David Betz has made the rounds discussing why he thinks that sectarian civil war in Europe will happen in the next 5 years. Here's one such conversation.
Here's an interesting article from ZeroHedge that applies.
France remains paralyzed even after its latest government reshuffle. Time is running out to consolidate public finances before bond markets turn against Paris.
The office of Prime Minister has become a revolving door. In just three years, President Emmanuel Macron has burned through five governments without visible results.
The country is trapped in political shock, a deadlock in parliament that appears unbreakable.On September 9, Sébastien Lecornu of Macron’s Renaissance party took the poisoned chalice from his failed predecessor François Bayrou. Like those before him, Bayrou was broken by France’s structural inability to reform. The country sustains one of the most bloated welfare systems in the world, with government expenditure at 57% of GDP. This overextended welfare state acts as a sedative for a migration-driven society that has shifted into full socialist-style management of the economy—and now cannot find a way out.
France buys social peace with ever-larger sums of borrowed money. The strategy leaves deep holes in the public accounts and barely hides the fractures of a fragmented society, where class conflict grows more aggressive and Islamist subcultures flourish. With new borrowing at 5.6% of GDP this year and total debt at 114%, France faces the classic Ponzi dilemma: once old debt can no longer be rolled into new issuance, the entire system collapses.
Unlike the US, the Euro is not the currency the world uses and so there is no real reason to buy French bonds as there is to buy American bonds. If any of the European countries find themselves in a serious fiscal crunch, there will be cuts to their social spending, either from inflation or budgetary necessity.
It hardly matters which. In a population used to survival at the hands of government largesse built upon clouds of borrowing, when that borrowing dissolves, things will get dicey and people will revert to clan and tribal loyalties. The African and Muslim "migrants" will have the advantage here as they are far more familiar with violence and deprivation than the native French and British.
If you think the IMF can bail out these countries, think again. IMF rules say that a country can borrow up to 200% of its quota, which is tied to its economic size and contributions to the IMF. For the UK, that would be about $55B. For France, that would be about $70B. That would cover about 4 months of each country's current borrowing.
The IMF can't come to the rescue because the amounts both nations need are just too large.
You can "buy social peace with ... borrowed money" until you can't.
David Betz has predicted it. Will the debt crises be the catalyst for it?
No comments:
Post a Comment