France to Seize Pensions by Raising Retiring Age

Financial Times

Expectations are growing that France is set to remove the right to retire at 60, as it embarks on a contentious reform of its debt-laden pension system and brings public finances back into line.

Christian Estrosi, industry minister, said on Sunday the government was “leaning towards an increase in the [retirement] age” in its talks with unions and employers’ federations, despite denials from cabinet ministers over the weekend of a decision being taken.

Although there has been much speculation that France’s legal retirement age of 60 – one of the lowest in Europe – would be abandoned, Mr Estrosi’s comments on national radio are the clearest statement yet of government intentions.

His comments are likely to give ammunition to unions planning a national strike on Thursday to protest against spending cuts and pension reforms.

The government is expected to announce its planned reforms next month and expects to have a draft bill before parliament by September. Nicolas Sarkozy, president, has made pensions the last big reform of his government before the campaign for the next presidential election in 2012 gets under way.

All but one of France’s five main unions have rejected suggestions that the retirement age should be increased, favouring instead taxes to fill a deficit expected to hit €32bn this year, as much as €45bn in 2020 and possibly more than €100bn in 2050.

The government is highly sensitive to the potential of pension reform sparking widespread unrest and will be watching Thursday’s protest closely. Former prime minister Alain Juppé was eventually brought down by national protests in 1995 when he attempted to restructure one of the most generous pensions systems in Europe.

However, there are signs of opinion shifting and the government may be hoping to take the opportunity presented by the Greek crisis to convince the public of the need for reform. A survey last week showed two-thirds of those questioned believed the pension system was in danger of collapse.

A similar percentage of respondents agreed that the retirement age needed to be raised from 60 to 62.

Stock Market Plunges 1,000 points in minutes

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AP

Stocks plunged Thursday as investors succumbed to fears that Greece’s debt problems would halt the global economic recovery. Themarket Dow Jones industrials slid almost 1,000 points before recovering to a loss of 328.

The sudden drop was a painful flashback to the worst days of the 2008financial crisis. Computer programs intensified the selling while investors watched protests in the streets of Athens on TV. Fears are running high in the financial markets that the Greek government will not be able to implement austerity measures that would enable it to contain its debt problems. And, in turn, that the country’s problems will hurt other economies in Europe and even the U.S.

The Dow’s gyrations showed the high emotions in the markets. Down 998.50 points in mid-afternoon, it recovered less than an hour later to a loss of 328. Meanwhile, interest rates on Treasurys soared as investors sought the safety of U.S. government debt. The yield on the benchmark 10-year note, which moves oppoosite its price, fell to 3.37 percent from late Wednesday’s 3.54 percent.

“The market is now realizing that Greece is going to go through a depression over the next couple of years,” said Peter Boockvar, equity strategist at Miller Tabak. “Europe is a major trading partner of ours, and this threatens the entire global growth story.”

The stock market has had periodic bouts of anxiety about the European economies during the past few months. They have intensified over the past week even as Greece appeared to be moving closer to getting a bailout package from some of its neighbors.

The fear now is that other countries will also be overwhelmed by their debt, and the recovery that is in its early stages will be wiped out. That would almost inevitably affect the U.S. recovery.

The losses in stocks were so widespread that just 161 stocks rose on the New York Stock Exchange, compared to 3,008 that fell. The major indexes were all down more than 3 percent.