Europe Has Three Days, Not Three Months, to Avoid 'Fiasco': Soros

Multibillionaire financier George Soros said Monday Europe's leaders have three days to agree on how to fix the euro zone crisis ahead of this week's summit of world leaders -- a dramatically shorter timetable than the three months' window he said at the beginning of June that Europe's leaders had to fix their problems.

Unless that is resolved in the next three days, then I am afraid the summit could turn out to be a fiasco. That could actually be fatal, Soros said on CNBC Monday morning. Soros, who is quickly becoming an éminence grise on the topic of the euro zone financial crisis, was making an appearance following the publication of an editorial in the Financial Times, where he warned the negotiating stance of German chancellor Angela Merkel going into this summit threatens to turn the June summit into a fiasco.

In his Financial Times piece, Soros, the notable hedge fund manager -- who last month delivered an explanation of the euro zone crisis to an Italian economics conference that went viral -- suggested the best way to proceed involves some kind of German guarantee of the peripheral countries' debt in return for Italy and Spain undertaking specified structural reforms. The idea is to have some austerity combined with a German safety net for the debt of weak economies, stabilizing the economic crisis in the Continent so as to hopefully spur growth. It is a pro-unification framework that will be the prelude to the establishment of a full political union and the introduction of euro bonds, Soros notes in his article.

For several weeks now Soros has been hammering on the idea that the current crisis should be used to form a more perfect union in Europe, but was previously sympathetic to the German political stance, noting in the early June speech that the German public cannot understand why a policy of structural reforms and fiscal austerity that worked for Germany a decade ago will not work for Europe today.

Monday, that sympathy became strong criticism, with Soros writing in the Financial Times piece that the main obstacle is in German politics, which is mired in a “can’t do” mode and that the current policy path espoused by that country will make Germany the centre of an empire and put the “periphery” into a permanently subordinated position.

Soros noted he does not believe that is what German leadership, and particularly Chancellor Angela Merkel, want to accomplish, but, as he noted in the CNBC interview, unfortunately, she has been leading Europe in the wrong direction.