There is a striking contrast between the real situation of the American economy and the frequently catastrophic judgment about the French economy. In Parliament, discussions on the 2026 budget are beginning and the rating agency Standard & Poors has just downgraded France's rating to A+ with a stable outlook from AA- with a negative outlook. The fragility of the government, characterized by the narrowly rejection of a motion of censure and a heavy debt justified this decision. And it has triggered a wave of alarmist comments aimed at pushing through a rigorous budget despite a political context that is not conducive to it.
However, the financial markets retain their confidence in France since the last medium-term bond issue on 17 October brought in 11.5 billion euros against a demand of nearly 34 billion and the ten-year rate on OATs after the S&P decision has changed little (3.35% compared to 3.55% at the beginning of October). The spread with the German Bund has even fallen below the 80 basis points reached after the fall of the Bayrou government. The following week's issuance of Treasury bills with maturities of up to one year was just as easily subscribed at a rate of around 2%. Nine billion euros were raised in the face of a demand of 22 billion.
Two factors explain this resilience. The financial wealth of the French continues to accumulate with more than 6000 billion euros. The country is therefore solvent. Secondly, the method, with artificially unfavourable criteria, distorts the judgment. If France has high levels of spending, it is partly because in recent decades it has had military spending in relation to GDP twice as high as in the European Union. In addition, in 2025, France has an inflation rate twice as low as that of the euro area. This mechanically increases the two ratios relating to deficits and public debt.
This debate obscures a much greater risk: the state of the US economy. We constantly warn about the disconnect of Europe and therefore of France from the United States. Growth, productivity developments and the emergence of giants in new technologies are indisputable signals and Europe would be well advised to tackle its backwardness rather than flood countries with regulations and standards that weigh on production costs and set up competition as a totem. This prevents each State from conducting a real industrial policy through public procurement and from facilitating business groupings that would make it possible to face Chinese or American competitors who are not affected by such constraints.
But other U.S. economic indicators are far less flattering, especially when compared to European figures. The federal deficit for the fiscal year that ended in September 2025 is estimated at $1700 billion, or more than 7% of GDP, and the public debt burden exceeded $1000 billion. It is therefore not surprising that the Fed is borrowing 10-year bonds at a rate 70 basis points higher than the rate paid by France. As no agreement was reached in Congress, the adoption of the budget for the current year did not take place and many administrations are paralyzed under the effect of the shutdown.
The foreign trade situation is no brighter, with a deficit that is expected to reach more than $1200 billion in 2025. This is what motivated the American president to launch a global trade war that is beginning to bring him tax revenues but which is a factor in reducing growth around the world and instability within companies. The current account deficit is slightly lower, while France recorded a surplus in 2024.
The argument generally used to minimize the risks of American imbalances is based on the special status of the dollar, which has always made it possible to finance these deficits and the debts that resulted from them. Even if the beginning of "de-dollarization" is underway, it is not likely to call into question this status in the immediate future. The major risk lies elsewhere. It concerns the fragility of commercial banks and the many financial institutions that allow companies to take on debt and investment funds to take stakes in them, with all the dangers that this entails.
The 2023 bankruptcy of Silicon Valley Bank was a warning that was not heeded. Banking regulations are much less strict in the United States than in Europe, which is rarely mentioned and is having serious consequences. The Wall Street shares of two regional banks, Zions and Western Alliance, have just fallen by nearly 10% following discoveries of bad loans granted to companies or investment funds.
The bankruptcy of two companies in the automotive sector, Tricolor and First Brands, has put financial institutions such as Jefferies and Blackstone in difficulty to grant them loans to make acquisitions. The development of leveraged loans, totalling $2 trillion, in the high-risk high-tech sector is another cause for concern. We marvel at the stock market performance of artificial intelligence players, who are among the main beneficiaries. But many of them have yet to make a profit while they have taken on heavy debt to grow.
The results of the major investment banks are up sharply in 2025 thanks to the resumption of mergers and acquisitions. But here too, these operations were largely financed by debt from private funds that are not subject to as strict regulation as banks and that would be weakened in the event of their clients' defaults. It is estimated at $1,700 billion in assets. This is why the bankruptcy of First Brands has not gone unnoticed, as the consequences of these financial practices on the entire economy could be considerable.
The "wealth effect" provided by the rise in the values of artificial intelligence has supported the consumption of households that had invested sometimes by taking on debt, and therefore growth. This, according to the IMF, could reach 2% in 2025 and 2026. But this effect is fragile because it would disappear at the first signs of a return to valuations more in line with technological and financial realities and sometimes even to sharp falls when we know that many of these companies have not yet made a profit.
This would have a double negative effect. Activity is expected to decline, weakening all companies. The financial sector would have to bear the brunt of private fund defaults, which would trigger a wave of financial claims that would not remain confined to the United States.
In October 1987, Wall Street fell by more than 20% during "Black Monday" following an ill-anticipated rise in interest rates. In August 2007, the listing of MMFs was suspended after irregularities in securitization transactions were discovered. It was the subprime crisis, then the bankruptcy of Lehmann Brothers and a global recession. Should we fear the consequences of the current excesses in the financing of the US economy in 2027? Certainly, and that is why we must prepare for it.