George Soros, the billionaire investor has warned that he believes there is just three months to save the euro.
Mr. Soros believes that Greece will elect a government that is willing to abide by the austerity conditions and conditions of the bailout but that agreement needs to be reached and set in place in the coming weeks because he anticipates a weakening of the German economy which will make it difficult for the German Chancellor to provide further support.
Mr. Soros, who was making a speech at an Italian conference said that European leaders did not understand the nature of the problem and therefore had “applied the wrong remedy”.
He said that EU leaders have been focusing on debt levels when the crisis was more of a problem with the banks and lack of competitiveness.
He said that the focus on austerity levels and getting debt down was hindering European countries’ ability to deliver economic growth, the only way to find a realistic solution to the problem.
"You cannot reduce the debt burden by shrinking the economy, only by growing your way out of it," he said.
He said growth was vital to enable governments to increase tax revenue to pay down their debts and he warned that time is running out for the euro.
Speaking at the conference, Mr. Soros said that he expected the Greek electorate “will be sufficiently frightened by the prospect of expulsion from the EU that it will give a narrow majority of seats to a coalition that is ready to abide by the current bailout agreement."
But he warned that this will just be the first step to a solution and that problems with the German economy could mean further support for the troubled economies of southern Europe will not be forthcoming.
"The crisis is likely to come to a climax in the autumn. By that time, the German economy will also be weakening, so that Chancellor Merkel will find it even more difficult than today to persuade the German public to accept any additional European responsibilities.
"That is what creates a three-month window," he said.
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