A few years ago I arrived in Zimbabwe and found my hotel full of bankers swearing loudly. The president, Emmerson Mnangagwa, had just banned bank lending. His reasoning was a little hard to follow, for his expertise lay more in cracking heads than analysing spreads, but it went something like this. He claimed the local currency was weak, not because his spendthrift government was printing too much of it, but because speculators were borrowing to bet against it. So he choked off credit to the whole country. Happily, this insane policy lasted little more than a week. But it was a reminder of how much harm politicians can do when they fail to understand how credit works. 

Which brings me to this week’s cover story, looking at the turmoil in rich-world government-bond markets. It goes without saying that rich countries are not like Zimbabwe. But some of the things rich-world politicians have been saying of late are, shall we say, on the Mnangagwa spectrum. Jean-Luc Mélenchon, France’s populist-left presidential candidate, says his country should “set fire” to a large share of its debt. Donald Trump, when not trying to intimidate governors of the Federal Reserve, has mused that inflation could reduce America’s debts “very rapidly”. A British MP recently said that if bond markets did not like the Labour government’s spending plans, they would just have to “fall in line”. 

None of this reassures investors. The public debts of big advanced economies have roughly doubled, relative to GDP, since the turn of the century. Even before the latest bond sell-off, the governments of these countries were forecast to spend 8% of tax revenues on net debt interest this year. Yet many governments refuse to tighten their belts. At some point, bond-buyers will revolt. 

Europe is where the danger looms largest. Its governments must compete for footloose capital with ravenous AI firms, even as the Russian menace pushes them to spend more on defence and their energy-importing economies are buffeted by costly fuel. And the risk is greatest of all in France, where protests are exploding, lawmakers struggle to agree even on tiny budget cuts, and Marine Le Pen promises that the pension age can fall as people live longer. To avert a crisis, Europe needs leaders who treat voters like grown-ups—and try to get public debts under control. 

On The Insider this week we look at the perilous politics of AI. American voters are furiously demanding tougher safeguards. But the White House is still dominated by those who think anything that slows down American AI firms will let China win the race to AI supremacy. Our editor-in-chief, Zanny Minton Beddoes, is joined by colleagues to discuss what it would take for Donald Trump to revise his “Let it rip!” approach. You can watch it now.