Courtesy of Mish.
This amusing headline story in Le Monde by by Bruno Moschetto, a professor of economics at the University of Paris has me laughing out loud this morning: “No, France is Not Bankrupt”
No, France is not bankrupt … The claim is untrue economically and financially. France is not and will not bankrupt because it would then be in a state of insolvency.
A state cannot be bankrupt, in its own currency to non residents and residents since the latter would be invited to meet its debt by an immediate increase in taxation.
In abstract, the state is its citizens, and the citizens are the guarantors of obligations of the State.
In the final analysis, “the state is us.” To be in a state of suspension of payments, a state would have to be indebted in a foreign currency, unable to deal with foreign currency liabilities in that currency.
Got That?
Bruno Moschetto suggests France is not bankrupt because the state is indebted in euros (not foreign currency).
For starters, France does not have its debts in its own currency, it has them in euros, a currency France cannot print.
Moschetto then goes on to say citizens would be “invited” to help France meet its obligations. Invited?
The ability to tax citizens to death to bail out the state is hardly a measure of non-bankruptcy. Indeed, having to tax citizens to death to bail out the state is proof of insolvency. One look at Greece should suffice.
Hollande already has tried 75% taxation. It has tried government takeover or threats of takeover of various auto manufacturers. It seek financial transaction taxes.
France citizens have had enough of Hollande and his socialist policies and have fled to Belgium, the UK, and Switzerland.
The French economy is imploding as I type. …
