France Goes Down Again

France's government has collapsed — again.

With the resignation of Prime Minister Sébastien Lecornu, the fragility of European politics is once more on full display.

Trapped between party deadlock, eco-socialist dogma, and a reform-weary public, France offers the blueprint for what could soon become the next Eurozone crisis.

After Lecornu's abrupt resignation Monday morning — just hours after being sworn in — President Emmanuel Macron must once again find a new head of government.

By now, Macron is well-practiced at this ritual: this marks his third attempt in a single year to form a stable cabinet.

Only a month earlier, Lecornu’s predecessor François Bayrou failed to push through a budget consolidation plan that Parliament deemed too harsh.

The logical next step would be new elections.

But Macron knows that a vote now would deliver a clear victory to Marine Le Pen's conservative-national bloc. And so, Paris will continue to muddle through — buying time, projecting a façade of stability, while the fiscal foundation of the French state lies in ruins.

A Banana Republic Without Hope

France — without disrespect — has begun to resemble a banana republic.

One can't help but recall the South American regimes that never quite got on their feet, forever gripped by cronyism and corruption aimed at squeezing the middle class dry.

In France, a political stalemate between the left and the right blocks any serious reform of a welfare state that has grown — better: overgrown — for decades.

Key social debates, such as ending the deliberate tolerance of illegal migration (a problem Germany knows well), are deliberately banished from public discussion.

France and Germany now march hand in hand toward economic depression.

Entrapped in the political Bermuda Triangle of Brussels, Paris, and Berlin, both have surrendered to an eco-socialist ideology — pursuing open-border policies to absurd extremes, ostensibly to stabilize demographics or cement left-leaning voter blocs through mass immigration from impoverished regions.

'Reality Bites'

Whatever the ideological motives, economic reality always catches up.
Investors are now taking aim at France’s chronic instability.

With public spending at 57% of GDP, a deficit of 5.8%, and debt exceeding 113%, the ice beneath Macron’s government grows dangerously thin.

The world has entered a new interest-rate regime.

Since the end of ultra-loose pandemic-era monetary policy in 2022, bond yields have been climbing. Investors increasingly question the debt sustainability of countries that inflated their deficits for years.

The trend turns alarming when a major economy like France becomes politically paralyzed — unable to stop the debt spiral.

On September 12, 2025, Fitch Ratings downgraded France from "AA-" to "A+" — the lowest rating in the Fifth Republic’s history.

The agency cited growing political instability since the 2024 elections and the failure to pass a viable budget. Fitch expects French debt to continue rising at least through 2027, with no credible plan for consolidation.

Moody’s and S&P had already acted earlier, identifying France’s structural fiscal weaknesses years ago.

The Signal in Gold

One of the most honest indicators of impending crises is gold.

The metal now hovers near $4,000, up over 40% this year — no coincidence.

Contrary to popular belief, gold isn’t merely an inflation hedge; it’s a refuge for capital when financial systems wobble.

The same goes for Bitcoin, gold's digital cousin.

Markets call this the "Debasement Trade" — the bet that central banks will ultimately monetize the exploding debt piles to release pressure from the system, echoing Mario Draghi’s "whatever it takes" moment.

While the Trump administration in Washington looks poised to tackle America's debt mess through tariffs, deregulation, growth, and real spending cuts, Europe’s political paralysis all but guarantees a sell-off in sovereign bonds.

That means higher yields, soaring debt service, and fiscal stress across the bloc.

Capital Flight Inevitable

The European Central Bank claims it’s ready to act.

But the yield curves suggest the ECB never really left the market — it has quietly defended certain spreads to prevent the Eurozone from fracturing. Once it’s forced to intervene openly, capital flight to the U.S. will accelerate.

Expect Brussels and the ECB to ramp up efforts to roll out the digital euro, a surveillance-friendly instrument meant to stem outflows.

The Euro crisis began 15 years ago in Greece.

This time, all signs point to France as the epicenter. Should French-German yield spreads widen sharply and the euro tumble against the dollar, panic will set in: money will first flee to Germany, then inevitably to the United States.

No Escape Left

Once a state can no longer roll over its debt, politics no longer matter — neither who sits in the Élysée Palace nor who holds Germany's finance portfolio. The bond market takes command.

Spillovers across the Eurozone would be unavoidable, given the fragmented structure of the monetary union.

In truth, the EU has long passed the fiscal point of no return. Don't be fooled by the grand "investment programs," such as Germany's so-called Sondervermögen.

Much of that borrowed money is already being funneled into widening social deficits.

Brussels will keep trying to buy time—but to what end?

There is no credible reform agenda to confront the EU's fundamental ailments: the overregulation of the Green Deal, the endless funding of the Ukraine war, and the chronic migration crisis.

The European Union, now preparing a new €2-trillion budget, has effectively become a debt union — one it was destined to become from the start.

It merely took time for its members to descend together into the abyss of collective insolvency.

Thomas Kolbe, born in 1978 in Neuss/ Germany, is a graduate economist. For over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.