Jay Sharma

Chamath: France Won’t Fix Itself. The Bond Market Must Force Its Hand. “I think the people have a responsibility to understand the numeric reality in which they are living. (The French) are living in a state that is spending more than any communist utopia that they hoped to achieve. Yet the outcomes are broken, which means the system is broken, and you need to reset that. And the government will not reset it on its own, and so the bond vigilantes will have to do it for them. I think they need to break the back of the French government.” Jason: “Okay, there it is. There's the mandate.” Chamath: “I think you need to take France to 8% and just break them.” Jason: “Yeah, and then all of a sudden, austerity measures, immigration, all this stuff is going to be taken a lot more seriously.” Chamath: “At least it'll all be on the table, and they will have to sort out what they're willing to give up. But right now, if you can skate through this moment, then these things continue to fester, and it is a tinderbox that at some point, again, we know what the trail of breadcrumbs can lead to in terms of fomenting this societal rage. You cannot allow that to happen. And so the government has a responsibility now to nip this in the bud in a structural way.”

David Friedberg: France’s Crisis Is a Warning for America “France is a bellwether for the West. So take a look at this chart. This chart is a measure of public spending as a percent of GDP. And you can see the comparison of France's public spending as a % of GDP to the peak public spending as a % of GDP of major communist nations.” @Chamath: “So do you think France is a communist state? They spend like it.” @Jason: “Well, it's certainly been a socialist state, right?” Chamath: “Is it working?” @Friedberg: “That's my point. And I think this is such a prescient lesson for the West to look at. We all think that there's some political problem with Macron or whoever it was. The more the government spends, the worse the conditions get for its people, not the opposite, and then the people riot and revolt. Take a guess where the US is today. US public spending is roughly 36% of GDP. France today is operating its national government spending deficit is 5.4% of GDP. The US is actually 6.2% of GDP. France is, I think, probably the first to go because they're only growing their economy at half a percent while the US is growing at 2.3%. So we're still kind of hanging on because we have some degree of economic growth that's allowing us to kind of hold things together. But I would argue that we are facing the same sort of fiscal cliff which leads to this extraordinary social unrest as France. All the economic measures are aligned, we're at the same rate, we're at the same set of problems, and we're starting to see the cracks in the system. There's probably a multi-year solution.”