Tags: Soros | Sinn | Eurobonds | euro

Soros Hits Back at Criticism of His Eurobonds Idea

Tuesday, 30 Apr 2013 11:30 AM

By Dan Weil

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Hedge fund legend George Soros has taken umbrage to criticism of his thoughts about Eurobonds launched by German economist Hans-Werner Sinn.

It started a few weeks ago when Soros said that Germany should agree to Eurobonds, which would combine the government debt of euro area nations, ending the euro crisis in his eyes.

If Germany didn’t want to do so, it should exit the euro, so that the euro area could issue Eurobonds without Germany, Soros wrote in an article for Project Syndicate.

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However, Sinn lashed out at the idea in a separate essay for Project Syndicate, stating that Germany should say “no” to the Eurobonds and “yes” to staying in the eurozone. The solution is for the weak economies to continue austerity, Sinn said.

Soros fired back in the comments section of Sinn’s piece on the Internet. “Hans-Werner Sinn has deliberately distorted and obfuscated my argument,” he wrote.

“I was arguing that the current state of integration within the eurozone is inadequate: the euro will work only if the bulk of the national debts are financed by Eurobonds and the banking system is regulated by institutions that create a level playing field within the eurozone,” Soros explained.

“Allowing the bulk of outstanding national debts to be converted into Eurobonds would work wonders. It would greatly facilitate the creation of an effective banking union, and it would allow member states to undertake their own structural reforms in a more benign environment,” he added.

“If Germany and other creditor countries are unwilling to accept the contingent liabilities that Eurobonds entail, as they are today, they should step aside, leave the euro by amicable agreement and allow the rest of the eurozone to issue Eurobonds,” Soros noted.

Meanwhile, economic conditions continue to deteriorate in the euro area. The European Commission’s index of executive and consumer sentiment for the area fell to 88.6 this month from 90.1 in March.

The report “supports other evidence that the eurozone is experiencing its longest recession on record,” Jennifer McKeown, senior European economist at Capital Economics, told Bloomberg.

Editor's Note: Save, shop and invest like an insider! Our experts lead the way each month in The Franklin Prosperity Report. Click here to learn more.

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