Soros blames Germany for Europe "deflation spiral"

Wednesday, 6 October 2010 18:49 -     - {{hitsCtrl.values.hits}}

NEW YORK (Reuters): Billionaire investor George Soros blamed Germany for leading the implementation of austerity measures that will throw the euro zone into a "deflation spiral."

Additional fiscal stimulus --and not fiscal discipline-- is the way out of the crisis for both Europe and the United States, Soros said in a speech at Columbia University on Tuesday.

"Deficit reduction by a creditor country such as Germany is in direct contradiction of the lessons learnt from the Great Depression of the 1930s. It is liable to push Europe into a period of prolonged stagnation or worse," Soros said.

Germany is unlikely to change its ways, however, because its economy is doing well and because the difficulties of other countries can be blamed on structural rigidities, Soros said.

German Chancellor Angela Merkel also gained the upper hand in a recent G20 meeting where she joined forces with Canada and newly elected Conservative British Prime Minister David Cameron to put pressure on other countries to adopt austerity measures, Soros noted.