George Soros previously said the euro crisis is over,while Europe’s nightmare is getting worse.
This is because of many “misconceptions and taboos that sustain it.”
In a new Project Syndicate column, Soros writes that Greece has been a victim of such taboos and misconceptions.
“Greece, too, is a victim of its creditors’ misconceptions and taboos. Everyone knows that it can never pay back its debt, most of which is held by the official sector: the ECB, eurozone member states, or the International Monetary Fund. After undergoing a lot of pain and suffering, Greece is close to posting a primary budget surplus. If the official sector could forgo repayment as long as Greece meets the conditions imposed by the Troika (the ECB, the European Commission, and the IMF), private capital would return and the economy could recover rapidly.
“I can testify from personal experience that investors would flock to Greece once the debt overhang was removed. But the official sector cannot write down its debt, because that would violate a number of taboos, particularly for the ECB.”
Soros goes on to remind Germany that it has benefited from debt write-downs in the past. And that it was French insistence on “harsh reparation payments after WWI that set the groundwork for the rise of Hitler, akin to what we’re seeing in Greece:
“Germany would do well to remember that it has benefited from debt write-downs three times in its history. The Dawes Plan of 1924 sought to stagger Germany’s reparations payments for World War I. The Young Plan of 1929 reduced the sum that Germany owed in reparations and gave the country much more time to pay. The post-World War II Marshall Plan provided debt relief as well.
“French insistence on harsh reparations payments after World War I clearly prepared the ground for the rise of Hitler. The rise of Greece’s neo-fascist Golden Dawn is a similar phenomenon.
“These two examples justify my description of the euro crisis as a nightmare. Only Germany can end it, because, as the country with the highest credit rating and largest and strongest economy by far, it is in charge.”
Soros insists that ultimately Germany can’t escape the responsiblities that come with its position.