Billionaire investor George Soros predicted weak growth and lingering political tension that could shatter Europe’s economic union even if Greece agrees to austerity measures. “Right now the European Union and particularly the heavily indebted countries face a lost decade,” Soros said. “It might actually be longer than a decade because Japan that had a similar situation with the real estate boom and the banking crisis has had now 25 years of no growth,” Soros said.
“That will create tensions within the European Union, which could destroy the European Union,” he said. “And that’s a real danger.” Soros spoke in an interview taped on Feb. 9 for CNN’s “Fareed Zakaria GPS,” scheduled to air today.
A package of budget, wage and pension cuts that Greece’s parliment could adopt as soon as tomorrow is “not necessarily going to work in the long run,” Soros said. “But it will certainly buy you another six months of quiet on the Greek front.” “Greece is a sick situation” that has been “mishandled” by European authorities and “will continue to be an irritant and a problem for Europe,” Soros said. The European Union, once a desirable objective, has become “more of an imposition,” he said.
The interim government of Greek Prime Minister Lucas Papademos Feb.10 approved budget cuts needed to secure a second package of aid from euro-zone finance ministers, preparing the way for a ratification vote in parliament today.
Signs of Revival
In the U.S., the economy “shows some signs of revival,” thanks in part to the emergence of shale gas and oil and years of low-wage growth, which have lowered manufacturing costs, Soros said. President Barack Obama, who has done a “mixed job”, deserves a second term, Soros said. “The problems that he inherited, because he came in immediately after a financial crisis, were bigger than any president could have immediately remedied,” Soros said. “So, whoever gets elected now has a much better chance of being successful than Obama had.”
He endorsed Obama’s “Buffett rule,” named after fellow billionaire Warren Buffett, to require those earning more than $1 million a year to be taxed at a minimum rate of 30 percent. “The big boom, the super bubble, really resulted in a great increase in inequity. Now we have the after-effect where you have slow growth one way or the other,” Soros said.
“If you could have better distribution of income, then the average American would actually be better off as a result. But that is totally politically unacceptable.” Soros said he would pay more in taxes under the plan.
“My tax bill would go up a lot if you had a minimum tax. But I’m willing to pay that because I think if everybody who made as much money as I do gave as much as I do, I wouldn’t advocate it,” Soros said. “I think the free riders should also pay.”