compare the state debt in Relation to GDP, so France in 2013. 92,7%; in comparison, Germany 81.9; Italy at 127%, Greece at 158,6%.

It seems to be a Trend. This can be noticed also if we compare the CDS of France and Germany. So you know Germany by 29.4.2013 a CDS of 35 and France 75,50 (source: Bloomberg). This means, in simple words, the market assumes a double risk on French government bonds, as in the case of the German Bund.

What are the risks of this development?

First of all, the risk is still manageable, you can be leaps and bounds currently. Because of a Trend to such an extent can not be and changed, stopped. This now needs political decisions, that there are no major dislocations. Because France is next to Germany the largest net contributor to the EU, and by the way, for Germany the most important export partner (at least in Europe).

This will bring the crisis back?

I don’t like horror scenarios, but we are honest, the crisis was over, never was. By the printing of cheap money, we can only soothe. A Problem in France would be determined by the hot Phase of the debt crisis, cheering.

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Sources: article image: Rainer Sturm /; Film: UVK/MB; data: Handelsblatt v. 30.5.2013; Bloomberg