4.19.12 AEP: George Soros and the Bundesbank’s Patriotic Putsch

by John Galt
April 19, 2012 23:00 ET

 

Tonight’s entry from Ambrose Evans-Pritchard contains not one, but two veiled warnings about the potential for another round of deflationary deleveraging which will stall the U.S. economy if not put it into outright recession, albeit brief, and destroy the European Union should it occur.

This one excerpt from George Soros’ commentary within the story should be alarming to U.S. government officials because it is a warning shot across the bow:

George Soros has launched all-out war against the Bundesbank.

In his latest Le Monde interview he said that if he were still an active investor, he would now “bet against the euro”, at least until there is a change in European leadership or policy.

IF Mr. Soros is saying that as an “investor” he would have bet against the Euro, odds are his minions have been positioning billions of dollars in short positions to crater the currency and force the United States into a hyperinflationary bailout of Europe along with the ECB to degrade both nation’s economically and politically.

The conclusions that Mr. Pritchard determines are equally as dramatic:

I suspect that the realities of the eurozone have reached a point where only two options exist:

1) The folding together of the eurozone states, with a debt pool, shared budgets, joint taxation, and fiscal union.

In other words, the nation states must abolish themselves (leaving only the shell), and Germany must cease to exist in any meaningful form. This was always the inherent logic of EMU. We are coming close to the moment when it must be decided.

2) The system blows apart. From a German point of view, Target2 means if the deed were done “twere better it were done quickly”. Perhaps very quickly.

If either route above is chosen by the German government, then all bets are off for the PIIGS and developing world. Eastern European economies wishing to join the Euro as full members are teetering on insolvency while Western economic powers have yet to finish the deleveraging process from the last credit bubble. This split which will create a violent, literally violent, reaction to either massive deflation or inflation will forever change the geopolitical landscape and George Soros is intelligent enough to understand the intricacies of making such a wager.

This must read from AEP is available at the U.K. Telegraph in full by clicking on the title below:

George Soros and the Bundesbank’s Patriotic Putsch

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