Sep

2

 My friend was telling me the other day that he thought it was likely France would try to nationalize its banks soon enough because "[a] previous Socialist government tried (and did, which is a big reason France became an economic basket case) and Hollande certainly suggested he might do the same if elected".

My view is that France will *not* try to nationalize its banks. The last socialist government (1997-2002) did not nationalize anything. In fact, the last socialist government privatized more companies than any other government in the history of France. Hollande never suggested he would nationalize banks. What Hollande campaigned for is a separation of investment banking / trading from traditional commercial banking / deposit activities. This would be a French version of the Glass-Steagall act. There is nothing socialist in Glass-Steagall. The conservative British government is going to do the same in the UK. What remains to be seen is if Hollande will implement this reform. Because the powerful banking lobby is fighting it tooth and nail.

As far as the impact of French politics on the markets is concerned, my opinion is that they have zero impact. France is too small a country to matter economically. And 90% of the regulations are originated in the EU, that is in Bruxelles, not Paris. So you can do like me, ignore French politics except for fun.


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