4 ms·

It’s meaningless. S&P downgraded the US in 2013 or so and it had no effect. S&P (and other) ratings are very useful for many things, but they’re rarely useful

It’s meaningless. S&P downgraded the US in 2013 or so and it had no effect. S&P (and other) ratings are very useful for many things, but they’re rarely useful for major sovereign countries because all medium to big firms already have tons of resources invested in researching these nations. S&P has no new or secret information about France that hundreds of other firms don’t already have.

alephnerd 1y ago
> S&P downgraded the US in 2013 or so and it had no effect The difference is USD denominated debt can be furnished in USD, something which the United States has control over. Not the same with the Euro and France. And the downgrade the US had did have a real impact on borrowing rates that the US could leverage. I also think you undervalue the impact the S&P has from a risk profile perspective. A number of funds do in fact take S&P ratings (along with Fitch and Moody's) into account when assessing risk due to compliance reasons. The reality is France needs to choose to cut down on one of the three below 1. Military Capacity - not realistic given the threat much of the EU faces. 2. Post-2008 Welfare Expansion - not realistic for political reasons 3. Industrial Subsidies - not realistic given that it is the only reason most French even have a job at this point Yet someone will have to take the sword and make the hard decision. Either of these choices will make the party and all their politicans who make this choice toxic for a generation, but the can cannot be kicked forward any longer.
- JPLeRouzic 1y ago
  Given the generational discontent, likely deliberately fueled by those in power, a tax on retirees will solve the problem. The 2026 budget proposal includes an increase in their tax burden, which may not be passed by Parliament. I suspect this is just the beginning: more and more people between the ages of 25 and 60 are holding down two jobs, and are increasingly wondering whether they will get a substantial pension.

alephnerd 1y ago

> S&P downgraded the US in 2013 or so and it had no effect The difference is USD denominated debt can be furnished in USD, something which the United States has control over. Not the same with the Euro and France. And the downgrade the US had did have a real impact on borrowing rates that the US could leverage. I also think you undervalue the impact the S&P has from a risk profile perspective. A number of funds do in fact take S&P ratings (along with Fitch and Moody's) into account when assessing risk due to compliance reasons. The reality is France needs to choose to cut down on one of the three below 1. Military Capacity - not realistic given the threat much of the EU faces. 2. Post-2008 Welfare Expansion - not realistic for political reasons 3. Industrial Subsidies - not realistic given that it is the only reason most French even have a job at this point Yet someone will have to take the sword and make the hard decision. Either of these choices will make the party and all their politicans who make this choice toxic for a generation, but the can cannot be kicked forward any longer.

JPLeRouzic 1y ago
Given the generational discontent, likely deliberately fueled by those in power, a tax on retirees will solve the problem. The 2026 budget proposal includes an increase in their tax burden, which may not be passed by Parliament. I suspect this is just the beginning: more and more people between the ages of 25 and 60 are holding down two jobs, and are increasingly wondering whether they will get a substantial pension.