France's Debt Crisis Could Trigger a Much Bigger European Meltdown

France's present economic woes signal serious trouble ahead for the coherence of the European Union. On Wednesday evening, the French National Assembly unanimously rejected the government's proposed budget, provoking further fears in the bond market. 1 per cent, the worst it had been for nearly a quarter of a century. Its national debt now stands at over 115 percent of its GDP.

Last Friday, the credit ratings agency Fitch downgraded the outlook for France from stable to negative. How close might we be to a French default There are precious few good options for dealing with such a scenario. Permitting a country of France's magnitude to default would undoubtedly undermine international confidence in the Euro, at a time when most EU economies have been struggling under the weight of multiple…