The Euro Crisis Just Entered A 'Less Volatile But More Lethal Phase'

04-12-2012 • http://www.businessinsider.com, Sam Ro

George Soros doesn't think so. From his new op-ed piece for the Financial Times:

Far from abating, the euro crisis has recently taken a turn for the worse. The European Central Bank relieved an incipient credit crunch through its longer-term refinancing operations. The resulting rally in financial markets hid an underlying deterioration; but that is unlikely to last much longer.

The fundamental problems have not been resolved; indeed, the gap between creditor and debtor countries continues to widen. The crisis has entered what may be a less volatile but more lethal phase.

Soros argues that "at the onset of the crisis, the eurozone’s break-up was inconceivable" because all of the countries finances were so deeply intermingled.

But thanks to the LTRO and the countries distaste for international bonds, Soros think that within "a few more years, a eurozone break-up would become possible without a meltdown – but would leave creditor countries’ central banks holding big claims that would be hard to enforce against debtor countries’ central banks."