Tags: Soros How Europe Can Help World Avoid Another Depression

Soros: How Europe Can Help World Avoid Another Depression

Friday, 30 Sep 2011 07:10 AM

Billionaire investor George Soros has a three-step plan to avoid another Depression: Eurozone governments must create a common treasury, the major banks must be put under direction of the European Central Bank, and the ECB would enable countries such as Italy and Spain to temporarily refinance their debt at a very low cost.

"These steps would calm the markets and give Europe time to develop a growth strategy, without which the debt problem cannot be solved," Soros writes in the Financial Times.

These actions do not require leveraging or increasing the size of the European Financial Stabilization Fund but it is more radical because it puts the banks under European control, says Soros.

“That is liable to arouse the opposition of both the banks and the national authorities,” he says. “Only public pressure can make it happen.”
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Soros believes the immediate task is to erect the necessary safeguards against contagion from a possible Greek default.

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George Soros
(Getty Images photo)
"There are two vulnerable groups – the banks and the government bonds of countries such as Italy and Spain – that need to be protected," Soros says.

The European Financial Stabilization Fund is still being formed but in its present form the new common treasury is only a source of funds and how the funds are spent is left to the member states.

“It would require a newly created intergovernmental agency to enable the EFSF to cooperate with Europe’s central bank,” Soros says.

Bloomberg reports that the enhanced powers of the 440 billion-euro ($601 billion) EFSF, which were approved at a July 21 meeting of European leaders in Brussels, take effect when all euro-area countries have ratified them.

The measures would allow the rescue fund to buy the debt of stressed euro-area nations, aid troubled banks in the region and offer credit lines to governments. The EFSF's current role is to sell bonds to finance rescue loans.





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Billionaire investor George Soros has a three-step plan to avoid another Depression: Eurozone governments must create a common treasury, the major banks must be put under direction of the European Central Bank, and the ECB would enable countries such as Italy and Spain to...
Soros How Europe Can Help World Avoid Another Depression
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2011-10-30
Friday, 30 Sep 2011 07:10 AM
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