Economics

إما أن تتولى ألمانيا القيادة أو ترحل

Sep 8, 2012 George Soros

نيويورك ــ كانت أوروبا في أزمة مالية منذ عام 2007. وعندما تسبب إفلاس ليمان براذرز في تعريض القدرة الائتمانية للمؤسسات المالية للخطر، حل ائتمان الدولة محل الائتمان الخاص، الأمر الذي كشف عن خلل غير ملحوظ في تصميم اليورو. فبتحويل حقها في طباعة المال إلى البنك المركزي الأوروبي، عَرَّضَت البلدان الأعضاء نفسها لخطر العجز عن سداد الديون، شأنها شأن بلدان العالم الثالث المثقلة بالديون بالعملة الأجنبية. كما أصبحت البنوك التجارية المحملة بسندات تنتمي لحكومات دول أضعف عُرضة للإفلاس.

هناك تشابه بين أزمة اليورو الجارية والأزمة المصرفية الدولية في عام 1982. فآنذاك عمل صندوق النقد الدولي على إنقاذ النظام المصرفي العالمي بتقديم القدر الكافي من القروض للدول المثقلة بالديون؛ وبذلك تجنبت تلك الدول العجز عن سداد ديونها، ولكن على حساب الكساد الدائم. وعانت أميركا اللاتينية عقداً ضائعا.

واليوم تلعب ألمانيا نفس الدور الذي لعبه صندوق النقد الدولي آنذاك. صحيح أن الظروف مختلفة، ولكن النتيجة واحدة. فالدائنون يحولون عبء التكيف بالكامل إلى البلدان المدينة فيتهربون بذلك من مسؤولياتهم الشخصية.

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George Soros

Writing for PS since 1997
126 Commentaries

George Soros is Chairman of Soros Fund Management and the Open Society Foundations. A pioneer of the hedge-fund industry, he is the author of many books, including The Alchemy of Finance, The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What it Means, and The Tragedy of the European Union: Disintegration or Revival? His most recent book is In Defense of Open Society (Public Affairs, 2019).

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0 Comments on this paragraph, 38 Comments on this article

Kir Komrik Oct 30, 2012

Thanks for the update,

Mr. Soros has said before that,

"The eurozone needs a banking union: a European deposit-insurance scheme in order to stem capital flight, a European source for financing bank recapitalization, and eurozone-wide supervision and regulation. The heavily indebted countries need relief on their financing costs. There are various ways to provide it, but they all require Germany’s active support".

And he now seems to acknowledge something critical. Namely, that Europe has a leader and that leaders are the ones that make things happen. As I've said before in discussions about the United States vis-a-vis General Federalism (see http://kirkomrik.wordpress.com/2012/02/27/the-quickest-summary-of-general-federalism/) , the EU needs a *legal entity* to back the Euro. This is the key omission in the Maastricht Treaty. I *think* this is what Mr. Soros is saying, and he is suggesting that it be the leader who implements it; namely, Germany:

"The same result could be achieved, with less cost to Germany, if Germany chose to behave as a benevolent hegemon. That would mean implementing the proposed European banking union; establishing a more or less level playing field between debtor and creditor countries by establishing a Debt Reduction Fund, and eventually converting all debt into Eurobonds; and aiming at nominal GDP growth of up to 5%, so that Europe could grow its way out of excessive indebtedness."

Which has all the appearances of being a "sell" to Germany, and its probably a darn good idea. In *my* estimation, Germany should support a legal entity, a General Federation, to back the Euro. And this would be a good step in that direction.

- kk
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John Brian Shannon Oct 29, 2012

Hi George,

Great piece.

On the question of why Germany should lead or leave, I feel Germany should stay and lead.

Debt mutualization between Eurozone member nations is the obvious route to enhance EZ stability.

Yes, it is unpopular with citizens of nations, but it wasn't so long ago that they themselves benefited from similar and one day in the future they may need such an arrangement to save their own national economies, again.

Feudalism has had it's day and while that may be a hard grasp for some Europeans, strength in numbers in the form of debt mutualization and other mutual aid is what is needed in this modern world to succeed -- long term.

Cheers, JBS
http://johnbrianshannon.com
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Michael Hullevad Oct 19, 2012

Germany will with a Euro exit destroy it own economy! The new D-mark would go up in value by 30-40% making German products much too expensive for their biggest market the EU. They have in fact benefitted from the low valuation of the euro!
So they in fact have no options left, they must carry on and share the burden of the "failing responsibility" of their EU partners.
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Trond Ryen Aspvik Sep 25, 2012

In what way could Germany take the lead, in a way that is also leaving something in it for Gretchen the waitress, Anna the journalist, Heinz the plumber and Helmut the hotel owner (read as taxpayers and voters)? Bottomline is that these four, together with their fellow Germans, for many years now have picked up the bill, The bill in the shape of lower wages than they could have had, higher taxes than they probably would have had elsewise and/or even better social welfare than they do have, higher retirement age, lower pensions, less holiday than what they could have afforded themselves, longer working hours than necessary, etc. If we still are not there where a political “earthquake” in Germany is about to happen, I worry that their trust in politicians and the EU will fade away like it already have in i.e. Greece. And what first might seem just like a gentle slide towards distrust can still show hard to stop or being reversed.
If Gretchen, Anna, Heinz and Helmut should lose their confidence in that their current politicians are there for them, that they do their very best for those who have voted for them, the incentives to behave as “good citizens” might just go down the drain. If their patience runs out and they don’t want to pick up the “restaurant bill” any more, what happens then? Yes they can throw their politicians by electing others, but to get such politicians in place, I’m afraid that they will have to go to such extremes that the cooperation between the EU and Germany will suffer hardship anyway. Or at least, I see the danger for something like this happening.
Another solution is that they could become more Greek and start to work in mysterious ways that does not benefit the country and EU (Black market, avoiding taxes, etc...), but I don’t see that as something arising soon. Fortunately; they have, unlike some of the rest, had politicians that were shown to be trustworthy, so they can’t be said to have lost every illusion in their “rulers” yet.
My point here is to try think like Gretchen, Anna, Heinz and Helmut might be thinking (I’m not saying that they are thinking this this way, just that they could be). That have slavery really been abandoned if there is somebody else who can claim their right to values created by themselves? For a time this might be accepted if there are a “greater good” that is valued by them greater than the cost, (in this case the reunion of East- and West Germany could be seen as such), but I do not believe that this is something they want to pay for until eternity.
So my guess is that the best, and I believe only true, solution for everybody is if Germany (and maybe some other countries) leave the EURO, and does it while they still can stand each other’s faces. Gretchen, Anna, Heinz and Helmut might think that this is could be a good idea, at least for the foreseeable future, and rightfully go to their elections with the future of their own carried in mind. While the rest of the EU must rally together in an effort to find solutions to their challenges. It will without doubt still be big and steady enough to play an important role in the world, and without the biggest contributor(s) to the EURO’s strength they might have an easier task. The other solution seems to me like a castle built in sand unless there is something, like already mentioned, in it for our friends Gretchen, Anna, Heinz and Helmut.
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Kofi Jackson Sep 17, 2012

How could Germany possibly leave? By self-implosion?
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Giles Conway-Gordon Sep 10, 2012

George Soros presents, as equally valid alternative solutions to the euro crisis, Germany quitting the euro or Germany accepting its dominant political and economic role in the Eurozone (EZ) and ‘leading the creation of a political union with genuine burden-sharing’.
These two ‘solutions’ are not equally valid and very far from equally achievable. Mr. Soros sets out the chief advantage of Germany’s leaving the EZ: the immediate euro devaluation which would occur, helping the debtor countries to return to economic growth and the economic (and ultimately financial) rebalancing of the EZ.
This would obviously create severe hardship for Germany but it proved itself capable of adapting to pressure of a similar size and scope when it merged with East Germany. The mechanics of a German departure are not hard to specify and have been used quite often in the last few decades in other cases.
But Mr. Soros’ easy and uncritical assumption that a systematic shift to German hegemony in the EZ, politically, economically and financially, would be equally successful and equally easily achievable, looks completely unrealistic.
Successful implementation would entail the complete dismantling and restructuring of long-established economic and social behavior in the peripheral economies. It is difficult to see this being achieved without much time and great difficulty; a recent report by the Bank of Italy and Confindustria, the Italian employers federation, reckoned that the modernization and restructuring of Italian industry would add 11% to Italian GDP but would take 30 years. Furthermore, the immediate consequence, for Italy and others, would be a steep additional rise in unemployment, particularly since this restructuring would take place against the backdrop of the worst and most persistent global economic slowdown in decades.
Secondly, how does Mr. Soros see German hegemony being exercized ? Is he in favour of a central body exercizing ultimate political control over the economic and financial policies of the EZ member countries ? Would Germany have a dominant role in some way in this body ? If not, as we have most recently seen in the ECB decision concerning bond purchases, Germany would be impotent to ensure that other members did not slip their leashes. Either way, giving such authority to an unelected, unaccountable group of commissars would effectively be the end of democracy in Europe and it is more than a little ironic to see Mr. Soros, of all people, advocate such a development.
Germany seems to be doing its best to combine a wish to see its EZ fellow-members modernize their economies, and to avoid writing them an endless series of blank cheques, with a sense of its responsibility to the ‘European project’.
The better of Mr. Soros’ two alternatives would seem to be for Germany to leave the euro to the other members. This would enable the ECB to continue to act as the central bank of the EZ and would give scope for collaboration with a resuscitated Bundesbank to work, in the interests of all the members of the Eurozone economy, towards a realistic and durable solution to the crisis.
- Gary Marshall Sep 13, 2012
  
  Hello Danny boy,
  
  So its only German views that are irreconcilable or indifferent to the rest of the Euro members' fortunes. Well, Germany's and those of every other nation that thanks God repeatedly for never having fallen into the Euro's socialist pit. And is it not expected that the financially best off member might hesitate in sharing the financial fruits of its nation and its taxpayers with the rest of the Euro's government squandering, wealth destroying, lethargic economies?
  
  The other economies don't have to comply with German dictates at all. They can do as they please. Unfortunately, that is what has brought them to the financial abyss and prostrate before the mighty German economy.
  
  Duh!
  
  So what's the answer? Is it better for Germany to remain with the faltering Euro nations, under a devalued currency that pushes up the price of imports and destroys wealth abandoned to parasites? Or is it better to walk away from the incorrigible big government squandering socialists, suffering a little under in its exports and leaving its banks and their depositor's penniless?
  
  Germany has every reason to drop the Euro and move on. If one must help, then help one's own.
  
  This has nothing to do with an episode in history a long time ago. Its just financial common sense. Why even Soros won't back the decaying socialist states with his money. He just urges everyone else to do so, while he bets big against them and any who give them money.
  
  George is no fool. He knows what he's doing. You, Daniel, are just one of his simple tools.
  
  How does that make you feel!
  
  GM
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- Daniel Gomes Sep 12, 2012
  
  Richard,
  
  For starters, don't Germans keep insisting that Greece should leave the Euro with little concern for how would it be done?
  
  So if Germany, the single isolated EZ country which is unhappy (with the fact that ECB no longer reports to the fuehrer), believes that its views are irreconcilable with the remaining 16, then the only country which should leave is Germany.
  
  Unless of course if idea of Germany was the prevailing one in the early 1940s in which Europe's purpose is simply to serve Germany with land and resources.
  
  So do explain to me why should the remaining 16 countries obey Germany?
  
  Has the EZ been integrated in the 4th Reich without anyone noticing?
  
  Now for the German exit..
  
  Such exit would be extremely easy for Germany in technical terms.
  
  Probably iGermany would prefer to keep its old debt denominated in Euros due to the devaluation but that would not have any significant effect for the remaining countries as initially those investors looking for a strong currency would shed such debt in exchange for new one in Deutschmark marks.
  
  Also German economy would immediately tank making its debt less attractive whereas a devalued Euro would boos EZ exports making its debt much more attractive.
  
  There are plenty of experiences along history of pegging and de-pegging of currencies carried on under much more severe conditions, so your concern is not fact based.
  
  Your concern is simply that you know that German economy would crash with a strong Deutschmark and therefore, like other Germans, you want to remain in the Euro to enjoy all of the benefits but none of the responsibilities.
  
  Like for example enjoy bailouts from the ECB in 2008 when the irresponsible over-leveraged German financial system was completely cut of from the credit markets.
  
  The more I read opinions like your the more I understand the drivers of the 1st and 2nd world wars.
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- Richard Grelber Sep 11, 2012
  
  "The mechanics of a German departure are not hard to specify and have been used quite often in the last few decades in other cases."
  
  Which are???
  
  I have never heard of this. What was the other case of a country leaving a currency because it was economically stronger than the others? I and other readers would be very interested to know, if you aren't just making this up.
  
  Since it is not hard to specify, why don't you?
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- Mark Pitts Sep 10, 2012
  
  Outstanding comment.
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Marc Sargen Sep 10, 2012

All of the governments also enter a compact to manage their budgets & finances under common limitations & restrictions. From the start, a multitude of governments (including Germany) ignored those restrictions to a greater or lesser extent. Several cook the books to hide the extent of their abuses.
All that the EU wants is for Germany to give up the sound financial practices that its economy has been based on to support the excesses of its fiscally irresponsible partners who do not with to honor rules of the compact they all agreed to a decade ago.
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Roman Bleifer Sep 10, 2012

Between buying the euro zone debt converting them into common debt, and increase economic growth, there is no connection. Soros offers a new face-off equivalent to the economy of unsecured trillion. It has been, but the growth of this no more. Soros says crisis cyclical monetary and offers treatments. But the crisis of the system, and therefore, it requires a very different ( http://crisismir.com/analiticheskie-materialy/ekonomika/13-mirovoj-ekonomicheskij-krizis-prichiny-i-posledstviya-quo-vadis.html ) New financial instruments throw without structural reforms, without changing the structure and regulatory framework in the EU, it is a recipe for disaster. In this part, the German position is quite correct. In Soros wants to be good for others. That would cast their billions to save the eurozone
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george sos Sep 10, 2012

Reading soros without any prejudice i see that what he points out really is that the decision (whoever is to take it) is about whether the creditors will lose or not.This seems to be the significant factor in whatever is to happen ,and the level of influence these creditors have in the european institutions and goverments.And if as a citizen without special financial interests or knowledge i understand one thing,this is that the enemy is clearly the rich.whatever this means or whoever it includes.Is it the banks?the investors?the funds?the IMF?the ECB?all of them together?my guess is that the only good thing for me will come out only of a big change in social conditions in euroope ,after a redistribution of wealth,to the poorer classes.only by securing a state that can pay salaries and pensions without borrowing,we can be safe and happy as citizens.Only if there is a state that actually fulfills its purpose,to provide for the people.Free education,health,and housing,should be a priority as well as securing food for everyone in the continent.at the same time we can return to production forms that were abandoned the last years ,agriculture can rise ,and production of useless cars (as if we dont have enough already around),or weapons of any kind should minimised and eventually stopped....banks of course nationalised,and big multinationals scrutinised by independent bodies and representatives of the people.Justice system should be cleaned ,and reorganised with honest new judges,and political parties should evolve into usefull organisations for the nation ,by opening up their finances and be subjected to scrutiny ,and public companies should be operated on a free market basis ,making profit and counting productivity of the workers.in all a more fair world.ok i stop now!...thanks for your patience
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Richard Grelber Sep 10, 2012

This sounds interesting, BUT TELL US: how exactly does Germany leave the Euro?

How does a new currency come about?

If the new currency would be stronger, why would Germany denominate any of its debts in the new currency?

If it doesn't, has it really left the Euro?

Without discussing this, Soros has not suggested anything of value.
- Charlie Browne Sep 13, 2012
  
  Invoking Godwin's law
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- Daniel Gomes Sep 12, 2012
  
  For starters, don't Germans keep insisting that Greece should leave the Euro with little concern for how would it be done?
  
  So if Germany, the single isolated EZ country which is unhappy (with the fact that ECB no longer reports to the fuehrer), believes that its views are irreconcilable with the remaining 16, then the only country which should leave is Germany.
  
  Unless of course if idea of Germany was the prevailing one in the early 1940s in which Europe's purpose is simply to serve Germany with land and resources.
  
  So do explain to me why should the remaining 16 countries obey Germany?
  
  Has the EZ been integrated in the 4th Reich without anyone noticing?
  
  Now for the German exit..
  
  Such exit would be extremely easy for Germany in technical terms.
  
  Probably iGermany would prefer to keep its old debt denominated in Euros due to the devaluation but that would not have any significant effect for the remaining countries as initially those investors looking for a strong currency would shed such debt in exchange for new one in Deutschmark marks.
  
  Also German economy would immediately tank making its debt less attractive whereas a devalued Euro would boos EZ exports making its debt much more attractive.
  
  There are plenty of experiences along history of pegging and de-pegging of currencies carried on under much more severe conditions, so your concern is not fact based.
  
  Your concern is simply that you know that German economy would crash with a strong Deutschmark and therefore, like other Germans, you want to remain in the Euro to enjoy all of the benefits but none of the responsibilities.
  
  Like for example enjoy bailouts from the ECB in 2008 when the irresponsible over-leveraged German financial system was completely cut of from the credit markets.
  
  The more I read opinions like your the more I understand the drivers of the 1st and 2nd world wars.
  A new reply to this comment has been posted.
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Tobias Engelmeier Sep 10, 2012

This article is very interesting. It brings together an economic and a political perspective. Soros thinks out of the box, based on an empathy with the European Union project as well as of all Europeans. Reading through it, a number of things come to mind.

1. How can we avoid a purely technocratic solution in which European citizens don't feel left out? The biggest challenge to me seems to be finding a democratic or at least democratically sanctioned process. I understand that it may be advantageous at first glance to delegate complex decisions to technocrats in times of crisis (like the Roman's did with their dictators). But we might in the process be giving up the most important political good - our democracy. (And you know what happened in Rome.)

2. I agree with Soros on his assessment of the German management of the crisis. There is no attempt to lead and there is little European spirit left. This is a shame. Perhaps this is a generational/demographic problem: the older generation, which has profited from past peace and prosperity has little incentive to take risks for the future. Changing, improving, and taking risks is, however, essential for the younger generations. Europe is a long-term project for our children. In Germany some weaker states have profited from the support of stronger states in the past and are now ready to themselves support others. Bavaria is an example. Saxony may soon be another.

Europe should be a globally competitive, internally cooperative and democratically governed entity. I still believe this is possible. But I feel that the voices of pessimism and provincialism are currently very strong.
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Alan Hill Sep 10, 2012

It all seems very simple but isn't. As always the devil is in the detail.

Europe does not have a definitive leader and even political and financial integration will not solve the issue.

Someone from Maine or Colorado or Illinois sees himself as an American. When will a Spaniard or a Greek or a Frenchman see himself as a European?

We may have had the longest peacetime in History in Europe but that is not due to the integration that has taken place.
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André Rebentisch Sep 9, 2012

There is no German interest in becoming a hegemon. It would be sufficient to hardglue ordo-liberal policies into the Union and restore trust in the Treaty principles. We could steer left or right to drive around a lake but we can't do both. Pacta sunt servanda is the most important guiding principle.
- Daniel Gomes Sep 10, 2012
  
  http://www.ibtimes.com/articles/369155/20120801/bundesbank-euro-debt-crisis-ecb-draghi.htm
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Zsolt Hermann Sep 9, 2012

It is a very eye opening overview article but still it only deals with half of the problem.
The half which the article mentions is the mutual responsibility of all the member nations to go beyond their comfort zone in order to save the Union and establish a deeper integration for a more sustainable and predictable future. This mutual responsibility affects Germany as much as the weakest nations, each has to do their maximum for the benefit of the whole, otherwise it cannot be maintained, finger pointing, blaming the others has no place in the solution, only common understanding and "round table" like solutions.
But even if such agreements, integration happened we are still left with the other problem: the whole economic model, the constant quantitative growth system which gave birth to the credit crisis, and would simply inflate it even more is the true cause of the crisis. Unless we change the economic model and its supporting socio-political system all other changes will be futile, we would continue to run into crisis after crisis, living an unnatural and unsustainable lifestyle.
If we want to solve the crisis we have to expose and solve both root causes: our excessive, way beyond necessities and resources lifestyle, and our selfish, subjective calculations and methods in a global, interdependent human network.
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Frank O'Callaghan Sep 9, 2012

Soros has suggested an original and intelligent solution. A devaluing Euro without Germany would allow Europe to deal with the crisis in the traditional way. It would also damage the economies of the devaluing countries and their fixed income citizens such as pensioners. The German economy would revalue and experience a lack of competitiveness with the difficulties that go with it. Not a desired outcome. The Soros suggestion is clearly that Germany must lead in solving this from within. The alternative is mayhem.
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Mark Pitts Sep 9, 2012

Aging European populations mean government liabilities are going to grow rapidly and economic growth will remain slow. And so, with time, the conflicts are only going to get worse.

Germany does not have the resources to save the Periphery, even in the medium run.

The printing press buys time, but does not create real goods and services that people can consume.
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José Luiz Sarmento Ferreira Sep 9, 2012

The German people is Sovereign. Germany is welcome to stay in the Eurozone if the Sovereign so decides, and has every right to leave if the opposite happens. But she has no right to stand in everybody else's way. If Germany doesn't want to be part of the solution, fine: but stop being part of the problem. Help Europe if you want to, don´t help if you don't, but don't condition your help to a belief in efficient markets, rational agents, monetarist policies or Central Banks beholden to nothing else but fighting inflation. Many Europeans no longer believe in such fairy tales. They will pretend to believe if they are forced to, but this will help neither Europe nor Germany.
- Tobias Engelmeier Sep 10, 2012
  
  Thomas Meyer, this is utter nonsense. As a German, I find it embarrassing.
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- Daniel Gomes Sep 10, 2012
  
  Thomas Mayer, you're the prototype of the ignorant supremacist German.
  
  Facts are no match for the faith in your beliefs.
  Even when all available facts prove you wrong, like an ignoramus you refuse to give up on your beliefs of German supremacist.
  
  You should seek medical help.
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Procyon Mukherjee Sep 9, 2012

Betwixt tax-payers of creditor nations bearing the brunt of the debt over-hang and rebalancing the adjustment program, the central piece of the puzzle is held by Germany, who by virtue of its commanding position on the current account surplus leads the one way traffic of goods and services in Europe; it could have been different if German domestic demand could be vitalized through a substantial change in wages, which is virtually stagnant. The question is how long this domestic demand-subdued competitiveness in the external sector could facilitate any kind of balancing for the debtor countries.

It leaves a sobering thought how with none of the convergence criteria of the Mastricht Treaty being fulfilled for so many years, the German banking system kept on buying Greek debt, which now seems more like a bail out of the German Banking system more than the Greek debtor position, with help from ECB et al.

Procyon Mukherjee
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Friedrich Böllhoff Sep 9, 2012

Germany seems to be rather strong right now. But it cannot escape its demographics. Collectively we cannot have a rosy retirement by putting lots of savings aside and having not enough children. Within the next 10 years or so Germany will have to cut entitlements or further raise taxes. Then it can ill afford permanent transfers to less competitive Euro zone countries (Greece is currently ranked at 96 in the global competitive index, other Club Med countries at much better ranks, though – source: indexhttp://www.weforum.org/issues/competitiveness-0/gci2012-data-platform/).
On the other hand Germany is not ready to acknowledge the heavy losses on its savings that would come with a break-up of the Euro zone. But they have to be borne anyway, because it was nonsense to give savings to someone who will not pay back. The alternative to a break-up is to devalue them by low returns and a dose of inflation.
Demography is destiny. This problem has to be addressed sooner or later to prepare the public for the end of generous welfare. I'm a bit amused that it is not yet happening. Public debates are about more social benefits or unfair distribution of wealth and income. And sometimes our judges take part in increasing entitlements as well.
… as if the less numerous next generation could finance it all.
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Alexandros Liakopoulos Sep 9, 2012

The problem with Mr Soros is not whether he is right or wrong. The problem is he can be either, while investing on the exact opposite. So, what kind of credibility can his words bear with? Maybe a "speculative credibility" which is a modern way to say "no credibility at all", but other than that, none.

Concerning his analysis, I could not agree more with him. However, overstating the European dramas and the internal-integral deficiencies of the European Establishment and underlying the need for Germany to make up its mind on whether it will lead or leave the Euro from a man directly and/or indirectly connected with the very essence of what is called "Deep State" of the USA - no matter how true and essential his claims may seem to be and do in fact seem to be - would make me quite suspicious on the long term objectives of the US government in Europe. If one combines his statements with his actions, both before, but also during the initiation of the "markets' attack" to Greek bonds till today, as also his "friendship" with (among thousands of others) the Prime Minister of Greece (and American citizen) at the time of the "attack" George Papandreou, one can come up safely with a conclusion of a direct involvement of US based "interests" to the creation and development of the ongoing "European debt crisis".

Now, last week, George Friedman from Stratfor, on one very interesting article about "Poland's security dilemma", was developing the point that Germany through EU got quite annoying for US interests. Namely, Friedman was (is) saying that whenever Germany dominates economically Europe, it tends to either to cooperate with or fight against Russia, in order to dominate politically all the rest. Polland payed that price quite some times and may need to pay that again. Therefor, Friedman says the US should play the role for the security of Poland that failed to fulfill in common the English and the French during the WW2.

Getting the full picture of the current geopolitical and geoeconomical changing image, one can investigate that there is a clear change of strategy of US towards EU. In international relations and politics where "appearance" (or "obvious concealment") of things is lots of times much more important (and efficient) than the very essence of the same things, Mr Soros "involvement" in the ongoing setting of the world economic agenda should be limited to zero: after all, why should we pay attention to someone partially - at least - responsible for the economic situation we all live in? If his advices were so accurate and important in something more than making money for his pockets and his friends' interests, given the fact that he is very well respected and "listened to" from the higher levels of the world establishment, why did our world fail???

I am very well aware that in the US Mr Soros is known as a "socialist". After all, George Papandreou is the President of Socialist International, right? However, in Europe this sounds like a big, ugly and very painful joke! Speculators are just criminals against the human kind, in any sense of logic. However, in our "modern" but so old oligarchic world of the Men of Money, speculators are well respected and tend to be treated as irrelevant and unconnected public analysts. Well, that's one of their first lies, establishing all the rest to come.
And the irony of today's "deadlock" situation is that we have to stay back and listen to people like that, accepting the fact they very well "move the strings" of the ongoing developments. I bet we - the rest 99% - will not do so for quite too long more, there I agree with Mr Soros, once more. But I really hope that we - the rest 99% of Europeans - have learned the lessons our leaders either didn' t, or couldn' t learn due to actions of people like Mr Soros and avoid to kill each other once more: bringing world criminals like "speculators", "banksters", "hygemonic fuhrers", etc, before justice and re-establishing a European common faith and trust could prove to be much more promising for a fruitful future. Of course, towards that target, we have to firstly claim back our governments and the power to rule our faiths through Democracy and the Rule of Law, especially as the "crisis" goes deepening and widening, on and on, till it "consumes" the whole democratic past of the European continent. Difficult task but if we fail to tackle it positively, we will have to pay it with our economies, democracies and lives. Therefor, we just cannot fail...
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Daniel Gomes Sep 9, 2012

Thomas Blunt,

For starters let me say that George Soros, as the speculator who bet and won against the European Exchange rate Mechanism back in 1992, understands the current crisis probably better than most and you should read him carefully has he makes a lot of sense unlike Angela Merkel.

Now comments like yours never cease to amaze me.
Lets look at the facts..

We have Germans producing all kinds of deceitful stereotypes, from...

- Merkel claiming that Germans work more than southern Europeans (lie).

- Implying that Germany was more financially disciplined than southern Europe for the past decade when in fact Spain's debt is still lower than German, whereas Portuguese was lower until not long ago (so another lie).

- Implying that Germany is bearing the burden of the so called bailouts when their stake on the so called bailouts is only about 15% of the total sum (more lies)

- Not to mention that citizens of Finland, Luxembourg, Finland etc contribute much more than the German tax payer... (implied lies)

- An of course they never mentioning that these bailouts are so far returning a profit for the subscribing countries like Germany... how shameless right?

- And what to say of screaming silence on their role in the subprime crisis which contributed significantly to the piling of sovereign debt?

- Also what to say about the silence on the mother of all bailouts given to irresponsible German banks who helped to destroy the world's economy in 2008 including those of southern Europe?

- Lastly how dare Germany , specially the arrogantly ignorant Bundesbank president, talk about socialisation of debt when the ECB took all sorts of toxic collateral from German banks against cheap credit?

But that is not the tale that Germans have been telling the world is it? Nothing like the above right?

So coming back to the beginning, yes.. it never ceases to amaze me how Germans can be so insistently deceptive still having the nerve to tell that those who disagree are "skewed" not providing any evidence to substantiate such claims.. really?

So coming to your statements.. you say:

"Of course German banks were part of the subprime problems as well as major lenders to the South. "

I'm sorry to say but this is nothing short of lie.

Do show me me one single Portuguese or Greek bank who irresponsibly speculated any significant amount of money on U.S. subprime, and if you are not able to produce such evidence I expect you to take the dignified approach and withdraw your statement.

And even from Spain and Italy I'm only aware of Santander and Unicredit having significant MBS assets.. but nothing close or as systematic as what happened in Germany.

I've provided evidence that the Fed alone subsidized the German financial with hundreds of billions of euros to all kinds of large and small banks in Germany.
I expect you to do the same to back your statements.

These values dwarf any so called bailout with draconian conditions provided to southern European countries.

If you are still not satisfied with the reputable sources I provided, then go and consult those of the Fed website showing all the loans in detail.

Just imagine if the German financial system had not been bailed out which would be the situation now..
Ironic right?

But it's Ok like the Bundesbank president stated, Germany is more important than other countries.

Then you say:

"While other nations only only took advantage of the Euro by borrowing more at Germanys low rates - either to fuel a property bubble or to hire a lot of civil servants."

Before you churn out falsehoods, go and check the numbers.
Compare the number of civil servants in Germany with that of other southern European countries, also do compare the hiring trend... you will be surprised when the facts don't match your believes.

As for the so called property bubble, once and for all it's time to stop this idiocy, Spanish population has grown for about 20% in 10 years, of course without an expendable territory the price goes up, its not a bubble, its sustained demand driving the prices.

Who invested in asst bubbles were the German banks of which the subprime speculation is the greatest example.

You say:

"Germany, just like Austria, The Netherlands or Finland, took advantage of the Euro to increase their competitiveness."

Again, I have provided to you the evidence (do consult the links please) of where did Germany do well.
Here is is again:

http://www.nytimes.com/imagepages/2011/07/18/business/20110719_GERMANY_graphic.html?ref=global

As shown, it was due to one single reason which even the Volkswagen head has admitted.. the China market and in particular the China financial stimulus of 2008 to help bring back the world from the abyss to which banks like Deutsche pushed it to.

And in the end comes the fuehrer stating that the EU relations with China are to be framed under her terms in order to serve German interests even though China's blatant WTO violations hurt the southern European countries in a disproportionate manner.

Until 2009 there was no differentiating factor between the performance of the German economy and that of most southern European countries as shwon in the charts provided earlier.

Why do you refuse to look at the facts?

The real GDP per capita of Germany didn't grow above European average or even above southern Europe average until 2010 when the Merkel led recession was imposed on southern Europe.

Do check the charts I provided to you, they don't lie.

Finally..

George Soros is right, Germany's isolation is more obvious than ever, Germany must decide whether it wants to be part of a democratic Europe, if not it's time for Germany to leave and go back to its overvalued currency, lets see how do Germans cope then.
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Daniel Gomes Sep 9, 2012

Thomas Blunt,

I forgot to respond to such gems like this:
"While other nations only only took advantage of the Euro by borrowing more at Germanys low rates - either to fuel a property bubble or to hire a lot of civil servants."

Before you churn out falsehoods, go and check the numbers.
Compare the number of civil servants in Germany with that of other southern European countries, also do compare the hiring trend... you will be surprised when the facts don't match your believes.

As for the so called property bubble, once and for all it's time to stop this idiocy, Spanish population has grown for about 20% in 10 years, of course without an expendable territory the price goes up, its not a bubble, its sustained demand driving the prices.

Who invested in asst bubbles were the German banks of which the subprime speculation is the greatest example.

Why do you refuse to look at the facts, the real GDP per capita of Germany didn't grow above European average or even above southern Europe average until 2010 when the Merkel led recession was imposed on southern Europe.

Do check the charts I provided to you, they don't lie.

For once in your life look at the facts and forget about your believes
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Timothy Williamson Sep 8, 2012

Germany will 'lead', they have too much time, history, and resources involved in it to let it fail. So they will do whatever is necessary to promote and encourage its success. What are the possible actions Germany could, or should, take? Foremost should be a strengthening of the oversight and regulatory powers of the ECB, and concurrently, the development of a more federal type approach to European governance.
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Gary Marshall Sep 8, 2012

Hello Mr. Soros,

Still giving out worthless advice I see. Always trying to get prudent nations to pick up the socialists' state tabs. Its a broken record.

Why should German taxpayers pick up the tab for Greece's lucrative public pensions?

They did so in the past, is not much of an answer. Hey. Why don't you, the supporter of so many socialist causes, take your money and buy all these debtor nations' bonds! The Keynesians tell us that more public expenditure will create mountains of wealth for any nation. So do your part you old hypocrite!

GM
- Daniel Gomes Sep 9, 2012
  
  Most americans tea party freaks are too simple minded to give their opinion on anything.
  
  Mr. Marshall, if you knew the first thing of economics, or even a little bit about Europe you would know that northern Europe socio-economical model has far more Socialist "bogey man" entitlements than southern European countries.
  
  In fact the least socialist regime of all, the George Bush junior's U.S. has piled the most gigantic amount of debt in a record time than another country on earth while cratering the economy simultaneously.. somehow American neo-liberals have simply given up on facts
  
  God created man and socialists created debt.. do you realise how retarded you guys sound to the rest of the world?
  
  When will American neo-liberals start using making judgements based on facts instead of ideology and 'truthiness'..
  
  Jeez.. 10 years of such brain-dead doctrine under George Bush haven't taught you anything?
  A new reply to this comment has been posted.
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pieter jongejan Sep 8, 2012

Mister Soros makes a comparison between the debt crisis of 1982 and the present debt crisis. The big difference between these two debt crises is that in 1982 the real interest rate was raised from 0% to 4,5%, while today real interest rates are kept at 0%. I understand that mr. Soros and all other hedgefund managers want to keep real interest rate sas low as possible for as long as possible. If they and the FED and the ECB succeed at that we will be sure that economic growth will not recover and unemployment will not come down. In 1982 (after raising real interest rates to 4,5%) economic growth recoverdd soon and unemployment rates came down quite sectectuarly. So why should the FED and the ECB help Wall Street at the cost of Main street?
Then we have France. this country does not like free markets, but likes administrative prices, bureaucracy, Brussels and the ECB in order to survive at the costs of other Western countries. France has the largest financial sector of all European countries and the smallest industrial sector. Why should northern Europe work and France (and Southern Europe) like Mr Soros be subsidized by letting the ECN keep real interst rates at zero? Zero real interest rates imply that the profit rate is low too. Companies will lower their investments, economic growth will decline and unemployment will go up. The sooner real interest rates are back at their equilibrium level of 2,5-3% the better. If banks or countries go bankrupt so what? Why should banks and countries be more equal than construction companies?
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Thomas Blunt Sep 8, 2012

It always makes me cringe a little bit if someone like Mr Soros asks others to take on "additional liabilities". I am sure that, in spite of his past and present role in the financial markets, he is still welcome to step forward and take the first step.

I am not sure how he can claim that the burden of adjustment is shifted to Southern European/debtor countries only. After all, Northern European/creditor countries adjusted in the 90s and 00s (like Sweden, Denmark or Germany) - while Southern countries went on a spending binge (for whom they and Mr Soros now blame the North).

Southern/debtor countries can count themselves lucky that Northern countries adjusted earlier. After all, who would pay for their bailout today, otherwise?

Also, Mr Soros continues to try to single out Germany. As a percentage of GDP, trade surpluses in other EU and EZ countries are in fact higher than those of Germany. So are net contributions per person to the EU households and transfers. So are benefits from the Eurozone (eg highest in Austria based on a study from Berger). Austria, Germany, Finland and The Netherlands are in the same boat and broadly share attitudes (both in terms of populace and political elites). "Burden sharing" the way Mr Soros suggests to them mean paying without limits. For others it means receiving.

Also, Mr Soros suggestion that Germany could leave and everything would be fine for the rest of the EZ is quite laughable. Does he really think that with Germany gone Finland, Austria or The Netherlands would stay - faced with paying for the bill (something Mr Soros call "burden sharing") on their own? They would leave the same second. And then what?

The headline and basic premise of the article "Lead or Leave" makes no sense at all. Not only is the "leave"-argument not thought through. The same goes for the "union"-argument. Has he ever talked to the French about giving up sovereignty? He argues that Germany refuses to accept what he thinks is reality. At the same time he puts himself, in my view, at the forefront lack of realism with many of his suggestions. Does he really think, given all the structural, political and social realities of Europe, aiming for 5%-growth p.a. to get out of debt has any relationship with reality at all?
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Burak M Sep 8, 2012

As a recently qualified lawyer specialisng in international public and trade law, and aspiring macro investor, and a fan of Mr. Soros (and no not for the purely cliche reason of his shorting of the pound and hence 1 billion trade as genuis as it were) but rather his comprehension of the global financial system and the the causes which he invests heavily in, I once again applaud Mr Soros for his I'm sure simplied version of the current situation in Europe and the responsibility that falls onto predominantly Germany. As much as Northern states blame irresponsible debt piling while same time decreasing competitiveness on southern states for the current crisis, one need not go futher than the mirror if your the northern states on who to blame for providing such finances for the piling of this debt. Europe once and for all by force must either integrate beyond just being merely monetary union or go their own ways hence the devaluing of currencies ie Greece, Spain, Portugal to increase some sense of competition(after an initial knee jerk massacre in global financial markets no doubt). However better the massacre earlier than later one must assume. Clearly even in the currently urgent atmosphere of the crisis, Europe is suffering contradictions in a sense of continued and increased unification such as Merkels approving of Draghis recent bond buying pledges on one hand which was although delayed positive none the less vs domestic populism such as the Dutch PM pledging that Holland will abstain from anymore potential assistance to Greece no matter the Troikas eventual conclusion of Greece's austerity implementations which is evidently negative. If the grand dream which Europe so self righteously promoted of a first ever unified continent is to materialise than it must act up on it. As the current dilemma of a supposed unified continent could be construed as California seeking Federal government assistance and New York saying "nope, you won't be getting a cent out of our tax payers". When viewed in this sense, apart from a four letter word that starts wit an E and ends with a O, the unified continent dream seem to have stalled at the dream phase.
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