you are going to live from moscow these are the top stories thousands of pakistanis protesting against deadly u.s. drone strikes could soon be joined by angry americans as washington looks to bring on a man's air spirit you already closer to home the government wants to increase funding for the program seven fold with a number of surveillance drones already patrolling the u.s. skies. as the e.u. read as its next wat of cash to save greece from financial collapse economists warn the rescue could take the country's problems further down the road and the main sponsors of the bailout germans question why they have to pay for gas and the state

again. applying extreme force to say democracy that's how georgists justify its actions against peaceful protesters many of whom have gone missing after a bloody crackdown two weeks ago human rights activists claim to believe the strategy of keeping the whereabouts of the demonstrators secret makes it impossible to find out. as greece stretches the credibility of the euro even further next cross-talk debates what solutions there could be to the single currency crisis and even if the projects worth saving. can. stand. alone and welcome to cross talk i'm peter lavelle saving the euro in the financial and political costs of doing so is it all worth it there's a euro project need

a serious rethink should there be a two tier euro system and can the politics of the euro serve the interest of all in this currency zone. came. across that the year was by ability i'm joined by andrew moravcsik in princeton he's professor of politics and director of european union program at princeton university in washington we go to sherry's are raymond she's a professor of international business finance and international affairs at the george washington university and in madrid we cross to philip boggles he is an associate professor at king juan carlos university is also author of the tragedy of the euro ok folks this is crossfire that means you can jump in anytime you want and i very much encourage it but first let's look at a short report on the plight of the euro. the trials and tribulations of a currency or the euro and those discontents no matter how you cut it or count

there are no easy solutions when it comes to resolving the euro crisis the financial costs are higher long term and the political costs are probably even higher ever since greece exposed the weakness of the entire euro project politicians and central bankers have been at loggerheads the single currency was always going to depend on member states exercising fiscal discipline and boosting their competitiveness to achieve convergence this is always been the theory behind the euro but it's reality has played out differently on the ground we can't just shoot solitary tea and say that these countries can't continue as before we can't have a common currency some get lots of occasions time until there's very little that would work in the long term timing is not on the side of the hero greece was a test case only to be followed by ireland and portugal and now probably spain european elites one another bailout on harsher terms while greece is asking for more funding on easy terms something is going to have to give and one of those

political discontent will arise as well reform and pain are in there in equal measure doesn't happen in the us to the second world war but the longer you. necessary evil. or more costly it is there's going to be the also easy to see in predict if germany gets its hardness fiscal way of forming the eurozone there will be more entire staring rights across the continent if the greeks get their way that is easy terms and easy money then there could be a tea party revolt in germany it could see the euro implode for too long european governments turned a blind eye to weaknesses at the heart of their project today politicians have found just enough resolve to avoid immediate disaster given the events of the past year it is an open question whether the populations of the eurozone have. much more patience with her and what does not serve all equally my search and crossed our

party. ok to start i thought i think go to philip in madrid here i'd like to as we did a few more words from angola merkel she said we don't have a problem with the euro as such it is a stable currency particularly because of the the dollar it is quite strong sometimes too strong for us as an export in country a nation we have problems with certain member states and their debts is that understatement for you or is it accurate and looking at the condition of the euro. i would say it's an understanding that this set up of zero system. it's it's needs to have to start from the problem is if we have several independent governments that can use one central banking system to. to finance deficits and debt and this person centers for politicians to have to finance these deficits and you buy a central banking system thereby externalizing the costs of price inflation to

other countries so i think that it's from the roads the system is bad all right all right here is that if i go to you in washington are you that pessimistic i mean we we're i'm reading in the press right as we do this program here that sixty or seventy billion more dollars could be funneled into to greece ok that's on top of already what's been put in there i mean is this money well spent because you know it is greece is such a small part of the eurozone but they want to save it ok why don't we cut the eurozone just cut its losses right now and because you know we're going to have other countries following suit i mean i want to talk about the slippery slope later in the program but is this project worth saving and can it be saved. well i don't think they have a choice they have to say that too much political investment has gone into this project they've gone too far you can't just go back and reintroduce national currencies at this point the market will hammer these countries so they have to

spend the money there's no choice ok if i can go to you andrew i mean that's a lot of money to spend here i mean i mentioned in my introduction why can't we go to which two tier system i mean some countries are in this not up to speed their economies are not in sync and the injured ration is not in sync go ahead. well i'm inclined to agree with that there are enormous common interests in keeping this system together because it's not just germany versus cories germany and greece are on the same side in the sense that it's germany and france that lent much of this money to greece so if greece goes belly up a lot of banks in germany go up so they need to work together the question is whether there's a middle solution between just shuffling more money from germany to greece and cutting them off ok it's interesting. right go ahead philip should go ahead ahead go. i think we should not think so much in terms of paper with

countries but more in terms of the political elite and the citizens so of course the political elite of france and germany and greece want the euro to continue and of course also the banking system that the german banking system the french system it has lent to banks and the greek government but it's not and maybe also some exporters from exporters want to continue but for german consumers this is not a very and picks player this is not a very good deal with the mark. they could import cheaper auto companies could import need for resources ship or they could be patient cheaper and we we scored by the location houses much cheaper. so they are now losing and it will be better to raise the difference in the conflicts in these terms the political elite and bankers versus can come and pick spares and consumers carries out if i go back you

know in washington when it when i think is interesting i mean if i could just interject here and if i meet a pilgrim it does bring up a good point i mean if you agree or disagree with him a lot of these bailouts are about banks failing our banks isn't it i mean are they thinking more about their friends and making sure they get a return on their investment eccentric cedric versus the average person in the street about having a job are paying higher taxes etc etc i mean it seems to me that that's the two tier thing here banks failing banks saving economies is the second after thought. let me let me jump in here i think that it's a little more than that you know in crisis you know yes banks bail out other banks were it's the i.m.f. or it's other banks bailing out banks but this is this is a little more serious you're talking about trade precipitating in a contagion across into spain probably and then who knows where else and so is trying to avoid another crisis situation which then not is this

a little bit higher up than just banks bailing out banks we're trying to prevent a financial crisis to repeat itself or what happened last spring and that will affect not only europe it will affect us here in the united states as well ok andrew i mean it's kind of a slippery slope personnel here because this is what's happening i mean there is this tendency you know well i mean trouble i have carried all this money i lied about it especially in the case of greece and now we need help so germans really come out ok for i mean we see this time and again. so here's the question jerry's odds right you have to bail out the banks if there's one thing we learned from the last couple of years and from the great depression it's that if you don't bail out the banks then everybody in society is going to pay on the other hand and philip is right that you don't want to stick the whole bill on the german taxpayers so the key to the solution to this problem is to find a way for german creditors and french creditors to oss oatcake

a haircut or to pay some of the costs of settling that that problem which is the whole issue of restructuring based debt in the medium term in such a way as to make it sustainable so that's what i was talking about before but we need to find some sort of a solution in between just cutting the greeks are off and bailing them out down the slippery slope as you say we need to find something where the greeks and the germans but not just the taxpayers also the banks share the cost of resolving the crisis it's interesting he said bill do you think banks want to share the cost of resolving this crisis because then they'll just go to the i.m.f. ok i mean you keep going up the ladder to get more money you could maybe star voth real reform in the euro zone now of course being safe have been shifting. from this financial crisis on who until now tooth and center banks and the taxpayer . he has books are already more than one hundred billion euros so

as it's from banks of. covered bonds from german banks but also we government bonds portuguese cologne bombs and i don't think that bailing out banks is really the best solution because it creates a moral hazard problem which has brought us to a large extent in the financial crisis in the first place if people thought i think i thought they would be bailed out if they would have probably a lot of government but still it was let me jump in here so you're saying don't bail out today what would happen then if the banks want to build out how we just affect the euro zone if it wasn't of course the problem to find interest system good. woods who would collapse at least the banks that i am in bed share shape and then there might be better ways to put them on a stable ground again of course shareholders would lose everything and let me jump

in radio this is the i pad to go ahead andrew jump in go ahead. but this is the this is the kind of radical thing we want to avoid i mean many even if it were true and retro suspect that regulating banks and offering to bail them out created a moral hazard here we are we're in a situation where people have made these loans and we don't want to mortgage all of the economic prosperity of society now in some kind of a neo liberal experiment we've lent the money and we now want to avoid as she has rightly said a kind of contagion effect that brings down and tire economies into a scenario like the great depression but the key is that banks which will benefit from an orderly restructuring of this rather than some kind of apocalyptic collapse need to share in the one that i'm not very a finalist and i don't know any let me jump in here and your show for it we'll continue our discussion on the euro crisis stay with r.t.

. and. wealthy british scientists. sometimes. market finance scandals i know what's really happening to the global economy with max keiser there are no holds barred look at the global financial headlines tune into kinds a report on our t.v. . while kings go mad their people suffer.

how some take advantage of power that was given to them. secrets of big dirty money. on our t.v. . can. still. welcome back across hawkeye peter lavelle remind you we're discussing the euro and its prospects. to kick. start. ok andrew i'd like to go back to the falling into the break we're talking about whether to bail out banks or not but there seems to be so many bailouts going on in the or euro zone is it really having a positive impact because if we see that contains and spreading not contract and everyone's talking about spain now and then italy's on. the head. no i'm not

arguing for bailing out banks i'm arguing for avoiding the need to endlessly go down the slippery slope of bailing out banks and the way to do that is to move toward orderly restructuring think about the way the latin american debt problems were addressed in the one nine hundred eighty s. the one nine hundred ninety s. between the u.s. and latin american countries what happened was people negotiated a restructuring of the debt american banks took fifty cents on the dollar sixty cents on the dollar for some of that debt paying their share for having made imprudent debts and in exchange for that latin american countries got i.m.f. nonny or god increase private money it's that kind of sharing of the costs between . german and french taxpayers german and french banks and greek. banks and society that needs to take place right now that's not going on and that's the middle solution between just shuffling money around on the one hand and cutting

off countries from the eurozone on the other to which we need to strive to decide if i ask you in washington i mean how much more austerity is that entail because really you know we look at these nice words reform restructure and all that but on the ground is austerity and it really is stinging i was in greece not long ago and that austerity is really quite obvious that you just simply just visiting for a few days i mean he what point is it politically viable that isn't everything go ahead. i think they're going to need a lot more austerity you know you talking about it least another decade of a lot of pain let me just backtrack here in terms of this miller ground there we've been talking about with andrew they have a middle ground in principle it's relatively simple they have a huge federal part of money was a useful bail out so they have to establish study keep it there but they also have to have oversight of the countries that they have bailed out which is where they're leaning towards so there is you know there are calls for

a eurozone finance minister now to oversee these countries that have been bailed out and have fiscal oversight over them and that's a uniquely european way about going things and they're probably going to end up doing that ok phil so that does not mean just another step towards moving away from sovereignty and for these individual states where it's going to be brussels in frankfurt going to tell everybody else what to do with their economies ok you have to do this this illness and a lot more pain is going to come your way and you know what there's nothing you can do about it. you know this is a dangerous but the most dangerous of the euro the euro produces the crisis through the centers in this crisis of the news from north centralization towards the step forwards towards central government and from supposed. and brussels so this is. the problem we see i don't i don't think. it would be in any case justified to make german

or french taxpayers pay for. or below german band. i think we could shoot you really in a moment a little ok go ahead jerry jump in go ahead this is the way this program works i'm jumping in i mean i mean what did you expect you know you allowed greece to come into a big boys' club on both sides you know of course we were not sure if they were going to behave fiscally or not and the greeks understood that they were playing with the big boys you know and they had to stand on their own this was an opportunity when they joined the euro twelve years ago for them to clean up their house and they chose to have an extended party instead and now the thing the consequences for everyone's paying the consequences for. consequences for i think germany when we're all essentially richard perry because for granted are

you trying to ask for a no. ok they should pay the cost for a number of reasons one reason is because the german exchange rate is lower than it otherwise would be because they're in the euro and germany benefits from that witness their enormous trade surplus which is almost as large as that it was you know that they should they benefit from it because german banks are kept solvent because as we all agree all three of us german banks would go belly up bringing about what philip himself called an economic crisis or collapse in germany without it and they should pay for it because german banks lend the money and made the the loans and should pay some of the cost and once again i'm not arguing and i don't think anybody ought to be arguing for a purely taxpayer funded bailout taxpayers should or should pay some of it but most of it should be covered by banks creditors who lend them money except being less than one dollar per dollar of debt owed that's what happens in normal i.m.f.

as you mentioned we're not talking about some enormous european sovereignty shift we're talking about normal international practice is for resolving crises and that's what should be applied in europe go ahead philip jump and go ahead what i don't see the more i room invited them to explain who should be liable for any action that some german bank did so i think the i think what made it to the owner i think of this was to get it and and i think it's a myth it's a myth that the low it changed rate makes makes that any richer i mean if germany would have stayed i don't see much pushes in pollard to put his goods from the eurozone from from outside they are losing by this it might be that some export or what and my point is what we need is you should use this moment to do or form a group or from the financial system that this could should not happen again like

a one hundred percent goes then that would be it would make both of these high bits in deficit and possible changes i do want to jump in there go ahead. yeah i do want to jump i think philip is forgetting that when the german taxpayer is elected the german government which signed the maastricht treaty which created the euro and allowed also in the end greece to enter the euro zone. this is a legal obligation and i'm not advocating taxpayer is in a simply hand over their money clearly there's a lot more to it as andrew has mentioned but there is a legal obligation here they allowed them then they got married to the greeks and now there's no divorce do you think what what what what is a voter german vote in one thousand nine hundred why would he be responsible for any action that his government why would he be responsible for the signing of the must retreat. actions i don't see the responsibility philip here but philip you have a double you have a double standard here you say to the greeks that they're responsible for whatever

their government did even if it wasn't in the interest of the country but when it comes to the germans and their government there's something that you say maybe it's true is not in the interest of their their population then all of a sudden the population is not responsible for why everybody is response every government is responsible for its actions in the modern world and for your actions or those that don't turn out in the long run to be in the interest of the country well then you have to just take it well and maybe it was a misunderstanding i didn't didn't want to say that there would be responsible for big governments for it and i actually would recommend. to be forward on the government here ok here's what i don't know this could be my next question why don't the greeks just do it ok just say we we don't belong if you don't table we screwed up we lied through our teeth or german friends on our italian friends and our friends all knew it but you know will we lied so we're going to have to start from scratch and we're going to leave how would that impact the entire euro project

. well here's the here's the catch this still this game playing adult at the table and so they're trying to behave by all the rules that adults play by at the table they can't believe if they leave the euro zone they'll be in the dark ages for the next fifty years their only future lies within the euro zone and we basically the germans and the french amongst a few others are going to essentially have control over their fiscal house for the next decade because of this bailout if you know things go down the road legislatively as they are seeming to to have fiscal oversight over the bailed out countries so they're going to be supervised as all teenagers are joining an adult table and yours are the greeks are going to be in the gutter friedly in the middle matter what they do they'll be in the gutter for at least a decade or a half century but you could be in the gutter for a long time all right i'm going to switch sides here so you know you may share as with terrorism against go it because i don't believe a gold standard is appropriate to the modern world but the reason i don't believe

a gold standards are appropriate for the modern world is because i don't think you can impose on countries too much austerity and too much outside control so if the middle solution proves to be impossible if the german banks won't pay if the german taxpayers won't pay if the greeks want to just and you can't negotiate that middle solution that shares and i think would be the best solution then i think it's better for the greeks to get out and default because it's really not possible to adjust within the confines of the e m you without using depreciation without using independent monetary means unless you have the cooperation of the international system so if we can't get the middle solution to understand weaker countries should get out of the euro we should go to a two tier system cheers i go ahead. yeah and there's a big difference between defaulting on this particular loan and getting out of the euro zone you know defaulting is an option but they'll probably restructure look

when the first loan was given out last spring four hundred and ten billion euro everyone everyone knew that there's no way that we set out to pay this back it was simply a matter of when would be the most appropriate time to restructure this when the markets are calmer because we don't want to instigate another scare so we already knew the restructuring was coming everyone knew this and so we here we are back at the table trying to restructure this debt you know a default is an option i don't think they want it yet but leaving the euro zone is not an option ok for you greeks and he was the last word in the program what's the future of the euro well it depends certainly on the words politicians do and what relation story really turned off if the drum relationship people would be subservient to their government and not protest and if the big parties want to proceed and see if the people want to move about more golds or if they might be

a tea party as indicated before and of course also in the countries ourselves thirteen measures. it will depend if they are willing to go forward with a measure of if they. get it with all ran out of time here we could have seen a lot more many thanks my guest today madrid washington and in princeton and thanks to our viewers for watching as you're r.t. to see you next time remember rostock means.

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