Tags: Soros | euro | tension | EU

Soros: Euro Tension Will Eventually Destroy EU

Thursday, 07 Feb 2013 01:49 PM

By Dan Weil

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Just last month, hedge fund heavyweight George Soros, chairman of Soros Fund Management, said the euro is “here to stay.” But now, he’s singing a different tune.

“It could last quite a long time, the same way as the Soviet Union, which was a very bad arrangement, lasted for 70 years,” he told Dutch TV program Nieuwsuur, Open Europe Blog reports.

“However, I think that eventually, it is bound to break up the European Union. The longer it will take, and it may take generations, those will be lost in terms of political freedom and economic prosperity.”

Editor's Note: Prophetic Economist Warns: “It’s Curtains for America.” See Evidence.

The problem is the gap between southern Europe’s desire for economic stimulus and the North’s desire for austerity, Soros says.

“Germany needs to realize that the policy it is imposing on the euro area — the austerity program — is counterproductive,” the hedge fund legend notes. “It cannot actually succeed.”

Germany is unwittingly pushing southern Europe into a “long-lasting depression,” he adds. “And it may last more than a decade. In fact, it could become permanent.”

Eventually the pain will grow big enough to spark a rebellion, Soros argues. “And that would then be the destruction of the EU, which is a terribly heavy price to maintain to preserve the euro, which is meant to be just a servant of the EU.”

Even Germany itself is in economic trouble, with gross domestic product dipping 0.5 percent in the fourth quarter, the worst quarterly performance since the 2008-09 recession.

The ultimate outcome will be “a terrible tragedy for the EU,” he explains.

“And it’s happening to the most developed open society. It doesn’t have villains, because I don’t think that Germany is doing it with bad intentions, but it’s happening out of a lack of understanding of very complex problems.”

Interestingly enough, Soros told CNBC just last month in Davos, Switzerland, that “Germany has done what was necessary to make it clear the euro is here to stay.”

Presumably he was referring to Germany’s decision to back the European Central Bank’s quantitative easing effort, despite the opposition of Bundesbank hawks.

“That has been a tremendous relief for the markets. … There's a general sense of almost euphoria,” Soros said. He injected some caution, though.

“I think that is somewhat premature. The fundamental internal inconsistencies in the system have not been addressed. And therefore, you face political dangers.”

Many experts have shifted their concern from the euro’s survival to evidence of a budding currency war.

Such a conflict already has begun, says James Rickards, senior managing director of Tangent Capital Partners.

“All major central banks are easing,” he tells Newsmax TV in an exclusive interview. “Eventually so much money will be printed that this will lead to inflation. The endgame is collapse of the international monetary system — sometime sooner rather than later.”

Editor's Note: Prophetic Economist Warns: “It’s Curtains for America.” See Evidence.

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