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1 S& P cuts France rating (BBC) Standard and Poor’s has cut France’s credit rating to AA from AA+. The moves comes almost two years after the country lost its top-rated AAA status. S&P said it downgraded France because high unemployment in the country was making it hard for the government to make important reforms which would boost growth. The French government responded by saying that its debt rating was one of the safest in the eurozone.
S&P said it expected government debt to hit 86% of gross domestic product (GDP) in 2015 and unemployment to remain above 10% until 2016. In theory, a lower credit rating makes borrowing more expensive. The return for investors buying French debt indeed did rise after the announcement. The yield on French government 10-year bonds rose more than 20 basis points to 2.389% from 2.158%.
However, the downgrade could be the last for some time. S&P attached a “stable outlook” to France, which implies a less than one-in-three chance that it would change France’s rating over the next two years.
2 America’s self-inflicted economic harm (Paul Krugman in The New York Times) Five years and eleven months have now passed since the US economy entered recession. Officially, that recession ended in the middle of 2009, but nobody would argue that we’ve had anything like a full recovery. Long-term unemployment — the number of people who have been out of work for six months or more — is four times what it was before the recession.
These dry numbers translate into millions of human tragedies — homes lost, careers destroyed, young people who can’t get their lives started. And many people have pleaded all along for policies that put job creation front and center. Their pleas have, however, been drowned out by the voices of conventional prudence. We can’t spend more money on jobs, say these voices, because that would mean more debt. Never mind the short run, we have to think about the future!
The bitter irony, then, is that it turns out that by failing to address unemployment, we have, in fact, been sacrificing the future, too. What passes these days for sound policy is in fact a form of economic self-mutilation, which will cripple America for many years to come. Or so say researchers from the Federal Reserve, and I’m sorry to say that I believe them.
True, debt can indirectly make us poorer if deficits drive up interest rates and thereby discourage productive investment. But that hasn’t been happening. Instead, investment is low because of the economy’s weakness. And one of the main things keeping the economy weak is the depressing effect of cutbacks in public spending, all justified in the name of protecting the future from the wildly exaggerated threat of excessive debt.
Is there any chance of reversing this damage? The Fed researchers are pessimistic, and, once again, I fear that they’re probably right. America will probably spend decades paying for the mistaken priorities of the past few years. It’s really a terrible story: a tale of self-inflicted harm, made all the worse because it was done in the name of responsibility. And the damage continues as we speak.
3 To persuade people, tell them a story (Dennis Nishi in The Wall Street Journal) Even with digital and social-media tools, employees often struggle to convey ideas to each other, to managers and to customers. That’s why companies such as FedEx, Kimberly-Clark and Microsoft are teaching executives to tell relatable stories as a way to improve workplace communication. It’s a tool that’s more useful than PowerPoint presentations, say career experts, who note that storytelling can also be used on a day-to-day basis to sell ideas to one person or a hundred.
But being an effective storyteller requires preparation. Move beyond facts and figures, which aren’t as memorable as narratives, says Cliff Atkinson, a communications consultant and author of ‘Beyond Bullet Points’. “You have to step back and put yourself into their shoes and take them through the process of understanding,” says Mr. Atkinson. “That requires you to distill the most important facts and wrap them in an engaging story.”