Tags: george | Soros | EU | recapitalize | Banks | Lower | Bailout

Soros: EU Should Recapitalize Banks, Lower Bailout Interest

Wednesday, 15 Dec 2010 08:01 AM

Billionaire investor George Soros said European authorities should make emergency funds available to recapitalize the region’s banking system and reduce the interest rate on rescue packages to debt-stricken nations to help stem the euro crisis.

Using emergency money to recapitalize lenders would be a “more efficient” use of funds than providing loans to governments and would leave countries with smaller deficits and a faster ability to access the markets again, Soros wrote in the Financial Times. “It is better to inject equity now rather than later and it is better to do it on a Europe-wide basis than each country acting on its own.”

European Union leaders will this week discuss the creation of a permanent mechanism to shore up over-indebted countries from 2013 as the European Central Bank tries to hammer out plans to aid the region’s weakest lenders. It is “virtually certain” authorities will set up some permanent institution and “it is equally certain that the new arrangements will also be flawed,” Soros wrote in the FT.

High interest rates charged on rescue packages are also making it harder for those countries to improve their competitiveness in comparison with stronger nations and the cost should be lowered to that at which the EU can borrow, Soros said. Otherwise, imbalances will continue to widen and there is a risk “that the euro may destroy the political and social cohesion of the EU,” he said.

Soros is chairman of Soros Fund Management LLC and gained fame in 1992 when he reportedly made $1 billion betting that Britain would fail to keep its currency in a European exchange-rate system that pre-dated the euro.

Soros Fund Management, which according to Soros’s website manages about $27 billion of assets, cut its holding in the SPDR Gold Trust in the third quarter, and bought a stake in iShares Gold Trust, also backed by bullion. Soros listed NovaGold Resources Inc., based in Vancouver, Canada, and Kinross Gold Corp., based in Toronto, among his fund’s 10-biggest holdings in a Securities and Exchange Commission filing on Nov. 15.

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Billionaire investor George Soros said European authorities should make emergency funds available to recapitalize the region s banking system and reduce the interest rate on rescue packages to debt-stricken nations to help stem the euro crisis. Using emergency money to...
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2010-01-15
Wednesday, 15 Dec 2010 08:01 AM
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