Yuriy Ukazkin
George Soros gives recommendations to EU leaders once again, saying that a delay in taking efficient steps will inevitably aggravate the local debt crisis and may eventually cause the disintegration of the eurozone.
Around 100 of “Concerned Europeans” (politicians, economists and businessmen) support Soros’s opinion. The even wrote an open letter to eurozone leaders, which says:
“The euro crisis needs a solution, now. The current measures are too little and too late and are precipitating global financial turmoil…
We, concerned Europeans, call upon the governments of the Eurozone to agree in principle on the need for a legally binding agreement to: 1) establish a common treasury that can raise funds for the Eurozone as a whole and ensure that member-states adhere to fiscal discipline; 2) reinforce common supervision, regulation and deposit insurance within the Eurozone; and 3) develop a strategy that will produce both economic convergence and growth because the debt problem cannot be solved without growth.
While a legally binding agreement is being negotiated and ratified, the governments of the Eurozone must in the interim empower the European Financial Stability Facility (EFSF) and the European Central Bank (ECB) to cooperate in bringing the crisis under control. These institutions could then guarantee and eventually recapitalize the banking system and enable countries in need to refinance their debt, within agreed limits, at practically no cost by issuing treasury bills that can be rediscounted at the ECB…”
According to ICM Brokers, EU leaders are still not ready to make cardinal changes to the eurozone management system. However, they can reconsider the eurozone’s banking system policy. Last week the German Chancellor Angela Merkel and the French President Nicolas Sarkozy agreed on recapitalizing some European banks. The details of the agreement are to be revealed by the forthcoming G20 summit (earlier next month).
Last week European ministers of finance also supported the idea of recapitalizing a number of European banks.
Previously we reported that George Soros had published his statement in the Financial Times, blaming the EU authorities for being too slow in their reaction to the debt crisis, thus putting the entire global economy at risk.
At the same time, Mr. Soros offered some solutions. Firstly, the EU should create a single ministry of finance for the eurozone. Secondly, the EU should expand the ECB’s authority to let it control the eurozone’s banking system. Thirdly, the EU authorities should let the ECB refinance European banks at low rates if there is an urgent need.
According to , the global economy is still under pressure. The eurozone crisis and numerous economic problems in the USA make things even worse. The possibility of a “trade war” between the US and China, the world’s 2 major economies, also aggravates the situation. The rivalry between the US and China is getting tougher as the US Congress is about to approve extra duties on Chinese products.
The US authorities are convinced that China benefits by undervaluing the Chinese Yuan, thus getting an unfair export advantage. So, the Congress wants to introduce extra duties on products exported from China.
Yuriy Ukazkin
