The European Union is becoming ungovernable and even threatening to disintegrate, at least as a common currency body, unless leaders come up with a plan, says billionaire financier George Soros.
Germany and other leaders are working hard to preserve the currency union, but governing the eurozone is becoming difficult due to so many dissenting opinions among member nations and also among organizations within member nations.
"We now have a dynamic of disintegration at work. The European Union was built up by a self-reinforcing process, with the leadership leading the move towards greater integration," Soros tells BBC News.
__________________________________________________________
‘You Opened My Eyes to the Catastrophic Enormity of This Financial Debacle’
Debt ceiling ‘medicine will become the poison,’ according to famed economist. Brace for economic meltdown. Watch the Aftershock Survival Summit Now, See the Evidence.
__________________________________________________________
"Now it's reversing and there are different voices. The leadership is trying preserve the status quo."
Therein lies the problem, Soros says.
 |
George Soros
(Getty Images photo) |
Preserving the status quo won't work, meaning Europe's leadership needs to move forward or backward, but cannot go on teetering about and threaten to turn Germany into a deep-pocketed lender for the continent's cash-strapped.
"Germany, which had been the leader of integration, is now afraid of becoming the deep pocket that the other countries are going to pick and they don't want to be the deep pocket for what they call a Transfer Union. So they are now resisting that and because of that, the authorities are trying to preserve the status quo," Soros says.
"Everybody recognizes that the present situation is not sustainable that you either have to go forward or you are going to go backward but you can't stay here. Everybody who realizes that is put into a position of being anti-European, so people are looking for national solutions and that then creates a political dynamic that reinforces the dissolution."
European leaders, meanwhile, are working to preserve the currency, which would come under fire if Greece defaults on its debts and prompts other countries like Italy to follow suit.
European leaders agreed to beef up its bailout fund, the European Financial Stability Facility, which now holds $1.38 trillion in its war chest, according to Reuters.
"We believe we will have a lot of flexibility to protect the euro and avoid contagion risks," German Chancellor Angela Merkel said, according to Reuters.
Merkel, Soros says, is working hard to keep the euro afloat.
"Angela Merkel is the one who is really leading the charge. She's determined to do whatever it takes to save the euro," Soros says.
But she does have her work cut out for her, as do all European leaders.
"There are conflicts between the Central Bank and the governments and there are differences between France and Germany and then there are all the other countries that are not given sufficient information and voice. So it is really a demonstration how ungovernable the European Union has become."
© 2012 Moneynews. All rights reserved.