Postcard from the Pyrenees

Posted by Neil Hume on Jun 24 10:00.

Bears are endangered and misunderstood. Here in the French Pyrenees, with only some 20 left in the wild, the authorities have been trying to introduce some Slovakian bears to the mountains to beef up the population. Their arrival has to be in secret and they are outnumbered one hundredfold by a gendarme escort. For bears, as I well know, are not too popular. Large demonstrations have been held in various towns against their re-introduction and some get ‘accidently’ shot – link. Needless to say, I’m not venturing out too much.

That’s from Société Générale’s uber-bear, Albert Edwards, who might want to stay indoors if he visits Paris on his way back from the mountains.

In this week’s global strategy note he draws attention to the rapidly deteriorating French trade deficit:

The rising oil price means that one shouldn’t be too surprised that the trade deficit looks set to rise to around 4% of GDP this year. But the real shocker is that France was in overall trade surplus less than a decade ago and it seems to be rapidly losing export share within the eurozone – even without suffering the rapid wage inflation and rise in bilateral real exchange rates that the periphery suffered during the bubble. Michel offers a thoughtful analysis of this disturbing trend but thinks it is more micro than macro related (including tax related). Mulling this over, I was also reminded about a point my colleague Dylan often makes in presentations about France’s fiscal situation. For, looking at the numbers, it is very clear France suffers from Spanish-sized public sector deficits and debt, yet France still enjoys Northern European-like bond spreads. Curious.

Curious indeed.

Related links:
When Italy is already priced to wreck the eurozone – FT Alphaville
The Ice Age – in pictures – FT Alphaville
Albert Edwards and an afternoon tea-party with the Vestal Virgins – FT Alphaville

This entry was posted by Neil Hume on Friday, June 24th, 2011 at 10:00 and is filed under Capital markets, People. Tagged with , , , , .

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