00:00:00 · S0, Erika Beras, Jeff Guo
[00:00:00] S0: This episode sponsor is HubSpot, which offers the following message. What if instead of updating your CRM, your CRM updated you? HubSpot's self updating CRM keeps your customer context current so you can win more deals. Learn more at hubspot.com. [00:00:17] S1: This is Planet Money from NPR. [00:00:23] S2: Raise your hand if you have a friend like this. They are driving a car they cannot afford. Their mortgage payments are bigger than their paychecks. They charge everything to their credit card, which they also can't afford. So they keep taking out new credit cards to pay the interest on the old ones. [00:00:39] S1: That's basically what some of the richest countries in the world have been doing. Over the past decade and a half, their governments have been racking up record amounts of debt. The United States, The UK, Italy, and France, even the Canadians. After decades of heavy spending, the Canadian government now owes more than a trillion dollars in debt. [00:01:01] S2: All of this national debt would have been unthinkable just a generation ago. The big question now, how much debt is too much debt? And that is why a lot of economists are paying very close attention to France right now. Because over the past several months in France, there have started to be serious whispers about an outrageous possibility, The possibility that France might not be able to pay back all of its debts, which could mean that the seventh largest economy in the world might at some point in the future need bailing out.
00:01:01 · Jeff Guo, Erika Beras
[00:01:01] S2: All of this national debt would have been unthinkable just a generation ago. The big question now, how much debt is too much debt? And that is why a lot of economists are paying very close attention to France right now. Because over the past several months in France, there have started to be serious whispers about an outrageous possibility, The possibility that France might not be able to pay back all of its debts, which could mean that the seventh largest economy in the world might at some point in the future need bailing out. [00:01:33] S1: These scary whispers are not coming from politicians. They're not just coming from economists. They are coming from the market itself, from all the people that France is trying to borrow money from. [00:01:46] S2: Those investors have started to worry that the French government might not pay them back, which is a crazy thing to even say out loud. So now in order to keep borrowing, the French government has to pay these investors higher and higher interest rates. [00:02:01] S1: The problem is France needs to keep borrowing money. It is running a huge budget deficit. France has an aging population, rising health care costs, and an expensive pension program. And right now, as you may have heard, maybe from NPR's Eleanor Beardsley, the French people are taking to the streets, not to tell their government to cut back, but to keep spending more.
00:02:01 · Erika Beras, Eleanor Beardsley, Jeff Guo, Julie Biat
[00:02:01] S1: The problem is France needs to keep borrowing money. It is running a huge budget deficit. France has an aging population, rising health care costs, and an expensive pension program. And right now, as you may have heard, maybe from NPR's Eleanor Beardsley, the French people are taking to the streets, not to tell their government to cut back, but to keep spending more. [00:02:26] S3: The farmers are asking for money. The workers are asking for money. The students are asking for money. Everybody's asking for money. There's money, and and we want it. You know? [00:02:35] S2: But is there money? [00:02:36] S3: Yeah. You know, no. Well, they have to borrow money. [00:02:41] S2: Eleanor's followed these protests since they started in September. At first, it was students in France's public schools complaining about the lack of teachers, the crumbling roofs, very real concerns. [00:02:51] S4: Just go to university and look at everything like [00:02:54] S2: That was Sydney jacin. Then as these protests were expanding, the French government revealed its proposal to actually trim some of the budget, spend less, and that really set people off. [00:03:06] S3: So now it's it's really transformed into a massive societal protest. They call them the cost of living protests. They've been absolutely huge. Like, last Saturday, it was like a coursing human river down this this boulevard. I mean, you couldn't even get across it.
00:03:06 · Eleanor Beardsley, Erika Beras, Jeff Guo, Julie Biat, Olivier Blanchard, Thomas Philippon
[00:03:06] S3: So now it's it's really transformed into a massive societal protest. They call them the cost of living protests. They've been absolutely huge. Like, last Saturday, it was like a coursing human river down this this boulevard. I mean, you couldn't even get across it. [00:03:21] S1: In late October, some of the protests got violent. There was looting. There was arson, and some police got violent. Eleanor got tear gassed at one point. But she says, for the most part, the hundreds of thousands of people marching in the streets have been peaceful. They're just frustrated. And to them, all this talk about France potentially running out of money seems like an excuse. [00:03:44] S2: Have any of the protesters that you talked to, have any of them said anything about, I don't know, France's enormous debt, the budget deficit? [00:03:52] S3: No. Not one. You ask people about the debt out there, and they're like, that... That's not our that's not our problem. That's up to the government to deal with. Or they say debt is just... One woman told me debt is just used to keep people in line. [00:04:03] S2: Eleanor chatted for a bit with this protester. She's a woman in her fifties. Her name is Julie Biat. And Eleanor asked her [00:04:10] S4: Cancel the debt. [00:04:10] S2: Should France just stop paying [00:04:12] S5: its debts? [00:04:13] S4: Yeah. Why not? There is a bunch of monies in the world. Don't say there's no money. It's not the question that there is no money. There is so much money. [00:04:23] S2: And look, Julie does have a point. [00:04:25] S6: She's at Rome.
00:04:25 · Thomas Philippon, Jeff Guo, Erika Beras, S0, S7
[00:04:25] S6: She's at Rome. [00:04:26] S2: There is a lot of money in the world. It's just that investors are increasingly nervous about lending it to the French government. [00:04:33] S1: And there is something economically strange about that. Why are investors so spooked by France specifically? Like, sure, the French government does owe a lot of money, but relatively speaking, Italy and Greece are even deeper in debt. And sure, the French government keeps spending more than it collects in taxes, but the budget deficit in The US is currently worse. [00:04:57] S2: So what is it about France that has investors so worried that we are talking about a potential debt crisis? Or is the better question, why haven't investors gotten spooked by all the rest of us, all the other countries that are also on this runaway borrowing spree? Hello, and welcome to Planet Money. I'm Jeff Guo. [00:05:16] S1: I'm Erika Beras. Today on the show, how borrowing on top of borrowing, on top of borrowing became the new normal for countries around the world. [00:05:25] S2: And what all those countries, including The US, might learn from what is going wrong in France. [00:05:39] S0: Stay tuned for the following announcements and messages from our sponsors. [00:05:43] S7: This message comes from Capital One. Capital One offers checking accounts with no fees or minimums. What's in your wallet? Terms apply. See capital1.com/bankguy for details. Capital One NA, member FDIC.
00:05:43 · S7, S0, Jeff Guo
[00:05:43] S7: This message comes from Capital One. Capital One offers checking accounts with no fees or minimums. What's in your wallet? Terms apply. See capital1.com/bankguy for details. Capital One NA, member FDIC. [00:05:58] S0: This message comes from Babson College. The world needs entrepreneurial leaders, and you can become one at Babson College. Gain the skills to lead, motivate, and inspire through a specialized master's or MBA program with full time, part time, and online options. Turn ideas into action with a graduate program that caters to your professional needs and fits your lifestyle. Ranked number one in entrepreneurship by US News and World Report. Visit babson.edu/gradprograms. [00:06:28] S7: This message comes from LinkedIn. Owning a small business comes with a lot of challenges and means juggling multiple things at once. It's even harder to do it efficiently. But with LinkedIn, you get all the tools you need to grow in one place. With LinkedIn, simplify your sales, marketing, and hiring so that you can actually run your small business. Learn more at linkedin.com/planetmoneyshow. [00:06:52] S2: There has been this huge international borrowing spree going on where all these rich countries are taking on more and more debt, and it wasn't always like this.