Seeking Alpha

The most interesting part of a George Soros treatise on the EU crisis is its brief preamble in...

The most interesting part of a George Soros treatise on the EU crisis is its brief preamble in which the author says the world has changed since he penned the essay. Merkel's siding with Draghi over the Bundesbank's Weidmann on the subject of bond purchases was a "game-changing event," writes Soros. Taking full advantage, Draghi has "promised unlimited purchases" of troubled nations' sovereign debt. "The continued survival of the euro is assured."
Comments (23)
  • divinecomedy
    , contributor
    Comments (466) | Send Message
    I admire George, but I think he's just covering himself over the 3 months Euro survival statement.
    9 Sep 2012, 08:44 AM Reply Like
  • 544
    , contributor
    Comments (29) | Send Message
    Promise to unlimited bonds purchases first has to happened, second,
    keeping adding debts with no ability to pay it back just delay the bankruptcy.
    9 Sep 2012, 09:01 AM Reply Like
  • untrusting investor
    , contributor
    Comments (9966) | Send Message
    Exactly right. Just more promises at this point. It remains to be seen if much of anything will actually happen on the bond purchase front. The Spanish and Italians are no sure thing to accept the conditions supposedly necessary to activate bond buying.
    9 Sep 2012, 04:54 PM Reply Like
  • Iron Hamster
    , contributor
    Comments (423) | Send Message
    I suspect the politicians of Europe have learned something important... That you don't have to be fiscally responsible, and other countries will pay for your gifts to your voters.
    9 Sep 2012, 09:38 PM Reply Like
  • mweaver
    , contributor
    Comments (201) | Send Message
    world history has shown that the way out,
    unfortunately, has often been war.
    9 Sep 2012, 09:25 AM Reply Like
  • orsogrigio
    , contributor
    Comments (80) | Send Message
    mweaver, right : it's the legacy of "hard money", i.e. a quantity of money not enough to produce the increment in richness needed by demography end/or new living standards. This leads to fight for the available richness, thought equivalent to money. With fiat money you can, if you act in a decent way, make money available to finance the increase of richness needed. It' s no longer the time where people can heat turnips and cover themselves with home-weaved wool, or better, nobody really wants to revert at that time. My father, born in 1916, knew hunger, enlistment to get food, war, POW camps, hyperinflation, ... I am not ready for that, fancy my sons & nephews ... I think mr. Draghi got mrs Merkel support for such reasons, in the last instance.
    9 Sep 2012, 01:32 PM Reply Like
  • Robin Heiderscheit
    , contributor
    Comments (1951) | Send Message
    but that's well down the road . . . history shows that as the democracies fail to grapple with the important stuff first you will have the rise of the unelected technocrats and then sometime later the rise of dictators willing to take the necessary steps to secure and hold power . . . .


    then war
    9 Sep 2012, 02:08 PM Reply Like
  • Tack
    , contributor
    Comments (13562) | Send Message


    Your calm logic probably passed way over the head of most of the usual reactionaries.
    9 Sep 2012, 02:27 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4013) | Send Message
    War is always a possibility, but I think governments will levy wealth taxes, small at first, and then progressively more onerous in an attempt to hold onto power and keep the parasites at bay.
    9 Sep 2012, 03:12 PM Reply Like
  • orsogrigio
    , contributor
    Comments (80) | Send Message
    beware, Robin : dictators you are thinking of have been duly elected ... this is not a political issue, these are really down-to-hearth matters. You NEED money to be able to create richness. Even if you print it out of thin air. The problem is if AFTER printing you do are able to make that richness. If yes, that's ok, and thin air becomes hamburgers, cars & facebook. If not you're in deeeep trouble. But still, technology is just sitting there, and so it's highly unlikely you can fail the operation. World since the '70s has changed (since space race, to be more precise)
    11 Sep 2012, 08:47 AM Reply Like
  • orsogrigio
    , contributor
    Comments (80) | Send Message
    look Geoffster, IMHO we are a little away from Nottingham Sheriff. Governments, with computers, are increasingly able to actually collect taxes, and so could easily kill citizens off ... or push too far and be torn apiece, and war is no longer any option (I mean true war, between two true powers or blocks, not huge police raids). So if money is needed, money will be "printed". Period, no other way
    11 Sep 2012, 08:52 AM Reply Like
  • Remyngton
    , contributor
    Comments (354) | Send Message
    Soros always knew when to admit he was wrong , as opposed to some of his former partners and competitors in the hedge fund world (Jimmy Rogers as example 1 )
    9 Sep 2012, 10:17 AM Reply Like
  • change is the only constant
    , contributor
    Comments (1747) | Send Message
    The attached article Soros has written is a good read. It does not solve the structure of the crisis; it promotes a new structure as solution - and implies (probably rightly) Germany as key. But breaking the agreement (financing of states) to keep an agreement (the euro itself) raises all the problems of being ruled by laws you can capriciously break. Hypocrisy and duplicity are the only "rules" followed. Short of a disorderly break-up, inflation is the prescription (both his and the current path) for the euro. Period.


    Soros can now disingenuously claim (he has now said both) the euro will survive and the euro will fail. Anyone following him has been left in the wake of this about face. Merkel supports BOTH Weidmann and Draghi, leaving it all to the German Supreme court to decide (she's a politician...what does anybody expect). Soros calling her Draghi support a game changer is less than honest.


    While I am a Soros fan, knowing the truth is more than just listening to "expert" opinions it seems.
    9 Sep 2012, 10:49 AM Reply Like
  • minecanary
    , contributor
    Comments (481) | Send Message
    No matter what he says, I'm sure George is buying metals
    9 Sep 2012, 11:50 AM Reply Like
  • rick flair
    , contributor
    Comments (369) | Send Message
    he's a born liar...can't change who you are...
    9 Sep 2012, 12:15 PM Reply Like
  • User 509088
    , contributor
    Comments (1101) | Send Message
    Holland is perhaps the most right wing country in Europe. And it's about to elect a left gov't.


    Draghi's non Jackson hole speech comes as close as possible to putting responsibility on financial institutions, and while he promises to protect Germany, he is clear that coupled with euro supervision of member country budgets, national or community controls will be applied to europe's out of control banksters, and those of the us as well.


    Merkel can go along with her rich burghers and protect the elite feeding frenzy, risk hyperinflation but protect global mercantilism, or she can protect the euro citizens from supra national financial institutions bidding the euro debt rates to the point of strangulation.
    9 Sep 2012, 02:19 PM Reply Like
  • Amadon
    , contributor
    Comments (163) | Send Message
    George Soros is making the case for inflation to solve the problems of the EU and the Developed Markets.


    "To make matters worse the Bundesbank remains committed to an outmoded monetary doctrine that is deeply rooted in German history. Following World War I, Germany had a traumatic experience with inflation; consequently it recognizes only inflation as a threat to stability and ignores deflation, which is the real threat today."


    He goes on to say:


    "That is, when too many heavily indebted governments are reducing their budget deficits at the same time, their economies shrink so that the debt burden as a percentage of GDP actually increases. Monetary authorities worldwide recognize the danger. Federal Reserve Chairman Ben Bernanke, Bank of England Governor Mervyn King, and even Bank of Japan Governor Masaaki Shirakawa have all engaged in unconventional monetary measures to avoid a deflationary debt trap."


    How does the whole world inflating their currency at the same time help anyone? Inflation primarily hurts the middle class and the poor with increased prices for necessities like food and gas which are excluded from cost of living increases and trail by years. This simply takes more money from the consumer who drives the economy and continues the downward spiral. It increases the obligations of government to provide a safety net for increasing masses of unemployed with decreasing revenues.


    Unless a solution is found that will give consumers jobs and money to spend we will continue on this death spiral. People who have no money or jobs do not pay taxes now, inflation will only create more of them who are dependent on government for survival.
    9 Sep 2012, 05:19 PM Reply Like
  • assetman07
    , contributor
    Comments (65) | Send Message
    Correct. The "solution" that Soros endorses does absolutely nothing to help the standards of living of the general European population-- in fact, it greatly increases the risks that those standard erode significantly.


    Since the signing of the Maastericht Treaty, it seems that to varying degrees that European members have found a way to work their way around the rules-- yet the rules were put in place fir very good reason.


    This applies as well to the ECB's decision to essentially finance its member states and its institutions. In reality, the ECB risks doing the dirty work for all the coward politicians-- as funding a growing debt burden is really easy to do if you have the power of an unlimited printing press.


    Does this path sound familiar to most of you Americans.


    I think Soros is (again) very cleverly talking his own book... and I'm sure that "book" includes lots of precious metals and essential commodities.


    My hope is that the German constitutional court puts and end to this madness... and forces the issue to a referendum. I doubt that is likely to happen, though.
    9 Sep 2012, 10:41 PM Reply Like
  • whidbey
    , contributor
    Comments (3391) | Send Message
    Being skeptical of Soro's views in just wise. He does not mention the"invitation" which is an admission against interests of those in need, the condition of meeting the austerity requirements of those receiving bond buying, and the nasty fact that the ECB plan calls for sterilization, a stunt that only the Fed has had the temerity to suggestion it is meeting, but always leads to inflationary pressures. Will, skip those hitches, what do you do with a southern culture + France where productivity is not globally competitive, and where consumers are tapped out?? Will anyone have the guts to put more private debt on the public books and then sell bonds to cover the magic stunt: wait this is where I came in.This is another pipe dream and just when clear heads and strong hearts were required. George has been had by his love for socialism and his dislike for capitalism. When he goes what happens? Merkle become a has been sold out, or is German politics now unstable? Maybe, probably, and all regrettably. Watch for similar action in the US.
    9 Sep 2012, 05:40 PM Reply Like
  • Amadon
    , contributor
    Comments (163) | Send Message
    Here is my plan. Watch the 10 YR Spanish and Italian bond yields leading up to the German Supreme Court decision on 12 September 2012. You can see what a profound effect last weeks statement by the ECB had on it. In fact, that was the whole point of the statement and it worked. It is called 'communication strategy' by the central banks. Like all talk, it is cheap. If there is a leak on what the decision is going to be you will see the yields move back up toward 7% if the court is going to rule it unconstitutional, which it is. The yields will move to under 5% if they are going to allow it. The S&P will follow suit.
    9 Sep 2012, 06:23 PM Reply Like
  • Amadon
    , contributor
    Comments (163) | Send Message
    What bothers me most about this is that our central bank,with thousands of Phd's on staff, keep using all these 'weasel' words to describe what they are doing like 'quantitative easing' and 'unconventional monetary measures' to describe a con game that has been going on since the early Roman Empire.


    It is a fraud and if practised be anyone other than the central bank would be prosecuted as such. It is counterfeit money printed up to avoid paying legal debts by dead beat debtors who can not face up to the fact that they are broke and either can't or won't do the honourable thing and pay 'in like kind' or file for Chapter 11 bankruptcy protection from their creditors and submit to court appointed regulators to restructure and supervise their affairs until the are once more solvent.


    We have corporations in the U.S. who have access to U.S. markets, legal system, military protection but who ship all the jobs to other countries, hide their profits and assets from taxation in off shore accounts and demand subsidies and other favourable treatment from U.S. taxpayers. We should restructure our tax laws and tell these corporations and wealthy individuals to bring it home and pay your fair share for services provided or find another home base.


    The worst of it is that they always have the same solution. Inflation! Have you no honour. Have you no shame. Inflation hits the middle-class and the poor with higher prices for the basic necessities of shelter, food and energy from which they can not escape.


    It is often said that 1% of the population controls 95% of the wealth of this country and 95% of the rest of the population must make do with with the 5% left over. That's a recipe for the Arab Spring coming to the EU and the U.S. next as the world degenerates to a 'Mad Max' scenario.


    Do we really expect China and the rest of the world to stand by and watch in helpless fear as we inflate away what we owe them? What would we do? Threaten to pay them off and never borrow from them again?


    Geez! When did we lose our way?
    9 Sep 2012, 10:40 PM Reply Like
  • Amadon
    , contributor
    Comments (163) | Send Message
    10:45 PM Food stamp cuts are bad for business, warns incoming Kraft (KFT) CEO Tony Vernon, who says a minimum one-sixth of company revenue comes from program usage. Proposals floating around Congress would cut funding for food stamps as health advocates point out the program is a corporate subsidy to the nation's processed food giants.


    Need I say more?
    9 Sep 2012, 10:53 PM Reply Like
  • Cliff Wachtel
    , contributor
    Comments (1785) | Send Message
    EUR survival assured? ok, technically, but if you print it into oblivion, will it be worth anything?
    10 Sep 2012, 05:35 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector