France's borrowing costs hit levels not seen since 2008. Bond traders noticed the country has debt problems and political gridlock. Took them long enough.
The government can't pass a budget. The debt keeps piling up. Investors want more interest to compensate for the risk of lending money to a country that operates like a homeowners association during a parking dispute. Groundbreaking stuff.
Retail traders spent the last six months buying tech stocks on margin because some guy on Twitter said AI would cure mortality. France spent decades building a welfare state it can't afford. Both groups are now shocked that math exists.
The spread between French and German bonds widened. This means investors trust Germany more than France, which is like trusting a dentist more than a guy selling teeth out of a van. Not exactly a close call.
France is now the poster child of sovereign debt problems. That's the label you get when your government spending makes a divorced dad's credit card statement look responsible. They joined the EU to get fiscal credibility and ended up with the borrowing costs of a subprime mortgage applicant who lists "entrepreneur" as their occupation.
Bond vigilantes are circling. These are the same people who get called fearmongers until they're right, then they're called lucky. They looked at France's debt-to-GDP ratio and did something retail traders never do. They read the f*cking numbers.
The French finance minister will probably announce reforms that sound serious and do nothing. Investors will demand higher yields anyway. Retail traders will ignore all of it and buy a leveraged ETF that tracks European dog food companies because someone on Reddit said pets are recession-proof.
France built a social safety net so expensive it needs a safety net of its own.
Photo by Sébastien Ramage on Unsplash
Leave a Comment