>> rose: welcome to our program. it has been a very busy day fofor the debt limitation talks at the white house. there was stunning and dramatic news. the speakeof the house of representatives who has been negotiating with the president walked out of the talks. the president then held a press confence at 6:00 p.m. to explain his reaction. >> one of the questions that the republican party is going to have to ask itself is can they say yes to anything. can they say yes to anything? i mean keep in mind if the republican party that has said that the single most impoant thing facing our country is deficits and debts. >> rose: then later the speaker of the house of representatives john bhner had his press conference. >> there was an agreement with the white house at $800 billion in revenue. it's the president who

walked away from his agreement and demanded more money at the last minute. that is-- and the only way to get that extra revenue was to raise taxes. >> rose: the late-breaking story and new developments caused us to scramble and both add and edit segments to give you fuller coverage. here is froid floor is, francesco guerara and al hunt who spoke with me after the president's press conference. >> i think they're likely to come up with a debt ceiling extension despite all the trauma that we're going through now. but boy, this has really become high-stakes politics. i think at least in the political arena obama has far the upper hand. popular support's with him. he's got a certain logic. the republicans are being totally recalcitrant on any kind of revenue increases. if, however, we have some kind of market implosion because of this and it really decimates the economy, then obama would be a big loser.

>> rose: also this evening a conversation with paul krugman and david brooks th columnists at the "new york times". this conversation took pla before the president's press conference and therefore was edited accordingly. >> whave no consensus in our political system. there is no center. we have no consensus about what all to be happening. so if you try to strike a lo-term deal you're basically stking a deal that nobody actually beeves and that isot going to be adhered to. i think we buy we buy se time. shouldn't be negotiating at all about the debt ceiling but we buy someime and give the voters another chance to weigh in. >> we really need to cut i think some of the rating agencies have said this, we need to cut $4 trillion to sort of stabilize debt levels and if we don't do that that's really bad news. and then the second thing i do think both parties may find it useful to have a framework. no, we're to the going to write a plan that is going to dictate the next ten years of politics but both parties may find it extremely useful to have a framework going forward and believe me none of these plans are very specific. there's a lot of vagueness

built into all of them. >> also this evening another segment we taped before the president's press conference, on the greek debt crisis with the aforementioned floyd norris and francesco guerara. >> we're moving toward a system where a country cannot control its own budget. it has to have european approval. and they pretty much ve to move in that directi unless they're going to sacrifice the euro. that is the alternative to having perennial greek ilouts from europe is sacrificing the euro. as of now they're unwilling toonsider that. whether they'll still feel that way if this goes on and on i don't know. >> the problem is that they've been talking about this for about 18 months. i mean there hasn't been any decisive action by the european governments. and the markets have got more and more nervous about the possibility to the island, portugal, italy and spain of course. rose: it ems me, this is only about europe, don't expect the other untries to get the same kind of treatment. >> exactly. but the problem is that this cause, as you see the many

bailouts, more hazard. >> rose: we conclude with the look at the final season of entourage with its creator doug ellin and actors jeremy pevin and kevin connoly. >> the time that i really felt like there was something special going on is when we went to las vegas. and people were screaming at these guys, really like they were elv. and i was stunned. we were at the pool at the hard rock cafe and people are screaming, are, turtle, e, that was kind of shocking for me, you know. because i'm kind of locked in my office in a bubble so you don't really feel it. >> rose: the debt limitation crisis, the greek debt crisis, and the final season of entourage next. >> fundingor charlie rose was provided by the following: evy story needs a ro we can all root for. who beats the odds and comes out on top.

but this isn't just a hollywood storyline. it's happening every day, all across america. every time a storefront opens. the midnight oil is burned. or when someone chases a dream, not just a dollar. they are small business owners. so if you wannroot for a real hero, support small business. shop small. captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: we begin this evening's program with this program note. after we had completed a segment of the greek debt

crisis and also on the debt limitation crisis in washington, there came the dramatic news that speaker john boehner had wked out of the talks with the president and the president was going to have a press conference. so then we asks francesco guerara and floyd norris to be joined by al hunt of bloomberg news inashington and began the conversation with floyd norris. >> what do you think. it's amazing. the greek situation is a al tragedy. greek cannot borrow money. this country is not in bad shape at all. or but we have a politically geneted crisis. there is no real rean to have a debt limitation anyway. what congress and the president shouldo is tax spending, taxes and spending and the economy together will produce a budget deficit or surplus. the democrats, i think were rightly worried a little bit about how much president obama was willing to give away in terms of slicing

spending on programs they hold dear. but it turned out the republicans are unwilling to accept anything. and john boehner who had promised repeatedly that the debt ceiling would be raised, apparently now is backing away from that. it looks like he's just caved in to the right wing members of his caucus. >> rose: he has released this statement. during these discussions as in my earlier discussions became evident that the white house has simply not serious about ending the spding binge thais destroying jobs and endangeri our children's future. a deal was never reached and never really close. in the end we couldn't connect. to the because of dfere personalities, because of diffent visions for r country. the president is emphatic that taxes have to be raised, a former businessman i know tax increases destroy jobs. here is another point that the president made in hi press conference. >> even if you are's not a recipient of social security, even if you don't get veteran's benefits or

disabilities, imagine what that doeto the economy when suddenly 70 million checks are put at risk. i mean if you are's a business out there, that is not going to be good for economic growth. and that's the number one concern of the american people. so we've got to get it done it is not an option not to do it. >> rose: so where are we? >> we are really playing with fire here. i think the markets have so far been really quite sanguine about the whole problem here. and they have kind of looked at this as political these their will eventually be resolved. now we're coming down to the wire and there's no solution in sight. the two position seem to be more and more entrenched. and the one thi i would guard against is the fact that the markets' confidence can disappear just like that. and we will be looking at very nervous markets on monday. very nervous invesrs because the default, and certnly the downgrade possibility ar rising by the minute here. >> rose: so the markets will be saying, and people who influence markets over the weekend will be having a lot

of conversations saying we thght this could never happen. but maybe. >> but now what the markets have been sayi so far, you know what it is a kabooku dance this washington thingment now the markets are saying maybe this is real. and they will react acrdingly. remember markets move very fast. money can move very fast and have seen this in other occasions, the leeman failure, other crisis and once the confidence evaporates it is difficult to put it back. >> rose: did you ever believe it would come to this point? >> i didn't. i still hope the eventual upshot may be that they will simply raise the debt limit. and next year's elections will be largely fought over this. and that, it seems to me, would make a whole lot of sense to-- . >> rose: to find a temporary solution to the debt limitations crisis. >> and effectively let the public make some decisions here. it's not ideal to put off decisions.

but it really is remarkable as francesco was saying, the markets have not taken this very seriously. yields on treasury securities have been going do, not up. people don't think it's possible the u.s. could default. and it isn't possible the u.s. could ever default unless it wantedo. buit appears that some people in congress may want it to. >> all right. let me go to washington. al hunt i think is standing by. >> this is political armageddon, he's drawn the lines on this one. i happen to agree with floyd. i think they're likely to come up with a debt ceiling extension despite all the trauma that we're going through now. but boy, this is really become high-stakes politics. i think at least in the political arena, obama has far the upper hand. possibly support's with him. he's got a certain logic. the republicans are being totally recalcitrant on any kind of revenue increases. if, however, we have some kind of market implosion because of this and it

really decimates the economy, then obama would be a big loser. >> rose: so what, so the president tomorrow morning will meet with boehner, pelosi, mcconnell, and who else? >> harry reid. >> rose: of course. the senate majority leader. and you think what's likely to come out of that is some movement towards a temporary solution in order to-- a short-term solution to raise the debt limit? >> charlie, one thing we know about this is what goes around ces arod. boehner walking out of talks, eric cantor walking out of talks. mcconnell reid which was dead just4 urs ago may be revived in a slightly different form tomorrow. they need to have some ki of cover. both sides but especially republicans. some kind of cover to pass an increase in the debt ceilingment i don't know if it is by august 2, there are some reports that maybe they have a week or so me. i'm not ite ear sure when it would be. but sometime very soon because the clock is

ticking. i don't think they had time, actual, to do anything else even if they had the will to do it as far as deficit reductio >> mcconnell reid, is that where they have to go to or some other. >> well, charlie, the simple thing would be just to say all right, we're going to do what floyd norris said a moment ago. we're going to extend the debt ceiling because that would be a catastrophe and wage this battle over the next 15 months and see which side wins. they could simply do that. they don't tend to do simple things so i think they're going to have to come up with some kind of mcconnell reid variation which would put the onus on the president but would also increase the debt ceiling for the next 15 months, perhaps in stages. >> another solution might be for the members of congress to simply say forget about party unity. let's try to forge an agreemt across party lines. and if some of the republicans are appalled by this and some of the democrats are appalled by otr reasons, let them vote

against it and get some kind of a centrist agreement. but at the moment, in the republican party in congress, and the democrats when they controlled the house, there seems to be a feeling that you should ner pass a bill unless it has overwhelming support in your party. >> you can do that in t senate right now today. i think there are at least 60 votes for what obama outlined today which is they're all the same. it's a variation of bowles simpson, a variation of dom inshe, of the gang of six. they could pass that with more than 60 votes tomorrow. mike currento of idaho, charlie and sax chambliss ofeorgia, lamarre alexander, they would all vote for it. the problem is the house. i interviewed earlier the chairman of the house ways and means committee, a very reasonable republican and he just says absolutely no way on revenues because i don't think he thinks his caucus would tolerate if it he gave in on that. so i don't think that kind of centrist coalition is possible in the house.

>> i think the market kos do the dirty work for them in the sense that if there is a bad market reaction on monday, this would be what we will call the tarp moment, remember during the crisis they voted down tarp and they immediately came back and so if the market finally move off this posture which is we don't believe that you are not going to do it, if they really show some sign of being very, very scared, i think that could focus the mind in washington and finally get to the table and do something. >> rose: thank you for coming back,hank you floyd norris. albert, thank you so much for joining us. >> thank you, charlie. >> rose: we have a lot to think about this weekend. joining me now are two columnist from "the new york times" from arlington virginia, david brooks from princeton, new jersey, paul krugman, i'm pleased to have them here. tell me where you think we. >> i have no idea what's going on in the rooms but just on general principleses, yeah. you have a lot of very extreme people were elected to congress last november. and they don't really, they don't believe that there's a

real risk if the debt sealing is not raised. they don't take it seriously and game of chicken and sometimes games of chicken end up with going off the cliff. >> rose: that sounds like you're buying into a short-term deal to get past limitations. >> we have no consensus in our political system. there is no center. no consensus about what ought to be happening. so if you try to strike a long-term deal you're basically striking a deal that nobody actually believes and that is not going to be adhered to. i think we buy, we buy some time. we shouldn't be negotiating at all about the debt ceiling but we buy some time and get the voters another chance to weigh in. a lot of voters voted republican last year because they thought republicans were going to protect medicare from obama. give the voters a chance to vote again and maybe we can resolve this. the idea we can solve our long-term budget problems in the middle of a hostage situation is i think extremelfoolish. >> rose: the other argument is, david that youre just kick the can down the road. >> right, d i would says that's, paul may be right.

it may genuinely be true there's no agreement. there's no middle ound. no way to reach a dea but woulsay a coup of things. first of all you're risking a downgrade of the deb or default. we really need to cut, the rating agencies have said this. we need to cut $4 trillion to sort of stabilize debt levels. and if we don't do that, that's really bad news. and then the second thing i do think both parties may find it useful to have a framework. no we're to the going to write a plan that is being to dictate the next ten years of politics. but both parties may find it extremely useful to have a framework going forward. believe me none of these plans are very specific. there is a lot of vagueness built into all of them. but they will find it useful because they want to be bound. in the '90s when we did bring down the debt there were certain rules put in place that bound both the parties and they could blame somebody else. politicians spend a lot of time trying to figure out how to blame other people for things they feel they have to do. and so say you are a republican. you probably want to bring medicare spending down. but say you win the white house.

say mitt romney wins the white house and you win both houses of congress. are you as a party unilaterally going to want to bring medicare spending down? i really do not think you're going to do that. and if you are realistic you would like to have a process in place that was agreed on a bipartisan basis to do those sings-- things so you can then blame. >> i was going say first of all, the threat of a downgrade seriously is all about the debt limit. it's not about, you know, in reality, the rating agencies are not going to downgrade the united states because they don't like long drawn policy. that is a fake threat. they will downgrade if we default on debt because we haven't raised the debt ceiling so the default issue is entirel artificial, entirely created by the decision of a large part of the republican party to take hostages, to take the economy hostage over the debt ceiling. it's nothing more than tha it doesn't require a long-term solution. and you know, kicking the can down the road when the can, i'm going to mix metaphors. when the can is an entirely art creation of the polit came process, you're kicking

this artificial deadline down the road for another 18 months is actually not a bad thing. we are not going to resolve how we're going to solve our long run budget issues in this negotiation. even i produce something that looks like a grand framework, it's not going to happen. so i think actually going small, going temporary, just getting this through until the voters have a chance to speak again is actually by far the wisest course. yeah, you know, i suppose president romney, if there is such, would like some cover. but if he has-- if there is someing he wants to do, he should try to actually run on it in the election and sell it. >> here, paul and charles authammer agree that we should go small. i'm afraid of that one. because i think nomatter who wince, say obama wins, will have no incentive to move to the center it makes it much harder to go for the deal. if the republicans win everything, as i said, i don't think they're going to do anything serious. and so i think this is actually even thgh it is

fractious i think this is our best moment in five years. and even if you take away the debt ceiling issue, which i agree is sort of an artificial thing, if we do nothing in five years, then you are really beginning to get to a point where the interest costs on the federal deficit begin to get huge, by the end of the decade according to the president's budget, they're approaching a trillion dollars a year in interest sts and that's cataclysmic. >> it actually isn't. the projections actually say that by the end of the decade interest costs as a fraction of gdp will be about what they were under the bush the elder's pet see. this is a much exaggerated threat. there is a lot, lot more slack in the arithmetic of the budget than people think. the only question is when do the markets decide that we're a banana republic. that's a very different issue. if you want to dot mechanical arithmetic of interest it's just not that big a deal. >> rose: what would you do if you were asked to, with full power to construct a deal? >> oh, wow, i mean i think what we-- constructing a

deal i don't know how to do because you've got a lot of crazy people in there. constructi a solutio what the long-run solution the u.s. budget problem is controlling health-care costs. it means more of the kinds of things that we're already in the affordable care act. a lot of serious, serious efforts to bring the rate of growth and hlth-care costs down, bending thcurve, horrible metaphor but bending the curve. which we know can be done because other country does it and then we need revenue. in the end we're going to need three, four percent of gdp in additional revenue. you can get some by allowing the bush tax cuts to expire but we wl need more than that. in fact have a prediction. if david and i are still a around, i predict that we will have a much more controlled health-care system that sort of matches the cost performance of other countries. and we'll have something like a value added tax to increase revue. that is how america will be solvent in the end. >>o you buy that idea? >> i think i wrote that column.

i sort of agree with that. if they made me god tomorrow, i would fix the budget, first you have to control health-care costs unlike paul i think the cost control mechanisms in the affordable care act are not sufficient. i would go more forward a more market based system by paul doesn't think would work. but i would have some general principleses. first of all everybody has to suffer. and there you have to make the rich, the middle class, everybody has to ta a hit. the secondhing i would do, i would redirect money fro the elderly to young families so like the president, i would invest a lot more in early education, head start but cut more, a lot from medicare and social security and i would do that by means testing. the core issue here is that democrats have taken the entitlement benefits for the rich and tied them to the middle cla. they want to get those two things linked. the republicans have ten tax rates for the rich and tied them to tax rates for middle class. onoth those things we have to sever tha and cut benefits for theich and raise taxes for thrich. and dothat, you begin to

get toward some serious progress. >> let me throw in the other thing which is what i wrote about this morning. which was that anything that involves short-term spending cuts, and there's probably going to be some of that if there is a deal, is actually a mistake. what we have is a huge long run budget problem. i agree with that. but now is not the time to be cutting. not now, not next year, probably not 2013 either. so actually again, if something cannot happen this is where actually basic sound macroeconomics, kicking e can down the road until the economy is on a sounder footing is exactly the right thing to do. it is the wisdom it is the wise course that doing what sounds wise and judd icious and serious which is start cutting right now is actually a deeply destructive policy. >> you said the disappearance of unemployment from ite policy discourt and its replacement by deficit panic has been truly remarkable. it's not a resnse to public opinion. in a recent cbs news "new york times" poll 53% of the public named the economy and

jobs as the most important problewe face while oy 7% named the deficit. but thos 7% are in the tea party. >> wel, i not even sure. i mean tea party people whatever it they believe, they seem to beiminishing as a force anyway. they say they are concerned about the deficit. but press and it turns out they are really against giving money to the bums on welfare or something else. i don't think it's really about the deficit. i think the problem is too many of those 7% are actually inside the beltway. that we have too many people who are you know, who are serious and responsible in their own minds who are actually, you know, fighting, fighting the wrong war right now. what we really need to do is do something about 9% unemployment. and yes, we do have a long-run budget problem but we have 9% unemployment right now. >> but aren't there consequences without dealing to the deficit that have to impact on the economy and markets which will therefore affect unemployment? >> well, we've actually had,

to say right away, look, if thmarkets were terrified by the long-run budget prospect, why is the united states government able to borrow long-term at an interest rate of 2.96% as of this afternoon. the markets are not complaining. if you ask businesses what's holding them back, not business lobbyists but businesses themselves, why they aren't expanding they say la of demand so this is,you know, this is not, people who believe that if we resolve the budget problems that that will somehow cause a surge in the economy, i have been told those people believe in the confidence fairy. it's not going to happen. if you want to fight unemployment, fight unemployment. and if fighting the long-run deficit comes at the expense of doing something about unemployment f it makes it worse in the short run, then you're actually probably worse than even the long-run budget picture because nothing hurts your long-run budget picture worse than an economy whose growth rate is

depressed by a prolonged period of economic weakness. >> so it's all wrong. what passes for being reasonable and wise and serious inside the beltway is in fact deeply foolish. >> david, are you guilty of deficit panic? >> well, i wouldn't overestimate the serious and responsible people inside the beltway. i don't think there are that many of us or any of them. but on the other hand there might be a lot of unseruous and irresponsible people outside the beltway. and you know, i think the country first of all takes a look at-- it's not only 7% concerned about the deficit. it may not be the top issue but it is always second or third it is a major issue. in part because they see the government behaving in ways thatre simply not respsible in pt because they do see there is a big long-term problem out there. and in part because they see it and they're right about this, it's symptomatic of the really shamefulature of the way the government works which is irresponsible on a whole series of levels and doesn't work on a whole series of levels. now abstractly i could

completely agree that we should have a little short-term spending. like a payroll cut holiday, as a way to boost the economy short term. and then a long rankig deficit program. if there was a serious commitment to a long-range debt reduction program i think a lot of people would tolerate a short-term stimulus program. we might think it wab less effective than paul does. but we think it would probably be moderately effective. but the fact is the political system is incapable of bearing that right now. in part because people do not believe in stimulus. the american people do not believe the stimulus plan worked. and they're really worried about debt. and so the political system is just not capable right now of bearing that sort of complicad cycle, cyclical policy. >> right. but even given that. >> and so -- >> even given that, that doesn't mean you have to actually cut, right. we arectually talking about spending cuts. one thing to say obama can't pass another stimulus program which i'm afraid is probabe true at this point. anothething to y we should be pursuing anti-stimulus in the face of 9% unemployment and yet that's where the dialogue is

going. >> right t is going -- >> and most of the cuts are, most of the cuts are in the last yrs of th ten-year window. so the short-term cut wa be pretty trivial at least from a macroeconomic respect. >> what i have been reading is people trying to ope through the gang of six plan. we're actually talking about serious drag in 2013. and we are, you know, i can almost guarantee you we are still going to hav a depressed economy in 2013. rose: there are two questions. one if you look at the dysfunctionality of government as in this case, who's responsible? >> i don't ple tend-- i wouldn't say it is symmetrical here. i do think the president and the democrats have been much more flexible than the republicans have been. i say that with a little pain maybe, but that's just simply the case. the prident to his credit has made his allies extremely uncomfortable. and if you are around washington yesterday when the entire senate democratic caucus erupted in furry, you saw that firsthand. and so i think the republicans are, it's a good

short-term negotiating strategy but they are not seizing a deal which should be out there for them. i'm sort of mystified why if the president is offering $3 trillion reduction in the size of government, why they are not seizing upon that. and potentially settling either for nothing or maybe $500 million. it's just mystifying to me why they don't take this deal. >> ros then take a guess, what's the answer? >> well, there are a lot of things. one, they will tell you we go home and nobod wants any more taxes. we ran on that. we pledged it. second, and i think this part is biptisan, the hatred iso stro, the is great personal resistence to doing a deal with the devil. and they regard obama or boehner and cantor as the devil. there's just sort of this emotional resistence to getting in a room, shaking their nd and having your picture taken. and so eneneath the subsnce of it, there is a great deal of emotional resistence. and even when the president mas an offer, wch is a pretty goooffer for republicans, they're always

looking for the weaknesses in it. >> let me just say -- >> they're looking for -- >> this is a longer-term story. it is not just what is happening in these negotiations. the underlying reason why we have dysfunctional politics right now is the radicallization of the republican party. i mean bruce bartlett, republican or maybe now ex-communicated republican just said basically obama is a moderate conservative. he's basically governing to the right of richard nixon. but what happened is the that the repuican party have gone so far off into an extreme, extreme right wing position that we have gridlock because basically one party cannot say yes. they cannot say yes to anything that might be coming from thother party. and in a basic sense they don't accept legitimacy of government by theth oer party. >> to be fair to them they would say hey, we've had government at a certain level of gdp for decade after decade and roughly the same. over the last couple of years it has leapt up signifantly. so if we want to bring it back to that level to the 2008 level, that is the

argument. >> all of that is the recession. all of that is that the ratio of government to gdp is liar because gdp is down. and safety net programs unemployment insurance, and medicaid and a f other programs that respond to hard times are up. if you take that out, there has been no increase in the size of government this is entire myth. >> rose: there. >> there is a long-term trend of health care spending. i think paul and i have come back to this a couple of times in this conversation. health care spending is the problem. and so there are two wildly different views of how you address that issue. and republicans look out and see health care spending increasing, swallowing of everything else. and they say we need something like the ryan plan in order to fundamentally reform the structure of the program. and that is not a radical irresponsible position. that's a position you can disagree with. but it doesn't make them lose, i would say. >> but we should also point out that we have an enormous amount of obstructionism at all levels. there is a tremendous level of unfilled positions. to a large extent obama is

trying to govern with a hollow administration because he can't get officials approved. we had my former mit colleague, nobel laureate peter diamon rejected for the federal reserve board. this is a crazy, this is what is making america ungovernable, is the extremism of one party. you actually have an extremely a come date, i would say a large-- alarmingly accommodating democratic president but a republican that won't deal. >> rose: another day i will come back. thank you, paul, thank you, david. >> thanks a lot. >> thank you. >> rose: european leader are aggressively trying to contain the economic fallout from the greek debt csis at an emergency summit on thursday in brussels. they agreed on a new aid package worth $109 billion euros. also gave new powers to a facility assisting peripheral nations whose banks are impacted by greek debt. joining me now are floyd norris, chief financial correspondent for "the new york times" and francesco guerara, the money and investing editor at the "the wall street journal". i'm pleased to have both of them here. explain the deal to me.

>> the deal is effectively a bit like modification on your mortgage so they decide that they didn't have enough money greece did have enough money to pay the debt this he extended t maturity, paid later and lowered the interest rate and injected a lot of money not greek economy. it's a deal that effectively delays t inevitable, which is greek will default. in fact t will be considered a technical default for the credit rating agencies. and it means that the best hope now is the contagion started in greece doesn't spread to weaker economies. >> rose: the point was stopping the con tidge on possibility. >> absolutely. the problem is that they have been talking about this for about 18 months there hasn't been any decisive action by the your mean-- european governments. and the maets have gone more and more nervous about the possibility to the island port began-- portugal, italy, and spa. >> rose: it seems to me this is only about europe shall don't expect the other countries toet the same kind of treatment. >> ectly. but the problem is that this cause, as you have seen the

bailouts even inhe u.s., more hazard. there is a sense that people will bail out if they fail. >> rose: and is it also a sense the european unit has agreed to support greece indefinitely. >> it is inevitable. there is no way greece can sustain it by itself. so they have to be bailed out constantly by the european union. and that simplicity when they say that. >> rose: so what whats to the banks? >> the banks that own greek debt, they are having a default now. supposedly they're ing to reduce the value of the debt by around 20%. based on arithmetic people do. this will probably cause some banks to be insolvent which will cause europe po bail them out. and there time we're going to have the european wide facility bailing them out. there's a uple of things. they're moving index orably. and without a lot of public consent. toward a much more integrated europe. toward a europe where fiscal-- .

>> rose: fiscally integrated. >> at least fincialicall finaialically-- financially integrated and that is in some ways politically as well. because we're moving toward a system where a country cannot control its own budget. it has to is european approval. and they pretty much have to move in th direcon unless they are going to sacrifice the euro. that is the alternative to having perennial greek bailouts from europe is sacrificing the euro. as of now they're unwilling to consider that. whether they will still feel that way if this goes on and on i don't know. >> rose: who won and who lost the argument. >> the rule in europe has always been when in doubt germany pays. as germany paid, it's always like that you knew this 18 months ago, they could have spared us 18 months of trouble and turmoil. germany ended up paying and essentially caving in to a lot of the requests. >> rose: so merkel had no choice? >> she had eventually no choice. because the alternative would have been serious strain on the euro. >> rose: yeah? >> t ecb also lost.

the cliche the head of european central bank insisted they could not have a default. and the reason he was insist on that was that last spring, spring of 2010, the ecb ended up doing much of the blaling out-- bailing out and was left with a balance sheet filled with really dubious paper from greece and other places. and he was afraid that in the bailout he would be left holding the bag. well i looks like there going to try to find a way to make him hole. germany will pay. so now he backed off from that. both sides, both germany gave in, germany got their partial default which they've badly wanted. they thought the banks, that had lent to greece shod suffer some pain t of course to some extent they already have. >> rose: but that was their condition. >> that was the german demand for quite some time and he resisted it intensely. >> -- he wanted to tax the banks to share the pain and that didn't pass.

>> rose: and so why, who objected to that? >> there was a concerted effort by the ecb and germany not to tax the banks because the banks are already very week. the ecb concerned that the banks will be much weaker as a result of this. ecb doesn't want to be the lender of last resort to the banks again. >> that was an alternative to forcing the banks to take losses on their bonds. which seemed a little odd. there is something to be said if you are going to charge the banks, why not arge the banks who made the mistake instead of all of them, the ones that didn't make the mistake. >> so where goes italy now and where goe ireland and where goes portugal? >> this is a bottom sometime. it's very important that they-- also a certain eternal market confidence. the problem with this is the italian situation and i can say, is not going away any time soon. the public debt to gdp ratio is huge, 120%. and there is no sign of austerity measures. the biggest problem italy has is no growth. the economy is not growing so they can't grow their way out of their troubles. if they impose austerity

measures the growth will be curbed even further so they're in a bit of a situation. >> it is not an option. >> austerity is the option but it will-- curtail growth. >> dow believe this might be the impetus tcreate a political union. >>here would be so much political restance to that and nationalistic resistance that don't see that happening any time soon. but if it carries on this way, you have got to think that theoretically take that step at some point in the future. >> europe needs another martial plan. >> europe, they're link communique said they would have a european martial plan and took that out of the final one. they didn't seem to change the substance but they took the phrase out. it's, you know, i agree with you completely. europe is moving in that direction. i'm not sure that much want to move in it. and of course there are huge resistence to it if only in

the matter of language a cultur in this country, obviously parts of this country are very different from other parts. if you live in rural mississippi, boston does not seem like a friendly place you understand. but you can communicate ere and be understood. and if you are a bask from spain in ger mannee you're not gok able to talk to many people. >> rose: i leave it there. thank you, floyd, thank you francesco. hbo's hit show entourage enters its eight and final season this summer it was inspired by actor mark wahlberg's risto imfa. e show as you know about is fouyoun men fronew york trying to make itn hollywood. they are surround by beautiful women, expensive wars and gorgeousnd glamourous parties but beyond the fame and celebrity is also about camaraderie and friendship. joining me are doug ellin, and kevin connol-- connoly and jeremy piven. i'm pleased to have all of them here at this table on this day. so why are we ending this?

it is a good thing. why is it? >> it's just we've run the course and we want to do a movie. i think it's the timehat we've done everything we can on the small screen. and if we have the opportunity to get it, and make it a little larger scale, i think it's time to do that. >> rose: it's in syndication around the world. >> it's in syndication around the world, yeah, yeah. so we're hoping to get that movie going. and i think as far as thetv sh goes t just felt like the right moment. it feels like we hit our stride. and we're going to go out strong. and it just felt li the right time. >> rose: why only eight episodes? >> younow, that was last year we kind of sat down with hbo and talked about a buet thing. the show is expensive at th point interest from where it tarted we sat down

and this was really almost two seasons worth of budget that hbo gave us. they said how do you want to break it up. we have the funding. we can do 18. so we did a 10 and 8 schedule. >> it's interesting because if you look at the way the show has progressed it used to be about suddenly we get on a plane and we would be in france and all these exotic incredible locations. and i think you really focused on outdoing yourself. and then once we realized we had to kind of bring it down a bit, it, to me, the show almost even got better because then it became more about the relationships anmore like a play. >> rose: not locates but relationships. >> i think so. and i do love that you know, i could feel like i could play a few more season approximates in an airplane bathroom, literally that small. >> what is the difference between the character on the paget the beginning, and the character he creates. >> there an intangible with jrmee, you know, you can't, you can't know it until you see it but again jerm's wa

in my mind when it was originally conceived. but i still didn't really know the kind of energy that he would bri to it. he's like a lightning bolt. when he gets on screen all of a sudden it just pops. so you know jeremy brought, which i'm no sure in the initial stable we knew the likability factor and that we would go in these places with his wif and relationship and family. i don't know that that was-- it was almost like a satire and it would be this lolife agent in hollywood and we would do that and all of a sudden eight years later in my opinion he's one of the great family men we would see on tv. >> which is surprising because of character, perhaps. >> yeah. and especially wre it started. in the first episode he was talking about having sex with supermodels which eight years later we know he never cheated on his wife. he is home every night, she controls the family. and so it's interesting. but that is where it goes. with all the action. >> so where-- kevin and i, you know, kevin is one of my closest friends off screen.

we've grown this character together from where he was this guy work at sibaros when we came out and eight years late certificate running this big business, mar agency the emanuel, the greatest women on earth. talking about this, as the perfect women and so you know he's progressed a lot. >> has your character changed? >> well, yeah, i mean he's grown-up a lot. here from new york, running a pizza pce and now he has his own manemen comny. he's been successful. so it's so much has happened in eight years on the show. these characters have all, ke i said, you know, it s a great example on the character of ari. i ink going into t none of us really knew exactly what, we were figuring it o as weere kind of going along. and i know doug alys uses the example of david simon who created the wire had a bible for the wire where he went in and it was like here's the entire series in

a book and this is it. not a page more or less. they gave it to doug. doug was like oh my god. >> when i wa pitchin the show going in, mark, steve and ri going to pitch the show and i said to my agent wa, i do need. and he sent me david simon's work. and i almost cried. i said there is no way coy ever, ever do this in a milln years. >> rose: how many times did you get turned down sm. >> well, we sold t having mark and ari in the room, we sold itedmmiately. ich is now looking back is meaningless. so we walked out of that meetg spinning around like tom cruise in vanilla sky, as if had accomplished something. it wasn't for another two years. >> rose: because they didn't buy-- they didn't like the draft. >>hey hated the draft. i got the first script which i thought was fantastic. >> do you still have tha >> still have it. no one can read it but i got the call from-- steve leffinson called me. i was sitting on my bed, waiting, he said they hate it i said what did they hate about it. he said they hated erything about it. so we threw that out and started over and probably did that really 20, 25

times. >> rose: the is something said that they were adamant it should not be a story-driven show. >> yeah. >> rose:t ought to be a sh of character. >> it was really, you know there we a couple of mandates from them. one was they wanted fun. which in hindsight looking at crist albrecht and carolyn strauss, they were brilliant i, you know, hi some dark sense of what i wanted to do. and mark was so much more edgier than what we were talking about. so i think in some sense i was trying to accomplish what would have been a disaster which was sopranos in hollywood almost, which would have been terrible. so chris and carollin really guided to us make the show fun and wish fulfillment and ultitely we did go to darker places. but they were great with that. it was almost like stop with the stories. let's have a good time. obviously we've gotten more story-drive only as we want on. >> rose: it is said ari is one of the most memorable television chacters of the last ten areas, is that true? >> it's so hard to have any distance on this to be honest with you. i was friends with mark

before this all started. and i was lucky enough-- . >> rose: mark wahlberg. >> yes. and i was on the lry sanders show for the first few years which kind of cked off original programming onbo. i had a referns for hbo and w they take care of their own and le artists play and do all that stuff. knowing mark's worldnd how fertile the premise could be about the backside of hold he wood. knowinari emanuel and the duality that he lives in where you think who is this add-riddled aggressive, you know, type a wrecking ball. and yet he is this long father and monogamous and all these great there is such a duality here that knew my god, it's a feast. as a character, you know. so. >> rose: contradictions are a feast. >> they really are. and i think it allows him to be incredibly reactive and aggressive. and so i knew that would be fun to play. i've never talked about this but i was lucky enough, one of my teachers was tim

robbins the acker director and he taught me-- which is you are always in one of four emotional states, happiness, sadness, anger, fear at all times. and that helped me so much with this character. because he's always so emotionally stated at a ten. and so what that form doe is you have got to get out of your own way and not second gets yourself, jump into that state. and one of the great things is the language is always there and the cadence, it's really all set up for you. so you have to kind of plug yourself in and go. and the rest of it, i have no idea about. i don't know how it's received. >> how do you write for him. >> i mean well obviously he's got so many levels to it. but when you have a character that can say the most offensive things in the world and still be likable, you cado anything, you know. i mean the things if you put a compilation of things that i've written that he says, it's pretty scary. i'm scared for my children. >> rose: what he said about acting that if you are playing a dispicible character, at least, you knowyou need to find something like it that you

can hang it on because that will make the audience more interested in the character. >> right. >> yeah. >> let me look at a clip. this-- describe vince. >> well, vince s you know, he's a huge movie star, you know. he's been up, he's been down. i think it's been great that doug has done that. we have really seen this guy go from zero to he's been all over the board but most importantly, he's the easiest going guy on the show. and he-- he is positive. he is the most positive character on the show and all he does is look out for his friends. people around him. >> and brought them with him. >> and brought them with him. >> roll clip. >> i'm still the lead, right, bro. >> of course you are. >> nice. >> so? how does it look? >> grammar is horrible. >> who cares. >> doing the same classes nce we were six. just shocking you can't punctuate. >> he was all stream of consciousness. >> you can't really smell either. faithful is f-a-i-t-h-f-e-l-. >> no, it isn't. >> it is o-l-. >> no, it is want so says

you. >> are you all il literate. >> who cares about my spelling or grammar, that is not what this is about. this is about a sta, a good start to a great story. >> we're going to find you a great writer to flush this out. >> i already found one. >> in your room. >> i was thinking since billy did a great job we should give him the rst shot at is. what do you think. >> i like it. >> i love it. >> the guy knows my voice like srsese snows deroness. >> talabouthe writing of that partular scene. >> iove a lot about that scene because itological is, those are my high school friends. i have a reference to a high school teacher, police carbone. she mighhave got married but that is-but you know, these guys to me are so real and so subtle and they are often overlooked that group right there. so but the writing of that scene, everything is about it is for new york guys who just bt on each other but lover each other all at the same time. and that's how i grew up and those are the friends that i still have today and you know, so -- >> all right, that's what

you -- >> what about the reat the timive dialogue. how fast moving it is. >> i mean i try to keep it, i always tell these guys, the faster the better, you know. >> pac pace, pace. >> our scripts have gone from -- >> it's allnherent and a lot of times doug willrite these great long speeches for ari and he, because he is so stream of consciousness and he hasdd, he's got to drive to his point. sore you're getting through, navigating through all this dialogue and so it's fun. you're trying to get to that one bit of informatio >> do you have peoe coming to you sayinghis must be improvisation. >> they do. and it's a great compliment because it is all scripted. and we're trying -- >> the goal is to make everything be heard for the first time and sd forhe first time. just the way you are listening to me right now they put a close-up on you and you will steal a scene from me. and the reality is as an acker it's your job to play well without the ball. i means that's really what

it is all about. >> it's reaction shots. >> we also do, our scripts are 46 to 48 pages and it's a half hour show. >> they letically it is a page a minute and we're doing -- >> that was part of the genius of johnny carson. >> the reaction. >> what else are we going to see in the new season. >> we're going to try to get back to the early roots. last year we got dark. you know, we had vince doing drugs and m & m beating him up. it is amazing we got to do that we're going to try to go back to the r509s, ultimately forgetting hold's wood which is obviously very prevalent the show this is about friendship and a core group of guys. we're going to try to get back to that. >> rose:ow believe by saying that you had gotten away from it? >> it was by design. so it wasn't something i want to get away from but it feels lit was the right time to come full circle and go let's end this -- >> which season was the worst. >> the worst in rms of content? >> jus your judgemt, which one did you think -- >> the worst was there was

one, which i don't know which season itsith but we kind of dragged on this whole thing with this movie. it just kept going angoing, i codn't get out it was like i was in box. >> rose: you jumped in and didn't know how to get out. >> and because i'm not as smart as david eye monday is, i'm not able to plan it out as much. >> rose: what is your favorite moment, year. >> you know, it just, it has to be this year. >> rose: becausef what you just said. >> yeah, because you don't lose this character's edge. i mean he's going to figure out a way to win. and at the same time the things that mean the most to him in this world which is his waive and his family are being taken away. kevin directed episode 7. and did an amazing job. he just-- . >> rose: seven of eight. >> seven of eight and i haven't seen it, seven and ght feel like the best episodes i've ever don because it feels like everything that we touched on is all in one episo. you know, he's struggling to save his life and his

marriage. he has epiphanies that you actively see happen. it's not off camera and he comes back and says i had an epiphany it is up to me to screw it up and it is all on the page. he is a great direct never that he sets an atmosphere in which he is really supportive and has incredible energy, more than any of us. he won't stop moving. and has, you know, he gets in there andeally enforces things that he leaks. and so it makes you feel very cfortable as an arti and that's the best place, which to create. >> will you come back to broadw? >> iould love to. i grew up on the page from-- stage, at 8 years old i climbed on stage and have been doing ever since. i'm a stage act their is lucky enough to work in front of the camera. i can't wait to get back it just has to be the right time and the right thing. >> rose: on behalf 6 an audience that is watching you, what happened when you came here? >> when i got to the show. >> rose: yeah. >> i don't want to waste too much of your time but it was one of the scariest moments of my life because i come

from a family in which you know, the show must go on at all costs. >> rose: right. >> so when i became ill from the beginning and-- . >> rose: perk ree poisoning. >> what happened, immediately the first week of rehearsal i was literally could in the stay awake. went to the hospital, and they checked everything. and i had among other things mono, extreme chronic fat agency syndrome and levels of mercury they hadn't seen in anyone walking around. i didn't know what any of this meant. i went to my producers and showed it. and the last thing in my mind is leave, you can't leave, you don't leave. that is just not an option. anyone else at that point, i was stupid and anyone else would have gone to their representatives and whatever and said i can't do this. it is not an option with me. my doctor said you're going to drop. we don't know when and i alerteeveryone. four months into a six month run, i will never forget it, sunday night performance. and i couldn't, i couldn't get enough oxygen for the lines.

i couldn't see bause it was so bright. i was holding on to thingsment finished the show, went to the hospital. the thing that gets me is mamet is so good and the rest of the actors were so good that even at that level, i ran into people that saw that show and said it was interesting. i said interesting, i would want my money back. i couldn't watch that. so i was unable to finish the show. >> the great bill macy who actually was with my father off broadway, i have this great relationship with, finished the show it was incredibly successful. and to be honest with you, my memories are of being on broadway and doing this incredible show it was the struggle of my life. i learned so much. i had become in cedably healthy ever since. the fallt from it was not pretty but i somehow needed to walk through all that and it's kd of all part of it. >> iseem like everybody likes each other. >> jeremy, the chicago guys enough to put him out, the four of them i would have been best friends with in high school, no doubt and jeremy probably as well.

but there is a camaraderie that you feel it on screen and it is behind camera. >> and the story line is that even tugh mark is from boston, you had to make it from new york because that's what you knew. >> that's what i knew. you know, and it sounds like what is the big difference. but it really needed a specific, for me to understand that real new york vibe, that is what i was going for. >> yet known reason why i should direct a movie. >> i think so too. >> as soon as i write a script. as soon as i get out of here ari will call me and say where's the script. >> the plan is to do a movie. >> rose: i think should come at this table. >> i would love you on a show, a movie it would be great. >> it would up our street cred. >> rose: thank you. great to see you genz. >> thank you very much.

>> fundi for charlie rose has been provided by the coca-cola company, supporting this program since 2002. >> and american express. additional fund funding provided by these funders.