To the left is a chart of the difference between interest rates charged Germany and France since late 2006. The higher the difference, the more worried investors are France will default, hence they will charge France a higher interest rate to borrow. To the right is a chart of Credit Default Swap (CDS) contract prices on major US commercial banks leading up to the 2008 financial crisis. The higher the price, the more worried investors were of US commercial bank default, hence the more willing they were to pay for CDS insurance contracts.
Notice a similarity?
If France does default, what does this mean to you, and to the causes that we talk about every day on this site?
A French default would wipe out the European financial system, and the resulting tsunami would be so high it would flow across the Atlantic ocean and render American banks no more impregnable than the Fukushima Dai'ichi compound.
The credit markets would lock up, first in Europe, then here, and we would see a repeat of the 2008 crisis on a much larger scale. The economy would tip back into a deep recession, and fresh job losses would quickly pile up. The government would lose revenues, and the deficit would explode even higher. States would lose revenues as well and be forced to fire even more workers and force unions into even more concessions. Retirement accounts would be decimated. Poverty rates would skyrocket even more than they have. More people would lose health insurance. The housing market would take yet another hit.
President Obama, in his waning days, would face a choice. Allow the US financial system to collapse, in which case the economy goes into a deep depression, making today's unemployment numbers look like boom times. Or, bail out the banks... AGAIN. You can imagine how popular he'll be, no matter how he chooses.
The Republican nominee, no matter how far out of the mainstream, incompetent, or stupid, and no matter what their personal scandals, will win, and likely come into the first term with commanding Congressional majorities. In such a scenario, even if the Republicans were to nominate Rick Santorum, Michele Bachmann, Ron Paul, or Donald Trump, they would still easily win.
It would likely be a time of great discontent. You could see disruptions in basic services, even violence or rioting in the streets.
The truly scary thing about this scenario is that there is nothing that any of us, indeed any American, can do to prevent it. The only ones who can prevent Europe from collapsing are the Europeans themselves. We can only watch-- and pray.