Soros: Deepening Euro Crisis Could Destroy the EU

Money News ^ | Monday, 16 Apr 2012 05:17 PM

[robowombat]

Billionaire George Soros warned on Monday that the euro crisis is growing deeper, tearing at the fabric of European Union cohesion, because policymakers are prescribing the wrong remedies.

"I'm afraid that the euro crisis is getting worse. It's not over yet, and it is going in the wrong direction," Soros said in discussion with Denmark's economics minister hosted by the daily newspaper Politiken.

"The euro is undermining the political cohesion of the European Union, and if it continues like that could even destroy the European Union," Soros said. "That is due to a misunderstanding of what the problem is."

...........

He said the euro crisis is being dealt with by policymakers as a fiscal crisis though the crisis began as a collapse of the banking system in the United States and was compounded by a divergence of competitiveness among European countries.

He said that failure to deal with the crisis was creating tremendous tensions because people, who see that policy is failing, are driven into anti-European positions and dissent is growing within and between the countries of Europe. .....

Soros said the crux of the problem was that debt reduction was coming at a bad time for the European economy. "You can grow out of excessive debt, you cannot shrink out of excessive debt."

And he warned that the euro zone fiscal compact, an agreement by 25 EU leaders to prevent another debt crisis and restore confidence, was pushing in the wrong direction because it obliged governments to balance budgets and reduce indebtedness at a time of inadequate demand

Read more: Soros: Deepening Euro Crisis Could Destroy the EU

[IbJensen]

US Citizens: Deepening Soros-Obama Crisis Could Destroy America!

[JudgemAll]

He said the euro crisis is being dealt with by policymakers as a fiscal crisis though the crisis began as a collapse of the banking system in the United States and was compounded by a divergence of competitiveness among European countries.

It's BUsh and America's fault again.

[EyeGuy]

An artifical, socialist Union destroyed by socialism.

Amazing.

[robowombat]

Yes, it sounds as though Soros shorted the dollar and went long on the Euro underestimating how really screwed up Euro land was. Maybe for once this evil toad let his hatred of the US color his economic perceptions. In any case he is now throwing out strong hints to his host of myrmidons on both sides of the Atlantic to start driving the dollar down and supporting the Euro and Euro denominated securities.

[fuzzylogic]

...isn’t this how he makes money? ...causing the collapse of a currency? short sale on Euro? Any Freepers able to clarify?

[freekitty]

The Left is going after Romney and his wealth. Why don’t they go after Soros and his wealth? Soros leaves a lot of death and destruction.

[nathanbedford]

He said that because fiscal stimulus was ruled out, monetary policy remained the only tool available.

There is nothing new or insightful here, Soros is merely serving up reheated Keynes. It seems to me that the world has had a surfeit of fiscal stimulus, the Fed alone has pumped enough money into the world economy to refloat the European Union.

Soros says, "You can grow out of excessive debt, you cannot shrink out of excessive debt."

Why should this be so? I do not understand how Greece can grow its way out of its massive overspending and overhanging debt if it does not rationalize. There is nothing in Greece besides olives and tourists with precious few of the latter these days, how can Greece grow out of its debt? The same would seem to be true in varying degrees for the rest of the PIGS.

Even assuming the political will in Germany (a short poll of my neighbors would demonstrate that to be a thoroughly dubious proposition) to bail out the profligacy of its southern neighbors, why do we believe that Germany has the wherewithal to do it? Why would not Germany more prudently simply provide liquidity to its own banks in the event of Greek default? Would that not be cheaper in the long run if it proves impossible to save the PIGS?

Soros fears the dissolution of the European Union for ideological reasons and I fear it for selfish reasons-I live here as an ex-pat-but Soros wants the EU to hold together as a stepping stone to one world government.

[SMARTY]

The EU was a bad idea from the beginning... Maggie knew!

[robowombat]

You are correct but I suspect this evil toad has so much cumulative exposure in a host of ways in the Euro and Euro denominated debt that he really is more than a bit concerned that he may be facing a situation that even he can’t manipulate.

[LibLieSlayer]

It was inevitable from day one. Whichever American banks survive this eu collapse... will not be so quick to want to invest again in foreign markets... these banks own the eu and many will go down when the eu falls. I hope that soros loses everything.

LLS

[MeganC]

I guess Soros is going short on the Euro is what this means.

[fred42]

When I hear talk like “grow out of excessive debt”... it usually really means “inflate” the money supply to make govt debt smaller.

That really bothers me, because it steals from retirement and any other savings !

[OlagJohnson]

“I am having a very good crises”, George Soros