It’s the closest the Eurozone has come to falling apart.
By Wolf Richter of WOLF STREET
Marine Le Pen, the leader of the National Front, will get enough votes in April during the first round of the French presidential election but will be defeated in the second-round runoff in May, according to the polls. So at least hopes the French political class, and by extension the European establishment.
They’re hoping Le Pen would be defeated because she is campaigning on taking France out of the euro (after holding a referendum) and re-denominating the entire €2.4 trillion pile of French government debt into new franc. Then the government can just print the money it wants to spend.
There are some complications with her plan, including that the diverse and bickering French political class will unite into a slick monolithic bloc against her during the second round. And if she still wins, her government will face that bloc in parliament. But hey. And now people are seriously thinking about it.
Greece was on the verge of leaving the euro, but then within a millimeter of actually taking the step, it blinked and inched back from the precipice in the hot summer of 2015. And so for now still no one knows what the cost would be to leave… they can only grapple with the costs of staying.
In Italy, the Five Star Movement, which has been gaining momentum, is making noises about a referendum on euro membership. Italy has a special set of problems: It wants to bail out its banks but doesn’t have the money to do it; and it needs to devalue its currency as it had done so many times before it joined the euro, but has no currency it can devalue.
So the question of what it would cost to leave the euro is uncomfortably on everyone’s mind and lips – that’s how far this has gone…
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