Germany's budget savings policy risks destroying the European project and a collapse of the euro cannot be ruled out, billionaire investor George Soros said in a newspaper interview released on Wednesday.
"German policy is a danger for Europe, it could destroy the European project," he told German weekly Die Zeit.
Soros, who earned $1 billion in 1992 by betting against the British pound, added that he "could not rule out a collapse of the euro."
"If the Germans don't change their policy, their exit from the currency union would be helpful for the rest of Europe," he said.
Chancellor Angela Merkel unveiled plans earlier this month for 80 billion euros ($107 billion) in budget cuts over the next four years—a package she hopes will bring Germany's structural deficit within European Union limits by 2013.Thousands in Germany protested the measures, which union leaders said were "economically damaging."
"Right now the Germans are dragging their neighbours into deflation, which threatens a long phase of stagnation. And that leads to nationalism, social unrest and xenophobia. Democracy itself could be at risk," Soros said.
"Germany is globally isolated ... Why don't they let their salaries rise? That would help other EU states to pick up."
Soros echoes what others have said, that cutting social spending and raising taxes right now will stagger the economy and could drop the planet back into a recession. To be honest, we never really left the recession in the first place, it just got more manageable. It's going to get a whole hell of a lot less manageable in 2011 if this keeps up.
I'm not sure if the Euro will collapse as a result, but a lot of countries with foreign reserves are spreading out their portfolios as of late, and that's only going to hurt the Euro's chances even more. Furthermore, when Spain or italy snaps and goes the way of Greece, who's going to bail them out? Not Germany: they're bunkering up.
Better listen to Georgie...probably has insider information...AGAIN
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