Krugman writes: "On Friday Standard & Poor's, the bond-rating agency, downgraded France. The move made headlines, with many reports suggesting that France is in crisis. But markets yawned."
Paul Krugman. (photo: NYT)
The Plot Against France
11 November 13
On Friday Standard & Poor's, the bond-rating agency, downgraded France. The move made headlines, with many reports suggesting that France is in crisis. But markets yawned: French borrowing costs, which are near historic lows, barely budged.
So what's going on here? The answer is that S.& P.'s action needs to be seen in the context of the broader politics of fiscal austerity. And I do mean politics, not economics. For the plot against France - I'm being a bit tongue in cheek here, but there really are a lot of people trying to bad-mouth the place - is one clear demonstration that in Europe, as in America, fiscal scolds don't really care about deficits. Instead, they're using debt fears to advance an ideological agenda. And France, which refuses to play along, has become the target of incessant negative propaganda.
Let me give you an idea of what we're talking about. A year ago the magazine The Economist declared France "the time bomb at the heart of Europe," with problems that could dwarf those of Greece, Spain, Portugal and Italy. In January 2013, CNN Money's senior editor-at-large declared France in "free fall," a nation "heading toward an economic Bastille." Similar sentiments can be found all over economic newsletters.
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