The governor of France's central bank told CNBC the country can cut its deficit from whatever horrifying number it is now down to 3% in three years. Three years. The same amount of time a retail trader spends watching a stock go from $47 to $12 while muttering "it's a long-term hold."
France has a massive budget deficit that's been spooking investors. Not spooked enough to stop buying French bonds, mind you. Just spooked enough to talk about being spooked on financial television. The central bank governor says they're "putting the house in order," which is the exact phrase your brother-in-law uses before filing for bankruptcy.
Three years to slash a deficit to 3%. That's the plan. Cut spending, raise revenue, balance the books. Revolutionary stuff. Nobody's ever thought of this before. Certainly not Greece. Or Italy. Or Portugal. Or Spain. Or literally any other European country that promised fiscal discipline right before asking Germany for money.
The best part is calling 3% a victory. That's still a deficit. The house isn't in order. The house is just on fire in fewer rooms. But when you've been running a country like a Ponzi scheme for decades, 3% probably feels like restraint.
Retail traders will read this headline and think it's bullish for French equities. They'll buy CAC 40 futures at the top. They'll hold through the entire three-year "restructuring period" while the deficit balloons to 8%. They'll panic sell at the bottom. Then they'll watch France hit the 3% target six months later and wonder why investing feels rigged.
The governor didn't mention what happens if they miss the target. Probably another press conference where he promises to hit 3% in three more years while putting the house in even better order. By then your shares will be worth half what you paid, but at least France will have a detailed plan to eventually stop spending money it doesn't have.
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