On Saturday, famed hedge fund billionaire and economic theorist
George Soros gave a speech in Trento, Italy before the Festival of
Economics about the European financial crisis. It's quite long, but
still well worth reading because his understanding of Europe's
problems is clear and deep. You can find it on his site
Some of the controversial headlines that have been drawn out in
Reuters and elsewhere are that Germany and its central bank are
to lead the way out of the euro zone debt crisis
within three months time
, after which it will be
and thus they threaten to destroy the European Union and
plunge it into a lost decade
like Latin America in the 1980s.
"The Greek crisis is liable to come to a climax in the fall. 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," Soros
The Hungarian-born U.S. financier said that all the "blame and
burden" of adjusting the euro area's imbalances was falling on
weaker peripheral countries, but the bloc's core bore an ever
greater responsibility for the crisis.
"The 'centre' is responsible for designing a flawed system,
enacting flawed treaties, pursuing flawed policies and always doing
too little too late," he said.
Soros may be overreacting. He may be sounding a very loud and
panicked alarm to spur action and prevent disaster. But is he more
right than wrong here?
Central bankers, EU planners, and politicians know they have the
power to do more. But they take their time, appearing to be in
control, re-making the eurozone at their leisure. But can they
really proceed at this pace and allow 5 to 10 years for
"restructuring" without jeopardizing their entire economic
potential and wealth?
Let me hear if you agree with Soros that Germany needs to do
more -- and quickly -- or a much bigger train wreck is about to
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