The eurozone is now officially screwed

Europe is f*cked, Hollande wins, that is all. From the BBC:


French socialist Francois Hollande has won a clear victory in the country's presidential election. Mr Hollande - who got an estimated 52% of votes in Sunday's run-off - said the French had chosen "change".

Mr Hollande - the first socialist to win the French presidency since Francois Mitterrand in the 1980s - gave his victory speech in his stronghold of Tulle in central France.

He said was "proud to have been capable of giving people hope again".

He said he would push ahead with his pledge to refocus EU fiscal efforts from austerity to "growth".

And from Eddie Braverman (live in Paris):

You should hear all the fuckwit socialists outside my window blaring their horns and acting like they just elected Jesus Christ. Vaguely reminiscent of America in 2008.

What I wouldn't give to be a real estate agent in London tomorrow.

http://www.bbc.co.uk/news/world-europe-17975660

 
blastoise:
How will this affect markets Monday?

Would love to see this overnight session last into the day tomorrow, but not sure, the drop has been quite big already in all 'risk on' assets.

Fiber down 80pips, AUDUSD down 70, oil leveled out at $95 from close at 98.5 on fri... Should be an interesting session into the European open..

 
melvvvar:
i'm all in leveraged long on the short end of the VIX curve as of Friday. months of bleeding, and now, vindication.

Through what vehicle? TVIX?

Here's the thing. If you can't spot the sucker in the first half hour at the table, you are the sucker.
 
Best Response
Edmundo Braverman:
You should hear all the fuckwit socialists outside my window blaring their horns and acting like they just elected Jesus Christ. Vaguely reminiscent of America in 2008.
....or 2000? I've been osessively following politics, especially global politics, a good deal longer than most people on this site, so my perspective is somewhat different. I'm a bit more optimistic at this point and offer the following:

The situation already looks bad, but now they have politicians that the public will implicity back.....just like when Obama was cheered by Dems for disbursing the second half of the same bailout that Bush initiated. What this means? They can ram through the necessary reforms with minimal pushback, all the while calling it something else: they're going to do a better job selling the public on exactly the same things that anyone else with half a brain would do.

Eddie, you'd know this better than anyone: French politicians are masters of saying one thing, doing the exact opposite, and having the public cheer them on for it. Downside, they're most likely going to try to blame the U.S......potential upside, it's very possible they make the necessary reforms. I think things will look very different by Sepember. Worst case scenario, they push off actual reforms until November until they can get a feel of how much they can get out of us and how. Anyone who doubts that the seat of proactive global decision making is the U.S. might want to take off the ideological blinders and just observe for a few months.

....and yeah, the markets are going to go nuts in T-12 hours, with a rally likely by the end of next week when everyone wakes up and discovers that the world still exists. I'm out of the market right now (except 401K) but if I were putting money in, this would be the week to get some bargains....

Get busy living
 

"Above 1m euros [£847,000; $1.3m], the tax rate should be 75% because it's not possible to have that level of income" what a fucking filthy rat.

French high earners, next destination: Canton of Schwyz.

[quote]The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.[/quote]
 

UK did well to avoid the eurozone, they've seen this coming for years

75% tax rate on the highest earners financial transactions tax abolishment of stock options and management bonuses

let the exodus begin...

 
Nobama88:
Leaving France yet Eddie?

I'll have to see how things shake out. As an expat, there's not a whole lot of stuff the French government does that affects me.

You guys might be interested to know that Hollande was far from the most radical left candidate to be taken seriously in this election cycle. A 75% tax on everything over €1m a year is bad enough, but the nutjob who finished 4th in the initial election two weeks ago was saying he'd put a cap of €350,000 a year on the country. As in, 100% tax over €350,000. And that motherfucker finished 4th. Scary.

 
Edmundo Braverman:
Nobama88:
Leaving France yet Eddie?

I'll have to see how things shake out. As an expat, there's not a whole lot of stuff the French government does that affects me.

You guys might be interested to know that Hollande was far from the most radical left candidate to be taken seriously in this election cycle. A 75% tax on everything over €1m a year is bad enough, but the nutjob who finished 4th in the initial election two weeks ago was saying he'd put a cap of €350,000 a year on the country. As in, 100% tax over €350,000. And that motherfucker finished 4th. Scary.

It's a shame this had to happen now that Spain can try to come out of the hole with the new government.

[quote]The HBS guys have MAD SWAGGER. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males.[/quote]
 

Everything European is getting smashed right now. Although I have serious doubts it is about France and rather the fact that Greece can't form a majority in their parliament that won't include a hefty dose of neo nazis or stalinists.

 
Futures Trader Man:
I feel bad for Societe Generale... looks like they're going to need to need to relocate now.

How does French culture accept a 75% tax on income above 1MM Euros? France has expensive wines, chateaus, designer clothing, etc. Is no one that desires to be wealthy outraged? And definitely, Societe Generale needs to consider a move to London longterm. There's no way that IB types are looking to stay in France now.

 

The retard is strong with this thread.

Hollande is the best chance the Euro has right now, at least until Merkel gets her ass kicked out of office.

There hasn't been a single EMZ country that has been rewarded with low bond yields after enacting austerity measures. Certainly not Greece or Spain. The actions of Merkozy and the pro-austerity crowd have exacerbated both deficits and the Eurozone crisis with their balance sheet recession insanity.

The only thing that has lowered bond yields up to this point has been central bank action, such as LTRO. What Europe needs right now is a central bank that is willing to accept higher inflation -- especially high in the core, and lower in the periphery, instead of no inflation in the core and recessionary deflation in the periphery -- and willing to engage in activist policies. To that end, if Hollande can help snap the European core out of its fantasy of preserving both the Euro and 1.5% targeted inflation (mutually exclusive ideas), then he's a boon to the EMZ.

Everyone bashing Hollande in this thread needs to stop being butthurt about his high marginal income tax pledge and focus on the reality that austerity is killing Europe -- a reality which has been reflected in the bond markets for some time now.

 
nameback:
The retard is strong with this thread.

Hollande is the best chance the Euro has right now, at least until Merkel gets her ass kicked out of office.

There hasn't been a single EMZ country that has been rewarded with low bond yields after enacting austerity measures. Certainly not Greece or Spain. The actions of Merkozy and the pro-austerity crowd have exacerbated both deficits and the Eurozone crisis with their balance sheet recession insanity.

The only thing that has lowered bond yields up to this point has been central bank action, such as LTRO. What Europe needs right now is a central bank that is willing to accept higher inflation -- especially high in the core, and lower in the periphery, instead of no inflation in the core and recessionary deflation in the periphery -- and willing to engage in activist policies. To that end, if Hollande can help snap the European core out of its fantasy of preserving both the Euro and 1.5% targeted inflation (mutually exclusive ideas), then he's a boon to the EMZ.

Everyone bashing Hollande in this thread needs to stop being butthurt about his high marginal income tax pledge and focus on the reality that austerity is killing Europe -- a reality which has been reflected in the bond markets for some time now.

I don't even know who Hollande is, I just think France sux. Some good points though.

Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.
 
nameback:
The retard is strong with this thread.

Hollande is the best chance the Euro has right now, at least until Merkel gets her ass kicked out of office.

There hasn't been a single EMZ country that has been rewarded with low bond yields after enacting austerity measures. Certainly not Greece or Spain. The actions of Merkozy and the pro-austerity crowd have exacerbated both deficits and the Eurozone crisis with their balance sheet recession insanity.

The only thing that has lowered bond yields up to this point has been central bank action, such as LTRO. What Europe needs right now is a central bank that is willing to accept higher inflation -- especially high in the core, and lower in the periphery, instead of no inflation in the core and recessionary deflation in the periphery -- and willing to engage in activist policies. To that end, if Hollande can help snap the European core out of its fantasy of preserving both the Euro and 1.5% targeted inflation (mutually exclusive ideas), then he's a boon to the EMZ.

Everyone bashing Hollande in this thread needs to stop being butthurt about his high marginal income tax pledge and focus on the reality that austerity is killing Europe -- a reality which has been reflected in the bond markets for some time now.

Absolute clown.

French businesses have become grossly uncompetitive relative to their peers - you think that an exodus of the nation's business elite combined with the plan to make it more diffucult to layoff workers will help this?

"Graduate: Oh I just graduated c'est bonne now I need to cherche some travailler" "Business: "Umm yeah sorry we have this lazy SOB who's 50 yrs old we can't fire occupying your desired position come back in ten years"

Hollande's emphasis on so-called "growth" is an illusion. Its simply delaying the reduction of entitlement benefits, which is imperative to a degree. Even if it turns out to be better than pure austerity for the Eurozone France itself is still fucked.

They are not on track to meet their deficit reduction targets, so their solution is to tax the shit out of high earners and businesses. This revenue won't be able to support their welfare programs forever; there won't be any high earners or profitable companies left to tax.

Also one of France's best industries is nuclear power. Which Hollande wants to kill. Nice bro.

It says a lot about that country when HS students are rioting over an increase in the retirement age . . .to 62.

Don't talk about the need to "focus on reality" with me pal.

"Some things are believed because they are demonstrably true. But many other things are believed simply because they have been asserted repeatedly—and repetition has been accepted as a substitute for evidence." - Thomas Sowell
 
SECfinance:
If I'm a French businessman, I'm shutting down for the year and laying off my workers when I hit 999,000 Euros for the year. No way am I working for .25 on the euro.

Don't worry they have laws to prevent that too.

 
Bondarb:
This election has been over for a long time, its no surprise at all. Markets are reacting negatively tonight to the horrible Greek elections where both of the pro-bailout parties got rinsed and new elections are likely neccesary....Hollande has nothing to do with it.

Finally some sense in this thread.

Don't let the facts get in the way of a good story I guess.

 
The.RealDeal:
I picked a great fucking time to go to B-school in France.

Ahh, fuck.

I don't know, assuming this is HEC or INSEAD, I wouldn't worry. I doubt the 75% taxation will actually go through.

 

It wasn't going to be a party/cakewalk for me regardless of who won the election as I'll be at neither of those schools. I'm sure in the short-term, or perhaps never at all, this won't affect me, but for some reason it doesn't feel like positive news.

GBS, he's going to be running France for 5 years, I'll graduate in 2. He's still going to be there. I might not be making more than 1 million euros, but my potential employer will be.

Either way, I was just preemptively lamenting out loud, I don't know shit about Hollande or what exactly he's going to try to do. For all we know the points nameback raised might be valid.

" A recession is when other people lose their job, a depression is when you lose your job. "
 

Don't worry, Socalist, conservatives in France nowadays it's all the same. They gather eating "petis fours" while driking some wine and it's all what politics do. French have to learn to improve their life by themselve and not hoping that the government will do it for them. They haven't understand it the cool way, they will have to learn it the hard way.

 
illiniPride:
nameback:
I went long XLF this morning at open and once again, Keynesian analysis pays the bills.
Well played. I was looking to buy the close today, now I'm on the fence.

Yeah I'm getting out with a LOC today. Make a quick 1.5% (with a little leverage) and out. Not sure I trust it to keep rallying after this. I'm expecting more chop this month like last month.

Thankfully our fund's algo made the same long call as well, which is more important to me than my PA.

 
illiniPride:
http://www.bbc.co.uk/news/world-europe-17984805

No pro-bailout coalition in Greece. New elections look likely. Anyone know when their next major bond payment is due?

The dude who is second in the running is calling for Greece to withhold their next interest payments, renege on the 2nd €174m bail-out and nationalise the banks!! I just can't get my head round that sort of mentality.

The credit markets are hating this with most indexes significantly wider

"After you work on Wall Street it’s a choice, would you rather work at McDonalds or on the sell-side? I would choose McDonalds over the sell-side.” - David Tepper
 
Oreos:
illiniPride:
http://www.bbc.co.uk/news/world-europe-17984805

No pro-bailout coalition in Greece. New elections look likely. Anyone know when their next major bond payment is due?

The dude who is second in the running is calling for Greece to withhold their next interest payments, renege on the 2nd €174m bail-out and nationalise the banks!! I just can't get my head round that sort of mentality.

The credit markets are hating this with most indexes significantly wider

He can't form a coalition though. Also, it's easy for 'outside' parties to lob attacks at the bailout supporters when they aren't in power and don't have to deal with the consequences. I think the next EU meeting to release funds is in July / August? That is plenty of time for backroom arm twisting.

Methinks the pot goes back on simmer, not boil.

 

France doesnt suck. I use to think this way as an American, it is not longer the case.

I now realize where France is coming from and that perhaps de Gualle was one of the most intelligent forward thinking heads of state in the 20th century.

The problems stem from the US being at the center of the IMS not the other way around.

In the end Hollande will do as his paymasters say.

You guys are over reacting. Lets see what transpires.

The one who does not fall, does not stand up
 

HAHAHA @

And from Eddie Braverman (live in Paris):

You should hear all the fuckwit socialists outside my window blaring their horns and acting like they just elected Jesus Christ. Vaguely reminiscent of America in 2008.

What I wouldn't give to be a real estate agent in London tomorrow.

I think there was another quote floating around on how Hollande said finance is evil. the double socialist winning is not good.. the new guys will make it more difficult for the leaders in the eurozone to agree on crap... like they haven't had enough back-and-forth on their policies in the past 2 years already

being socialist, he'll likely put the country into more deficit to create jobs / whatever that makes the common citizen happy, and bad for the macroeconomic growth.. there was a good barrons article on it a copule weeks back

 

Reading comments of people who are not even able to locate France on a map is quite funny... Don't even talking about a very basic knowledge of what France may actually be!

Of course, French entrepreneurs and bankers and far from being happy of his election, but it won't change the whole face of the country. Just keep in mind that France is part of the Euro zone, one of its key drivers and consequently depends on it for its major reforms.

Hollande may implement a couple of highly controversial reforms, but I won't last. First, the French government is seeking for growth and consequently needs people able to invest and to consume, second maintaining such a high tax burden will encourage entrepreneurs/hardworkers/highly motivated people to run away... Have you ever seen a country where tax revenues were only based on taxes paid by poor people?

 

How will Hollande's election affect M&A in France?

Will there be a surge of M&A activity as owners try and sell before the 75% tax rate gets enacted?

What happens after the tax rate gets enacted? Does mid market M&A die as business owners and investors flee France?

Or is the 75% tax rate only applied to ordinary income, not capital gains?

 
laser:
How will Hollande's election affect M&A in France?

Will there be a surge of M&A activity as owners try and sell before the 75% tax rate gets enacted?

What happens after the tax rate gets enacted? Does mid market M&A die as business owners and investors flee France?

Or is the 75% tax rate only applied to ordinary income, not capital gains?

In a way, it will affect at least temporarily the M&A market in France. As the tax burden will increase, people will be less prone to invest and company will spend less cash on acquisitions. Fewer deals means lower valuations, means lower fees for bankers. It won't change the face of the world, but it may indeed affect the industry... as long as there is no (real) growth in France.

This government is also willing to decrease the number of LBOs by limiting tax refunds. As someone said, there is often a huge gap between what is said and what is actually implemented...

As far as we understand, this 75% tax rate will only apply to ordinary income and above all should be temporary (2 or 3 years at max) till the country recover from the crisis.

So, yes we'll pay more taxes, but hopefully it won't kill the industry.

ps: I don't support these reforms, I just try to explain them as objectively as possible

 
Abdel:
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Billions of € of what? Govt spending i assume. If so it's obvious by that graph and the flattening of the curves at '09 it shows that austerity does mean relative cuts. "large" is very subjective too.

"After you work on Wall Street it’s a choice, would you rather work at McDonalds or on the sell-side? I would choose McDonalds over the sell-side.” - David Tepper
 

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