Soros speaks on Euro

 

Can European leaders escape from the mess they've got themselves into? It's the first question I was asked by John Humphreys this morning on the Today programme, as part of a lively discussion of the crisis with Martin Wolf, of the Financial Times.

I happened to draw a comparison with the 1992 ERM (Exchange Rate Mechanism) crisis - that the writing was on the wall, not when politicians run out of things to do, but when they run out of things to do that investors believe they can actually carry out. (That was 15% interest rates in the middle of a recession, in the case of the UK in 1992).

The question was whether eurozone leaders have now reached that point.

As luck would have it, I later found myself interviewing George Soros, the global financier-turned-activist who is still best known in Britain as the man who bet against the pound in the 1992 crisis - and came out the process a great deal richer.

George Soros says the European Union has become "ungovernable"

I asked Mr Soros whether this did now feel like a similar crunch-point to 1992. Not to put too fine a point on it - was he selling the Euro? He said no, European governments would find a way to hold the single currency intact, if only because the alternative was too ghastly to contemplate.

You hear the same thing again and again: people insist that the Euro cannot fail, just after explaining why it's going to be so difficult for it to carry on.

So, there was a vote of confidence for the euro, of sorts, from Mr Soros. But the rest of the interview would not make happy listening for President Sarkozy - or Jean- Claude Trichet.

Mr Soros actually compared the Eurozone crisis to the collapse of the USSR - he said both cases had the same air of disintegration. He also said that the "plan", as we understand it, might get the single currency through the next three months, but it would not tackle the underlying problems. Growth was a massive problem. And they were going to have to write off a lot more Greek sovereign debt - not just the bonds held by private investors.

Food for thought. Incidentally, Mr Soros also had some very interesting things to say on my second Stephanomics programnme on BBC Radio 4. We debated who deserves the most blame for the financial crises of the past few years - including the travails of the eurozone: financiers, economists, or politicians?

The other participants in this week's show were Deanne Julius, Chairman of Chatham House and Sir Howard Davies, the former Director of the FSA and a former deputy governor of the Bank of England.

Fascinating discussion of how we got into this mess - and whether the right lessons had any chance of being learned. You'll not be surprised to hear, there was plenty of blame to go around.

 
Stephanie Flanders, Economics editor Article written by Stephanie Flanders Stephanie Flanders Former economics editor

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Comments

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  • rate this
    0

    Comment number 1.

    In short: No.

    But, 400 characters is a risibly inadequate amount for a reasonable explanation.

  • rate this
    -3

    Comment number 2.

    The Euro is being taken to the brink either because the politicians have run out ideas OR because the Brusselsocracy want the politicians to see the abb
    ys so they can move to the good old EUSSR.

  • rate this
    0

    Comment number 3.

    " We debated who deserves the most blame for the financial crises of the past few years - including the travails of the eurozone: financiers, economists, or politicians? "

    I'm surprised "bankers" doesn't even make the list.

  • rate this
    -2

    Comment number 4.

    Do we really need lecturing on this by the likes of Soros?
    Corruption, greed & low morals have caused the calamity - forget all the nonsense about poor regulation etc - the Tower of Babel is going to collapse.
    Thank goodness we have David Cameron there as UK PM at the summit & not Brown - who knows what untold damage Brown would do to the UK if he had been let loose again -'saving the world'.

  • rate this
    +1

    Comment number 5.

    Mr Soros simplifies the EuroZone problem to 'unmanageable', but that is a product of incompetent financial controls, omitted as a very convenient device to avoid political accountability.

    Anger is the sight of taxpayer funded EuroCrats from the 'olive oil republics' parading on a red carpet like global financial heros when the state of the Eurzone reveals them as idiots having a eureka moment.

 

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