“Everything Has Gone Wrong”: Soros Warns “Major” Financial Crisis Is Coming
The comments below are an edited and abridged synopsis of an article by Tyler Durden
Billionaire investor George Soros has warned that the world could be on the brink of another financial crisis, as debt crises reemerge in Europe, and a strengthening dollar pressures both the US’s emerging- and developed-market rivals.
And Europe won’t be far behind as political pressures eventually translate into economic harm. It is facing 3 pressing problems: The refugee crisis, the austerity policy that has hindered Europe’s economic development, and territorial disintegration—not only Brexit, but the threat that countries like Italy might follow suit.
In the near term, the US’s decision to pull out of the Iran deal is straining Europe’s alliance with the US, just as the strengthening dollar is constricting financial conditions around the world.
Soros’s warning comes as Italian 2-year bond yields shoot higher by the most on record.
Adding to the urgency, it is no longer a figure of speech to claim that the EU is in existential danger, Soros said. It’s a reality.
The only way to prevent an all-out collapse, Soros said, would be a 30-billion euro ($35.4 billion) Marshall Plan for Africa that he believes would help stem the flow of migrants into Europe. The EU, Soros believes, should use its borrowing authority to finance the plan.
The alternative, Soros said, is further territorial disintegration of the EU as countries that have suffered as a result of the monetary union contemplate leaving. To prevent this, Soros said Europe must acknowledge and address the flaws of the euro system, perhaps the most glaring of which is an entrenched 2-tiered system of debtors and creditors.