PLAYING WITH MATCHES NEAR A GASOLINE TANK.

PLAYING WITH MATCHES NEAR A GASOLINE TANK. Here is a Guardian summary of events on Friday December 16 relating to the Eurozone crisis. If you scroll through you will see that it was a hectic day. At 5:50 p.m. Fitch rating agency put six Eurozone countries—Belgium, Spain, Slovenia, Italy, Ireland and Cyprus—on rating watch negative. At 9:46 p.m. Moody’s rating agency cut Belgium’s credit rating by two notches. The Guardian was following minute by minute whether Standard and Poor’s rating agency would downgrade France. At 6:06 p.m. the Fitch rating agency announced that it has “reaffirmed France’s AAA rating, but lowered its outlook to negative.” At 11:05 p.m. the Guardian concluded that: “The French AAA rating lives to fight another day….”

In the midst of this excitement, France was casting doubt on Britain’s credit rating. At 1:09 p.m. the French foreign minister said that: “”It’s true that the economic situation in the UK is very worrying…. from an economic standpoint we prefer being French than British.” The Guardian also quotes the French prime minister as saying: “Our British friends have a higher deficit and debt [than us] but it seems the ratings agencies have not yet noticed.” And the head of the Bank of France, Christian Noyer, was quoted in the Guardian (December 15) as saying that the rating agencies “should start by downgrading the UK, which has a bigger deficit, as much debt, more inflation, weaker growth and where bank lending is collapsing…” The French attacks on the British credit standing seem extraordinary because a downgrade of Britain would seem to be bad for the credit of European Union countries generally, including France.