It's not often you hear banker types dishing it out to European leaders. But George Soros, who is known as ‘the man who broke the Bank of England’ back in the Black Wednesday days of the early ‘90s, gave a speech in Frankfurt on Tuesday that suggested Germany faces a crucial national turning point as far as the euro is concerned.
He said that the country is heading for its own recession and called for it either to get out of the single currency altogether, or throw its weight behind Eurobonds. Currently Germany is against the bonds, which would be a new type of debt that means the whole eurozone guarantees each member state’s public borrowing. A license for Spain, Greece and Italy to spend all Germany’s money, as many Germans might see it.
In a lecture called ‘How to save the European Union from the euro crisis’, he said: ‘My first preference is Eurobonds; my second is Germany leaving the euro. It is up to Germany to decide whether it is willing to authorise Eurobonds or not, but it has no right to prevent the heavily indebted countries from escaping their misery by banding together and issuing Eurobonds.’
He added: ‘In other words, if Germany is opposed to Eurobonds it should consider leaving the euro and letting others introduce them.’
He went on to accuse Germany of going ‘too far’ with the bailout for Cyprus, and appealed directly to the Germany government and Merkel, saying: ‘I hope that by offering you a different perspective I may get you to reconsider your position before more damage is done. That is my goal in coming here.
‘The financial problem is that Germany is imposing the wrong policies on the eurozone. Austerity doesn't work. You cannot shrink the debt burden by shrinking the deficit.’
But given that a vast amount of Germany’s cash is lent out to these bailout-buggered countries, we doubt Merkel will be crashing out of the euro and letting bygones be bygones any time soon…