France Sneezed
Rising interest rates aren’t good for the housing, bond, and stock markets. Which bubble will burst first?
French bonds seem to be the catalyst. Their interest rates are rising because their government can’t cut spending. French leftists and foreigners are teaming up to loot and vandalize cities throughout the country to intimidate the government into spending more- justifying their actions as students protesting for better schools. Investors don’t want to lend money to lunatics.[1]
Per Jenni Reid and Cloe Taylor writing for CNBC,[2]
“France’s benchmark borrowing cost, the yield on its 10-year bond, rose above 5% for the first time since 2002 this week before moving sharply higher.
Meanwhile, the spread between French and German 10-year bond yields — a closely watched metric of distress — reached more than 170 basis points on Thursday for the first time since the euro zone debt crisis of the early 2010s. The cost of insuring the French government against default, as measured by credit default swaps, is also the highest since that period.”
The whole of the West is in the same boat, but,
“When France sneezes, Europe catches a cold.”
-Prince Klemens von Metternich, Austrian foreign minister (1809-1848) and Chancellor (1821-1848). Ousted from power by the Spring Revolutions of 1848.
Indeed, the riots have spread to Spain and Italy. Poland isn’t on the list. They didn’t open their borders to Vandals.[3]
In America, the AI bubble also has a ton of bad debt and are most of the gains in the SP 500 this past year. CoreWeave is not looking good. Nvidia and Amazon have warehouses of unused chips waiting for data centers to be built. Could France burst the stock bubble?[4][5][6]
The Housing bubble in America could also burst as foreigners leave in response to the US government ending immigration fraud and H-1B visa abuses. Why pay a mortgage for a house that you can no longer use?[7]
The obvious solution is for the Fed to cut interest rates and juice the economy. However, after nearly 40 years of the Greenspan Put, it looks like the Fed may have lost control of interest rates. Yields on 10-year US treasuries have risen in response to the last 6 Fed funds rate cuts, starting in September 2024. Interest rates on the 2-year treasury have been rising since the start of the Iran war on Feb 28, 2026.
The consequences for the West will be the riots seen in France. Leftists have taught foreigners that Westerners (white people/colonizers) are the bourgeoisie, and that proletariat (Leftist and brown foreigners) have a right to their stuff. When Western nations can’t afford their social spending anymore, then Leftists and invaders will take it from their “oppressors.” The revolution will eat the useful idiots, like the French store owner who pleaded with looters to leave her shop alone. She was moved aside and ignored.
It is only a matter of time until one of the bubbles pops in response to higher interest rates. If investors- many of whom worry about their home’s equity- cannot flee to stocks or bonds for protection, then they will look elsewhere. Gold is money by default. Debt default.
The US Constitution was adopted during a time of historic debt, historic inflation, and insurrections. The Constitution was made for hard times.
[1]https://www.zerohedge.com/political/france-braces-far-left-chaos-70000-police-deployed
[2]https://www.cnbc.com/2026/10/23/france-debt-euro-zone-contagion.html
[3]https://apnews.com/article/europe-protests-rome-milan-b41b5adf5a749440abb88693059eeced
[4]https://www.reuters.com/commentary/breakingviews/us-corporate-profit-boom-faces-its-minsky-moment-2026-10-22/ Analysts at Morgan Stanley predict that 42 leading companies exposed to AI will grow their earnings by 67% in 2026. The aggregate earnings growth of the other S&P 500 companies is projected at 23%. Put another way, these 42 stocks account for more than half of the earnings growth for the S&P 500 in the current year. Next year Morgan Stanley expects the basket of AI plays to contribute 78% of the S&P 500 earnings growth as AI investment in the United States rises to a forecast $1.6 trillion.
