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Billionaire Soros tells EU leaders they have a “three month window” to save the Euro

Wednesday, June 6th 2012 - 21:42 UTC
Full article 8 comments
“You cannot reduce the debt burden by shrinking the economy, only by growing your way out of it” “You cannot reduce the debt burden by shrinking the economy, only by growing your way out of it”

Billionaire investor George Soros has warned European leaders they have a “three-month window” to save the Euro and insisted that the EU leaders did not understand “the nature of the crisis”.

He said he believed Greece would elect a government willing to abide by loan conditions imposed by the EU in this month's elections.

But he said the German economy would begin to weaken in the autumn, making it much harder for Chancellor Angela Merkel to provide further support.

Soros said that while European leaders were focusing on debt levels, the crisis was “more of a banking problem and a problem of competitiveness”, and for this reason they had “applied the wrong remedy”.

“You cannot reduce the debt burden by shrinking the economy, only by growing your way out of it,” he added.

Soros, speaking at a conference in Italy, was referring to the drastic austerity measures that have been implemented across Europe, measures that are now being questioned by a growing number of politicians and commentators.

Without policies to boost growth, which would enable governments to raise revenue to pay down debt, Soros said “time was running out for the Euro”.

“I expect the Greek public will be sufficiently frightened by the prospect of expulsion from the EU that it will give a narrow majority of seats to a coalition that is ready to abide by the current [bailout] agreement,” he said.

However, this would provide only temporary respite, he warned, as the German public becomes less willing to continue bailing out its weaker European neighbours.

“The crisis is likely to come to a climax in the [autumn]. By that time, the German economy will also be weakening, so that Chancellor Merkel will find it even more difficult than today to persuade the German public to accept any additional European responsibilities.

”That is what creates a three-month window.“

Later in the day, a report from the credit ratings agency Standard & Poor's said there was ”at least a one-in-three chance of Greece exiting the Euro in the coming months“.

But the report added that other countries would be ”unlikely“ to follow Greece's lead, ”having witnessed the resulting economic hardships and long delay in harnessing benefits from national currency devaluation“.

It also said that in the event of a Greek exit, Euro zone policymakers would be keen to stress that it was a one-off and hence more likely to provide support to other countries.

But it warned that without that support ”the likelihood of a lasting restoration of confidence in major Euro zone financial institutions over the near term is doubtful”.

Categories: Economy, Politics, International.

Top Comments

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  • willi1

    always the same scrap:
    :”“You cannot reduce the debt burden by shrinking the economy, only by growing your way out of it,” he added.:

    Growing the economy means having profitable projects which create money. And the state must collect tax from the earnings.
    Only to build streets and bridges and plants with fresh loans in the nowhere is contraproductive. the mobile phone company Nokia is one of the most terrible examples of investments in the nowhere: once they have consumed the public subsidies and must pay normal tax and salaries they flee the country and settle in the next cheaper one. and the community sits on its loans and unemployed workers.

    Soros is only interested in the growing of his own money which he has invested in companies like Nokia.

    Jun 07th, 2012 - 07:50 am 0
  • Ozgood

    willi1 (#)

    George Soros is not really a philanthropist.

    The new French president seems to have the same idea idea as Soros.

    Jun 07th, 2012 - 09:22 am 0
  • ChrisR

    But you would think with all his money he could look happier than this.

    Jun 07th, 2012 - 02:57 pm 0
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