The only good thing to come out of the Euro debt crisis is that "France will get screwed," financial commentator John Mauldin told attendees at the 3rd annual Innovative Alternative Strategies conference in Denver yesterday. And anyone who believes Germany would or could bail out their socialist neighbors to the west is delusional.
Mauldin admitted he loves Paris, particularly its museums and restaurants. But their socialist arrogance and sense of cultural superiority, among other things, make Frenchmen somewhat deserving of their fate. France is on track to have a debt-to-GDP ratio of 200 percent.
The GDP ratio, combined with the present socialist government's idea to raise tax rates from 50% to 75% and possibly tack a wealth tax on top to get out of its debt morass, is sheer suicide. The nation already devotes 55 percent of GDP to taxes and government spending. "They will hit the wall in two years," Mauldin predicted.
But after all that, "Paris will be there." The French have survived Waterloo, various Louis rulers, Napoleon, Verdun, the Maginot line, the Nazi occupation, Dien Bien Phu, student revolutions and interminable worker strikes and slowdowns.
Germany, meanwhile, is in a huge dilemma. Exiting the Euro would cost Germany trillions. But as the biggest holder of European debt, Germany is between a rock and a hard place. "They are wetting their pants," Mauldin said.
It's questionable whether Germany has the ability to bail out Spain, much less France. Another speaker at the conference, Morgan Creek Capital CEO Mark Yusko, said that Deutsche Bank, Germany's biggest financial institution, had a debt-to-equity ratio exceeding 60-to-1.