Soros Warns EU Debt Debacle Could Launch Depression
The European debt crisis may spread to other regions, including the U.S., even as finance ministers of the euro zone join U.S. Treasury Secretary Timothy Geitner and International Monetary Fund official David Lipton to contain the "contagion."
With increasing speculation that Greece is on the brink of insolvency, the 17-member bloc has already decided to expand the international bailout fund.
Bloomberg reports that Greece has a "98 percent of non-payment or debt default in the next five years as Prime Minister George Papandreou failed to reassure investors that his country can survive the euro-region crisis."
George Soros, the Hungarian-born financial tycoon and philanthropist, cautions that keeping the euro system in one piece will require an extended period of fiscal shortages that will thrust Europe to the threshold of recession.
Soros gave an exclusive interview to EmergingMarkets.com and said, "If the crisis is controlled, the German voting public will force austerity on the rest of Europe, pushing the entire region into recession and ultimately into a depression."
The German government is already pondering how to support its banking institutions if Greece fails to comply with its obligations in repaying the rescue loan. Avoiding a Greek default is the top priority of Germany amid the worsening crisis.
Soros predicted a turning point in December, when the next installment for the rescue package is scheduled.
Although he maintained that a Greek default was not an "inevitable conclusion, government leaders must be ready for such a possibility or risk a chaotic default that would endanger the international financial system."