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10-year Treasury yield climbs above 5.3% to a level not seen in 24 years

122 points · 193 comments · kaycebasques

  1. petcat · · focus · HN ↗
    You want to see what's really bad, a train wreck in slow motion, just look at what France is doing.

    They've been subject to EU Excessive Deficit Procedures for multiple years, must bring deficit-to-GDP ratio from ~5.8% down to 3% within 3 years despite virtually no GDP growth and complete political and societal paralysis about reducing any public benefit or welfare whatsoever.

    ECB will most likely get involved after 2029 to start austerity measures. You can predict how that will go over with the French public especially if Le Pen takes the presidency, which looks likely.

    Very tough times ahead and the EU is facing a critical point about its future.

    1. JumpCrisscross · · focus · HN ↗
      > must bring deficit-to-GDP ratio from ~5.8% down to 3% within 3 years

      Or what? (Seriously.)

      Greece was forced to the table because the market wouldn’t lend to it. So long as France has lenders, why does this rule matter?

      1. viraptor · · focus · HN ↗
        They can lose some monetary discretion if it goes on for too long. I'm not sure what "corrective net expenditure path" means in practice, but it sounds like other members get to decide that one at the time.
        1. clickety_clack · · focus · HN ↗
          The ECB doesn’t have the political power to force France to give up any monetary control. The EU might govern France, but France (and Germany) govern the EU.
          1. petcat · · focus · HN ↗
            That's why I said that it is a coming crisis of confidence for the EU.

            France has snowballing debt with virtually no prospects of growing out of it by itself. So what is going to happen? It's a very dangerous situation that is only feeding the euroskeptics even more.

            1. iamnothere · · focus · HN ↗
              It appears that the intended solution is EU militarization, in which French and German defense companies will take the lead.
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