On January 7, long before Italy was in the spotlight of mainstream media attention, I wrote Italy The Invisible Elephant.
It was five or six months before Italy became an uncloaked popular economic topic.
However, "elephant hunting" is now a popular sport and mainstream media has done a better job at spotting the next one (with help of S&P threats to France's AAA rating of course).
Elephant Spotting Articles
San Francisco Chronicle: France Plans EU7 Billion in Taxes, Cuts to Save AAA Rating
Los Angeles Times: Eurozone debt jitters creeping into French bondsFrance unveiled tax increases and spending cuts amounting to 7 billion euros ($9.6 billion) for next year to defend its triple-A rating as growth slows and Europe's debt crisis deepens.
The country will increase some levies on large companies, push up the lower end of its range of value-added taxes and curb welfare spending, Prime Minister Francois Fillon said today.
"French people must roll up their sleeves," Fillon said at a press conference in Paris. "We have one goal: to protect the French people from the severe difficulties faced by some European countries."
Ah yes, how can you save Greece and Italy if your concern is to save yourself?The European debt crisis has gone from bad to worse as Italian government bond yields have soared, threatening the solvency of the Eurozone’s third-largest economy.
But things could go from worse to worst if bond yields keep rising in France, the continent’s No. 2 economy after Germany.
The French government knows it can’t afford for the bond market to turn on it. Paris announced a new round of spending cuts last week aimed at ensuring that the country holds on to its coveted AAA credit rating.
Moody’s Investors Service warned last month that it might put a negative outlook on France’s top-rung rating if Paris made too many commitments to back up its banks or other Eurozone states with tax dollars.
But France’s need to protect itself also raises doubts about its ability to extend help to Italy as Rome’s debt nightmare worsens.