this yeah the similar measures were taken at the parades. also and he also says guess that the rich western countries will never be able to pay off their mountains of debt. and you can. follow and welcome the cross-talk i'm peter lavelle drowning in red dead levels in rich industrialized countries are truly staggering the euro is under serious threat and the u.s. has accumulated debts that may soon be larger than its entire economy for a long time to come there is plenty of financial pain to spread around. and you can. discuss the global debt crisis i'm joined by general robert shiller in tucson he is

a commentator and author of how to survive the crisis and prosper in the process in bucharest we have our life he is a professor at brown university and in washington we crossed a role in a more he is an executive director at oppenheimer and another member of our cross talk team on the hunger mark i'd like to go to you first i mean first of all there's a lot of conflicting numbers out there what the u.s. debt level is it's thirteen point seven billion or is one economist at boston university says it's almost two hundred i'm sorry thirteen point seven trillion up to two hundred trillion a year in europe right now the eurozone is in very bad shape we have everyone's talking about ireland this time before it was greece spain is on the radar portugal's on the radar there's an enormous amount of debt out there and everyone's trying to drive it down is that possible and will we ever be able to pay off these debts these enormous debts. one of the things about the concern here is that while it makes sense for any one country or even individual or household or form to try

and clean their bolland she hasn't got too much dad if we all try and do it at the same time all you end up doing is essentially constructing the economy for everyone what's kind of locally a rational choice becomes collectively disastrous if we do it all at once so while it may make sense colman sense to try and reduce that all at once unfortunately that might not be the market outcome ok rowan i mean it's continue on that theme there if everybody does it it once then it's a race to the bottom here and looks like the united states is out in front with its six hundred billion dollars purchase by the fed mean it didn't announce today anybody just did it and a lot of people are not very happy about it it's export ing america's problems to everybody else and that goes basically to emerging markets the us didn't do everybody a favor maybe itself though. well. first. first of all you've got to remember that this was pre-announce several weeks ago and it was very well telegraphed into the into the markets in the purchase and started but

you know that's a very different problem than the debt problem case sickly what you're looking at when you're printing a lot more money and yes it is indeed making other countries and so she emerging markets angry because it has the potential of devaluing or diluting the currency that is one of that the solutions certainly not one that enjoys a solution to resolving debt problems but let's go back to the debt problem in point that mark just made was that if all the economies contract at one time it would serve to hurt the economy but you know that is that's one school of thought i mean it because every dollar that the government spends it doesn't not take a dollar out of the private market or dollars in the private market much better spent resource decisions much better i have to take a contrary opinion to that i feel that if these governments worldwide go on an austerity program you will see the slack picked up with much more efficiency by the

private sector ok darrell. let's look at looks let's look at austerity who pays for austerity because we're going to be the rich bankers that we bailed out i mean it seems like the same people to build out the bankers are going to have to suffer through this austerity because wall street is swimming in money again. taxpayers are always the last man on the hook because other people are spending their money and so what we've seen here is a crisis of debt that first broke in two thousand and seven two thousand and eight and the government's move very quickly to bail out the banks and this was the matter of necessity because governments like everybody else live on borrowed money and that governments therefore are their debts are far in excess of all other levels of debt and so for governments to keep functioning they move first to save the banks and what you're seeing here is a a situation where everybody is trying to protect themselves and as mark pointed out this is not functional but it is reality and it may be functional as roland points

out but my point is that it doesn't matter what's functional we're going to see what is is is is crises driven ok well what a rational decision making what about that i mean you know wasn't there a lot enough private money in private hands to bail out the banks i mean what what was the did the government really actually do the right thing because. as i pointed out and i think you pointed out in different places is that it's going to be the taxpayers is going to have to do it's a another bailout in a sense i mean with this austerity it is cutting their lives to part i mean and no one's talking about unemployment here in this case. nothing that's absolutely correct let me respond first of all to the point of the second speaker made crowding out only hopkins if markets are recovering markets are not recovering and if you call it the only source of spending that's left government spending because private sector ballance sheets are completely underwater as a result of the financial crisis then it's not the case that somehow governments

get in the way of private investment there is no private investment because they're sitting on piles of cash because the future is incredibly uncertain in an uncertain environment it's rational not to invest so there's no crowding out going on that's a nice theory but it's actually not true regarding well you know when you're symmetry of the cost regarding the a symmetry of the course you know i don't think we can lose sight of this essentially you had a private sector debt problem that became heavily leveraged which when underwater was transferred to the public ball and she was the clear the solvent in that crisis that governments have been spending themselves into oblivion what they did was to pick up the rest from the private sector the could no longer cover and no the poorest members of society the ones who are dependent on government services are being the ones who are asked to pay for this that doesn't end well ok we're rolling you want to respond to that you have that want to come back to you know my my my nice little theory look through reality is this balance sheets for most corporations in the u.s. and western europe are not as bad as they were two years ago why is all the cash

sitting there and it comes down to uncertainty part of the problem especially in the u.s. and that's the debate that we just saw going on especially at election day two weeks ago the debate is is are we going to continue on this path this path of spending or not are we going to continue a regulatory environment that's really harmful or or malevolent for for business is what you're seeing in the u.s. the money is not being spent not because of economic projections going out it's because of precaution we have a new administration here in the last two years that has made a lot of noise about spend. a lot of money that's what's holding it back if there is a definitive point of austerity in the u.s. and in western europe i have no doubt you're going to see corporations with that kind of certainty start investing the money put people to work invested in equipment. research and development new markets it's the way

a thriving economy is supposed to work uncertainty is what's holding back the market not the financial crisis so roland if i could just finish continue with you i mean a trickle down effect ok once corporations once big money feels certain that somehow someway new jobs will be created ok like that ok cutting taxes i think under eight years of george bush george w. bush we lost eight million jobs in the united states you know with the tax cut i mean i don't understand i mean these people are valid beautifully rich again they were always rich really i mean they don't have any they can sit on their money for a very long time and it doesn't really matter i mean watch the rest of the country go through austerity in the u.s. in the in the euro zone i mean i don't see the end of the incentives there for them to be well you know you hear i mean certainly not because they do a bus tour it is now being very happy i mean everything works for them i'm not going to the results that i feel i'm going here ok and so let me let me get my point and first of all ok ok we define the wealthy in the united states in terms of

tax brackets those families that make two hundred fifty thousand or more which is certainly not a millionaire ok this is the sector of the economy of the economic structure this is the one that creates all the jobs if you want to kill the golden goose kill the golden goose we see what happens you threaten to kill the golden goose of the last two years with hostile tax and regulatory policy and guess what they're sitting on the regs they're not laying new eggs so then well it's all ninety dollars. and talk . well i mean it's not only the law that's gone crazy. but look at the reality go ahead mark and. why is that why is that the countries that don't have obamacare as the big guns the don't have u.s. regulatory changes maybe sort of twenty three of them or twenty four of the suffered in the financial crisis. the really the regulatory and policy changes that in america that everyone's worried about if you're trying to explain twenty cases

in your cause or exist in one is not usually a very good explanation the problem is you have a consumption driven economy and most of your consumers are on the water it's a very old fashioned term but it's called the mind it was driven by debt right across the public sector and the private sector and your private sector is leveraged underwater so you can invest all the money you want no one's buying. ok darryl is going i guess i was going to just go ahead jump in the meter and we're going to go to peter thank you peter i want to make the point here because this staring issue and spending is is a is a prime importance but what i want to make the point is is driven by crises the reason why you have a move to our stared in europe is because in the in the spring of two thousand this year the sovereign debt crisis first started in greece bread and all of a sudden the spreads on c.d.'s and credit default swaps started skyrocketing and europe found out very quickly that they could no longer borrow at the risk because

now the markets were afraid that they weren't going to get paid back to the banks in europe are in a systemic pressure and we were about to blow a valve all right so that's why all of a sudden out of the blue out of the blue after four decades of excessive spending you had a sort of a real wakening of austerity or of cutting spending so that's by pressure and that was by necessity now the other countries which can still spend major economies are like the united states and japan and they are doing everything they can to try and avoid the deflationary collapse that they themselves set in motion with excessive credit driven demand and that's what they're trying to do i'm not saying it's right i'm not saying it's wrong i'm saying there's going to be terrible consequences the united states is doing what it feels it has to do and it's i don't think it's going to save it japan has been in this deflationary trap since one thousand nine hundred ninety they're one cycle ahead of us the united states is one cycle behind we have

we have no export economy like they have we have huge amounts of debt and the question of us terry is not so much a policy decision even though they are going to talk about it it's going to be driven by the markets as roland knows and the markets are very very freaked out about getting paid back all right gentlemen we're going to go to work we're going to get a real short break and when we return we'll continue our discussion on the debt crisis today with our. the amish. say. the ability to do the leg. is easy to.

see. sweet and clean. salty and very useful. radioactive and dangerous. and even the dead end desolate. they all keep their unique secrets their bottoms unique lakes on our team. the and. soon. the ability to do the leg welcome after all saw computor go through mind you were discussing how to deal with

crushing debt in the end it. suited the lead. but before let's see if russians fear a banking crisis the republic of ireland's extraordinarily debt crisis has driven bone deals to record highs and undermine the euro this has raised concerns that. the e.u. will need to step in with the bailout package with greece in receipt of german taxpayers cash several other european economists to face crippling debts the russian public opinion research center gauge citizens fear of a banking crisis default or loss of savings sixty two percent of the respondents said they held no fears when an emphasis on however clear a banking crisis perhaps remembering the pain of nine hundred ninety eight the fault either way it seems the irish boom to bust economy is set to keep the you

roll struggling back to peter. ok roland before the break you were just itching to say something so go right ahead and the. you know we were talking about why the crisis in the why now why why why did what triggered it and so forth in terms of austerity the debt crisis or rather the financial crisis just brought the debt problem to the forefront and basically what you've got is it's very simple most of the liabilities in the u.s. and in certainly western europe are exponential in other words their growth expands tremendously as time goes forward and people they kind of woke up to this you've got to remember the underlying issue is a political issue it's a media logical issue and that is what is the role of government what's the role of state those who believe in large statism more of a socialistic approach certainly do not see the debt crisis and they certainly don't want austerity and those who take the opposite political view certainly want

to see yesterday they want to change the pendulum this is really an india logical crisis as as as a debt problem well in america if i go to you i mean this is kind of a political crisis but maybe more of a psychological sociological crisis i mean these debts were accumulating all along for decade after decade i mean you know i guess somebody we just got caught you know holding the bag ok and the financial crisis really put you know put the icing on the cake there i mean for decades governments and western governments just didn't want to deal with the issue because we have for years and election cycles and then we just got caught with it ok you know and you know before we went to break i. you know how can we how can we cut down debt with austerity ok because in some ways they're mutually exclusive go ahead. move forward to the let's establish . because in the i.m.f. so info goes over forty percent of the increase in debt across the cd is directly attributable to lost revenue because the financial sector stopped given them talks

receipts all of that remained the only twelve percent is economic stimulus the rest is either a recall but allies and liquidity to the financial system to keep it afloat so over eighty percent of the increase in debt that everyone is free directly attributable to the financial crisis it is not because governments have been on a binge and everyone was and looking for the past twenty five years that's a complete myth in fact european governments under the must criteria had spent a decade getting ready for the util apart from the greeks who were lying about it by actually cutting down the debts and deficits so this is a fairly story that the markets are telling us because it simply isn't square with the fuck it's ok roland you want to do you want to know what the let me let me jump in there on that heater up all right now we're going to go that general go ahead ok . i can make a point here it's like let's move this to i'd like to move to a medical metaphor and let's say your neighborhood and everybody knows he's been

drinking and he's a drinking problem and he's been drinking for a long time and now he's starting to binge drinking he's having blackouts and he's ended up in the hospital and so it's a crisis so everybody's gathered in the waiting room deciding what to do and we have. roland on one side and he's the doctor because listen you know this is this is a terrible situation this man's got to stop drinking i mean alcohol is the cause of his problem the sooner he stops drinking the better and then we have mark on the other hand who says you know i mean that's true he's been drinking too much but if we cut him off right now he's just going to have a heart attack and die we're going to have systemic collapse all right and my situation is i'm looking at this as you know that guy's going to be hauled off to the to the room and let's start praying so this is basically what it is cannot stay . stop the debt you've got to stop spending to cut down debt whether or not it's too late is now the question ok go ahead yeah absolutely look i would just go back to mark mark you cannot separate economy and debt if you're suggesting that the

debt is caused because of bad economic performance if you look at western europe industrialized larger economies over the last thirty years compare them to the economy in the us with the major difference being a larger socialist spending agenda in europe do you realize that the us. g.d.p. on an annual basis has been thirty percent greater for thirty years than that of europe so to segregate policy in the economy is really a very large mistake they go hand in hand in the economy but you still get. grand marnier you calculate product and the way you calculate productivity is that the united states is more productive in europe than we thought because americans walketh longer if you control for the most productive economy in the world is simply the swedes you actually hear about one being said much but it's true as the whole notion of a big social auto europe the running in debt and having terrible or growth most of

that was a self-inflicted wound from the seattle monetarist treaties of maastricht after this you then have a situation whereby we're going to take even more growth of the economy i don't deny that is there and it's there that's a problem what i worry about is the asymmetry of the put why is when you have a situation let's take the united states and nine hundred eighty the top one percent united states or affectively eight percent of the income then of twenty four percent of the income and the idea is let's give them the bush tax cuts let's give them an extra one percent so they got twenty five percent of the income he has now make a difference how is this going to get us out of a problem or by you go to consumption led a corner me and you consumers can't consume because they're totally stretched with debt that's what i'm not hearing from the are steadily people what i hear is basically a protestant morality tale ron you want to reply to that. sure sure look yes we are a consumer based economy and guess what when the economy's not going to perform well at these debt levels we don't consume i mean you've got

a deflationary trend in there very strong not dissimilar as i think as you pointed out to japan in the from one thousand nine hundred nine all the way through the last what they call the last decade but was really the last decades if you get the machine economic machine going again ok we had these debt levels two years ago there were three different and we were consuming it's about economic performance the rest fixes itself austerity makes it even that much better all we have to do is . talk with this may about tax cuts look at one thousand nine hundred two we had a recession in a financial crisis the equal of this and what happened just the opposite we cut taxes we reduced the growth of spending in the growth in government in that triggered the twenty five years of the greatest global economic growth ever witnessed so to suggest. taxes only benefits the wealthy that is the word is left in the face to flies in the face of the evidence out there go ahead mark the

evidence. of the united states the united the united states did not start generating massive unsustainable budget deficits on dollar on old reagan didn't cut talks is under increased the size of government i believe you actually look at the statistics you'll find votes when both the deficit goes negative the budget deficit goes chronic is not balanced until clinton in one nine hundred ninety nine so you're very selective in the american economy story you want to tell everyone and frankly over here and you know i just look at the results look at twenty five years and i hear a lot of people who say the country has to spend what do you say the u.s. is bad for that's the result of bankruptcy general you want to jump in there and i want to talk about words and i want to. go there oh yes. thank you peter the situation about ronald reagan. is a watershed event in america and he came in and he promised to balance the budget when he left when he began his first term we owed nine hundred eighty billion when

he left office we owed three and a half three and a half trillion dollars and he did cut the taxes and we had the supply side shift in tax situation but what we did created was enormous asset bubbles and and it was all done on borrowed money and this is where it's so insidious and and because you can't i think i think the problem really is we've gone too far down the road to try to correct it the issue roland pointed out was was was if we get the economy going to get it is going to fix itself and i this is where i want to address the issue of ben bernanke his latest push the theory of restarting the economy is easier said than done they couldn't do in the 1930's and they were more sanguine about it in this crisis because of bernanke he's believe that milton friedman's little theory that if you could expand the money supply during a deflationary contraction it would work so he came out they put two trillion dollars into the pot they spent they slashed and it did work now everybody is

nervous everybody is nervous and i was sent away where the people who had a good point here and the reason it didn't work is the problem is not monetary deflation is not a it to me it's measured in monetary but the problem is fiscal tax policy regulatory policy clearly is what it is and you're right ben bernanke he's pushing on a string listen the fed does not have the tools to effect demand their tools only affect the money supply and this is going to ask mark a question how about just printing a lot of money that's one way to get rid of debt and is that what the united states may be contemplating and the money. is what i'm going to agree with at all and this is what i'm going to do with it all and i'm going to do their duty right so absolutely pushing on a piece of string i don't think it's going to work i don't think quantitative easing is the way forward i think we can all agree on the following. that is the problem whether it's the public sector the private sector and to me what i can see what i'm concerned with is the symmetry of the for the past thirty years as was

just pointed out we ruled gigantic also bubbles we took the profits we cycle through equities through real estate and through briefly through commodities markets too small to absolve the wall and then we have a big leverage crisis then we blow two trillion dollars hole two trillion dollars in the financial crisis and this ends up on the public sector balance sheet because these institutions are too big to fail at the end of the day we're asking stretched consumers who are already on the wall with their own private to deal with this quads i public that which is being transferred from the financial sector i think that's unfair and i think it's unsustainable from an economic point of view i think we need to pay down the debt but we need to do it symmetrically well those who actually generally some of the costs look at david cameron's proposal of the budget it came out with just recently in the united kingdom you have a one billion dollars bank levy where you take it i don't remember i'm sorry i have to jump in here we've run out of time i have to say i agree with mark i think people that causes problems should pay for it many thanks to my guest today in

tucson bucharest and in washington thanks were viewers for watching us here darkie see you next time and remember crosstalk.

she's available in. toto keep a promise it is cool just photo these twists told. his story. in the city. cool smalls. may do as a good. stroke for mr tropicana hutto. leave all those journalists that we didn't have protection of freedom of the press we did have first amendment rights and all the news crew jailed while attempting to

fill when i protest outside the so-called school of assassins in the us is released on bail we hope that eyewitness account coming up tonight. new details to all of the russian soldier friends. with the russian moscow on the block will protect each other from the road we're. going to see i think the euro zone's days are numbered i can't see the euro surviving this decade as the e.u. approves of. broadway also the future holds for a lot of running to rescue each one of its members. from economic lifeline catastrophe our team travels to the i.o.c. in central asia to see how decades of mismanagement exposed the threat.