The Decline and Fall of France?

'Nouriel Roubini says France is on the cusp right now and poses the question in a recent note to clients: â??A core or periphery country?â?

Roubini says that France is currently on â??honeymoonâ? with French investors who have cut their holdings of PIIGS debt and rotated into French sovereign debt due to a â??home bias.â?

However, according to Roubini, â??many problems are brewing in Franceâ? at the moment, and there are a few reasons for serious concern if youâ??re holding French bonds.

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'It could happen. Empires have collapsed before. Only our hubris would lead us to think that our generation is somehow special or different. But is Mr. Roubiniâ??s prediction the most likely outcome? Probably not. Unless we re-imagine the place of France (and other European nations of comparable stature) so that weâ??re not comparing it to failed states in the Middle East and Africa, but to other nations within Europe.

If we consider the European Union as its own economic system, we end up with core and peripheral countries there, too. Germany, clearly, would be the core country, and Greece the peripheral country. The others would be grouped between them, with rather more Greeces than Germanies in the lot. And given Franceâ??s economic, political and social problems, while it has thus far avoided the kind of major problems that are rocking the so-called PIIGS â?? Portugal, Italy, Ireland, Greece and Spain â?? it could rapidly join their ranks. Leaving us, with, what? The PIFIGS? The FIGPIS (pronounced â??fig piesâ?)?

That would bruise the legendary French ego, but would be in some ways a recognition of the inevitable.

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