George Soros: European Crisis Has Entered 'Potentially More Lethal Phase'

George Soros, Chairman of Soros Fund Management, deliver his speech to journalists on January 25, 2012 at the Swiss resort of Davos. (Getty Images)

Belt-tightening in the Eurozone is putting the region on life support, at least according to one famous billionaire.

The European debt crisis "has entered what may be a less volatile but potentially more lethal phase," Billionaire investor George Soros wrote in an op-ed piece published on Project Syndicate Wednesday. Soros, who has been warning of the dangers of austerity in Europe for months, wrote that current European economic policies will likely lead to the breakup of the European Union.

Soros recommended that the Eurozone become more deeply fiscally integrated and share its debt burden.

This isn't the first time that Soros has criticized the eurozone's response to its government debt and financial crisis. He said in January at the World Economic Forum, located in Davos, Switzerland, that European leaders "had little understanding of how financial markets really work and did everything wrong." He also said that Germany's "tough fiscal discipline" would create tensions "that could destroy the European Union."

"The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system," Soros told Newsweek in January. And in December, Soros said that developed countries are falling into a "deflationary debt trap" and the global financial system is in a "self-reinforcing process of disintegration."

Soros' latest comments come as the crisis in Europe begins to again flare up. Although Italy and Spain have been paying more reasonable interest rates on government bonds over the past few months, those same interest rates have spiked over the past few days as investors panicked over the countries' long-term economic and budget outlook, with the eurozone plunging into recession because of government budget cuts.

Italy is currently paying a 5.42 percent interest rate on 10-year government bonds, and Spain is paying a 5.83 percent interest rate, according to Thomson Reuters.

Spain and Italy need interest rates on their long-term government debt to fall to about 4 percent in order for reach sustainable debt level, according to a report released last year.

Comments

[The Debt Planner]

11:25 AM on 04/16/2012

I have to agree with Mr. Soros that the European debt burden is starting to become a really scary problem for most of use here in the old west, but I cant agree with his suggestion that Europe should be more fiscally linked to solve the problems we currently have.

Surely its to much integration that has caused the problem, if we weren't so inextricably linked we could let these "softer" nations of Europe fail like they deserve to which would then mean more opportunity for those more stable nations. Allowing the poor accounting practices of Italy, Greece, Spain and Ireland to go unnoticed for to long and then giving them a hand out and a shoulder to cry doesn't help anyone surely?

I live in the United Kingdom and we are seeing the levels of insolvency, bankruptcy and debt management rise to unprecedented levels. How is it fair or right that we should be paying for other peoples mistakes??

[Paris215]

09:40 AM on 04/15/2012

Maybe he's right.. but me.. I am always wary about commentary from these financial investors. Not knowing where they have hedge their bets.. the general public is too easily manipulated.

[den1953]

04:14 PM on 04/14/2012

Wait until this whole mess hits China should make for a interesting late spring early summer once the economic crap hits the Chinese fan, even Wal Mart won't be able to stock the shelves!

[AZreb]

11:01 AM on 04/14/2012

No matter your views on Soros, if the EU financial situation develops into a deeper cirsis, we in the US will be affected. That is what needs to be investigated and the facts revealed to the American people.

Even though we are in a "recovery" (had to cross my finger on that one), financial issues will have an impact on our economy due to the globalization of many corporations.

[Moxo]

11:41 PM on 04/13/2012

Europe needs to adopt American-style Socialism, where hard-working Blue Staters pay enough in taxes to shore up the impoverished Red States.

[sysaphus71]

08:31 PM on 04/13/2012

What's the matter ,George, your little currency game in the U.S. hit to many headwinds.
Now you're going back to Europe to get a double dip and finish them off?
Say George ,why exactly won't they let you back in Thailand without being arrested on the spot?
Was it that little mess with the Baht?

[Moxo]

11:43 PM on 04/13/2012

LOL - you do realise that Soros is warning that austerity measures can make things much worse... and those same measures are the one's proposed in the Ryan Plan and proposed by the GOP?

If you support the Ryan Plan then you should attack Soros for attacking the Euro version of the same plan.

[sysaphus71]

08:13 AM on 04/14/2012

Moxo,
Please explain further.
If you are over spending and piling on debt which is unaffordable or unsustainable,,doesn't it follow that conservation of funds and assets is advisable?
How can amassing debt with interest due on this debt growing logarithmically be wise?

[hoperequired]

04:23 PM on 04/13/2012

I'm sure you'll be capitalizing on it soon; after all, you were the one who brought down the British pound by shorting it!

[Moxo]

11:46 PM on 04/13/2012

Actually it was the British Treasury that brought down the Pound. Soros was smart enough to know they were trying to do what Greece did - hid the extent of their problems.

But using your fiscal logic, it does appear YOU are the cause of the economic meltdown experienced here starting in 2007.

[Erikhuffpost]

01:57 PM on 04/13/2012

Funny how a topic over my continent always seem to turn into a discussion on pro/con Obama or ad hominem attacks on George Soros, without any thorough knowledge about Europe.

[Kenz300]

11:03 PM on 04/13/2012

Right wing radio and faux noise talking points are all some people know.

[Moxo]

11:46 PM on 04/13/2012

Most Republicans have no idea where Europe is.

[sensimilla]

01:26 AM on 04/15/2012

HAHAHA!

[Midnight Cry]

01:56 PM on 04/13/2012

Divide & conquer.... Rules for Radicals follower....

[Erikhuffpost]

03:01 PM on 04/13/2012

Prove it

[hoperequired]

04:25 PM on 04/13/2012

Don't you find it strange that all of a sudden Obama is FOR natural gas drilling since his friend S oros bought 3 million shares in Westport Innovations?

[Midnight Cry]

01:54 PM on 04/13/2012

He is a major contributor to the Snopes, and other fact checking websites. He's dangerous, and not to be trusted.

[Moxo]

11:49 PM on 04/13/2012

True - anyone who checks GOP facts and proves them untrue is a danger.

[TFlint]

02:02 PM on 04/14/2012

you oppose fact checking?

[KarmaPatrol]

01:46 PM on 04/13/2012

Hmmm. I can listen to a man who has made billions on the global finance scene or listen to random trolls on the internet taking a break between reading Ayn Rand or "Lord of the Rings". Which ones should I listen to when adjusting my portfolio?... Gee whiz, decisions, decisions (/sarcasm).

[Midnight Cry]

01:50 PM on 04/13/2012

This guy is sinister, and dangerous.

[artgurrl]

02:38 PM on 04/13/2012

Prove it. You have no proof. Where are you links?

[Andman0121]

09:06 AM on 04/14/2012

rolls eyes

[Ruthless1]

12:49 PM on 04/13/2012

The stock markets ups and downs were compared to a person it would be considered by-polar. Crazy behavior never ends well. It really does not take George telling us the world has financial problems, just ask the long term un-employed.

[The political pulse]

12:36 PM on 04/13/2012

America did not truly become America until after the Civil War. Until that point we saw ourselves as Virginians or New Yorkers first and Americans second, which created tremendous tension and animosity. The same issues are happening in Europe. I have a few European friends and they would never identify themselves as Europeans but Germans or Italians. To have a successful long term Union however they need to all one day see themselves as Europeans, and frankly I don't ever see that happening. To be honest I see many of the same divisons occuring in Europe that were prevalent prior to WW1. I hate to say it, but if Europe is to ever become an actual Union the people need to feel they are Europeans first and whatever country they are from second. Without that the EU is destined for failure and worse yet it may be destined for future armed conflict.

[CologneCitizen]

03:47 PM on 04/13/2012

Europe does not intend to become a carbon copy of the USA. The union is basically for economic reasons. We are Europeans but we have a strong national identity and will keep it. Although our societies are becoming more and more diverse, the goal is to live together peacefully but maintain the original national identity.

[The political pulse]

07:37 PM on 04/13/2012

What Europe is trying to accomplish is not possible. Thats fine if it is just for economic reasons, but if the Union is going to exist in an economic sense they need to all agree on the same fiscal policies and many political ones as well, which they have shown is impossible for them to accomplish. Anomosity is growing among the nations in the union that are not economically as strong as those carring their weight. Europeans need to realize that what they are trying to has been attempted before in history. It is what the United States was before we established our current Constitution. Our orginial founding order and document was the Articles of Confederation. It essentially loosely associated economically the original states in the union and had basic laws that allowed individual states to keep their identities and power while being associated with a large union. It failed miserably, the states could never agree on trade, the weak central body created to communicate laws and policies with the individual states had little power to affect any change while the stronger more economically viable states hated the weaker states and begrundgingly were forced to help them. Any of that sound familiar?

[The political pulse]

07:37 PM on 04/13/2012

What the EU is trying to do is not something new. The reason we are the United States and not a loose Union, because to have an economic union as close as the EU is trying to accomplish you need to have a political and national union as well. What the EU has been trying to do will never work with as separated as all the couintries are culturally. For it to possibly work all 27 nations need to accept that each country has their own beliefs and cultural values and come together as one. If they don't, it flat out will not work, and if they continue to push this union without those acceptances, you will get a result more similiar to 1914, something no one wants.

[Moxo]

11:54 PM on 04/13/2012

To have a successful long term Union however they need to all one day see themselves as Europeans, and frankly I don't ever see that happening
-------------------
I hear ya - no Italian-American or Polish-American worth his salt would ever not consider himself not American!

[BurrRobson]

11:59 AM on 04/13/2012

Well, I'm sure the again crook will take full advantage. Unless he's tussling with a girlfriend somewhere.....

[Barbi520]

11:52 AM on 04/13/2012

the right wing comments here are ridiculous. Soros has supported democracy all over the world and is a great philanthropist. He is only bad according to the liars and propagandists on FOX news. Americans really are the stupidest, most venal people on the planet.

[Midnight Cry]

01:51 PM on 04/13/2012

Read the background of this guy. He's made millions off the strife of others.

[artgurrl]

02:39 PM on 04/13/2012

Supply links and proof, otherwise you're just another Fox Noise parrot.

[drkazmd65]

02:55 PM on 04/13/2012

And you are going to claim the likes of Jamie Dimon, or Blankfein, or Vicram Pandit,... or,... pick your favorite CEO or Hedge Fund guy,...

Are not making millions off the strife of others?

Ad homenm attack alert,...

[hoperequired]

04:26 PM on 04/13/2012

He brought down two countries and brought down the British pound by shorting it....it's a fact.