Financier and billionaire George Soros said the European Union could collapse after the coronavirus pandemic unless the Bloc issued perpetual bonds to help weak members like Italy.The coronavirus, which appeared in China last year, flooded part of the global economy, and governments increased loans to levels not seen in the history of peacetime, notes Reuters.
Soros, 89, said the damage to the eurozone economy from the new coronavirus would last “longer than most people think”, adding that the rapid development of the infection meant it would be difficult to develop a reliable vaccine.
The hedge fund veteran and chairman of Soros Fund Management LLC said the perpetual bonds used by the British to finance the wars against Napoleon would allow the European Union – itself created from the ashes of World War II – to survive.
“If the EU is not able to adopt such an instrument now, it may not be able to overcome the challenges it is currently facing,” Soros said in an interview with reporters by e-mail. “This is not a theoretical possibility; it could be a tragic reality, “said the billionaire.
Soros, who made a name for himself by betting on the pound in 1992, said that with large countries such as Germany selling negative-yield bonds, perpetual bonds would ease the ongoing budget crisis across the bloc.
He said the EU would have to maintain its credit rating at “AAA” to issue such debt – and therefore should have the power to collect taxes to cover the cost of bonds – so it is assumed that it can simply allow taxes instead of imposing them.
“There is a solution,” Soros said. “Taxes only need to be allowed; they should not be applied. ”
Asked about Brexit, Soros said he was particularly worried about Italy: “What would be left of Europe without Italy?”
“The easing of state aid rules, which is in Germany’s favor, was particularly unfair to Italy, which was already the ‘sick man of Europe’ and was then hardest hit by COVID-19,” Soros said.
Soros fled Hungary when the Communists consolidated power in the country in 1947 and graduated from the London School of Economics. In 1992, his investment fund made huge profits, betting that the sterling was overvalued against the German mark, forcing the British to withdraw pounds from the mechanism of the European exchange rate.