France’s Threat to the World’s Government Bond Market - American Enterprise Institute - AEI

Mark Twain is said to have observed that while history may not repeat itself, it certainly rhymes. We would do well to bear this in mind as we watch France’s government bond-market crisis unfold. As with the 1997–98 Asian financial crisis and the 2010 eurozone sovereign debt crisis, the turmoil in France’s bond market could quickly spread to other countries that share some of its basic weaknesses. That risk looks especially acute at a time when Italy, Japan, the United Kingdom, and the United States all appear to have unsustainable public finances. In 1997, the Thai currency devaluation triggered a wave of devaluations across Asia, including in Indonesia, Malaysia, the Philippines, and South Korea.