The agency said the country’s net general government debt is the highest among A-rated sovereigns, and now expects it to peak later and at a higher level than it previously anticipated.
“In our view, Italy’s economic growth prospects are weakening and we expect that Italy’s fragile governing coalition and policy differences within parliament will continue to limit the government’s ability to respond decisively to domestic and external macroeconomic challenges,” S&P said in a statement.
It is apparent not only that US banks have lost confidence in their European counterparts and have started shutting them out of inter-bank funding markets, but also that US officials are busy making matters worse by seeking to shift blame for America’s dire domestic performance on to influences from this side of the Atlantic. “Seventy-five per cent of the dark things happening in the world economy are because of the eurozone,” one of Geithner’s team said at Marseille….
Markets are convinced of several things: that Greece is politically incapable of meeting the austerity demands imposed by the EU and the IMF, and is now locked into a spiral in which its debt position can only become worse as its economy deteriorates; that a default on Greek sovereign debt is therefore inevitable sooner rather than later, and will impose losses on European banks, including the likes of Société Générale and Crédit Agricole of France, which may in turn need to be bailed out by their governments; and that the eviction of a bankrupt and incorrigibly irresponsible eurozone member is not only a technical possibility but an economic necessity if the single currency is to survive at all.
A ban on saying prayers in the street, a practice by French Muslims unable to find space in mosques, has come into effect in the capital, Paris.
Interior Minister Claude Gueant has offered believers the use of a disused fire brigade barracks instead.
The phenomenon of street prayers, which see Muslims spreading mats on footpaths, became a political issue after far right protests.
Financial turmoil in Europe is no longer a problem of small, peripheral economies like Greece. What’s under way right now is a full-scale market run on the much larger economies of Spain and Italy. At this point countries in crisis account for about a third of the euro area’s G.D.P., so the common European currency itself is under existential threat.
And all indications are that European leaders are unwilling even to acknowledge the nature of that threat, let alone deal with it effectively.
O God, who didst call thy servant Louis of France to an earthly throne that he might advance thy heavenly kingdom, and didst give him zeal for thy Church and love for thy people: Mercifully grant that we who commemorate him this day may be fruitful in good works, and attain to the glorious crown of thy saints; through Jesus Christ our Lord, who liveth and reigneth with thee and the Holy Spirit, one God, for ever and ever.
The market has effectively downgraded French debt already. The spread between 10-year French government bonds and German bunds has widened to 0.85 percentage point this week, three times wider than a year ago. Some of this is down to concern about France’s own credit quality: France’s debt to GDP ratio is forecast to hit nearly 90% in 2013, the highest among remaining triple-A rated countries. Last year, France ran a budget deficit of 7%; only Spain, Portugal, Greece and Ireland among euro-zone countries were higher.
True, Paris has a plan””a crucial difference between France and the recently downgraded U.S., according to Standard & Poor’s. The government has pledged to cut the deficit to 4.6% of gross domestic product next year and 3% in 2013 even if growth falters. But its forecasts are based on an optimistic assumption of annual GDP growth of at least 2% for the next three years; French taxes are already high so if growth falls short the bulk of any further fiscal tightening will need to be via politically tricky spending cuts.
No amount of jaw-jawing from the ECB (or from the G-7, which yesterday put out an odd statement calling the rise in euro-zone bond yields not “warranted”) can make investors buy Italian debt. Mr. Trichet continues to act as if the markets are having an attack of the vapors, from which they’ll recover presently. But no rational person or institution is going to start buying sovereign debt from heavily indebted, stagnant, deficit-running countries as if the past 15 months had never happened. The lamp has been rubbed, the genie has escaped, and no amount of un-rubbing will put him back in the lamp.
Behind the paralysis in Washington and prevarication in Berlin lies a troubling thought. Political systems in thrall to 24-hour rolling news have lost the capacity to make difficult choices. Globalisation imposes wrenching change and simultaneously saps the ability of governments to adapt. Politicians find it easier to argue about taxing the rich or cutting Medicare and about central bank bond purchases versus default than to confront the consequences for western societies of the profound upheaval in the global economy.
So it is tempting to say all is lost ”“ that a political and economic model built on western primacy is cracking under the strain of the shifting balance of international advantage. The American dream and European welfare state are bending to the competitive winds of globalisation.
Tempting but premature. It is too early to despair. What makes the crises in Washington and Europe so infuriating is the fact that, for all they demand hard decisions, they are susceptible to political solution. The missing ingredient is leadership.
Three years ago, the collapse of Lehman Brothers, the US investment bank, triggered a domino effect that had calamitous consequences for the world. No one knew how many institutions had lent money to Lehman, or how many might be pulled down with the bank. Fear spiralled through the financial markets and central banks worked overtime to prop dominoes up. The result was a painful recession.
This time, some of the dominoes are nations. Greek debt is about three times the size of that of Lehman Brothers. Around half of it is held by foreign investors, who will be hit if Greece defaults. Add in Spain and Italy, which represent about 28 per cent of eurozone GDP, and the numbers get scary. Add in a leadership vacuum, and investors start asking why they should keep lending to countries such as Italy that are troubled but still solvent…
That Europe has reached its Lehman moment is substantially the fault of its myopic and reckless power elite.
Five years ago, I was among those who argued that the probability of a collapse of the eurozone was close to zero. Last year, I wrote it was no longer trivial, but small. The odds have risen steadily since, not because of the crisis itself, but the political response. I now would put the odds of a break-up of the eurozone at 50:50. This is not because I doubt the pledge by the European Council to do whatever it takes to save the euro but because I fear it has left things too late. The council may be willing but it will not be able to deliver. As I argued last week, a eurozone bond is the only solution to the crisis. But this gets progressively more expensive, and politically less realistic, once bond spreads of large countries widen.
The United States is in the World Cup final for the first time since it last won the title in 1999, and once again, it was Abby Wambach coming up big in a 3-1 victory over France.
Wambach broke a tense tie in the 79th minute Wednesday with a monstrous header ”” what else? ”” off of a Lauren Cheney corner kick. Cheney delivered the ball perfectly to the far post, and the 5-foot-11 forward soared over the scrum and pushed the ball past French goalkeeper Berangere Sapowicz. Wambach let out a scream and did a sliding sprint into the corner, where she was mobbed by her teammates.
The stunning reversals in the criminal case against Dominique Strauss-Kahn, a putative French presidential candidate, have reawakened a dormant anti-Americanism here, fueled by a sense that the raw, media-driven culture of the United States has undermined justice and fair play.
There was shock in France after the arrest of Mr. Strauss-Kahn in May and intense criticism of the manner in which he was displayed in handcuffs, pulled unshaven into a televised court session and stuffed into a Rikers Island cell under suicide watch. There was confusion and criticism over the glee with which the New York tabloids in particular highlighted every humiliation and turned to clichés about the French ”” “Chez Perv” and “Frog Legs It” ”” in the coverage. And there was a sense that it was not just Mr. Strauss-Kahn who was being so jauntily humiliated, but France itself.
The reason a currency union needs a political union is simple. The centre has to have some way of stopping parts of the union from borrowing too much in the common currency at the common interest rate. If some borrow too much they are free riders on the backs of the more prudent areas.
If they go on borrowing too much they undermine the credit rating of the whole area, and force up the cost of borrowing for the prudent parts. To achieve discipline, the centre also needs to send subsidies and payments to the poorer parts, to compensate them for their inability to devalue to price themselves back into a competitive position.
Today the single currency system is suffering from the double stresses of too much borrowing by countries such as Greece and Portugal, who have spent too much and raised too little in tax, and from the need of countries like Ireland to bail out their overstretched banking systems….
REV. MICHEL BRIERE: The eldest daughter of the Church, that’s what we were called. Today, saying you believe in a religion takes a real identification of faith. Today, the number has really diminished.
[DEBORAH] POTTER: Twenty years ago, about 80 percent of French people described themselves as Catholic. Today, it’s just over half and less than 5 percent””most of them older””regularly go to Mass. Father Briere blames a growing culture of consumerism and a Catholic hierarchy that he says has been too rigid, failing to draw young people into the Church. That’s true across Europe, but France is a special case, a country where religion is widely seen as a source of trouble. If France had an official religion it would be laicite or secularism, a principle that’s enshrined in this country’s constitution and reflects its history of religious wars between Catholics and Protestants, as well as the French Revolution, that basically booted the Catholic Church from power.
That history lives on in French movies and classrooms, where students are taught in gory detail about a 16th-century massacre, when thousands of Protestants [Huguenots] were slaughtered by the Catholic forces of the King. And that history still lies on public display in Paris. These are the bones of Catholic priests killed and mutilated by a revolutionary mob in 1792””small wonder that the French concept of separation of church and state is strikingly different from that in the US, says Jocelyne Cesari, a French political scientist and research fellow at Harvard.
The European Union seems to have adopted a new rule: if a plan is not working, stick to it….But their strategy of denial””refusing to accept that Greece cannot pay its debts””has become untenable…
An orderly restructuring [for which the Economist advocates] would be risky. Doing it now would crystallise losses for banks and taxpayers across Europe. Nor would it, by itself, right Greece. The country’s economy is in deep recession and it is running a primary budget deficit (ie, before interest payments). Even if Greece restructures its debt and embraces the reforms demanded by the EU and IMF, it will need outside support for some years. That is bound to bring more fiscal-policy control from Brussels, turning the euro zone into a more politically integrated club. Even if that need not mean a superstate with its own finance ministry, the EU’s leaders have not started to explain the likely ramifications of all this to voters. But at least Greece and the markets would have a plan with a chance of working.
No matter what fictions they concoct this week, the euro zone’s leaders will sooner or later face a choice between three options: massive transfers to Greece that would infuriate other Europeans; a disorderly default that destabilises markets and threatens the European project; or an orderly debt restructuring. This last option would entail a long period of external support for Greece, greater political union and a debate about the institutions Europe would then need. But it is the best way out for Greece and the euro. That option will not be available for much longer. Europe’s leaders must grab it while they can.
Investors are withdrawing cash from money market funds heavily exposed to short-term debt issued by European banks out of fear that a Greek default could spark contagion across the region’s financial sector.
At the same time there is increasing reluctance among US banks to lend to their European counterparts in the past two weeks because of growing worries over Greece, according to brokers and bank traders.
So many people in France believe that the world is about to end that a government agency yesterday alerted the country to the risk of mass suicides by converts to prophesies of imminent Armageddon.
Natural disasters, the internet and French fears of economic doom are conspiring to lend credence to predictions that the planet will self-destruct on December 21, 2012, said Miviludes the government body that monitors cults and suspicious spiritual activities.
There have been 183 false predictions of the end of the world since the Roman Empire collapsed and these are multiplying with new technology and a global climate of fear, it added.
Parisian cemeteries are to enter an era of multimedia interactivity under plans to return the capital to what it sees as its rightful place at the cutting edge of change.
The high-tech cemeteries are among 40 plans unveiled this week as Paris Council seeks to transform a city widely seen to have fallen behind London, Barcelona and Berlin. Visitors to the graveyards will be greeted by touchscreens helping them to find the tombs of notable residents or relatives.
France remains steadfast in its opposition to a restructuring of Greece’s debt under any terms, the government’s spokesman said on Wednesday, showing a divergence of opinion with Berlin.
German Finance Minister Wolfgang Schaeuble raised the prospect of a restructuring, saying in a letter to EU partners this week that private bondholders should bear some of the burden of a debt relief deal, preferably via a bond swap and a rescheduling.
Ultimately, Nadal wore down Federer 7-5, 7-6 (3), 5-7, 6-1. It was not a great match, running 3 hours, 48 minutes, but it was solid and satisfying.
And then he thanked life itself for giving him the opportunity to make this sterling piece of history.
“A big personal satisfaction, especially when you started [the tournament] without playing your best,” Nadal said. “Finally, I was able to play my best when I needed my best….”
French voters expressed disbelief as well as imaginative plot theories Sunday after waking up to the revelation that Dominique Strauss-Kahn was being held by police in New York on charges of sexual assault.
“This is completely surreal””politics is turning into a play,” said Hakim Bouras, 24, a bank information-technology technician, who said he voted for Socialist candidate Segolene Royal in the 2007 presidential elections.
In the hours since New York City police said Mr. Strauss-Kahn had been arrested after allegedly forcing a cleaning woman onto his bed and sexually assaulting her inside his room at the Sofitel Hotel near Times Square, images of the International Monetary Fund president have flooded the airwaves in France and dominated news coverage.
Did Christ really have awesome abs? Western art has frequently stumbled over the contradiction between the ascetic figure of Jesus of Nazareth and the iconography of Christ inspired by the heroic, Hellenistic ideal: Christ as beautiful, tall and broad-shouldered, God’s wide receiver; blue-eyed, fair-haired, a straight aquiline nose, Christ as European prince.
Rembrandt van Rijn, in a career rich with artistic innovation, begged to differ. A new exhibition at Paris’s Louvre museum””and coming to Philadelphia and Detroit later this year””shows in dozens of oils, charcoal sketches and oak-panel studies how the 17th-century Dutch painter virtually reinvented the depiction of Jesus and arrived at a more realistic portrait.
As “Rembrandt and the Face of Jesus” shows, before Rembrandt painters tended to reiterate the conventional imagery of Christ. Catalog authors Larry Silver, of the University of Pennsylvania, and Shelley Perlove, of the University of Michigan-Dearborn, call this “the predictable majesty” of the subject.
French President Nicolas Sarkozy promised Libyan rebel leader Mustafa Abdel Jalil Wednesday that France would intensify air strikes on Muammar Gaddafi’s army, the president’s office said in a statement.
It gave no detail on how the strikes would be ramped up.
“We are indeed going to intensify the attacks and respond to this request from the national transition council,” the Elysee Palace said in a statement after Sarkozy met Abdel Jalil in Paris, their first face-to-face meeting.
“The President said ‘We will help you,'” the Elysee said.
Some justify the burqa ban by insisting that fundamentalist Muslims who demand that women wear the full veil are misogynists. I certainly sympathize with concerns about what the burqa says about women’s dignity and rights. But we should not allow the government to act as a religious judge: keeping the government out of religion’s business is the historic heart of what church-state (or mosque-state) separation has meant. It never traditionally meant aggressive state-imposed secularism, at least not in the United States. Of course, we cannot tolerate religious violence ”” “honor killings,” terrorism, and other vicious practices of certain fundamentalist sects can never be accepted, as they cross the line from religious expression into criminal acts.
The ban on the burqa, at root, is about France’s discomfort with the increasingly visible presence of a disliked religious minority. France is catering to the tastes and comfort of the traditional French majority, composed largely of Catholics (many of them nominal) and secularists. But remember, when you do not honor religious liberty for one group, the freedom of all believers is in jeopardy.
There is a pathway to peace that promises new hope for the people of Libya ”” a future without Qaddafi that preserves Libya’s integrity and sovereignty, and restores her economy and the prosperity and security of her people. This needs to begin with a genuine end to violence, marked by deeds not words. The regime has to pull back from the cities it is besieging, including Ajdabiya, Misurata and Zintan, and return to their barracks. However, so long as Qaddafi is in power, NATO must maintain its operations so that civilians remain protected and the pressure on the regime builds. Then a genuine transition from dictatorship to an inclusive constitutional process can really begin, led by a new generation of leaders. In order for that transition to succeed, Qaddafi must go and go for good. At that point, the United Nations and its members should help the Libyan people as they rebuild where Qaddafi has destroyed ”” to repair homes and hospitals, to restore basic utilities, and to assist Libyans as they develop the institutions to underpin a prosperous and open society.
France’s new ban on Islamic face veils was met with a burst of defiance Monday, as several women appeared veiled in front of Paris’s Notre Dame Cathedral and two were detained for taking part in an unauthorized protest.
France on Monday became the world’s first country to ban the veils anywhere in public, from outdoor marketplaces to the sidewalks and boutiques of the Champs-Elysées.
French President Nicolas Sarkozy set the wheels in motion for the ban nearly two years ago, saying the veils imprison women and contradict this secular nation’s values of dignity and equality. The ban enjoyed wide public support when it was approved by parliament last year.
Cheating has become more common in recent years. But a recent French case is the most sensational, and the most troubling.
In January, the French Chess Federation accused three of its members, including Sebastien Feller, a 20-year-old grandmaster, of cheating during last year’s Chess Olympiad. Feller, who is ranked No. 4 among French players, played Board 5 for the national Olympiad team and won an individual gold medal for his performance.
But the federation said he had help from Cyril Marzolo, an international master, who watched Feller’s games online and put the positions into a computer, which suggested moves. Marzolo relayed the suggestions to Arnaud Hauchard, a grandmaster and the French team’s captain, who used a code in transmitting the suggestions to Feller, the federation said.
France has proposed that a new political steering committee outside Nato be responsible for overseeing military operations over Libya.
The proposal comes just a day after Prime Minister David Cameron told the House of Commons that Nato would be in charge of enforcing UN Security Council resolution 1973.
But on Tuesday Nato secretary general Anders Fogh Rasmussen said that it would only “help enforce” the no-fly zone, not lead it.
France and Britain on Thursday agreed that Libya strongman Moamer Kadhafi “must go” and called on the EU to consider the country’s rebel national council a valid political interlocutor, Sarkozy’s office said.
“To stop further suffering of the Libyan people, Muammar Gaddafi and his clique should leave,” French President Nicolas Sarkozy and British Prime Minister David Cameron said in a joint letter to European Union president Herman Von Rompuy.
France earlier recognised the rebels as the country’s rightful representatives.
“At the UN Security Council we are working closely with partners on a contingency basis on elements of a resolution on a no-fly zone, making clear the need for regional support, a clear trigger for such a resolution and an appropriate legal basis,” …[William Hague] told Parliament.
Diplomats at the UN said a resolution could be presented later this week at the earliest, but depended heavily on events on the ground in Libya. A resolution will not be submitted without solid support from the Arab League and the tacit approval of Russia and China, who as permanent members of the UN Security Council can veto resolutions.
“There should be a demonstrable need that the whole world can see, there must be a clear legal basis for such a no-fly zone and there must be clear support from the region, from the Middle East region, from the North African region as well as from the people of Libya themselves,” said Mr Hague.