Soros: Germany “major player” in the Euro crisis

Interesting lecture by George Soros at the Humboldt University in Berlin on Germany’s responsibility in the current crisis of the euro and where calls for an exit that leads to it.

For readers who do not have enough time to hear the next video or who follow English uncomfortable, this article a brief summary of the content of the conference is included.

Video: George Soros Conference

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The current crisis has two aspects: fiscal and financial. The financial crisis in the US, epitomized was the fall of Lehman Brothers, and the fiscal crisis centered in the European Union, whose seed is to be found in the Maastricht Treaty which foresaw a non – political economic union without a common treasury. This treaty so limited that the EU did was an experiment in social engineering.

For a long time the ECB ‘s monetary policy to promote growth in Germany, with low interest rates caused the peripheral countries into debt beyond their means.

At first Germany he had a keen interest in the EU for its own reunification process and was willing to assume the cost involved him. Currently, Germany is in a contradiction because it has no interest in changing the Maastricht Treaty but does not want to continue to assume the cost of product acceptance supposes him.

The euro was born with a number of shortcomings:

  • a common fiscal policy was not created.
  • the false belief that the ability of financial markets to self-regulate, it made possible the creation of a bubble of cheap credit was assumed.
  • He did not contemplate the possibility of error or that a state could leave the monetary integration.

If Germany persists in its economic policy, with a strong currency to stimulate their competitiveness and want to stop contributing, deficit countries in the euro zone may be led to a long period of deflation, which could jeopardize the future of the EU, by resentment among its members.

The lines for proper economic policy in the euro area should consist of cutting public deficit, structural reforms and foreign aid to stimulate economies (a devaluation of the euro is needed for deficit countries regain competitiveness).

Then it is important that Germany realize the possible consequences of their ways and should recognize 3 principles to guide future policy:

  1. The current financial crisis is that tax. Banks have not done enough cleaning up their balance sheets valuing their assets at market prices. This has led to a crisis of confidence between them and having to go to the ECB for short-term financing. The main problems are small banks, but the financial system needs to be recapitalized (Germany opposes bailouts).
  2. A rigid fiscal policy accompanied by a more flexible monetary policy, enabling the purchase of debt by the ECB (which Germany opposes).
  3. Must allocate resources for education, infrastructure and research throughout the Eurozone.

When banks regain solvency and be recapitalized again it is possible growth in the Eurozone and may review the structure of the euro. To make this possible is essential to the leadership of Germany, that should not happen must assume responsibility for the current crisis.