Now France is Being Dragged Into Global Financial Crisis as Credit Rating Could Be Cut!

• Illuminist banksters are still setting up the pieces for a catastrophic sovereign debt crisis collapse! Whatever happened to Keynesian fiscal policy of expanding public sector expenditures in a recession to counteract contraction in the private sector? Fiscal and monetary economics do not explain what is the cause of the sickness! Central Banks. Try Austrian economics!
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  The Austrian business cycle theory (“ABCT“) …views business cycles .. as the inevitable consequence of excessive growth in bank credit, exacerbated by inherently damaging and ineffective central bank policies, which cause interest rates to remain too low for too long, resulting in excessive credit creation, speculative economic bubbles and lowered savings.^[1] Proponents believe that a sustained period of low interest rates and excessive credit creation results in a volatile and unstable imbalance between saving and investment.^[2] ..  the business cycle unfolds in the following way: Low interest rates tend to stimulate borrowing from the banking system. This expansion of credit causes an expansion of the supply of money, through the money creation process in a fractional reserve banking system. .. this leads to an unsustainable credit-sourced boom during which the artificially stimulated borrowing seeks out diminishing investment opportunities. … a credit-sourced boom results in widespread malinvestments. .. a correction or “credit crunch” – commonly called a “recession” or “bust” – occurs when exponential credit creation cannot be sustained. Then the money supply suddenly and sharply contracts when markets finally “clear”, causing resources to be reallocated back towards more efficient uses.
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  Now France is being dragged into global financial crisis as credit rating could be cut
  By Hugo Duncan, http://www.dailymail.co.uk/
  France was dragged into the global financial crisis last night with warnings it could be stripped of its top-notch credit rating without ‘more efforts’ to tackle its debts. The International Monetary Fund told Nicolas Sarkozy’s government that further spending cuts were needed for the country to hit its budget targets in the face of weak economic growth.
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  France is the second biggest economy in the Eurozone and a downgrade to its credit score would wreak havoc in financial markets and plunge the single currency deeper into crisis. As stock markets around the world tumbled, Italy was also told to ramp up austerity measures while Cyprus became the latest country in the Eurozone to have its credit score cut.
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  With the debt crisis in the United States also raging, nervous investors dumped risky assets such as shares and piled into gold, a traditional safe haven in times of financial and economic woe. The panic saw the FTSE 100 index in London drop more than 70 points – losing £19billion of its value – as global stock markets tumbled. The price of gold leapt to a new high of $1,628 an ounce, underlining the folly of then-Chancellor Gordon Brown’s decision to sell-off 400 tons of British gold for less than $300 an ounce in 1999.
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  Sean Power, an analyst at London-based spread-betting firm City Index, said: ‘We have seen risky asset classes sold off across the board with a clear escalation in investor uncertainty over both the sovereign debt situation and also the deadlock in the U.S. over how to rein in the burgeoning deficit and raise the debt ceiling.’ The increasing crisis in the Eurozone is bad news for the beleaguered British economy as Europe is the UK’s biggest trading partner.
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  The IMF forecast that growth in the French economy would slow from 2.1 per cent this year to 1.9 per cent next year, rather than the 2.25 per cent expected by the Paris government. It said ministers would struggle to reduce the country’s deficit from 7.1 per cent of GDP last year to 3 per cent by 2013 because of weaker than expected growth.
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  ‘Achieving the deficit target of 3 per cent of GDP by 2013 requires further measures,’ it said, adding that France ‘cannot risk missing its medium-term fiscal targets’ because it would jeopardise its AAA credit score and drive up borrowing costs. The gloomy outlook was particularly embarrassing for Paris because the Washington-based IMF is now run by former French finance minister Christine Lagarde.

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