What does a 1,000-year-old medieval tapestry have to do with a 21st-century economic meltdown?
Everything.
Right now in France, the priceless Bayeux Tapestry is being held hostage—not by thieves, but by nationwide strikes. It’s the perfect metaphor for a country, and a continent, where history is literally on pause because the future is broke.
France is paralyzed. It’s trapped in a financial checkmate between a €3.1 trillion mountain of debt and a population that refuses to accept the bill. The government is trying to make minor budget cuts, and in response, the country has exploded in protest.
This isn’t just another French strike. This is the endgame of 15 years of free money. It’s the moment the bond market wakes up and threatens to pull the plug on one of the world’s biggest economies.
In this video, we’re going to decode the financial doom loop that has France cornered. We’ll explore the radical “tax the rich” solution being proposed, and why it has investors terrified.
Most importantly, we’ll show you why France is a canary in the coal mine for the entire developed world. Its three possible futures—a slow, painful decline, a populist political explosion, or a massive inflationary bailout—are a preview of a choice that could soon be coming for all of us. This is the story of how a nation’s social contract goes bankrupt. You need to understand what’s happening.
#France #Economics #DebtCrisis #Investing #GlobalEconomy #Austerity #Geopolitics #Recession
Bonjour friends and welcome back to Boss Economics World the only show that tells you why your portfolio is trembling by looking at who’s throwing cobblestones in Paris Today’s date is September 19 2025 and we have a fascinating little story out of France a piece of news so perfectly so stereotypically French it almost feels like a parody apparently the loan of the Bayou Tapestry to the UK has been delayed you know the one the 1000 year old embroidered cloth showing William the Conqueror’s invasion of England why the delay because of massive nationwide strikes think about that for a second a medieval depiction of a historic conquest is being held hostage by a modern conflict over spreadsheet numbers history is literally on pause because the future is broke if you’re looking for a single metaphor for the state of the European socioeconomic model in the mid 2020s you can’t write a better one than this so today we’re going to peel back the layers of this French onion and I promise you it will make you cry we’ll go from the point the street protests to the surface the fragile state of a major G7 economy the endgame of zero interest rate policy and the existential question facing the entire developed world who pays the Bill so grab your coffee or perhaps a strong Bordeaux because we’re about to decode the revolution let’s get the basics out of the way the headlines read French unions lead widespread anti austerity protests this isn’t exactly dog bites man news France going on strike is like the sun rising in the east it’s a reliable feature of the universe the French have elevated street protest from a political tool to a national art form but this time the unity is what’s catching the market’s eye all the major unions from the fiery leftist CGT to the usually more cuddly moderate CFDT are marching arm in arm this is the kind of united front we haven’t seen since the massive backlash against President Macron’s pension reforms back in 2023 the unions are calling the government’s budget proposals unprecedented brutality brutality let’s look at the numbers behind this so called fiscal waterboarding the previous government before it was torpedoed by a no confidence vote proposed a plan the goal to trim France’s budget deficit from a whopping 5.4% of GDP this year 2025 down to 4.6% in 2026 that’s a cut of 0.8 percentage points of GDP to put that in perspective we’re talking about roughly 22 billion euros in a 28 trillion euro economy now is that nothing no but unprecedented brutality that’s a bit rich even for the French this isn’t the kind of shock therapy Greece endured in the 2010s where pensions were slashed by 40 percent and the economy imploded this is more like being told you have to switch from artisanal sourdough to a regular baguette it’s an inconvenience not a guillotine the new prime minister Sebastian Le Cordonne is in what we in the business call an impossible position he has no majority his predecessor was just fired for proposing these cuts and his only mandate is to well somehow implement these cuts without getting fired himself he’s a tightrope walker in a Hurricane with no tightrope the opposition is circling like sharks the Socialists want him to soak the rich the National Rally under Marine Le Pen and Jordan Bardella is just sitting back with a bucket of popcorn waiting for him to fall so they can take over so the streets are full with the government claiming 500,000 protesters and the unions claiming over a million the real number is somewhere in between but the important number isn’t the headcount it’s the one on the bond market ticker and that number my friends is flashing red to understand why a 08 percent budget trim sparks a national crisis you have to understand the modern French economic model France is a high wire act balancing a globally competitive luxury goods and aerospace sector on one side with a massive cradle to grave welfare state on the other for decades this worked more or less but the cracks have become chasms let’s bring in the data the debt mountain France’s public debt to GDP ratio is currently sitting at a dizzying 112 percent for context the eurozones official albeit widely ignored limit is 60 percent Germany is around 66 percent France isn’t in the same catastrophic league as Greece 170 percent or Italy 140 percent but it’s firmly in the club of nations that have a serious structural problem the total debt is over 3.1 trillion euros that’s a number so large it loses meaning it’s three thousand one hundred billion euros the spending addiction why the huge debt because France spends like no other major economy according to the OECD French public social spending is a staggering 31.6% of its GDP this is the highest among all 38 OECD countries the average is 21 point one % the US is at 22 point six % France spends nearly a third of its entire national output on pensions health care unemployment benefits family allowances the whole shebang this isn’t a criticism it’s a mathematical reality this is the famous French social model the French people pay high taxes and in return expect an exceptionally high level of security and public services from the state the problem is for years the math hasn’t added up the state has been paying for this model by borrowing essentially funding today’s comfort with tomorrow’s credit card and now the Bill is due the 54 percent budget deficit is one of the widest in the eurozone this isn’t a one off from a crisis it’s a structural feature they are consistently spending far more than they take in this is the core of the conflict the unions and protesters aren’t just angry about 22 billion euros in cuts they see it as a fundamental attack on their way of life a betrayal of the post war social contract for them a well funded state isn’t a line item on a budget it’s a right the government on the other hand is looking at the global bond market and realizing that their national credit card is about to be declined so why is this happening now France has been running high deficits for years why the sudden panic one simple reason the end of free money for the better part of 15 years from the 2008 financial crisis until 2022 the world was swimming in zero cost liquidity central banks LED by the US Federal Reserve and the European Central Bank ECB kept interest rates at or near zero for a country like France this was a magical elixir it meant they could borrow trillions of euros at laughably low interest rates who cares about a 3 trillion euro debt pile when the interest payments are negligible but that party is over to fight the inflation dragon unleashed by post covid supply chain chaos and massive fiscal stimulus central banks have hiked rates at the fastest pace in a generation the ECB’s main rate went from negative territory to over 4% suddenly that 31 trillion euro debt pile is no longer a sleepy giant it’s a ravenous beast that needs to be fed with ever larger interest payments this is where we see the dreaded sovereign debt doom loop starting to twitch here’s how it works one dot a country has high debt check 2 dot global interest rates rise making it more expensive to wish a new debt enroll over old debt check 3 bond investors get nervous about the country’s ability to pay they demand an even higher interest rate to compensate for the perceived risk this is measured by the spread the difference between a country’s borrowing cost and that of the safest borrower Germany for dot this spread widens as we speak the spread between French 10 year government bonds 80s and German bonds has blown out to 85 basis points 085 percent a level that rings alarm bells in Frankfurt and Brussels Earlier this year it was under 50 5 dot higher borrowing costs mean the government has to spend more on interest payments which blows an even bigger hole in the budget check 6 dot to plug the hole the government must announce austerity measures check 7 dot this leads to mass protests and political instability check the instability makes investors even more nervous and they demand an even higher interest rate the spread widens further and you go back to step 3 this is the vicious cycle that nearly tore the eurozone apart in 2011 to 2012 with Greece Portugal and Spain France is not Greece its economy is larger more diversified and too big to fail but the mechanics are the same the sell off in French assets mentioned in the news isn’t just a blip it’s the markets way of saying we’re watching you and we don’t like what we see Prime Minister Lakorneo is trapped if he gives in to the protesters the bond market will punish him if he holds firm the protesters might bring down his government creating even more chaos that the bond market will also punish him for it’s financial checkmate faced with this impossible choice the French left has a simple seductive answer tax the rich The Socialist Party is leading the charge proposing a 2% annual levy on fortunes over 100 million euros they claim this would raise 15 billion euros a year neatly plugging a large part of the budget hole without touching public services it’s a beautifully simple solution politically potent and morally satisfying to many it’s also a perfect example of what we called static scoring it assumes that the super rich will just sit there like docile sheep and let themselves be shorn the head of France’s state investment bank Nicholas Doffort had a more colorful reaction he called the idea crazy in Communist asking how can people still come up with such nonsense in France his panic isn’t unfounded France has run this experiment before the impotence to solidarize Serla Fortune ISF a wealth tax was a feature of the French system for years what happened a 2018 parliamentary report found that it triggered a massive exodus of capital in taxpayers between 2000 and 2012 alone the country saw a net outflow of over 42,000 millionaires taking billions in taxable assets with them Macron eventually scrapped it replacing it with a tax just on real estate wealth this is the eternal debate supercharged by the work of French economist Thomas Piquet proponents argue that extreme wealth concentration is corrosive to democracy and that high wealth taxes are the only solution they point to data showing the top 1% now hold a disproportionate share of global wealth a trend accelerated by the asset price boom of the free money era opponents argue that in a world of mobile capital a punitive wealth tax in one country just incentivizes the wealthy to move their assets and themselves to more favorable jurisdictions like Switzerland Luxembourg or Dubai they warn it would kill investment trigger a brain drain and ultimately yield far less revenue than promised while cratering the economy the socialist proposal for a 2% tax is particularly aggressive think about it if you have a portfolio of stocks and bonds a safe long term real return might be 4 to 5% a year a 2% tax on the entire principle is equivalent to a 40 to 50% tax on the income from that wealth it’s a massive disincentive to invest in France this isn’t just a French debate it’s happening in the United States with figures like Bernie Sanders and Elizabeth Warren but in France it’s not an academic exercise it’s a life policy proposal in a moment of acute crisis and it represents a fundamental fork in the road so why should an investor in New York a factory owner in Shanghai or a tech worker in Bangalore care about some grumpy French people and a delayed tapestry because France is not an isolated case it is the canary in the coal mine for the developed world every major western economy is facing the same toxic cocktail one dot record high public debt after 15 years of crisis fighting the 2008 crash and the covid 19 pandemic 2 dot aging populations which mean fewer workers paying taxes and more retirees drawing pensions and using health care three dot the end of the cheap money era which turns those debt piles from a nuisance into a clear and present danger for data politically polarized and restive populace that has been conditioned to expect a certain level of state support and is unwilling to give it up France is just where these forces are colliding most violently and most visibly the path France chooses will have enormous consequences there are realistically three ways this can go path 1 the muddle through austerity by a thousand cuts this is Le Corne’s plan a slow painful grind of minor cuts small tax hikes and endless political trench warfare it will likely lead to sluggish growth constant social unrest and a slow bleed of economic competitiveness the markets will tolerate it just barely but the political system might not path to the populist rupture if LA Corna fails the door swings wide open for Marine Le Pen’s national rally they are polling strongly while Liu Peng has softened her anti euro rhetoric a government LED by her would send shockwaves through the European Union a major political crisis in the EU’s second largest economy a nuclear power and a core member of the Franco German engine could trigger a financial crisis dwarfing that of 2012 investors would dump French assets the euro would tank and the stability of the entire block would be in question path 3 the inflationary bailout this is the path of least resistance the government fails to make meaningful cuts the deficits remain high and eventually the ECB is forced to step in to prevent a market collapse by buying up French debt either directly or indirectly this is quantitative easing on steroids it avoids immediate riots and a market crash but it does so by monetizing the debt effectively printing money the result a slow corrosive inflation that acts as a stealth tax on everyone silently eroding the value of savings and wages so as we watch the protests in Paris we’re not just watching a local dispute we are watching a live action trailer for the biggest economic challenge of our time how do you reconcile democratic demands for social spending with the mathematical realities of sovereign debt in a high interest rate world The Bayou Tapestry depicts a decisive brutal and swift conquest that redrew the map of Europe the battle France is fighting today is slow messy and internal there will be no glorious victory only a series of painful compromises William the Conqueror took a kingdom in 1066 the existential question in 2025 is whether France’s leaders can even hold onto their own budget the tapestry can afford to wait the bond market won’t alright that’s our deep dive for today this isn’t just about France look at your own country’s debt it’s demographics it’s politics you’ll see the same storm clouds gathering the question is who has a strong enough roof to withstand the rain let me know your thoughts in the comments is the wealth tax a Panacea or poison can France reform or is it destined for a crisis this is boss economics world helping you see the story behind the numbers until next time
2 Comments
Interesting and informative – thank you!
is this AI?