by Mark O’Byrne, Gold Core:
David McWilliams, economist, writer and journalist, has warned that the coming French election may lead to the euro breaking up and that Ireland should have a ‘plan B’ and ‘print punts’ in order to be ready for the collapse of the “single currency.”
David McWilliams at Ireland’s Banking Inquiry
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This time last year, only a few of us were suggesting that Brexit was likely. The mainstream view was that it couldn’t possibly happen. But it did. And so too did Trump. When this column argued in June that “we should prepare for President Trump”, one or two local talk shows chuckled and sneered at the mere suggestion that such a creature could inhabit the White House. But he is there.
In December, the Italian electorate revolted against its government – again the view of ‘sensible’ people was that bolshie Italians would see reason. But they didn’t.
The next stop on this political whirlwind will be the Netherlands next month; and the big one, of course, is France. In less than 70 days, France goes to the polls and only an idiot would rule out Marine Le Pen’s chances.
It was the great French romantic poet and novelist Victor Hugo who declared:
“You can resist an invading army; you cannot resist an idea whose time has come.”
Do you get the feeling that we are living through epochal change, where one great idea is about to be replaced by another? Are we experiencing the irresistible force of an idea whose time has come?
The first thing to happen in the case of a Le Pen victory is that money will flood out of all non-German members of the euro. Italy will face a massive bond crisis, presaging default fears. Greece will be gone. Spain and Portugal will experience similar bond crises, and so too will Ireland.
The reason for this is that a bond is a 10- or 20-year IOU. For Ireland, the bond states that the Irish State will pay the investor back a certain amount in euro. But if the euro itself is breaking up from the centre, why would anyone bet on an English-speaking periphery country where ties to the UK and the US – two countries where the administrations are implacably opposed to the EU – are extremely strong?”
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