Germany should leave the euro – that’s one of the recipes billionaire George Soros proposed for the debt-ridden European economies to overcome the crisis.
"The problem would disappear into thin air," as the value of the euro declines and yields on the bonds of debtor countries adjust, CNBC quotes Soros as saying.
Another option involves Germany accepting “greater commitment to helping not only its interests but the interests of the debtor countries, and playing the role of the benevolent hegemon," Soros added.
Sharing the risks equally among the EU member states by issuing euro bonds, where one country takes up a certain portion of the debt of its co – members, could prove to be a good way for the troubled economies to get out of the debt path, he said. So, Germany just needs to support the euro bond plan, as "if it successful, it would cost very little, but if it fails, it would drag down Germany," Soros explained.
Germany, an economic locomotive for troubled Europe, is currently in a wrangle with its southern neighbours, who appear to be reluctant to become more financially disciplined. Earlier Germany questioned Greece’s need for more time to fulfill the austerity promises given in return for financial aid from the bloc. This added to the fears that Athens could leave the eurozone, something largely unwelcomed among monetary authorities.
Another heavy cloud is hanging over Spain which despite pressure from EU member states has so far decided not to ask for financial aid. The country is reportedly afraid of the strings attached to any bailout from the Eurozone.
People in Germany are increasingly against any additional aid to the indebted economies. The income tax in Germany, that follows a progressive tax scheme, sometimes goes up as high as 45%. A progressive tax means that the exact portion of one’s income to be paid to the budget goes up together with one’s welfare.