George Soros: The Tragedy of the European Union and How to Resolve It

Mario Draghi, the current president of the ECB, announced that it will do whatever it takes to preserve the euro within its mandate. Bundesbank President Jens Weidmann has since been vocal in emphasizing the legal limitations on the ECB ever since, but Jörg Asmussen, the representative of the German government on the ECB’s board, came out in support of unlimited intervention on the grounds that the survival of the euro was at stake. This was a turning point. Chancellor Merkel was backing Mario Draghi, leaving the Bundesbank president isolated on the board of the ECB. President Draghi made the most of this opportunity. Financial markets took heart and rallied in anticipation of the ECB’s decision on September 6. Unfortunately, even unlimited intervention may not be sufficient to prevent the division of the euro area into creditor and debtor countries from becoming permanent. It will not eliminate the risk premiums, only narrow them and the conditionality imposed on the debtor countries by the EFSF is likely to push them into a deflationary trap. As a consequence, they will not be able to regain competitiveness until the pursuit of debt reduction through austerity is abandoned.

Mein Blog befasst sich in einem umfassenden Sinn mit dem Verhältnis von Wissen, Wissenschaft und Gesellschaft. Ein besonderes Augenmerk richte ich dabei auf die Aktivitäten des Medien- und Dienstleistungskonzern Bertelsmann und der Bertelsmann Stiftung.