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Real Time Insight

On Saturday, famed hedge fund billionaire and economic theorist George Soros gave a speech in Trento, Italy before the Festival of Economics about the European financial crisis. It's quite long, but still well worth reading because his understanding of Europe's problems is clear and deep. You can find it on his site

Some of the controversial headlines that have been drawn out in Reuters and elsewhere are that Germany and its central bank are unlikely to lead the way out of the euro zone debt crisis within three months time, after which it will be too late and thus they threaten to destroy the European Union and plunge it into a lost decade like Latin America in the 1980s.

From Reuters...

"The Greek crisis is liable to come to a climax in the fall. By that time the German economy will also be weakening so that Chancellor Merkel will find it even more difficult than today to persuade the German public to accept any additional European responsibilities. That is what creates a three-month window," Soros said.

The Hungarian-born U.S. financier said that all the "blame and burden" of adjusting the euro area's imbalances was falling on weaker peripheral countries, but the bloc's core bore an ever greater responsibility for the crisis.

"The 'centre' is responsible for designing a flawed system, enacting flawed treaties, pursuing flawed policies and always doing too little too late," he said.

Soros may be overreacting. He may be sounding a very loud and panicked alarm to spur action and prevent disaster. But is he more right than wrong here?

Central bankers, EU planners, and politicians know they have the power to do more. But they take their time, appearing to be in control, re-making the eurozone at their leisure. But can they really proceed at this pace and allow 5 to 10 years for "restructuring" without jeopardizing their entire economic potential and wealth?

Let me hear if you agree with Soros that Germany needs to do more -- and quickly -- or a much bigger train wreck is about to occur.




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