With all the agony now going on about the Eurozone, a lot of the attention is now shifting to France. Former British Prime Minister Gordon Brown says France will be the next victim of the sovereign debt crisis and it looks like France is on the fast track to trouble with yields on French 10 year bonds soaring, suggesting that investors think France will be the next domino to fall. What made it worse was that ratings agency Standard & Poor's mistakenly issued a notice stripping France of its coveted AAA rating. S&P subsequently said they stuffed up, but that has set the hares running.
There are good reasons why we should worry about France. First as Der Spiegel notes, France's national debt of €1.7 trillion ($2.3 trillion) is equal to 84.7 percent of its GDP. That's the highest debt-to-GDP ratio of all euro member states with triple-A ratings. Also, as Der Spiegel notes, France last passed a balanced budget in 1974.
And most importantly, Italian borrowers owe French banks some $366 billion, in addition to the $53.9 billion Greek borrowers owe them. These are bad loans. There is now a real possibility that French banks are going to lose a lot of money.
And if France, supposedly one of the stronger economies, goes under, what happens next? Europe is falling apart.
no comment untill now