Critical Mass: Eurozone Dominoes Threatening to Fall

PARIS -- Economists have worried all along that the nations in the eurozone would start to fall like dominoes. Now the dominoes seem to be moving.

"History is repeating itself," German economist Robert Halver warned. "We are again in full crisis mode. Last year: crisis, this year: crisis. The politicians have learned nothing."

With Greece on the verge of being expelled from the eurozone, Spain is now in critical danger, and eyes are even turning to France.

'Inter-Generational Solidarity'

While France may have a relatively strong economy, it hasn't had a balanced budget in almost 40 years.

Some joke that France is the one country where Communism succeeded. The government sector of the French economy is larger than the private sector, and socialism is patriotic.

The French have even given a virtuous label to saddling young people with mountains of debt from the welfare state.

"It's called 'Inter-generational Solidarity.' It means you get your grandchildren to pay for you and they call that 'solidarity,'" French economist Emmanuel Martin explained.

France has been breaking basic economic laws for decades, but somehow the French model keeps rolling along. But it's rolling toward a cliff.

During the Cold War, Western economists starting crunching the numbers from the Soviet economy and knew that it had to crash. It did.

French economists have done the same thing with their economy. Yet, so far, it has defied the rules of economics.

Edge of Collapse

Economist Bertrand Lemennicier at the University of Paris Pantheon-Assas, predicted 20 years ago that the French economy had to collapse. If the system is not reformed enough, he believes insolvency could happen suddenly and will stun the world.

"Nobody will expect that France will collapse in one month," Lemennicier said. "But we are at the edge of that. We don't know the date. My point is it will be more like overnight."

Some economists suspect French government debt is much higher than figures show. And French banks are heavily leveraged with bad loans to Italy.

And just when France needed to reform itself, it elected a new socialist president who wants to bring in more socialism.

France's new president, Francois Hollande, has promised to raise the minimum wage, raise the tax on the wealthy to 75 percent, and lower the retirement age.

"Some say we have to keep this social model, the French social model, alive. But this model is the worst enemy of the French economy," French economist Nicolas Lecaussin told CBN News.

Why the U.S. Should Worry

If France falls, that leaves only Germany, which alone cannot save the eurozone. But an ever growing number of economists have decided that nothing can save the eurozone now, and it's only a matter of time before the fallout reaches America.

The European economy is one fifth of the world economy. And just when it needs smaller government and freer markets to spur economic growth, most of the Europeans, and especially the French, continue to cling to socialism, at their peril.

"Spain is clearly trying to reform its country when France clearly is not," Martin said. "We're not dealing with the real issues."

Lecaussin flatly predicted, "France will collapse."

A nightmare scenario could be looking more and more likely: devastating capital flight out of the eurozone, multiple bank failures, and a collapse in the value of the euro.

All that could mean the collapse of some American financial institutions in an event worse than the Lehman Brothers collapse in 2008.

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