This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Soros: 'Germany Must Lead or Leave' Euro

NEW YORK ( TheStreet) -- Germany must fully commit itself to solving the European debt crisis or leave the euro, financier George Soros contends in a lengthy essay published Friday in the The New York Review of Books.

Soros argues Germany is currently doing only the bare minimum to preserve the euro -- a policy that is "leading to a prolonged depression, political and social conflicts and the eventual breakup not only of the euro but of the European Union."

Instead, the 82 year-old Hungarian-born billionaire contends Germany must allow higher inflation than it currently does, and commit to "establishing a more or less level playing field between debtor and creditor countries."

Setting up that level playing field would involve a series of steps, such as creating a European Fiscal Authority that, unlike the European Central Bank, would be allowed to finance government deficits.

Germany won't make such a move without pressure from France, Soros contends. He urges the French to ally themselves with Italy and Spain to present an "economically credible and politically appealing program," that would "recapture the European Union as the idealistic vision that fired people's imagination."

Those three countries, then, could issue Germany the "lead or leave" ultimatum.

While Soros prefers Germany lead the euro zone, he argues that a German departure from the common currency would be "a disruptive but manageable onetime event, instead of the chaotic and protracted domino effect of one debtor country after another being forced out of the euro by speculation and capital flight."

A German exit would cause the devaluation of the euro, angering creditors but giving them no "valid" legal recourse. It would also encourage a German rush to buy up suddenly cheap real estate in the countries that remain in the euro, among other benefits, Soros writes.

Soros is not the first to suggest Germans leave the euro. Essays published by Bloomberg, the Financial Times and a strategist interviewed by CNBC all mentioned the idea over a five day period from June 27 to July 1.

At least one commentator argued fear of a German exit was responsible for driving the euro to a fresh two-year low against the dollar of $1.20 in mid-July. The euro has since rebounded and was worth about $1.28 on Friday.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%
YHOO $36.60 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs