In a previous posting, we described The Soros Solution. It documented how a strategy to attack Europe was reportedly formulated at a meeting of leading hedge funds (including Soros Fund Management) in New York in early 2010. Interestingly, at the time, the world was actually more concerned about Dubai's debt and the Middle East than Europe (as shown in this article from The Huffington Post).
The hedge fund meeting targeted Greece as the first point of attack in Europe. Granted, there are serious debt problems. But with the use of Credit Default Swaps and other derivatives, the situation has gone from desperate to impossible. Recently, the Greek Government has had to pay over 50% interest rate to borrow money for two years. During the fourth quarter of 2009, the yield on Greek Two-Year Bonds was below 2%. Dubai was perceived as the problem. Then the hedge fund community met and decided to target Greece. Now, we also have press reports that Al Qaeda was targeting the European economy.
So what's the outcome? According to a New York Times story (September 6, 2011):
As leaders in Europe try to contain a deepening financial crisis, they are also increasingly talking about making fundamental changes to the way their 17-nation economic union works.
The idea is to create a central financial authority — with powers in areas like taxation, bond issuance and budget approval — that could eventually turn the euro zone into something resembling a United States of Europe.
Officials have been hesitant to publicly endorse such a drastic change. But privately they say the issue has gained urgency in recent months, as it has become clear that Europe's current approach, which requires unanimity on any significant moves, is unwieldy and inefficient. The idea is being promoted by some global financial officials, who worry about the risks that continued uncertainty in Europe poses to the global economy.
The article goes on to say how the approach may be unpopular but is necessary. It compares the European Union's failure to the Articles of Confederation that had to give way to the Constitution and a stronger Central Government. Former German Chancellor Gerhard Schroeder used the term, The United States of Europe on Sunday.This is precisely The Soros Solution.
Here is an analysis by The Economic Policy Journal that is worth reviewing.
The strategy? Either create or sharply worsen a crisis and then use the crisis to force a solution that would otherwise would have been unacceptable. From all appearances, this is a classic example of economic warfare. The first question then becomes by whom? The second question is why is a United States of Europe so important?
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