Treasury Director Sells French Securities over Lamb Chops, Money Managers Hear about Low Inflation, a Low Deficit, and It's Not West Germany, It's France! - a Financial Letter from Boston

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I want to tell you about dinner the other night with Jean-Claude Trichet, director of the French Treasury. He had invited a small group of Boston's fabled money managers to sell them on buying French government securities used to finance its relatively modest deficit. It was in a French-owned hotel and thus, perhaps, home cooking from his standpoint.

I know the idea of a high French official peddling bonds in the United States may sound a bit strange. But it reflects the internationalization of capital markets. It also shows, as Mr. Trichet said, that this is a "new world."

Trichet told a story to illustrate his comment. He was attending a meeting of the newly formed European Bank for Reconstruction and Development, a multibillion dollar institution recently set up to lend money to help the nations of East Europe modernize and privatize their economies. The point of the meeting was to decide where this bank would be located. Officials from various countries made their plea to have the bank's headquarters located in their capital. Britain, Denmark, the Netherlands, and other countries took turns at explaining why their cities would be desirable. Then a Czech minister got up to offer Prague. After noting the location of Prague in the center of Europe and other advantages, he stated what he obviously hoped would be a clinching factor. "We have already chosen a building for the bank. It is the Museum for Marxism-Leninism."

That prompted about five minutes of laughter. Trichet said the Czech was dead serious in the offer. But Britain, as a provider of funds, had more clout and won the headquarters for London.

Back to Trichet's bond pitch. His basic point was that the French economy is now managed most conservatively (though the Socialist Party is in power). The International Monetary Fund (IMF) even predicts that France will have less inflation next year than that bulwark of economic stability, Germany. This, Trichet boasted, is the first time a respected financial institution has made such a happy prediction for France since at least the 1960s. …