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<oembed><version>1.0</version><provider_name>naked capitalism</provider_name><provider_url>https://www.nakedcapitalism.com</provider_url><author_name>Matt Stoller</author_name><author_url>https://www.nakedcapitalism.com/author/matt-stoller</author_url><title>George Soros: Eurozone Crisis Has Entered "A Less Volatile but Potentially More Lethal Phase" | naked capitalism</title><type>rich</type><width>600</width><height>338</height><html>&lt;blockquote class="wp-embedded-content" data-secret="kqkGse1LqG"&gt;&lt;a href="https://www.nakedcapitalism.com/2012/04/george-soros-eurozone-crisis-has-entered-a-less-volatile-but-potentially-more-lethal-phase.html"&gt;George Soros: Eurozone Crisis Has Entered &#x201C;A Less Volatile but Potentially More Lethal Phase&#x201D;&lt;/a&gt;&lt;/blockquote&gt;&lt;iframe sandbox="allow-scripts" security="restricted" src="https://www.nakedcapitalism.com/2012/04/george-soros-eurozone-crisis-has-entered-a-less-volatile-but-potentially-more-lethal-phase.html/embed#?secret=kqkGse1LqG" width="600" height="338" title="&#x201C;George Soros: Eurozone Crisis Has Entered &#x201C;A Less Volatile but Potentially More Lethal Phase&#x201D;&#x201D; &#x2014; naked capitalism" data-secret="kqkGse1LqG" frameborder="0" marginwidth="0" marginheight="0" scrolling="no" class="wp-embedded-content"&gt;&lt;/iframe&gt;&lt;script type="text/javascript"&gt;
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</html><description>As the next INET conference begins in Germany, George Soros has a piece out discussing the Eurozone crisis.&#xA0; He points out that the Eurozone has been quietly restructuring its financial arrangements along national lines, ending an era of co-mingled assets and liabilities across national borders. &#xA0;This is something I hadn't realized, but it presents, as he shows, other dangers.  At the onset of the crisis, the eurozone&#x2019;s breakup was inconceivable: the assets and liabilities denominated in the common currency were so intermingled that a breakup would cause an uncontrollable meltdown. But, as the crisis has progressed, the eurozone financial system has been progressively reoriented along national lines. This trend has gathered momentum in recent months. The LTRO enabled Spanish and Italian banks to engage in very profitable and low-risk arbitrage in their own countries&#x2019; bonds. And the preferential treatment received by the ECB on its Greek bonds will discourage other investors from holding sovereign debt. If this continues for a few more years, a eurozone breakup would become possible without a meltdown &#x2013; the omelet could be unscrambled &#x2013; but it would leave the creditor countries&#x2019; central banks holding large, difficult-to-enforce claims against the debtor countries&#x2019; central banks.</description></oembed>

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