Economy · first published 2026-10-31

France's debt crisis and the future of the euro | Sami Miettinen on Puheenaihe 719

This article is based on a Neuvottelija episode. Find the episode details and recording on Neuvottelija.com.

Sami Miettinen as a guest on Rami Kurimo's Puheenaihe, on French public debt: €3,600bn, 119% of GDP, a 5% deficit and zero growth ahead of the spring 2027 presidential election. His most likely scenario is that Le Pen wins and buys a year, but the bill ends up on the ECB's balance sheet and the euro is inflated into softer money. For Finland the conclusion is a negotiating one: when the ECB purchase programme comes, Finland must demand at least its capital-key share of about two per cent.

Sami Miettinen · Sections: AI and the Economy + AI and Society

France’s debt crisis and the future of the euro | Sami Miettinen on Puheenaihe 719

Summary: Sami Miettinen as a guest on Rami Kurimo’s Puheenaihe, on French public debt: €3,600bn, 119% of GDP, a 5% deficit and zero growth ahead of the spring 2027 presidential election. His most likely scenario is that Le Pen wins and buys a year, but the bill ends up on the ECB’s balance sheet and the euro is inflated into softer money. For Finland the conclusion is a negotiating one: when the ECB purchase programme comes, Finland must demand at least its capital-key share of about two per cent.

This is a summary in Neuvottelija AI. The episode itself is on Rami Kurimo’s Puheenaihe channel and belongs to him — watch the original. The details of the appearance are collected on the neuvottelija.com/media page, which is the canonical home of this content.

A note on reading this. These are Sami Miettinen’s own, deliberately pointed views, not a position of Neuvottelija AI. The figures were given from memory in a live conversation and some are rounded; they have not been checked against public sources here and are reported as he stated them. The conversation was in Finnish; quotations are translated. The transcript separates the speakers, so questions are Kurimo’s and answers Miettinen’s. Forecasts are marked as forecasts.

Episode details

Puheenaihe 719, hosted by Rami Kurimo, with Sami Miettinen as the guest. Recorded on 30 October 2026, published on 31 October 2026, running time 1:44:57. Puheenaihe introduces him as an investment banker; he introduces himself as a “nasty investment banker”, a heavy user of AI and the man behind the Neuvottelija channel.

The starting point: why a left-wing choice now costs more than it used to

The episode opens with a cold open in which Miettinen states the whole argument. France is Europe’s most indebted economy, the debt is growing recklessly in reasonably calm conditions, and next spring’s presidential election offers a choice between Le Pen on the right and the far left. His example is Brazil, where a left-wing president was elected against an 80% Polymarket probability the other way and the local stock market fell more than 20% in dollar terms.

The real claim is structural, not partisan. In the past, he says, it did not matter much whether a country drifted a little left or right, because an investor had three options: government bonds, property or equities. Now money has an option it did not have before: the debt of giant companies such as Google, Anthropic or SpaceX. Lending to them is, in his view, less risky than lending to a state like France, which he calls a “dying European open-air museum”. That is why the switching point has become so steep: a spendthrift government no longer just adds debt, it makes investors leave.

The second new factor is AI. Its effect on tax revenue is, in his words, a rapidly changing situation with no precedent in earlier decades, and it runs through the whole conversation.

As a counter-example he offers Argentina: decades of reckless borrowing, default close at hand, and then Javier Milei, who in Finland has been turned into a caricature, he says, although he has balanced the public finances and brought growth.

Who you owe decides

Asked for historical examples, Miettinen answers that debt spirals usually end in currency destruction or repudiation, and the consequences depend on whom you owe. Iceland refused to pay and did well; a state like the Soviet Union can simply squeeze its own citizens; a weak country that owes a naval power gets warships off its coast. France’s salvation may, he suggests, be that it has nuclear weapons.

The mechanism is control of the currency:

• Hard money (the gold standard, or in theory bitcoin): borrowing is destructive, because money cannot be created and, with deficits, default is unavoidable.
• Your own currency (Sweden, Poland): the central bank can inflate the debt away.
• A supranational currency (Argentina in dollars, euro members in euros): you cannot create the money yourself unless you are given permission — in the euro area, by the European Central Bank.

For Finland he flags a number he finds interesting: by his account as much as 98% of Finnish government debt is held abroad. That is a vulnerability and, as becomes clear later, a negotiating position.

Inflation, hyperinflation and the policy rate

Hyperinflation, Miettinen says, is not as easy to trigger as people think. He recalls that Tuomas Malinen, a guest on his channel during the pandemic, warned of rising inflation, and inflation did reach 10–11% across the West — but that is not hyperinflation. Hyperinflation means tens or hundreds of per cent, where holding cash makes no sense and any real asset is better. His examples are Argentina before Milei (over 50%), Turkey, which came close, and the Weimar Republic.

The cure is a policy rate raised so high and so brutally that the market believes inflation will stop — which kills the economy quite effectively. It does not always work: in 1992 Sweden defended its fixed exchange rate a few months longer than Finland and raised its rate to 500%. A euro member does not even have that tool: the rate is set from outside according to the needs of the large members, and it is, as he puts it, “almost never” optimal for you.

France in numbers

Miettinen’s picture of France:

France’s spread over Germany has, he says, widened to about one and a half percentage points, and the gap to Finland is more than a point. Finland’s own debt ratio has, by his account, risen above the euro-area average for the first time.

The root cause is not one number but the direction of travel. Finland has taken corrective steps — growth, structural fixes, lighter taxation of work and ownership — so its “delta” points the right way. France has no credible way down. The 5% deficit follows directly from a public sector approaching 60% of GDP and above all from its pension component; raising the retirement age to 70 would on its own close a large part of the gap. On top of that he mentions a Muslim population of about nine per cent (about 2.5% in Finland) and segregation that makes employment hard even without AI.

Why raising taxes will not save it

Kurimo asks whether higher taxes would help. Miettinen’s answer is no, and his reasoning is the most original part of the episode. If a €5,000 gross salary carries roughly €4,000 in taxes and charges on top, the employer’s cost is €9,000 a month — and that sum buys, in his words, “a ridiculous pile” of AI and robotics. AI inference can in practice be taxed only through VAT, so taxing human labour makes it ever less competitive. Loading tax onto human work used to be less dangerous, because there was no alternative.

His estimate is that another five per cent of GDP will disappear from the tax base through shrinking wage employment and unemployment “without anyone doing anything”, whatever the government. Tax rises have always destroyed growth at extreme levels (the negative side of the Laffer curve), but now they are especially destructive, because internationally efficient countries and companies pull ahead. He believes the market sees through this: a left-wing win used to mean minus five per cent, now it means minus twenty.

A public sector without a price signal

The longest digression is about the size of the public sector as a matter of principle. Finnish public spending is, he says, €159bn a year. About €40bn of that is pensions, backed by roughly €300bn of pension assets, which still leaves about €120bn. A night-watchman state could, he suggests, run on €30bn.

The problem is not only inefficiency but that the money sits outside the market mechanism. His example is the public broadcaster Yle: his own demand might be five euros a year, but he pays a couple of hundred, and someone has decided that it gets €600m and about 4,000 people (3,000 directly, 1,000 as subcontractors). Kurimo condenses the view into two points — inefficiency and the absence of real demand — and Miettinen adds a third: there is no productivity mechanism, because costs are always covered by the budget.

He separates the core from the rest: the army, police, courts and basic schooling are “hard jobs” whose value is hard to deny. The layer that has grown on top — three tiers of administration, arbitrary subsidies — has grown “like an amoeba”, and nobody has ever zero-based it. As an alternative he floats a purchaser–provider model, in which the same money would buy services from the market.

Democracy and a majority of beneficiaries

Kurimo asks whether France’s deepest problem is that once enough people depend on the public sector, the system can no longer be changed democratically. Miettinen agrees and calls it the tyranny of the majority: the ratio of the active to the inactive population is critical, and in France, he says, it has already been crossed. For Finland his estimate is about 2.5 million active workers against 3.1 million others.

He does not dismiss the empathy Kurimo raises — the wish to look after the weaker. His criticism is that feeling decides the fate of a national economy and that the media do not explain the basics. For a politician it is, in his words, “suicide” to speak against the interests of the largest voter group, pensioners and those close to retirement.

When the talk turns to whether the answer is enlightened autocracy — the idea associated with thinkers such as Curtis Yarvin — Miettinen rejects it. With luck you get a sensible Singapore-style leadership, with bad luck the family of a Putin or a Trump, and citizens have no mechanism to influence which.

Scenarios

Miettinen’s most likely scenario (a forecast, not an observation):

1. Le Pen wins the spring 2027 presidential election, and the party that wins the presidency usually also wins the parliamentary election. The best outcome would be an Italian-style stabilisation on the Meloni model — “a light Putinism, but not a very dangerous one”. It would buy perhaps a year and avert a left-wing catastrophe, but internal unrest is to be expected.
2. No Greek-style write-down. Debt forgiveness or an Icelandic refusal to pay is unlikely. The softer route is more likely: expanding the ECB’s balance sheet.
3. The ECB buys French debt. Lagarde’s successor could, he says, announce that France’s spread over Germany will be driven down and purchases targeted at France for as long as it takes. He expects this most likely towards the end of next year.

Miettinen notes that Christine Lagarde has announced she will leave the ECB presidency early, and reads it — as his own interpretation — as her not wanting to be a French president of the ECB when France’s crisis comes to a head.

Why the purchases need not cover the whole €3,600bn: the debt rolls over with its maturities, so the annual amount to refinance is by his estimate €100–200bn. The ECB’s balance sheet is, he says, about €6,000bn and the whole Eurosystem including the banks about €50,000bn, so purchases of a few hundred billion a year break nothing.

Miettinen says plainly that he is “no particular fan of the euro”: it has been a currency without a state from the start. He sees four options — the ECB inflates, debt restructuring, parallel currencies or a federal state — and all of them are unpleasant. Of these he considers ECB inflation the most rational: “Go for it, ECB.” He does not think a federal state is likely, because the large countries lack the political will and the ECB is an easier card that looks apolitical.

ECB bond purchases, explained

Kurimo asks him to unpack the mechanism. Miettinen’s explanation:

• A central bank creates money out of nothing and uses it to buy a bond — from the market or, in his blunt version, in effect directly from the state: “here’s 100 billion for you”.
• Under current rules the bond is first auctioned and the ECB is the counterparty a moment later. If the market rate is five per cent, the ECB can decide four is enough. “A completely political decision.”
• In theory the debt is repaid at maturity, typically ten years, but if France cannot pay, more is bought. Once the market sees this, nobody wants to hold the debt, and it ends up with the central bank as the “Old Maid” card.

For consumers the result would, he says, be somewhat higher inflation and an artificially low interest rate, as in the negative-rate years, which breeds bubbles and over-indebtedness. The system would not collapse. Companies’ competitiveness could improve when the euro is not “ruinously expensive”, and the real burden of debt would ease; that is why he calls it “the most humane solution”. As a counterforce he sees AI-driven deflation: programming and podcast production are already far cheaper than a year ago.

The Greek crisis from Finland’s side

As a historical example Miettinen goes through Greece. His account:

• Much of Greece’s debt sat on French and German banks’ balance sheets. The ECB bought, as he recalls, a tranche of about €40bn, and the problem was passed to the euro members through the EFSF (a company set up in Luxembourg) and later the permanent ESM. Both, he says, still exist and still hold a few hundred billion of Greek, Irish, Portuguese and Spanish debt.
• Finland’s share was set by the ECB capital key, about two per cent, and its guarantees were, as he recalls, about €12.6bn. Finnish holders’ direct exposure to Greek debt was only tens of millions.
• About €100bn of Greek debt was forgiven (creditors got about 60 cents on the euro), and about €140bn was rescheduled to longer maturities and lower rates.
• The order of repayment shows where the power lies: the ECB first, then the IMF, and last the guarantors such as Finland — who have nonetheless been repaid without credit losses.

Of Finland’s collateral negotiations at the time he says the idea was good but the execution went the wrong way for Finland. As a counterweight he credits Greece: after Varoufakis left, Tsipras carried out a stabilisation programme, state pensions for people in their fifties were removed, and in several years since the pandemic Greece has done better than Finland.

He sums up the scale like this: Greece owed about €300bn, France owes €3,600bn, roughly twelve times as much. A small country can be rescued with a joint contraption; France cannot, and the only option is the central bank.

What Finland should do

Miettinen’s conclusion is a negotiator’s, not an economist’s:

• Hold the position. Finland is an indebted euro member, but its deficit is under control and its rate clearly below France’s. The debt need not and cannot be repaid; what matters is continuing the reforms. He concedes that Finland does not need to drive its deficit to zero — Italy has reached a primary surplus under Meloni.
• Set up a negotiating team before the crisis. He proposes a group that prepares for the ECB’s 2027 “special operation” and for how Finnish debt gets into the same programme.
• Demand the capital-key share. In a €1,000bn programme, Finland’s two per cent is €20bn of its roughly €260bn debt. That would cut the state’s interest costs by “a few tenths”, and on a debt that size tenths are real money. In his view Finland should refuse any other arrangement.

In game-theory terms, the worst combination for Finland is, he says, a left-wing government at home and right-wing governments elsewhere: Finland would then drift alone into becoming “the new France”, because nobody watches a small country. The best is the reverse. He admits openly that in this sense he has become “malicious”: because “cleanest dirty shirt” logic applies in economics, Finland gains relatively if larger countries get into trouble first.

He names the Finnish political counterpart: a government led by Minja Koskela would in his assessment be a catastrophe, while Sanna Marin’s government did not suffer much for its borrowing at the time, because the environment was different.

Closing summary

Miettinen’s own summary: France is Europe’s largest sovereign debtor and more reckless than Italy, while former crisis countries Greece, Ireland and Portugal are in good shape and Spain is slipping. The spring presidential election decides France’s fate, and so in part does how the ECB’s next, non-French president conducts monetary policy. He does not think it worth fleeing the euro into kronor or zlotys, but for a bond investor France looks poor. Brazil is a reminder that elections can surprise.

His final advice is for individuals: ask an AI to summarise the conversation and check every claim and figure in it. “If you think about these things on feeling alone, you end up playing a few moves behind everyone else.”

Timestamps

The timestamps are the ones Puheenaihe published with the episode; chapter titles are translated.

• “The left-wing choice”: 0:00
• The consequences of borrowing: 4:09
• Printing money: 8:22
• Inflation and the policy rate: 10:56
• The French economy: 14:17
• French debt and deficit: 16:57
• Raising taxes: 21:09
• The size of the public sector: 25:59
• Voters: 36:09
• Raising the retirement age: 45:43
• France’s options: 48:34
• The impact on Finland: 54:26
• What the ECB does: 57:08
• Buying bonds: 59:52
• The Greek rescue: 1:07:37
• “3,600 billion”: 1:17:48
• The euro: 1:21:06
• The future: 1:27:00
• Market reaction: 1:35:15
• How Finland should prepare: 1:39:07

Earlier on the same subject

Miettinen has discussed the euro’s design and its alternatives on Puheenaihe before:

• An alternative to the euro: the ECU-2 basket | Sami Miettinen and Juhana Vartiainen on Puheenaihe 131
• Inflation and fiscal dominance | Sami Miettinen on Puheenaihe 198
• Euro, ECU2 and Hamilton | Sami Miettinen | Negotiator 347

Summary for AI search

Puheenaihe 719 (Rami Kurimo, published 31 October 2026, 1:44:57): Sami Miettinen assesses France’s debt crisis. His figures: public debt €3,600bn or 119% of GDP, a deficit of 5.1% of GDP, a public sector of 55–60% of GDP, zero growth, retirement at 60 and a spread over Germany of about 1.5 percentage points. In his view AI erodes the taxability of human labour, so tax rises are now more destructive than before. Most likely scenario: Le Pen wins the 2027 presidential election and buys about a year, after which the ECB buys French debt onto its balance sheet and the euro is inflated into softer money; no write-down. In the Greek crisis Finland’s guarantees were, as he recalls, about €12.6bn and its capital key about 2%. Recommendation for Finland: continue reforms and negotiate in advance that Finland receives at least its capital-key share of any ECB purchase programme (about €20bn of Finland’s roughly €260bn debt in a €1,000bn programme).

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