ZeroHedge News
Follow
Sovereign Debt Crisis: The French Left Wants To Simply Burn The Debt
Socialists, according to the author, view their primary challenge as securing credit for ambitious state-led projects. They ideally operate in a zero-interest-rate environment where even questionable ventures can be debt-financed. This artificial credit, the author argues, is disguised by propaganda, leading citizens to question economic stagnation while state apparatus expands. French socialist Jean-Luc Mélenchon's proposed solution involves unchecked government debt accumulation, with the European Central Bank acting as a "bond landfill" to neutralize these securities. Mélenchon suggests these neutralized bonds could then be "burned" on balance sheets, effectively erasing debt and creating a socialist paradise of unlimited possibilities. The author criticizes this approach, stating it ignores finite resources and existing distribution problems. He contends that the European Central Bank has already been pursuing such an illusory policy since the sovereign debt crisis. The text further questions the central bank's true market control, highlighting their influence at the short end of bond markets. Mélenchon's plan for common European bonds, stabilized by the ECB, is presented as another economically incompetent idea. The author argues Mélenchon's concept of the ECB buying French debt equates to France owing itself credit, which can then be canceled. This, the author states, is economically nonsensical and a catastrophic breach of trust leading to inflation. The author highlights current state spending on conflicts, climate policy, and migration as examples of this credit pump in action. He suggests Mélenchon's proposals indicate political camps are heading towards sovereign bankruptcy, with German politics potentially supporting Eurobonds. The "Next Generation EU" project is cited as a precursor to common debt, primarily benefiting fiscally weaker nations. The author concludes that a European military sector and green initiatives will necessitate further common debt, pushing countries like Germany towards excessive subsidies and tax increases, ultimately leading to a financial crash, capital controls, and financial repression.