Tuesday 26 June 2012

Soros on Europe

SOROS: Europe Has 3 Days To Avoid A Fiasco That Could Turn Fatal
George Soros is out with a new proposal on how to fix the Eurozone crisis

25 June, 2012

As we wrote about last night, investor George Soros is out with a new proposal on how to fix the Eurozone crisis.

The basic idea is: A new "debt redemption fund" would be launched, which would have the ability to buy up sovereign debt funding itself via ECB backed Treasuries with the safest risk weighting. In exchange for countries being able to fund itself via that fund, they would have to agree to various structural reforms. Any failure to deliver on reforms would get a penalty, but not a fatal one. Eventually after all the reforms were made, a more complete fiscal union/Eurobonds scheme could be enacted.

His most stark warning: If Europe doesn't solve anything at its summit over the next three days, Europe could be left with a fiasco that could be fatal, because Greece might leave the Eurozone without a major firewall being in place.

Anyway, the tension building up to this week's EU summit is pretty intense, and Soros has just the stakes. This will be the theme of the week.

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