Le Big Short: French Political Risk Runs Deep
Let’s hope European policymakers have a plan if Macron’s domestic quagmire gets worse.
`Block everything’ — a giant protest looms in France next week.
Photographer: MATTHIEU DELATY/AFPIt’s getting harder for financial markets to look away from the raucous circus of French politics, a year on from snap elections called by Emmanuel Macron that strengthened populist parties and eroded his own power. While not yet enough to fully derail the hype behind euro assets in a post-Trump world, France carries a whiff of “Le Big Short” relative to its neighbors. One hopes euro policymakers are doing more than crossing fingers.
The catalyst is the rumpled figure of Francois Bayrou, France’s fourth prime minister in two years, who has become a fixture on television screens as the centrist prepares for a confidence vote he called that will likely fail. It’s a political self-immolation intended to shock the country into backing his call for €44 billion ($51 billion) in budget savings to start taming the national debt. The reality is it’s united opposition parties against him. His latest warnings of a need for wealthy boomers to accept sacrifices in the name of the young, while justified, won’t change much.