French Stocks and Free Money - 4 January 2012

France's CAC 40 reveals the effect of central bank policies...

FRENCH STOCKS began the year with some good "price news", writes Brian Hunt for Steve Sjuggerud's Daily Wealth.

When it comes to monitoring the European debt crisis, one of the biggest focus points should be France. It's the world's fifth-largest economy... which makes it one of the economic engines of Europe, the world's largest economic zone. France's banks have tremendous exposure to the bad debts of basket cases like Italy and Greece. Many folks worry that if the crisis can affect France, it will kick off a credit crash. 

Last November, France's CAC 40 approached dangerous new lows.

But as you can see from the chart below, French stocks have rallied back from danger levels:

European leaders have promised to print as much money as needed to "paper over" the region's bad debts. This rally goes to show that if you pump enough credit and free money into a system, you can push up the price of almost anything.

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Steve Sjuggerud, 04 Jan '12
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Former stock-broker, mutual-fund vice-president and hedge-fund advisor Dr. Steve Sjuggerud is the founder and editor of True Wealth. Launched in 2001 and now one of America's best-followed newsletters for private investors, True Wealth also provides free analysis and ideas in the Daily Wealth email service.

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