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Last Updated : Jan 27, 2012 04:49 PM IST | Source: CNBC-TV18

Eurozone policies forcing deflationary debt spiral: Soros

The European crisis continues to hog the headlines in Davos with top global leaders discussing the way forward for the struggling region. Soros Fund Management Chairman George Soros says that eurozone policies are pushing the region into a deflationary debt spiral, reports CNBC-TV18.


The European crisis continues to hog the headlines in Davos with top global leaders discussing the way forward for the struggling region. Soros Fund Management Chairman George Soros says that eurozone policies are pushing the region into a deflationary debt spiral, reports CNBC-TV18.


"The policies that Germany is pushing on the eurozone strict fiscal austerity, it is creating a deflationary debt spiral because it puts pressure on wages and profits. So as the GDP declines, the debt ratio goes against you, then you need more austerity and that makes the economy decline some more and that is the trap we are caught in," he reiterated.


However, other global leaders are a tad bit more optimistic. Jamie Dimon, JP Morgan, CEO says that he is confident of the eurozone clawing out of the crisis. He adds that the impact of greek default on US banks will be almost zero.


"I always thought that they will muddle through because I don't think there is a better solution. This is a 50-year human endeavour to get the continent together. That's a wonderful endeavour," Dimon added.


Zhu Min, the deputy managing director of the IMF spoke how he rated the chances of a Greek default, what the contagion impact will be and whether USD 500 billion that the IMF hopes to raise will be enough money to help the troubled euro zone.

Watch the accompanying videos for more.



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First Published on Jan 27, 2012 09:17 am
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