The question posed in the Irish Independent is a simple one; Is France is willing to swallow national pride and confront its own financial elite?
Christian Noyer, the Bank of France’s governor, denied on Sunday that French officials were mulling a capital injection of up to €15bn to beef up banks. “There is no plan, and we don’t need one. The banks are very solid. None of them is hiding any toxic assets,” he said.
What is the point of uttering such rubbish? The markets know this is untrue, and so does the IMF. It is an almost surreal refusal to recognize that investors are – for good reasons – terrified about French bank exposure to Italian sovereign debt. Mr Noyer encapsulates the mixture of stubborness and amour propre now threatening the world with disaster, and which is so like the French reflex as everything collapsed in mid-1931.
I entirely agree. The French Banks are MASSIVELY exposed to debt in Greece as well as Italy and Spain and everyone knows it. But the French dare not admit it less it intrudes into national hubris. However the problem about denial is that the longer one engages in it, the worse the outcome. Some further useful analysis here.