Blame it on the policymakers, said billionaire George Soros on Thursday in an opinion essay that favors letting Greece default.
Charging that Europe’s monetary authorities have failed to keep pace with global market changes, the Hungarian-American financier and chairman of Soros Fund Management warned that if European policymakers don’t act fast, they’ll lose financial control entirely and could very well send the world spiraling into a second Great Depression.
"These measures would allow Greece to default without causing a global meltdown," Soros wrote in a Financial Times blog post. "That does mean that Greece would be forced in default.... How Greece fared would be up to the Greeks."
He then listed “three bold steps” to avert a depression, saying these would “calm the markets and give Europe time to develop a growth strategy, without which the debt problem cannot be solved.”
Soros' three steps include:
- Establishing a common treasury for the governments in the 17-state euro zone
- Allowing the European Central Bank to monitor risk of "systemically important" banks in terms of maintaining credit lines and outstanding loans. In exchange, the banks would receive a temporary guarantee and permanent recapitalization through the zone's European Financial Stability Facility.
- Seeing that the ECB lowered its discount rate so struggling countries such as Italy and Spain could refinance their debt cheaply
Read more about Soros’ strategy at AdvisorOne.com