Today, the finger-pointing in Europe continued as Bank of France Governor Christian Noyer scolded the ratings agencies and complained that it was the U.K. that should lose its AAA credit rating before France. Let us be clear: Christian Noyer is way out of line. First, the French are the premier bashers of the over aggressive role that Moody’s, S&P and Fitch play on the international financial scene. But when the power of the agencies can be used against a foe, then NOYER can point the finger that the BRITS are much weaker than the French and need to be punished. Secondly, NOYER shows how inept he is as a central banker because the finger-pointing does nothing to make the case of why France should not suffer a downgrade.
It was Noyer’s colleague, Christine Lagarde, who criticized the French and other European Banks for being woefully undercapitalized. In August at Jackson Hole, Ms. Lagarde castigated the European financial structure for failing to have the needed capital to weather the financial storm that was ravaging the sovereign debt markets. If the IMF DIRECTOR is pointing out your inadequacies it is a time that NOYER should be leading the battle to reinforce the balance sheets of French and not worry about British solvency. Rather than acting like children in kindergarten, it is high time that the European elite figure out a real plan of action to begin to get ahead of the crisis.
***The Swiss National Bank held its fire and did not provide the SWISS SHORTS with a raise in the EUR/CHF floor to the alleged 1.25 level. The immediate effect was that the SWISS FRANC strengthened against all the major currencies. In its monetary assessment, the SNB let it be known that it is very worried about the effect of the still strong SWISSIE on the economy as the pace of growth “slowed considerably” in the third quarter. The SNB went on to state, “THE INTERNATIONAL OUTLOOK CONTINUES TO BE HIGHLY UNCERTAIN.A FURTHER ESCALATION OF THE EUROPEAN SOVEREIGN DEBT CRISIS CANNOT BE RULED OUT.THIS WOULD HAVE GRAVE CONSEQUENCES FOR THE INTERNATIONAL FINANCIAL SYSTEM.” (emphasis mine)
So we have another European Central Bank that is very worried about the European debt crisis. The EUROCRATS seem very nonchalant about the vicious FEEDBACK LOOP strangling the European economies. Stop the finger-pointing and get to work instituting a workable plan for even your nearest neighbors are warning of the tremors shaking their nations. The SNB will be vigilant to any strengthening of the FRANC. It is a holiday market and very thin and the ability of the SNB to impact the markets is highly magnified. Don’t let today’s correction in the SWISS CURRENCY lull you into complacency.