Soros: Euro Collapse Could Lead to "Great Depression"

Euro Collapse Could Spark Global Depression, Soros Tells L'Hebdo
Thursday, 18 Aug 2011 06:47 AM


Billionaire investor George Soros said a collapse of the euro may spark a global financial crisis in a “new Great Depression,” L’Hebdo magazine reported, citing an interview.

“It seems to me that one still doesn’t understand what would happen if the euro collapsed,” Soros told the Swiss magazine in an e-mailed pre-release of tomorrow’s edition. “It would lead to a banking crisis that would be totally out of control.”

He also said Europe’s future hinges on Germany, which should “dictate its solution” to the region.

To read the whole article click on the link below.
http://www.spiegel.de/international/...780189,00.html

In a SPIEGEL interview, billionaire investor George Soros criticizes Germany's lack of leadership in the euro zone, arguing that Berlin must dictate to Europe the solution to the currency crisis. He also argues in favor of the creation of euro bonds as a way out of the turbulence.


SPIEGEL: Mr. Soros, we currently see a global banking crisis, a currency crisis and a sovereign debt crisis. Has the financial dilemma become too big to handle? How can politicians on both sides of the Atlantic be expected to solve such a multitude of crises?

Soros: The politicians have not really tried to fix any crisis; they have so far tried only to buy time. But sometimes time actually works against you if you refuse to face the relevant issues and explain to the public what is at stake.
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SPIEGEL: Are you talking about the Germans? Many experts think Chancellor Angela Merkel has been particularly hesitant to address the euro crisis.

Soros: Yes. The future of the euro depends on Germany. This is the point I really want to drive home. Germany is in the driver's seat because it is the largest country in Europe with the best credit rating and a chronic surplus. In a crisis, the creditor always calls the shots. Sure, this is not a position Germany or Chancellor Merkel ever desired and they are understandably reluctant to embrace it. But the fact is that Germans are now in the position of dictating to Europe what the solution to the euro crisis is.

SPIEGEL: Why should Berlin embrace that idea?

Soros: There is simply no alternative. If the euro were to break up, it would cause a banking crisis that would be totally outside the control of the financial authorities. So it would push not only Germany, not only Europe, but also the whole world into conditions very reminiscent of the Great Depression in the 1930s, which was also caused by a banking crisis that was out of control.

SPIEGEL: What, then, needs to be done to fight this crisis?

Soros: I think there is only one choice. It is not a question of whether Europe needs a common currency. The euro exists, and if it were to break apart, all hell would break loose. Germany has to make it work. To make it work, you have got to allow the members of the euro zone to be able to refinance the bulk of their debt on reasonable terms. So you need this dirty word: "euro bonds". But when you study what it involves to have euro bonds, you really have a problem because each European country remains in control of its own fiscal policy, and you have to rely on the country to meet its financial obligations.

SPIEGEL: Germans hate the euro bonds idea. They fear that under this scenario they will ultimately need to bail out everyone, even large nations like Italy.

Soros: That is why you need to establish fiscal rules that will ensure the solvency of every member. This should make the euro bond acceptable to German voters. Europe needs a fiscal authority that has not only financial but also political legitimacy. The difficulty is agreeing on the rules. Unfortunately, Germans have some funny ideas. They want the rest of Europe to follow their example. But what works for Germany can't work for the rest of Europe: No country can run a chronic surplus without others running deficits. Germany must propose rules that other countries can also follow. These rules must allow for a gradual reduction in indebtedness. They must also allow countries with high unemployment, like Spain, to continue running cyclical budget deficits until they recover.

SPIEGEL: More and more economists, especially in Germany, would like to see Greece leave the European Union. Do you consider that to be a viable option?

Soros: I think that the Greek problem has been sufficiently mishandled by the European authorities that this may well be the best solution. Europe, the euro and the financial system could survive Greece leaving. It could survive Portugal leaving. And the remainder would be stronger and more easily managed. But the financial authorities have to arrange for an orderly exit in order for the European banking system to survive it. That will cost money because the European banking system including the European Central Bank has to be indemnified for its losses. Depositors in Greek banks also need to be protected. Otherwise, depositors in Irish or Italian banks will not feel safe.

SPIEGEL: Is the current crisis even worse than the one in 2008?

Soros: This crisis is still the continuation of the same crisis. In 2008, the financial system collapsed and it had to be put on artificial life support. The authorities managed to save the system. But the imbalances that caused the crisis have not been removed.

SPIEGEL: What do you mean?

Soros: The method the authorities rightly chose three years ago was to substitute the credit of the state for the credit in the financial system that collapsed. After the failure of Lehman Brothers, the European financial ministers issued a declaration that no other systemically important financial institutions would be allowed to fail. That was the artificial life support; it was exactly the right decision. But then Chancellor Merkel stated that such support would only be granted by each EU member state individually, and not by the European Union.

I tried to explain to Siriusly Wrong that Soros is quite knowledgeable about finance.
He would rather listen to Schiff. lol.

Quote:

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Originally Posted by Havakasha

I tried to explain to Siriusly Wrong that Soros is quite knowledgeable about finance.
He would rather listen to Schiff. lol.

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Gold is at an all time high, AGAIN. I'm now up 35%. And the dollar is down. I'm up 5% shorting the dollar. I would say those two trends confirm what Schiff has predicted. If the euro didn't suck more than the dollar, the dollar would be way worse. Duh.

It doesn't take a rocket scientist to know that if the euro collapsed, havoc would ensue.

Do you think Soros has made a donation to the government?

I quess you werent reading the nuances of Soros discussion.
I quess you were too busy following Schiff's predictions that the U.S. would have hyperinflation this year,
that interests rates on 10 years bonds were going to rise to 6% this year, that the market was going to have
a catastrophic collapse in January of 2011, etc. He has been predicting all kinds of doomsday
scenarios for years and to make them happen he supported the U.S. defaulting on its debt
(oh by the way S&L did you support us defaulting on our debt?) You should be following Soros investment advice in general.Too bad you believe in Schiff because he has been wrong about almost all of his predictions.
For those reading these threads notice how Siriusly Long avoids discussing all the wrong predictions
of Schiff which i have posted in several threads. Its as if they dont exist. LOL.

Soros invested in gold as well as many others.
If you had invested according to Schiff's predicitons (beside gold) you would have lost a lot of money. I quess you are only following his advice about gold. Lol

Ah you are back on your silly policy gimmick schtick again?
As you know Soros, Buffett, Bloomberg and others support a change in the
tax rate for people who make above a certain income. They put their money
where their policy beliefs are. I hope you will support their reasonable position.
I know you have suggested you were ok with it, though you seem to want to fight against it
at the same time. Very funny.

Quote:

---

Originally Posted by Havakasha

I quess you werent reading the nuances of Soros discussion.
I quess you were too busy following Schiff's predictions that the U.S. would have hyperinflation this year,
that interests rates on 10 years bonds were going to rise to 6% this year, that the market was going to have
a catastrophic collapse in January of 2011, etc. He has been predicting all kinds of doomsday
scenarios for years and to make them happen he supported the U.S. defaulting on its debt
(oh by the way S&L did you support us defaulting on our debt?) You should be following Soros investment advice in general.Too bad you believe in Schiff because he has been wrong about almost all of his predictions.
For those reading these threads notice how Siriusly Long avoids discussing all the wrong predictions
of Schiff which i have posted in several threads. Its as if they dont exist. LOL.

Soros invested in gold as well as many others.
If you had invested according to Schiff's predicitons (beside gold) you would have lost a lot of money. I quess you are only following his advice about gold. Lol

Ah you are back on your silly policy gimmick schtick again?
As you know Soros, Buffett, Bloomberg and others support a change in the
tax rate for people who make above a certain income. They put their money
where their policy beliefs are. I hope you will support their reasonable position.
I know you have suggested you were ok with it, though you seem to want to fight against it
at the same time. Very funny.

---

I should follow Soros's investment advise? I'm happy with my 35% return on gold. Had I invested earlier, it would be 70%.

You cite Schiff's prediction of hyperinflation only because his idealogy is different than yours, and you can't tolerate that. So you try to chide him on it. Remember this about liberals.

"Liberals speak often of tolerance, but they only tolerate Liberals and Liberal ideas."

Hava-gafa-kasha seriously avoids the fact that Soros, Buffet and Bloomberg can contribure to the government as they see fit. They can write a check. But no, they play the "tax accountant game" hiding their money and trying to avoid paying more taxes. In my book, they are nothing more than HYPOCRITES.

And yes, I don't care about taxing the rich, but for me and my family, I would like to have our taxes reduced dramatically - maybe 20%.

I know liberals loathe math, but if my taxes were indeed reduced 20%, that would be $10,000 a year. Save that for college for 8 years when my kid will hopefully go to college, and that's $80,000. Yeah, I know. You and your liberal friends know what to do with that money more than I do. LMFAO. What balls you have.

Still "modifying a post" Hava-gafa-kasha?

I love it when Havakasha cracks and admits "no one wants to pay taxes", and "get a freakin' tax accountant."

I will eventually get him to admit that the democratic party is a convoluted power grab of strong praying on the weak. I will eventually get him to understand that the corporations liberal so loathe generate taxes that our government consumes. He will eventually comprehend that "rich" already pay million of taxes - in fact, he should be reminded every time he posts as the avatar I use paints that picture ALREADY.

Just to refresh his memory on the last one: http://www.politifact.com/virginia/s...ericans-dont-/

I love how you are unwilling to acknowledge that your economic favorite Peter Schiff who follows the Austrian school of economics (you are a believer of), has gotten MANY of his predictions wrong. He was wrong on hyperinflation, wrong on interest rates, wrong on his market predicitions, etc. Those are simply facts. No matter how many times you try to change the subject those are going to be facts. Sorry you are unable to accept it. I simply demand that you acknowledge when something
you publish is a lie, and admit that the economist Peter Schiff has a pattern of incorrect doomsday'
predictions. If that makes you livid I cant help you.

I havent cracked and I seriously dont even know what you are talking about; I think your comments about me having a tax accountant are beyond bizarre: and despite what you continue to say about me people who know me understand that i have a very tolerant nature. Your anger is misdirected. Sorry you seem to be so upset about some of our discussions.
Obama has been cutting your taxes since he took office and is presently proposing a continuation of middle class tax cuts so you should feel optimistic about your future tax situation. Combine that
with all the money you are making on gold and you should be downright happy. Smile. :)