In an interview yesterday with Der Spiegel, George Soros confessed that he’s not shorting the euro — but only because China is backing it up.
In a case of strange bedfellows, China and Germany will ultimately be forced to back up the struggling currency, whether they like it or not.
“Germany has to make it work,” he argued, adding, “You can count on China to back the efforts of the European authorities to maintain the euro” because it needs an alternative to the USD as a world currency.
Here’s what else he had to say:
– The eurozone would be better off without Greece and Portugal, and could probably survive their exit from the currency.
– “You need this dirty word: ‘euro bonds’,” Soros told reporters. This is the only logical way for indebted nations to refinance their debt, the next step that needs to happen in the eurozone.
– If John Maynard Keynes were alive, he’d modify his theory to require that new debt incurred in a stimulus be sustainably invested so that it would some day pay for itself. Obama has embraced these ideas, but preexistent debt levels have thrown a cog in the wheel.
– Barack Obama is to blame for what is sure to be a double-dip recession in the US — but only because he yielded to Republican pressure. “The president would have to show leadership to counter the Republican wave, and so far he has not done so.”
– The ratings agencies are trying to reinvent themselves “as anticipating rather than responding to changes that have occurred,” hence the U.S. downgrade.
Click here to read the full interview.