Some remarks on the euro area by Soros
- The survival of the EU is being challenged
- This is not a theoretical possibility; it may be a tragic reality
- EU needs to consider perpetual bonds, otherwise it may not survive
- Says that he is particularly concerned about Italy
- Says that Italy has been treated badly by the EU and Germany
Soros has been floating the idea of perpetual bonds since the beginning of the crisis and his idea does have its own validity as such a commitment involves a high degree of mutualisation among member states.
However, this runs counter to an economic argument considering that we are traversing through a landscape of ultra-loose monetary policy - so why would governments not issue debt at negative rates up until 10 years and pay more to issue perpetual debt instead?
But in all fairness, it perhaps may be the only possible joint solution if EU member states were to try and reach a consensus on how to finance the recovery fund.
As things stand, we're continuing to see the can kicked down the road with the latest Franco-German proposal also still encountering opposition by some members.
