The fate of the euro will be decided in Germany. That's what legendary investor George Soros writes in an essay this week published first by the New York Review of Books and later by SPIEGEL ONLINE in Germany. The 82-year-old believes that Germany either needs to be convinced or pushed to take greater action. And he argues that the country must either lead as a "benevolent hegemon" or leave the euro.
Soros, a native of Hungary, has emerged as one of the leading critics of the German government's policies in addressing the euro crisis. In light of the dramatic developments in recent weeks, the billionaire investor has once again sharpened his arguments.
Since the start of the global financial crisis after the collapse of United States investment bank Lehman Brothers, Chancellor Angela Merkel has been to a large degree responsible for the erosion of unity that befell the European Union, Soros writes. Merkel's demand that each country provide guarantees for its own financial institutions was "the first step in a process of disintegration that is now threatening to destroy the European Union."
At each point in time over the past three years, the crisis could have been solved relatively easily and inexpensively, Soros writes. Instead, Germany missed every opportunity to resolve the crisis, and the situation deteriorated to the point that the very survival of the euro came into question. Meanwhile, Europe "did only the minimum necessary to avoid a collapse of the financial system." Now this has all come back to haunt it.
Soros has described last week's decision by the European Central Bank to purchase unlimited sovereign bonds as a "game-changing event." In addition to showing that German Chancellor Angela Merkel has sided with ECB President Mario Draghi rather than Jens Weidmann, the head of the Germany's Bundesbank who bitterly opposed the move and now stands isolated on the ECB's board, it also "committed Germany to the preservation of the euro." Soros has said the "euro crisis has entered into a new phase. The continued survival of the euro is assured, but the future shape of the European Union will be determined by the political decisions the member states will have to take during the next year or so."
Read the complete essay by George Soros on the euro crisis here:
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