Soros To Germany: Issue Eurobonds Or Quit The Euro

With the Euro Zone struggling to move forward from recent bailouts, billionaire investor George Soros has strongly encourage Germany to either quit the euro currency or to reconsider its position on Eurobonds, reports CNBC. As Europe’s leading economy and strongest financial backer, Germany has been under immense pressure to quit the single currency in order to improve the future of the euro.

Soros — known as “the man who broke the Bank of England” for his infamous $10 billion bet against the pound in the 1990s — is the most recent in a line of experts to criticize Germany’s stern financial policies. Using the Cyprus bailout as an example, he warns that the financial crisis is likely to only grow deeper.

During a speech in Germany, Soros stated, “The financial problem is that Germany is imposing the wrong policies on the Euro Zone. Austerity doesn’t work. You can’t shrink the debt burden by shrinking the budget deficit, ” reports CNBC.

Soros makes his position clear, insisting that he does not place blame on Germany, but that he does attribute a large share of the responsibility to the country. He strongly believes that there are two options that can be considered in order to aid the euro crisis: Soros has suggested that Germany leave the euro altogether, or back out on their opposition to authorizing eurobonds. The eurobonds are government bonds that serve as a suggested solution to tackle the European debt crisis. They are debt loans for the other Euro Zone nations, in which Soros suggests Germany could provide.

Soros explained, “My first preference is eurobonds; my second is Germany leaving the euro. It is up to Germany to decide whether it is willing to authorize eurbonds or not. But it has no right to prevent the heavily indebted countries from escaping their misery by banding together and issuing eurobonds,” reports CNBC.

Germany accounts for 30 percent of the Euro Zone’s output and has been able to stay afloat during the financial crisis that started back in 2008. Germany has held strong ground, vehemently opposing issuing eurobonds, but Soros believes that with tighter budget rules it would work. The advantages of lowering the borrowing costs in the surrounding states would be able to stabilize debt and also remove the country’s threat of default.

Soros commented, “Germany did not seek the dominant position into which it has been thrust and it is unwilling to accept the obligations and liabilities that go with is. Germany understandably doesn’t want to be the “deep pocket” for the euro. So it extends just enough support to avoid default but nothing more,” reports CNBC.

Read more about Soros’ comments at CNBC here and at the Telegraph here.