Soros: Germany Should Lead Eurozone or Leave It

Others in Germany have also voiced their opposition to any leniency in dealing with what they see as “slacker” nations, and on Wednesday, Bloomberg reported, the country’s Constitutional Court will decide a challenge to the European Stability Mechanism (ESM), including a fast-tracked request for an injunction against it by Peter Gauweiler, a Bavarian lawmaker in Chancellor Angela Merkel’s ruling coalition.

Gauweiler’s website said the ECB’s new bond-buying pledge has “fundamentally changed” the situation and the ECB must withdraw its “undemocratic, self-appointed right” to become Europe’s “hyper-rescue fund.”

Soros, for his part, seems to approve of the plan, saying, “It’s a more dramatic move,” and that it would probably buy Europe “a longer period than previous measures that were taken.” But it didn’t go far enough; instead, what Europe really needs is some kind of common eurozone bond, which Germany opposes. He added, “You need a growth program, and that is again not what Germany is imposing on Europe.”

Soros compared the present austerity obsession to the financial crisis of 1982. Lenders pushed austerity on debtor countries then, too. “It was the lost decade for Latin America and something very similar is happening now in the euro situation, where Germany is actually playing the same role within the euro as the IMF did within the global financial system,” he said in the report.

He added, “This policy is pushing Europe into a depression which is going to last 5 or 10 years.” This would intensify the slowing of global economic growth, he said, adding, “I think this whole process is reinforcing the deflationary tendencies in the world, so Germany itself is slowing down and will stop growing. China is actually destined for a hard landing, which will reinforce the global tendency towards depression.”