On april 16th a new futures-bond market called FOAT is to be created. Much speculation exists about it as the timing of the launch is suspicious, i.e. just before the new presidential election and the fact that it can be leveraged 20 fold to potentially bet against the French economy.

Rue89 carried the following suspicion:

The most alarmist talk of a “financial attack”. Wednesday, the Left Front candidate Jean-Luc Melenchon denounced “a new coup finance against our country”, the day before, another candidate, Jacques Cheminade warnedagainst an “offensive is underway throughout the world “against France.

What they worry all of a sudden? The launch of the Eurex (one of the largest derivatives markets), a new futures contract on French government bonds. Announced March 21, this contract will be launched April 16 and will allow buy or sell bonds equivalent to Treasury (OAT) of France at a price fixed in advance for an effective regulation at a later date. Eurex code of this contract: Foat.

Jacques Cheminade considers that the arrival of such an instrument on the eve of the presidential election is no accident: it will allow to speculate with “leverage than twenty times” (“twenty times you can make your put “) and threatens to destabilize the next president.

But The Slog took the theme further and ran with an interesting theory based upon the global elite not being too happy if Francois Hollande wins the presidential election instead of their man Sarkozy. The FOAT (run by Morgan Stanley) could be used in that case to bet against the french economy. Ultimately a unity government would be needed with Lagarde riding to the rescue as the technocrat in charge. Time will tell but lets see how The Slog teases this one out. Read full article to get a proper view, I am just adding the part I found most interesting.

What Morgan Stanley hopes to create after April 16th is the perfect hedge for itself: squillions of money betting on French collapse playing off similar squillions exposed to that collapse. So those French politicians publicly suspicious of the danger to France are right on the money: this is classic Wall Street double-dealing at its worst…the sort of client conflict that made Goldman Sachs infamous.

This feels to me like the biggest and best-evidenced motive I’ve yet seen in this affair. But remember: everything today is a weapon with which to carry out l’attentat. Picture the scenario:

Hollande wins the election…still the most likely result, despite Sarko’s choreographed execution of a Toulouse Islamist the week before last. He immediately starts unpicking Merkel’s FiskalUnion, slowing down its progress, and denouncing the Troika strategy of ClubMed austerity as obviously flawed.

This is a potential disaster for American debt, for American business, and for Barack Obama’s re-election ‘certainty’. So there is no shortage of motive here: “we can’t let Hollande keep the crown”.

But suppose, the second Francois le Terrible is elected, the brand new FOAT futures market takes the news badly….with Fed help. As in, starts betting heavily on Hollande making a mess of things and leading Europe into further chaos. Nice work for Morgan Stanley, and bad news for Le Parti Socialiste.

The wave ripples outwards, and a couple of French banks get desperate. French bond yields treble. France is turning into a ClubMed….zut alors, quelle horreur et Dieu en ciel! It is a catastrophe. Sauve qui peut! What can we do?

Well….why not appoint Christine Lagarde as Minister of Economic Finances: the acceptable French face of the IMF? OK, she’s in America’s pocket – but the upside is, she’s never worked at Goldman Sachs. What a relief: it is a government of National Unity – just like in Greece. We are saved. It is a miracle.

That’s the theory, now lets see some of the circumstantial evidence.

Sound far-fetched? Perhaps. But let’s apply a few classic Maigret detection techniques:

The accused Troika has form: Greek Goldman implant in Athens, abandoned referendum, delayed elections; Italian Goldman implant in Rome; Italian Goldman implant in the ECB; Geithner mouthing off about bazookas and foaming at the mouth in Poland; openly admitted attack on the Iranian Rial.

The Troika – really, Germany + America – has motive: eurobanking contagion would sink the USA, and the last thing Americans want is a Frog Commie screwing up all those excellent critical path analysis fantasies handed out by the IMF.

Sarkozy has form and motive: remaining enigmas in the obliteration of DSK as an opponent, his role with the Fed  in getting Lagarde the job as his replacement, the guy’s track-record as a wannabe moneterist supporting globalist pre-eminence: all of these suggest that Nico may well be something of a con…in both the English and French senses of the word.

The surveillance data: the problems facing Morgan Stanley after September 2011, a visit from Blankfein to the Elysee in November, the FOATs announcement in March, its launch just as we get to the election, the creation of a Get out of Jail Free card for MS.

Far, far crazier things than this have turned out to be true. For the moment, the geopolitical element remains in the realm of informed speculation….although to the questions – would they and could they? – the answer is a resounding “Yes”.

Looks like we could be hearing a lot more from France after the presidential election. Interesting theory nonetheless.