In his big interview with Bloomberg TV, George Soros said something really profound…Well actually Angela Merkel has emerged as a strong leader. Unfortunately she has been leading Europe in the wrong direction. I think she is acting in good faith and that is what makes the whole situation so tragic and that is a big problem that we have in financial markets generally – that you could have a false idea, a false ideology, a false interpretation which is reinforced by reality. In other words it works for a while until it stops working and that is what is called a financial bubble – which, you know, looks very good while it is being formed and everyone believes in it and then it turns out to be unsustainable…The European Union could turn out to have been a bubble of this kind unless we realise there is this problem and we solve it and the solution is there. I think everybody can see it, all we need to do is act on it, and put on a united front, and I think that if the rest of Europe is united, I think that Germany will actually recognise it and adjust to it.
If Angela Merkel were just purely acting in Germany’s interest, then you might feel confident that the recent downturn in economic data was a reason for optimism, since it would be a spur for Merkel to change her tune about growth and stimulus.
And it still may.
But if Merkel really believes what she says? Oh boy. Scary.