Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Monday, June 25, 2012

George Soros: Germany Has 3 Days Left To Save Eurozone Through Fiscal Union

Billionaire investor George Soros says Germany has three days left to spearhead the creation of the "embryo" of a European fiscal union in order to save the eurozone. (Hat tip: Business Insider's Joe Weisenthal.)

"There's a disagrement on the fiscal side, and unless that is resolved in the next three days, then I'm afraid the summit could turn out to be a fiasco, and that could be acutally fatal because you are facing the possiblity of Greece leaving the euro and perhaps the European Union, and you need to strengthen the remaining euro structure to withstand that shock," Soros told Bloomberg TV.

A summit of European leaders is set to take place later this week -- the latest of many summits that have typically concluded with agreements on half-measures. Meanwhile, borrowing costs for Italy, Spain and other troubled eurozone countries have been on the rise, as investors fear these countries might default and leave the eurozone.

Soros has said he is concerned that peripheral eurozone countries will be stuck in a permanent economic downturn in which they have to pay sky-high interest rates on their debt. He said only fiscal backing by the eurozone can reassure investors enough to lower interest rates for these countries, allowing them enough breathing room to implement policies that will spur economic growth.

Soros said without a full-fledged European fiscal union to address these issues, "the euro system will not work." And he said in the Bloomberg TV interview and in a Monday op-ed in the Financial Times that Germany, as the most powerful eurozone country, must lead the creation of such a European Fiscal Authority and debt reduction fund.

An EFA fund would allow troubled eurozone countries to borrow at a fraction of the interest they now are paying, in the form of European Treasury Bills backed by the fund, in exchange for implementing structural economic reforms. The fund would be able to penalize countries that did not meet their commitments through fines and other means.

The consequences of not creating a fiscal union would be dire, Soros said.

"Even if a fatal accident can be avoided, the division between creditor and debtor countries will be reinforced and the 'periphery' countries will have no chance to regain competitiveness because the playing field is tilted against them," Soros wrote in the Financial Times. "This may serve Germany’s narrow self-interest but it will create a very different Europe from the open society that fired people’s imagination. It will make Germany the centre of an empire and put the 'periphery' into a permanently subordinated position."

Soros said on Bloomberg TV that the fund he is proposing would be only the first step toward a European fiscal union. A proposed full-fledged European Treasury Department "would come into being gradually," he said.

Soros has been calling for more urgent action by European leaders to address the eurozone crisis for months. He gave the same warning of the possibility of a German empire against a peripheral "hinterland" in a speech earlier this month.

Soros said at the World Economic Forum's annual meeting in Davos in January that "Germany is acting as the taskmaster imposing tough fiscal discipline," which could create tensions "that could destroy the European Union."

Original Article
Source: huffington post
Author: Bonnie Kavoussi 

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