George Soros' Plan to Save The Eurozone
Yet again, our markets today were unnerved by the Eurozone crisis as bond yields in Spain and Italy creeped up to levels viewed as unsustainable. Meanwhile, Greece is still teetering on a financial precipice after the appointment of its new prime minister Lucas Papademos and the rest of the PIIGS nations continue to struggle.
In comes George Soros with his ambitious 7-Point Plan for the crippled Eurozone and its constituencies. The entirety of his plan can be found on:
I definitely agree with Soros that the European Financial Stability Facility should be utilized to "guarantee the banking system, not government bonds," which is the key to to this plan. There is absolutely no way the relatively paltry $600 billion the European Financial Stability Facility has under its wing has the potential to contain the crises in Spain and Italy head-on by ensuring government bonds, but the EFSF can definitely mitigate the crises by acting as a "lender of last resort."
Of course, Soros' plan and its application should also be taken with a grain of salt. I find his last point somewhat amusing in its optimisim: "Markets will be impressed by the fact that the authorities are united and have sufficient funds at their disposal." Things hardly ever go according to plan, especially in the context of a continental recovery strategy, but kudos nonetheless to Soros for his plan.