George Soros has been on a serious media blitz lately.He has a new Project Syndicate column up about how Germany should lead the eurozone (as a benevolent hegemon) or get out (and let the Euro drop to competitive levels).
He also has a much longer New York Review of Books essay about how Germany can still make things work.
And today he’s doing an interview and Q&A at a conference in Germany expanding on what needs to be done.
It’s very long and we hope to watch the whole thing again at some point, because Soros has an endless string of insights.
But one point that he keeps coming back to is the tragedy of Germans’ misunderstanding about their own role in the crisis.
Whereas Germans think they’re already incredibly on the hook for peripheral finances, the fact of the matter, says Soros, is that from the beginning, Germany has only done “the minimum.”
That’s a tragedy.
He points to Italy, for example: Mario Monti came into power last year with a mandate to reform things after the Berlusconi disaster. But because there was no institution willing to give Monti breathing room (by significantly lowering Italy’s borrowing costs), Monti hasn’t really gotten that much done, and he’s already a “lame duck.”
Had Germany stretched itself further in the beginning, the reforms would have worked, and Germany would not have lost any money.
Now, he says, “It’s 5 minutes past midnight.”
And in the Germans’ obsessiveness about avoiding inflation (owing to the trauma of the Weimar era), they have now created a housing bubble in Germany, thanks to the rush of safe-haven flows into the German republic. That’s a brilliant observation.
Soros really is a master at this, as he’s an endless font of knowledge on economics, market structures, politics, and European history.
His only hope, he says, is a massive change of mind among the German people… something that seems dicey as smart as Soros is.
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