We can be sure that the euro debasement trade versus the US dollar is not over. France’s situation is suddenly critical, particularly when its experience of the 1973—1974 OPEC crisis is considered.
Introduction
Regular readers of MacleodFinance will be aware of a looming debt crisis affecting all G7 member nations and beyond. This crisis is unique for modern times, being a widespread government financial crisis and not a private sector one in its origin. The outstanding question has been which of the G7 dominoes will topple first, and will it knock all the others down?
We appear to have the answer: France. Headlines tell us of a far-right takeover in the French senate, and there’s a presidential election in six months. Students are rioting out of control. But this is not unusual for France; the problem the media misses is the government debt bomb in the process of exploding.
The chart below reflects the growing risk of a French default on its debt, whereby the buyer in effect pays an insurance premium as protection against default on a 5-year bond. In the last month, this CDS has risen from 33.75, an increase of 136%. It is screaming crisis.
