Salient to Investors:

Tyler Durden writes:

  • The IMF has admitted Greece has an unsustainable debt problem.
  • French PM Hollande’s sole focus in the Greek crisis was to preserve near-term stability and his job at any cost – he is guaranteed to lose the 2017 French elections.
  • Once the current generation of French workers retire and realizes their retirement entitlements were a lie, France will have two choices: violence or the more likely printing press.
  • France has had 80 consecutive months of record unemployment and its fiscal and solvency situation will deteriorate dramatically over the next 2 years.

Albert Edwards at SocGen says:

  • Greece’s net government liabilities as a percent of GDP are rapidly approaching 1000% vs. just over 500% for the US and 5 times for France, the most unstable core nation.
  • Germany, Finland, Holland and Austria are traditional fiscally conservative.
  • France’s debt dynamics and sustainability is highly questionable, with worse unfunded liabilities to GDP ratios, along with the US and Germany, than Spain and Italy
  • When adding in off-balance sheet liabilities which are only now coming onto the balance sheet as populations rapidly age, the US, France, Germany and the UK are worse off, in that order. The likely policy response will be a combination of inflation, default on pension and medical promises, and severe fiscal retrenchment, and for the US and UK, QE, devaluation and the printing press.
  • Within the euro zone, the Greek settlement shows that austerity and reform will be the likely solution imposed from above.
  • Germany has net overseas assets of 50% of GDP to call on to pay its unfunded bills. France is a net debtor by 20% of GDP.


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