UNDERSTANDING HOW IT STARTED

THE BIG RECESSION IN FRANCE

To understand how it affected France, we must start from the beginning.

It started with the attack of Al Qaeda against the Twin Towers of EEUU (2001), this crisis reached its critical point in 2008 with the bankruptcy of Lehman Brothers which was not rescued by the American state.

This crisis occurred because the American state wanted to generate confidence in its citizens by lowering interest rates to 1%, so that anyone could access to credit.

But the lack of state control led to a housing bubble that took away all the confidence of the companies and the citizens. These events were followed very closely around the world because this crisis was spread in a very short time by all sectors of the economy.

When we talk about France we know that they were affected in a certain way by the housing bubble.
The problem in France was the creation of currency for credit in a way that  everyone could access to them (Central Bank of France).

Central Bank had allocated large sums of money to French commercial banks, which created money through loans that were loaned to people. The probleme was that they were not interested if they could pay them back. This money did not recover, which generated a lack of liquidity and led France to the greatest crisis of its entire historical trajectory. 

All this was favored by :

• Treaty of Lisbon, particullary Article 123
• Fractional reserve 
  

This practically allowed banks to get rid of the money of everyone with the intention that this flow of money return almost immediately It was a perfect business for the private bank but not for society.

Noticing the instability of these credits, people would prefer to keep their money at home.

Through the policies that the state followed, inflation had been dictated, what they had achieved was that their society lived indebted in a way that had never been experienced before.

Outstanding consequences: 2006 GDP growth was 2%, unemployment rate was more than 50%, fiscal deficit, rising cost of living and loss of competitiveness.