Ten days ago, before Varoufakis even announced his stunning break of negotiations with the Troika and proceeded to engage in a referendum which perhaps more symbolically than anything else just said a resounding "No" to the status quo, we said to Forget Grexit, "Madame Frexit" Says France Is Next: French Presidential Frontrunner Wants Out Of "Failed" Euro.
Because while the ECB could at least in theory contain the Grexit fallout with a few hundred billion in bond (and stock, since Europe is pretty much fresh out of bonds it can monetize) purchases, it will not be able to halt the contagion once it spreads to Italy, Spain and Portugal. But once it reaches France, and Marine Le Pen engages in the same type of negotiations with the Troika as Greece just did, it's all over.
Unfortunately for the ECB, that's precisely where it is headed because as Reuters just reported, "French far-right leader Marine Le Pen welcomed the early results of the Greek referendum on terms for a bailout from Europe as initial tallies showed the 'No' camp leading with results still being counted."
Le Pen, the leader of the anti-immigration, anti-euro National Front party, said in a statement that the anticipated result was a victory against "the oligarchy of the European Union".
"This 'No' from the Greek people must pave the way for a healthy new approach," said Le Pen.
"European countries should take advantage of this event to gather around the negotiating table, take stock of the failure of the euro and austerity, and organize the dissolution of the single currency system, which is needed to get back to real growth, employment and debt reduction."
Here is why we suggest the ECB panic: Le Pen's star has been on the rise in France and in Europe in the past year since her National Front party performed well in European parliamentary and French regional elections. Surveys suggest she could make the second-round run-off in the 2017 presidential election, if not win outright.
She has sought to capitalize on discontent over Socialist President Francois Hollande's handling of the economy and rising unemployment, and has made Europe's management of the Greek crisis a particular target for critique.
As a reminder, a recent Wikileaks NSA data dump showed that the French economy is in "Dire Straits", and is "Worse Than Anyone Can Imagine" which just happens to be music to Le Pen's ears.
Finally, Le Pen's platform supports the end of the common currency zone and a return to more national-based policies on everything from immigration to the economy.
Greece just made it that much easier for Le Pen to achieve her goal.