Billionaire investor George Soros called on Europe to start a fund to buy Italian and Spanish bonds, warning that a failure by leaders meeting this week to produce drastic measures could spell the demise of the currency, Bloomberg reports.
Policy makers should create a European Fiscal Authority to purchase sovereign debt in return for Italy and Spain implementing achievable budget cuts, Soros said in an interview in London yesterday. Funding for the purchases would come from the sale of European Treasuries, which would have low yields because they would be backed by each euro member, he said.
France and Italy are urging Germany to take decisive action to end the 2 1/2-year-old debt crisis after Spain’s 10-year bond yields jumped to more than 7 percent last week, a level that economists consider unsustainable. Leaders are at an impasse as they prepare to meet in Brussels on June 28. That risks disaster because Europe is running out of time to show investors it will do what’s necessary to save the euro, Soros said….