George Soros On Euro Zone: Recapitalize Banks, Create Common Treasury, Protect Vulnerable States

Policymakers have lost control of the economic crisis and financial markets are forcing the world into a depression, George Soros said on Friday, urging Europe to create a common Treasury, recapitalize its banks and protect vulnerable states.

Soros, chairman of Soros Fund Management who made a fortune during the 1992 sterling crisis, said the most important task was to "erect safeguards against contagion from a possible Greek default."

"Since a euro zone treaty establishing a common Treasury would take a long time to conclude, in the interim the member states have to appeal to the ECB (European Central Bank) to fill the vacuum," he wrote in an article for the Financial Times newspaper.

"Both the banks and bonds of countries such as Italy and Spain need to be protected ... To relieve the pressure on the government bonds of countries such as Italy, the ECB would lower its discount rate."

Soros said the ECB could then encourage countries to finance themselves with Treasury bills bought by banks. Those banks could then at some stage rediscount the bills with the central bank, allowing countries to refinance for about one percent a year during the "emergency period."

"Neither the ECB nor the EFSF (European financial stabilization facility) would buy any more bonds in the market," he said.

He said the EFSF should be used to guarantee and recapitalize banks who would then have to maintain credit flows under guidance and monitoring from the ECB.

"These measures would allow Greece to default without causing a global meltdown," Soros said. "That does mean that Greece would be forced in default ... How Greece fared would be up to the Greeks."

However, he said only public demand for his plan would make it happen, given likely resistance from banks and national governments.

(Reporting by Matt Falloon)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[Kat119]

12:52 PM on 10/03/2011

George Soros -- born Georgy Schwartz--is a key part of the global economic problem.

[Neopolitan]

08:03 AM on 10/03/2011

The man who "broke the Bank of England" will profit from Europe's problems as always.

[twistedboomer]

03:35 PM on 10/02/2011

nationalize banking....

[AmosKnows]

02:15 PM on 10/02/2011

I have a one step plan - default and let the banks die. That's my plan.

[Dan Langdon]

03:35 PM on 10/02/2011

Could work

[eyeitall]

02:07 PM on 10/02/2011

Soros just make him the supreme ruler of the world for life. That's what he wants

[tribilin219]

09:33 AM on 10/02/2011

Here's the best step I can think of? Throw a bunch of them in jail, that will do it.

[banana republican]

09:27 AM on 10/02/2011

I don't think I'd be going too far out on a limb if I speculated that George's net worth would increase by a few hundred billion if his 3 step plan was followed to the letter.

[crabbyoldart]

09:22 AM on 10/02/2011

When you are talking about "THEY" - you are talking about George Soros and his 1% cronies. He is THEM. And he has spoken again...watch out, because if you sign the contract, he will have you do it in blood.

[Klaus Kastner]

06:18 AM on 10/02/2011

For years now, Greeks have created their own „domestic Euro“. When A had to pay his bill to B, he didn’t pay with cash (which he didn’t have) but, instead, with a check dated 3 months later. When B needed to pay C, he endorsed A’s check in his favor. And so forth. Who lost in this system? No one, as long as the original check was paid when it was presented to the bank 3 months later. A wonderful example of Greek ingenuity!

Since this is a time where thinking aloud must be permitted, I refer to such a loud though below. Could someone please tell me where the catch is?

http://klauskastner.blogspot.com/2011/10/thinking-aloud.html

[RPDash]

12:03 AM on 10/02/2011

Somebody quick call Glenn Beck, Spooky Dude has spoken!

[americaisracist]

11:53 PM on 10/01/2011

don't listen to this devil. always do the opposite of what people like him want.

[codycap]

01:45 PM on 10/02/2011

Soros' book, The New Paradigm for Financial Markets (May 2008), described a "superbubble" that had built up over the past 25 years and was ready to collapse.

[Always Conservative]

09:51 PM on 10/01/2011

Step one: Do the same thing that has failed...
Step two: Double down on step one.....
Step three: Make checks payabel to mo ve on. org...

[Sandra Stevens-miller]

07:58 PM on 10/01/2011

Oops---must have missed your suggestions in 1992 and in 1998----thanks to Google, we can now not only find out the facts, but also verify them. Wouldn't you say you perhaps had something to do with the disconnect also in the global financial markets, and does this not prove your economic theory, not necessarily to the advantage of all people but, rather, the exact opposite?

[Michael GE]

03:44 AM on 10/02/2011

I absolutely agree! He is actually advising the same "medicine" that allowed him to play his games against the UK!

[uneeda]

07:16 PM on 10/01/2011

george needs a transfusion

[rotorhead1871]

04:25 PM on 10/01/2011

I didnt know soros was a consultant for the euro zone!!