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Why We're Ungovernable, Part 17: Europe Gets Its Doomsday Scenario

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Published : April 17th, 2017
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The rise of French far-right presidential candidate Marine Le Pen has made a lot of people nervous since, among many other things, she's in favor of leaving the eurozone, which would pretty much end the common currency. But since polling has shown her making the two-person run-off round but then losing to a mainstream candidate, the euro-elites haven't seen any reason to panic.

Here, for instance, is a chart based on February polling that shows Le Pen getting the most votes in the first round, but then - when mainstream voters coalesce around her opponent - losing by around 60% - 40%. The establishment gets a bit of a scare but remains firmly in power, no harm no foul.

24hGold - Why We're Ungovernab...

Then came the past month's debates in which a previously-overlooked communist candidate named Jean-Luc Melenchon shook up the major candidates by pointing out how corrupt they all are. Voters liked what they heard and a significant number of them shifted his way.

Melenchon: Far-leftist surges in French polls, shocking the frontrunners

(France 24) - In a presidential campaign with more twists than a French braid, Jean-Luc Melenchon's sudden play to become France's third man -- or better -- is shaking up the race.

With ten days to go before April 23's first round vote, the colourful, cultured and cantankerous far-leftist has the frontrunners on the defensive.

Suddenly, the grumpy far-leftist -- a showman in a Chairman Mao jacket who openly admired late Venezuelan populist leader Hugo Chavez -- holds the mantle of France's most popular politician. In the course of a whirlwind month, the 65-year-old Melenchon surged nine spots to number one in weekly glossy Paris Match's opinion poll. A full 68 percent of those surveyed hold "favourable opinions" of the far-left candidate, the poll by the Ifop-Fiducial firm showed.

On some polls, Melenchon has now bypassed embattled conservative François Fillon for third place in a presidential race that will see the top two advance to the May 7 run-off.

An Ipsos poll on Tuesday put Melenchon a half-point ahead of Fillon for third place in the race, behind National Front leader Marine Le Pen and the independent centrist Emmanuel Macron. With 18.5 percent, the far-leftist has gleaned 4.5 percent in just two weeks, with Macron and Le Pen tied on 24 percent.

Melenchon wants to quit NATO, the World Trade Organization, the International Monetary Fund, the World Bank, and block European trade treaties with the United States and Canada. He promises a French referendum on whether to stick with the reworked EU he is pledging to negotiate or leave the bloc altogether.

Here's a chart from the Washington Post showing just how tight the race for the run-off spots has become:

24hGold - Why We're Ungovernab...

It's still unlikely that both Le Pen and Melenchon will make the run-off, but based on the above chart it's suddenly possible. This would be the cultural equivalent of a Trump - Bernie Sanders race in the US, but with - believe it or not -- even higher stakes because both Le Pen and Melenchon would threaten the existence of both the euro and the European Union, the world's biggest economic entity.

So it almost doesn't matter who wins that run-off. Just the prospect of having one or the other in charge would tank the euro and set off a stampede out of Italian, Spanish and Portuguese bonds, possibly doing irreparable damage to the eurozone before the eventual winner even takes power.

To repeat the theme of this series, when you screw up a country's finances you take its politics along for the ride. In France, the right feels betrayed by open borders and excessive regulation, the left by an unaccountable elite that always seems to profit at everyone else's expense. And both sides suffer from soaring debt at every level of society.

So if a fringe candidate doesn't win this time around, the mainstream will just make an even bigger mess, raising the odds of a fringe victory next a few years hence.

 

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John Rubino is the author of The Coming Collapse of the Dollar (co-written with James Turk), How to Profit From the Coming Real Estate Bust (Rodale, 2003), and Main Street, Not Wall Street (William Morrow, 1998). A former Wall Street financial analyst and columnist with theStreet.com, he currently writes for Fidelity Magazine and CFA Magazine He lives in Moscow, Idaho
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