In an op-ed on the EU in the Financial Times today, billionaire hedge fund manager George Soros blames the euro crisis on how Angela Merkel directed European countries to handle the financial crisis.
And he does it in just three swift sentences.
He says that she called on them to bail out their own institutions, rather than creating some EU entity (they have no central bank) to handle it in one swoop.
“Angela Merkel, Germany’s chancellor, insisted there should be no joint EU guarantee: each country would have to take care of its own institutions. That was the root cause of today’s euro crisis.
“The financial crisis forced sovereign states to substitute their own credit for the credit that had collapsed, and in Europe each state had to do so on its own, calling into question the credit-worthiness of European government bonds.”
He also suggests that because Merkel’s homeland is Germany, she might have not seen why ultimately, this would be disastrous for the EU.
As the largest creditor, Germany could dictate punitive terms of assistance, which pushed debtors towards insolvency. Meanwhile, Germany benefited from the euro crisis, which depressed the exchange rate and boosted its competitiveness further.
In the end, he writes, “a Greek default may be inevitable” and “we need a plan B.”
Here’s how the Euro crisis will end, according to Soros.