France Races Towards a Debt Crisis as the Nation Continues to be Besieged by Violent Foreigners Demanding to be Paid for Peace

Before getting to that, let me offer a completely-unrelated bit of history. Via Google AI:

Danegeld was a tax raised in Anglo-Saxon England and Francia from the 9th to the 11th centuries to pay tribute or protection money to Viking raiders to stop them from ravaging the land.

Key Historical Facts

• Meaning: The word comes from Old English, literally translating to "Dane payment" or "Dane yield".

• Early Tribute vs. Army Tax: Originally known as gafol when paid directly to Vikings as bribes, it later evolved into a kingdom-wide land tax called heregeld (army tax) used to fund a standing defensive force or pay mercenary armies.

• King Æthelred the Unready: The practice became most prominent during the reign of King Æthelred II (978--1016), who paid massive quantities of silver pennies (such as £10,000 in 991 CE and up to £48,000 in 1012 CE) to buy off invaders

With that irrelevant, off-topic mention of large bribes paid to violent invaders to not loot and pillage and kill them, let's turn to a completely different subject.

France's, uh, guests are demanding, supposedly, more "resources" for schools.

This demand comes at a very bad time. Because France's dysfunctional government is made up of alleged "centrists" and even some "conservatives" in a coalition with socialists and communists, no one can agree on a budget.

So they just keep borrowing money, growing the deficit more and more.

You can only borrow freely until the markets begin to doubt you can ever repay your debts. And then the cost of borrowing rises, and you have to borrow more and more at higher and higher interest rates until it becomes impossible to repay the debt and then people stop lending you money completely, and your finances collapse.

France is now in this doom-loop of increasing debt and compounding interest on the debt.

For most of the past decade, lending money to France was considered almost as safe as lending money to Germany.

That belief is now breaking down, and it is happening fast.

Last week, investors demanded up to 5% a year to lend to the French government for 10 years. France had not faced borrowing costs that high on its 10-year bonds since July 2002.

The extra return investors want to hold French debt instead of German debt rose to its highest level since the eurozone debt crisis of 2011-2012.

France now pays more to borrow than Italy and Greece, two countries that sat at the centre of that crisis.

This matters well beyond the bond market. Government borrowing costs influence the rates on mortgages and business loans and the interest bill that every French taxpayer ends up covering.

...

Beyond the rise in France's 10-year bond yield to 5%, its widening gap with Germany shows investors are increasingly concerned about French debt.

Its premium over Germany's equivalent Bund reached 152 basis points, or 1.52 percentage points, returning to levels associated with the 2011 eurozone crisis.

Intesa Sanpaolo strategists, led by Gian Marco Salcioli, argue that the speed of the move matters more than its level.

When yields jump this fast, they say, the fear shifts from the price of borrowing to the risk of not being repaid in full, and France is the clearest example.

"The move tends to transform rate risk into something broader, first and foremost credit risk," Salcioli said in a note to clients.

Díaz-Alvarez said this was "the largest weekly widening in said spread in seventeen years."

Politico 4 Kidz, Axios:

France is dealing with a major debt crisis and social unrest ahead of its presidential election next year.

Why it matters: Worries are rising about contagion in Europe and beyond, and the situation is drawing comparisons with the sovereign debt crisis that rocked the European Union in the 2010s.

"Government bond yields in France are spiraling out of control. Contagion to the rest of high-debt Europe is unfolding rapidly," Brookings' Robin Brooks wrote recently.

Where it stands: Yields on government debt are rising across Europe and in the U.S., but the situation in France is worse.

Investors are demanding higher yields to hold French debt, compared with bonds from Germany, which are seen as a safer alternative.
On Friday, the difference, or spread, between the two countries' bond yields, was the widest it has been since the debt crisis.

The spread is widening due to "higher sovereign default risk in France," Macquarie's Thierry Wizman wrote in a note Thursday titled: "Are the French Toast?"

Meanwhile, the foreign guests continue ravaging the countryside while demanding the peasants pay them more money in exchange for a few months of pillage-free "peace."

Not even the trees are safe from these Aspiring Doctors and Engineers:

Harsh, but seems accurate:

posted by Disinformation Expert Ace at 05:20 PM

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