France remains paralyzed even after its latest government reshuffle. Time is running out to consolidate public finances before bond markets turn against Paris.

The office of prime minister has become a revolving door. In just three years, President Emmanuel Macron has burned through five governments without visible results. The country is trapped in political shock, a deadlock in parliament that appears unbreakable.

The Hyper-State Emerges

On September 9, Sébastien Lecornu of Macron’s Renaissance party took the poisoned chalice from his failed predecessor François Bayrou. Like those before him, Bayrou was broken by France’s structural inability to reform. The country sustains one of the most bloated welfare systems in the world, with government expenditure at 57% of GDP. This overextended welfare state acts as a sedative for a migration-driven society that has shifted into full socialist-style management of the economy -- and now cannot find a way out.

France buys social peace with ever-larger sums of borrowed money. The strategy leaves deep holes in the public accounts and barely hides the fractures of a fragmented society, where class conflict grows more aggressive and Islamist subcultures flourish. With new borrowing at 5.6% of GDP this year and total debt at 114%, France faces the classic Ponzi dilemma: once old debt can no longer be rolled into new issuance, the entire system collapses.

Markets Focus on Assets, Not Just Debt........

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