According to billionaire George Soros, a fateful decision by Angela Merkel, chancellor of Germany, ignited the euro crisis in the wake of the Lehman Brothers default in September 2008. Now, Soros says, the joint currency hangs in the balance, and only Germany can save it.
With Merkel’s decision that debt guarantees against defaults must be given separately by euro zone countries instead of by the European Union (EU), said Soros (left) in an opinion piece that appeared Friday on Reuters, came the origin of the debt crisis. Procrastination on the part of Germany, he added, inflamed the Greek crisis and pushed contagion onto the rest of the euro zone.
While Merkel’s decision was based on an accurate reading of Germany’s mood, he continued, that mood has become more trenchant, with strong resistance to providing Europe with credit. That means that changing direction now can only be done in the midst of a crisis, and with small increments. But it must be done, said Soros, because the steps thus far taken by the euro zone as a whole are inadequate and likely to fail.