"April is the cruelest month," wrote T.S. Eliot at the beginning of his great poem, "The Waste Land." But if Eliot had been a professional investor who had observed European financial markets over the last few years, I am quite certain that his choice would have been August.
In August 2007, the decision by BNP Paribas to close two of its hedge funds exposed to the subprime sector precipitated a liquidity crisis for all European banks during that summer. This year, BNP's great rival, Société Générale, has been in the spotlight. Its stock fell by more than 14 percent in one day in mid-August, plumbing depths not seen for 2½ years. Rumors have swirled about a possible downgrade of France's sovereign debt, accompanied by speculation about the consequences for French banks.
Since the French, of all continental Europeans, most respect the convention that no useful work should be done in the month of August, this is harsh treatment for their bankers. They have not been slow to claim that they are being singled out unfairly.