France could kick off a world-wide run on sovereign debt. From Thomas Kolbe at zerohedge.com:
France remains a politically immovable monolith. A toxic mix of a ballooning budget deficit, an overgrown welfare state, and a persistent recession makes the country a prime candidate for a full-blown sovereign debt crisis. If the government fails to pass its budget, Europe could be in for a heated autumn.
Cuts to social benefits, pension freezes, or reductions in health coverage have historically ended in general strikes, highway blockades, or suburban riots. The media tends to romanticize this as “character strength” — a people resisting the stingy state and fighting for their rights.
What’s left unsaid is that France operates with a staggering government spending ratio of 57% of GDP — the largest welfare state in the EU, possibly even the democratic world champion of redistribution. This deeply socialist policy mix has driven the country into a fiscal and economic dead end.
Public debt stands at around 114% of GDP, with Prime Minister François Bayrou’s government planning fresh borrowing of 5.4% of GDP this year — figures so far removed from the defunct Maastricht criteria they make you dizzy. In July, Bayrou managed to trim the projected deficit from 5.8% to 5.4%, a €5 billion reduction.
We aren’t as bad off as EU rump vassals.
Real socialism (communism) hasn’t been tried.
It’s gonna work this time comrade.
Honk, honk.