Bloomberg
May 2, 2011
Greece? Been there. Ireland? Done that. Portugal? Got the T-shirt. For the past year, countries sharing the euro have been going bust one by one.
So where’s next? Plenty of people will point the finger at Spain. Some at Italy. A few single out Belgium, a country with high debts, and no government.
But they should be looking somewhere else: France.
It is increasingly politically unstable, its debt position is getting worse all the time, it is losing competitiveness against Germany, and it shows little willingness to change. Those are all good reasons for the bond markets to make France the next battleground. But the yield on France’s 10-year bond is still hovering quietly at about 3.6 percent.
There isn’t, of course, a shortage of candidates for the next leg of the euro-area’s rolling crisis of confidence. Spain experienced a property bubble every bit as extreme as Ireland’s, and has one of the biggest budget deficits in the euro area. Italy has a legacy of government debt almost as bad as Greece’s, and has struggled to grow since joining the single currency. The same is true of Portugal. Belgium has just marked a year without a government, a world record in peacetime: There isn’t much chance of it getting a grip on the budget deficit while the country can’t even agree on who is in charge.
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