George Soros on European Malaise and What to Expect

George Soros has some interesting words regarding the debt meltdown of Europe. The original text can be found here.  

The worry is that Germany may lack the political motivation to look into the interest of bailing out Europe after austerity is not an option anymore for the surrounding nations.  

But the likelihood is that the euro will survive because a breakup would be devastating not only for the periphery but also for Germany. It would leave Germany with large unenforceable claims against the periphery countries. The Bundesbank alone will have over a trillion euros of claims arising out of Target2 by the end of this year, in addition to all the intergovernmental obligations. And a return to the Deutschemark would likely price Germany out of its export markets – not to mention the political consequences. So Germany is likely to do what is necessary to preserve the euro – but nothing more.

The most poignant message Soros has offered is that it is in Germany’s best interest to save the Euro, despite how politically unpopular it may be.  Germany benefits in the near-term as a falling Euro boosts their exports and continues to drive their economy. Putting a stop to this would effectively be political suicide as it would mean that Germany’s current stellar growth and positive economic health would be put at risk. Yet, as Soros has said, Germany only has a year or so more of this until the European economy implodes on its self.

So, as Germany had destroyed Europe nearly 70 years ago, it now has a chance to help save it. I hope Germany can transcend its own nationalism for European interest, but as previously said, it is a tough sell politically. I suppose Germany will have the same mantra the U.S. had to recite during the bailouts: if we don’t do this, we will be worse for it. It will be a true test of leadership for the history maker’s. I really hope that Germany doesn’t fall prey to political cowardice like it did 70 years before. Our world won’t be a pretty place if we have to go through that again.


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