5:14pm

Fri August 12, 2011
Planet Money

'The End Of The Line For The Euro'

Here in America when we go to the beach, we read romance novels or mysteries.

France is different sort of place. Over the past few weeks, the French have been obsessed with an economic thriller called Terminus pour L'Euro — The End of the Line for the Euro. It was published in Le Monde, one of the biggest newspapers in France.

The series is fiction. But for a while this week, as rumors about the French financial system spread through markets and French bank stocks plunged, the line between fact and fiction began to blur.

Terminus pour L'Euro takes place in 2012. Germany announces that its courts have declared participation in the euro unconstitutional, and it wants out of the currency union. Here's a quick, translated excerpt, to give you the flavor:

Financial stability is important, but the sovereignty and interests of the people come before that. Maybe we've forgotten about that. Better to look at a crisis now, than to weaken our financial institutions for years to come.

Sure, the idea that the Germans would exit the euro is hard to believe. But this has been a weird summer in Europe. Some investors have been wondering if the euro can survive with so many of its members deeply in debt.

Other parts of the fictional series played perfectly into this paranoia. The story used real names — not only of national leaders, but of big banks. Another excerpt:

We must put ourselves in position, buy back shares, for the right to know what's going on, and prepare the next move: the rescue of Crédit Agricole itself and its dismantling.

So, the French this summer are reading this fake scary story of banks panicking and going under, et voila: This week, rumors start spreading that real banks are in trouble.

On Wednesday, amid these rumors, stock in Societe General dropped 15 percent — the largest fall since the 2008 financial crisis.

The bank went looking for the source of these rumors, and the trail led back to London. Last Sunday, the British paper the Mail on Sunday published an article questioning whether Societe General was still solvent.

And many people in France assumed the Mail on Sunday had read Le Monde's fictional series and mistaken it for fact.

"For the last few days, we all believed that the Daily Mail had misread Le Monde," Jean Marc Illouz, a French television journalist, says.

The Mail on Sunday says, no, they didn't steal from the fictional story in Le Monde. But they did retract their story about Societe General's problems.

Meanwhile, French regulators today moved to protect Societe General, Credit Agricole and several other banks from the rumors swirling in the market. They temporarily banned on short selling of the banks' stocks.

Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.

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