Lagerfeld defends luxury in time of economic crisis

Lagerfeld, head designer at Chanel for nearly 30 years, made his comments on the sidelines of a Chanel show at the Grand Palais in Paris.

He defended the fashion industry for its importance to the French economy and as a provider of many jobs.

As for the ratings agencies, the day that Standard and Poor's warned it could downgrade 15 eurozone countries, including France, Lagerfeld quipped: "Who put them in a position to give A's?"

Chanel created for its show the luxurious palace of an Indian maharajah as the backdrop for its "anti-gloom" ready-to-wear collection.

Lagerfeld described the collection as "very elaborate, a lot more expensive than the normal ready-to-wear," evoking the fantasy of India.