The Crisis and the Euro

By George Soros, in The New York Review of Books

I believe that misconceptions play a large role in shaping history, and the euro crisis is a case in point.

Let me start my analysis with the previous crisis, the bankruptcy of Lehman Brothers. In the week following September 15, 2008, global financial markets actually broke down and by the end of the week they had to be put on artificial life support. The life support consisted of substituting sovereign credit—backed by the financial resources of the state—for the credit of financial institutions that had ceased to be acceptable to counterparties.

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