One source of last week’s market panic could have been set off by a simple work of fiction.
A series of articles in Le Monde, “End of the Line for the Euro,” looked at how a collapse of the currency might hypothetically play out, particularly against the backdrop of French presidential elections next year.
While the newspaper’s 12-part series was clearly labeled as fiction, it named real banks, like Societe Generale, whose shares plunged 15 percent last Wednesday, prompting the bank to deny speculation that it was in financial trouble.
Now French politicians, business leaders and journalists — at least those who are left in Paris during the dog days of August — are wondering if that series somehow played a role.
The trail seemed to lead to London, where the Mail last week published an article saying that Societe Generale was “on the brink of disaster.” Societe Generale and an Italian bank, UniCredit, were in a “perilous” state, the paper added, citing “a senior government source.”
Last Tuesday, two days after the report appeared, the Mail retracted it.
Readers of “End of the Line for the Euro” noticed that Societe Generale and UniCredit were named in the same passage in the series, in an imaginary conversation involving the hedge fund manager John Paulson, in which he says that US regulators have been raising concerns about the liquidity of the two banks.
On Wednesday, a journalist at the Reuters news agency, Natalie Huet, speculated about a possible link between the tale in Le Monde and the article in the Mail.
“The rumor of a collapse of SocGen could have come from a misreading of the summer series in Le Monde by the Daily Mail,” she wrote on the blogging site Twitter, referring to the weekday sister publication of the Mail on Sunday.
Huet subsequently clarified that her comment was based on the “words of traders” and was merely intended to relay a “funny and not impossible hypothesis.” She also specified that she had been commenting in a personal capacity.
The story took off from there. On Thursday, the news agency Agence France-Presse said, in an article that it later killed, that the Le Monde series “was the source of false information that has largely contributed to Societe Generale’s stock market drop.”
On Friday, French Minister of Economy, Finance and Industry Francois Baroin discussed the possible connection in a radio interview.
By the weekend, the talk had grown so loud that Le Monde was moved to defend itself in a front-page editorial by Erik Izraelewicz, its top editorial executive.
“The reality is that our fiction had nothing to do with this crazy rumor,” Izraelewicz wrote. “The paradox is that this case has come to illustrate something that our series denounced: the unacceptable role played by rumors in determining the fate of nations and businesses.”
In the series, the collapse of the eurozone is driven by market rumors that Germany would pull out of the eurozone, setting in motion a disastrous cycle of events.
The scrutiny comes at an awkward time for Le Monde, less than a year after it was taken over by a group of French business executives with links to the Socialist Party.
Societe Generale actually fared better in Le Monde’s fiction than another French lender, Credit Agricole, which complained to the newspaper after it was portrayed as requiring a costly bailout.