After France, Belgium Is Europe's Next Debt Flashpoint

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After France, Belgium Is Europe's Next Debt Flashpoint Authored by Thomas Kolbe via American Thinker,In the shadow of France's sovereign debt crisis, other smoldering fires…

In the shadow of France's sovereign debt crisis, other smoldering fires threaten to become a raging blaze. In Belgium, things could come to a flashpoint that sets the entire eurozone alight.

But things hung by a thread. For in the eurozone, states are chained together through the bond market. The EU, and above all the eurozone, is simply not a federation like the United States. Debt consolidation under the leadership of the European Commission may be Brussels' goal, but given the growing tensions on the continent, it is likely to remain an illusion.

Brussels has long been using an instrument that points in this direction: through NextGenerationEU, the Commission raises joint funds on the capital markets in order to make them available to member states in the form of grants and loans. Countries such as Spain and Italy in particular benefit from this. The political trick is to increasingly cushion national financing problems through joint debt and EU funds. Joint liability is thus growing not necessarily through an open decision in favor of a debt union, but gradually through new financing instruments.

In Brussels, it has been recognized: in the event of a crisis, a fragmented capital market exacerbates the problem. If one member comes under pressure in the bond market, speculators shift their capital in cascades through the ranks of the fiscally weakest members, setting off a domino effect. Moreover, the construct stands and falls with the creditworthiness of the Federal Republic of Germany - and lately, that is no longer in such good shape either.

Much has recently been said about France's political paralysis and its sovereign debt, growing at an annual rate of more than five percent, which is likely to reach more than 120 percent of economic output by the end of the year. A financial catastrophe is quite obviously brewing here, one that even a doubled Federal Republic of Germany in better years could hardly cope with out of its own economic strength.

France is…

Right…

Bel…

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