If the eurozone does not agree on the way out of the crisis within
three months it could eventually turn into “a German empire with the
periphery as the hinterland,” billionaire investor George Soros warns.
Germany will struggle to preserve the euro as a single currency, as a breakup would have dramatic effects both economically and politically, George Soros said. Economically, a euro split would mean huge claims against the periphery economies, with the Bundesbank alone having over a €1 trillion in claims. That’s without any intergovernmental obligations. On top of that, a return to the Deutschemark “would likely price Germany out of its export markets – not to mention the political consequences,” Soros added.
In the end, all the effort from Berlin “would result in a eurozone dominated by Germany in which the divergence between the creditor and debtor countries would continue to widen and the periphery would turn into permanently depressed areas in need of constant transfer of payments.”
The statement came as Soros warned of a narrow three months’ window remaining to save the euro and bring the eurozone back to the shape it was when created. The monetary union needs to agree on the way out of the crisis before its locomotive economy – Germany – falls into a downturn itself, he said.
Given the increasing tension in Greece, which has so far failed to form a government capable of meeting the EU terms, “the Greek crisis is liable to come to a climax in the fall,” Soros said.
“By that time the German economy will also be weakening so 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 months’ window,” the investor explained.
Read more: http://rt.com/business/news/euro-save-soros-germany-014/
Germany will struggle to preserve the euro as a single currency, as a breakup would have dramatic effects both economically and politically, George Soros said. Economically, a euro split would mean huge claims against the periphery economies, with the Bundesbank alone having over a €1 trillion in claims. That’s without any intergovernmental obligations. On top of that, a return to the Deutschemark “would likely price Germany out of its export markets – not to mention the political consequences,” Soros added.
In the end, all the effort from Berlin “would result in a eurozone dominated by Germany in which the divergence between the creditor and debtor countries would continue to widen and the periphery would turn into permanently depressed areas in need of constant transfer of payments.”
The statement came as Soros warned of a narrow three months’ window remaining to save the euro and bring the eurozone back to the shape it was when created. The monetary union needs to agree on the way out of the crisis before its locomotive economy – Germany – falls into a downturn itself, he said.
Given the increasing tension in Greece, which has so far failed to form a government capable of meeting the EU terms, “the Greek crisis is liable to come to a climax in the fall,” Soros said.
“By that time the German economy will also be weakening so 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 months’ window,” the investor explained.
Read more: http://rt.com/business/news/euro-save-soros-germany-014/
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