On November 9, 2007, the European Union’s Euro currency was at its peak exchange rate with 1.00 Euro equal to 1.47 United States Dollar. Investors were buoyed by the potential success of this amazing European Union of nations – declaring it as a model for the world. In 2016, George Soros is warning that the European Union may be about to collapse. So what has changed so dramatically in nine years?
“Money Makes the World Go Round”
Billionaires George Soros and Jim Rogers ran the infamous Quantum Fund, which enjoyed record profits for decades. For this reason, the financial community trusts all that Soros says. Soros has paid his dues and demonstrated his expertise.
Just like a business, nations depend upon money for their affairs. Police, soldiers, bureaucrats and politicians all depend on a government paycheck for their livelihood. Nations with healthy finances, naturally prosper.
“Government Sovereign Bonds”
The Gross Domestic Product (GDP) is an estimate of the value of an entire nation’s productivity. Wealthy investors, institutions, businesses, banks and other nations invest in the sovereign bonds of a nation. When a country is successful, it can attract more buyers who will naturally want to enjoy higher profits.
Nations with poor productivity must offer higher interest rates to encourage more investment. In 2008, a number of European Union nations – Greece, Spain, Portugal, Ireland and Italy – faced serious financial problems. As of 2016, Greece, Spain and Portugal still remain on “financial life support.”
“Why Does Soros Predict Impending Collapse”
When a company has higher debits than credits, it might file for bankruptcy. Greece has basically done the national equivalency of bankruptcy by defaulting on its debt. Greece simply stopped paying the investors of its sovereign debt.
George Soros has warned viewers of CNBC that the European Union may collapse. The nations of the European Union are no longer acting in concert. Refugees, economics and the environment are just a few of the issues causing serious division.
Unemployment rates are very high in the European Union as debt continues to increase. At a certain point, nations will face an impossible debt load, from which they cannot escape. George Soros believes that these high debt loads are one of the many reasons why the European Union will fail.