talking about it with our seed live from moscow on boylston street. thousands of pakistanis protesting against the deadly u.s. drone strikes could soon be joined by angry americans this sounds worse and looks to bring unmanned air superiority closer to home the government wants to increase funding for the program seven full of a number of surveillance drones already patrolling u.s. skies. as the e.u. readies its next one of the cash to save greece from the financial collapse economists warn the rescue could take the country's problems further down the road and the main a sponsor's all to bail out the germans are questioning why they have to keep on

paying from athens mistakes. plus israeli troops in the golan heights are locked and loaded after hundreds of protesters tried to storm in from across the border with syria on sunday at least twenty were more than be gunned down by the israeli. right are resigning or attention to that of the e.u. and all these bailouts as greece stretches the credibility of the euro even further next cross talk about what solutions there could be to say a single currency if indeed it's even worth it. taken. alone and welcome to cross talk i'm peter lavelle saving the hero 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 year old system and can the politics of the euro serve the interest of all in this currency zone. can. still. get crossed up a year was viability i'm joined by andrew moravcsik and princeton he's professor of politics and director of european union program at princeton university in washington we go to sherry's i raymond she's a professor of international business finance and international affairs at the george washington university and in madrid we cross to philip bagus he is an associate professor at king juan carlos university he's also author of the tragedy of the euro ok folks this is crossed out 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 hero and his discontents no matter how you cut a cow 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 show you solitary and then say to these countries can't continue as before you can't have a common currency but some good lots of occasion time until this very initial work in the long 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 rise as well reform and pain are in there in equal measure doesn't happen in the us in the second world war but the longer you. mr evil. the more costly it is there's going to be the costs are easy to see in predict if germany gets its hardness fiscal way of forming the euro zone there will be more anti-us terry riots across the continent if the greeks get their way that is easy terms and easy money when there could be a tea party revolt in germany that 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 euro zone have much more patience with the currency but does not serve all equally. across our team.

and ok to start off i think go to philip in madrid here i'd like to read a few more words from anglo 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 is quite strong sometimes too strong for us as an export in country a nation we have problems with certain member states in their debts is that an understatement for you or is that accurate and looking at the condition of the euro . i would say it's been understood it meant the sort of the euro system. it's so it's it needs to self-destruction that problem is that we have several independent governments that can use one central banking system to. to finance the deficit and this has perverse incentives for politicians to have to finance these deficits that you buy a central banking system thereby externalizing to costs via price inflation to other countries so i think that it's from the root system is.

bad all right all right shares out if i go you in washington are you that pessimistic i mean we were reading in the press right as we could do this program here that sixty or seventy billion more dollars could be funneled in to 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 recent 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 we're saving and can it be saved well i don't think they have a choice they have to save it 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 a two tier system i mean some countries are in this not up to speed their economies are not in st and the integration 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 greece german greece are on the same side in the sense that it's germany and france that land 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 is a middle solution between just shuffling more money from germany to greece and cutting them off ok it's interesting i don't agree you are right go ahead phil should go ahead ahead go. i think we should not think so much in terms of countries but more in terms of the political elite and the

citizens so of course that put it to could it lead or france and germany and greece want the euro continue and of course also the banking system that the drone banking system the french banking system that this lent to. banks and the greek government but it's not and maybe also some exporters from export us want to continue but for german consumers this is another issue and complex players this is not a very good beer with the demarc. they could import cheap hard to companies could import natural resources cheaper they could be occasions cheaper angry we could pie to vacation in 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 give and bankers versus come and pay as consumers carries out if i go back here in washington one of

the one of the things is interesting i mean if i could just interject hearing it i mean phil brown does bring up a good point i mean if you agree or disagree with him a lot of these bailouts are about banks bailing out banks isn't it i mean are they thinking more about their friends and making sure they get a return on their investment eccentric cetera 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 saving 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. in crisis you know yes banks bail out other banks it's the i.m.f. or it's other banks dealing up thanks but this is this is a little more serious you're talking about trade precipitating in a contagion across 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 for 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 for it's kind of a slippery slope scenario here because this is what's happening i mean there is this tendency all well i'm in trouble i have parot 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 cher is 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 so take a haircut or pay some of the costs of settling that that problem which is the whole

issue of restructuring this debt and the medium term and such a way as to make it sustainable so that's what i was talking about before but you need to find some sort of a solution in between just cutting the greeks off and bailing them out down the slippery slope as you say you 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 you think it will 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 to do it maybe start off real reform in the euro zone. no of course the banks have been shifting progress some said from the financial crisis on who until now to send central banks and the general taxpayer to the e.c. b. has bought already more than one hundred billion euros of of assets from banks of.

covered bonds from german banks but also a weak government bonds portuguese government bonds oh and i don't think that bailing out banks is really the best solution because it creates a more hazard problem which has brought us to a large extent for in the financial crisis in the first place that people thought of buying for so that they would be better of if they would have probably a lot of government facilities also let me jump in here so you're saying don't be allowed to big what would happen then if the banks won't build up how we just affect the eurozone because and of course the problem of the financial system would . 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 then let me jump in radio this is like head to go and you're jumping ahead. but this is the

this is the kind of radical thing we want to avoid i mean many even if it were true in retrospect 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 entire 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 i'm not i'm not very appealing to look to her if i don't and you let me jump in here after a short break we'll continue our discussion on the euro crisis stay with r.t. .

for the full slate we've got it's. the biggest issues get a human voice seems to face with the news makers on the. lead. the close up team has been to the golden grammarian. the turning point of world war two . this time the party goes to the region where half of the area is occupied by

a nature preserve. where the young generation transit in their ancestors. and where the mysterious city on the deadlocks welcomed the republic of north to such a russian carkeek. can see. the full. plate. welcome back across talk on futile about three months you were discussing the euro and its prospects play can. stay slim. ok and i'd like to go back to following one of 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 year euro zone is it really having a positive impact because we see that contains and spreading and 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 that 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. money or increased 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 so there's not a thing ask you in washington i mean how much more austerity is that entailed because well 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 could do something just visiting for a few days i mean to what point is it politically viable thing is that everything go ahead. i think they're going to need a lot more austerity you know you were 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 a relatively simple they have a huge federal part of money was a useful bailout so they have to establish that and keep it there but they also have to have oversight of the countries that they had bailed out which is where

they're leaning towards so there is you know answer 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 that mean just another step towards moving away from sovereignty and for these individual states where it's going to brussels and frankfurt going to tell everybody else what to do with your economies ok you have to do this business 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 we're going to see the most dangerous of the euro that the euro produces the crisis through the centers in this crisis of any use for more centralization what is. a step forward towards central government sent from supposed. and russert so this is. the problem

to see i don't i don't think it's a good idea it would be in any case justified to make drama of french taxpayers pay for. the belladrum invent. i think we could shoot you with me in the moment is ok go ahead jerry jump in go ahead this is the way this program works go right ahead and i'm jumping it i mean i mean what did you expect you know you allowed greece to come into the big boys club on both sides you know of course we were not sure if they're going to behave fiscally are not and the greeks understood that they're playing with the big boys you know and they have to stand on their own this is 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 they're paying the consequences for everyone's paying the consequences for it ok joe why should they expect to pay the queen for consequences which i think germany when we have jurisdiction here is

should pay the cost for. green and are you part of the cost for an. 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 is you know that they should 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 or collapse in germany without it and they should pay for it because german banks lent the money and made 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 taxpayer should should pay some of it but most of it should be covered by banks creditors who lend the money except being

less than one dollar per dollar of debt owed that's what happens in normal i.m.f. if you wish and we're not talking about some enormous european sovereignty shift we're talking about normal international practices for resolving the crises and that's what should be applied in europe. go ahead philip jump in and go ahead what i don't see the moral argument why the german taxpayer foot should be liable for any action that some german bank did so i think that the they were predators the owners of the little sleep getting it better and i think it's the myth it's the myth that the low it changed rate makes makes it any richer i mean if germany would have three d. mark german so would have a much higher pushes empowered to purchase goods from the eurozone front from our i would say they are losing by this it might be that some export of what and my point is what we need is we should use this moment to do reform or through our foremost

financial system that this could should not happen again like a one hundred percent all standards which would make all of these high bets and deficit impossible cherry's 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 tax payers into 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 when they got married to the greeks and now there's no divorce do you think what what what what is a vote to determine. 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 them must be. actions i don't see the responsibility philip you have a philip you have

a double you have a double standard here and 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 does 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 if the actions are 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 whether maybe it was a misunderstanding i didn't didn't want to say that there would be responsible for their governments for. the ford on their government ok here's i don't know this could be my next question why don't the greeks just do it ok just your fault say we we don't belong at the adult table we screwed up we lied through our teeth are german friends are 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 we got impact the entire euro project. well here's the here's the catch this still this game playing adult at the table as so they're trying to behave by all the rules that adults play by at the table they can't leave 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 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 in and out table and yours are the greeks are going to be in the gutter friedly goodness no 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 that you know if you're a sheriff with terrorism against villa 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 then it really to understand weaker countries should get out of the euro we should go to a true tier system cheers i go ahead. andrew andrew there's a big difference been 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 ten billion euro everyone everyone knew that there's no way that we sit on a 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 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 i believe the last word in the program what's the future of the euro well it depends certainly on board politicians too and what population story really penned off but so drum relation with people would be subservient to their government and not protest and if the big parties want to see it and see if the people

want to move about more roads or if there's my new tea party rule lutenist indicated before and of course also in the countries of the i was thirteen measures . it will depend if they are willing to go forward with austerity measures or if the. budget will run out of time here we could have seen a lot more many thanks my guest today in madrid washington and in princeton and thanks to our viewers for watching us here r.t. see you next time and remember cross talk means.

and. while the kings go mad their people suffer. was how some take advantage of power that was given to them. secrets of big dirty my.