Dec 19 2011

Scary reason why France shouldn’t point the finger at UK on economy

Posted by: Nick Shaxson in: Thoughts

Zero Hedge, one of the few U.S. financial commentators to have ‘got it’ with respect to offshore London, has another fascinating post. France should stop pointing its finger at the UK. it argues – not because the UK is better than France, in economic terms (see this chart from Reuters, for a dispassionate view of some numbers) – but because it’s downright dangerous. Why?

Well, take a look at this.

the UK’s consolidated debt (non-financial, financial, government and household) to GDP is… just under 1000%. That’s right: the UK debt . . . is nearly ten times greater than the country’s GDP.

See the graph below. France should cool down the rhetoric, he argues, because:

Here’s the bottom line: France should quietly and happily accept a downgrade, because the worst that could happen would be a few big French banks collapsing, and that’s it. If, on the other hand, the UK becomes the center of attention then this island, which far more so than the US is the true center of the global banking ponzi scheme, will suddenly find itself at the mercy of the market.

This is apocalyptic. Note my highlighting in bold, to accentuate what we’ve been saying for years.

Click on the graph to enlarge it.

So the message to Paris is this: take the criticism on the chin, perhaps feel a little smug, but please don’t fuel this particular fire.

More background on Offshore London here and here.

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