Although the unrest in France is unlikely to grow into another French Revolution, it could in retrospect prove to be a pivotal moment in triggering the next eurozone debt crisis. French bond yields have risen sharply in the middle of a global bond selloff, and the difference between French and German yields are now greater than at any point since the early 2010s. Other eurozone countries, largely untouched by the crisis 15 years ago, are now also in the danger zone. One thing is clear: Another eurozone debt crisis would not look like the first one.
The eurozone crisis of the early 2010s followed the global financial crisis of 2008. The trigger varied by country: Ireland and Spain saw collapsing housing and credit bubbles, while long-standing fiscal problems and fudged numbers resurfaced in Greece. During the boom years, the common currency delivered an artificially strong euro and unusually cheap borrowing to countries that had previously faced higher interest rates and frequent devaluations of their pre-euro national currencies. When the crisis hit, these now over-indebted countries were unable to set their own interest rates and depreciate their currencies, as they no longer had their own currencies. Rising sovereign yields threatened bank balance sheets (many of which held large amounts of domestic government debt), prompting bank bailouts that further increased public debt and deepened the spiral. Portugal, Spain, Ireland, and especially Greece lost normal market access.
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