weighing in on what you perceive to be the issues surrounding other possible us going trend of spy drones and united states that was radio host alex jones and that's the new deal for now for more on the stories we covered at r.t. got com slash usa or you tube channel you tube dot com slash r t america and you can also follow me on twitter at lauren lester but for now that's going to do it for the news thanks so much for tuning in and have a great night. the latest in science and technology from. the suburbs.

rachel martin here broadcasting live from washington d.c. coming up today on the big picture. more news today is once again flared up. and these are the images the world has

been seeing from the streets of canada. giant corporations rule the day. can. stand. 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 euro system and can the politics of the euro serve the interest of all in this currency zone. crossed out 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 shares 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 he is an associate professor and king juan carlos university he's also author of the tragedy of the euro ok folks this is cross talk 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 his 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 on the ground we can't just shoot solidarity and say that these countries can't continue as before we can't have a common currency but some get lots of creation time until there's very little 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 when it does political discontent will rise as well reform and pain are in there in equal measure doesn't help in the worst of the second world war but the longer you. necessary evil. more costly it is there's going to be the costs are easy to see in

predict if germany gets as hard as fiscal we're forming the euro zone 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 because 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 the current form but does not serve all equally my search area for christ our party. ok to start off 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 and is quite strong sometimes too strong for us as an export in country nation we have problems with

certain member states and their debts is that understatement for a year or is that accurate and looking at the condition of the euro. i would say that and understand meant this set of the euro system. it's it's it needs to self-destruction the problem is that we have several independent governments that can use one central banking system to. finance deficits and debts and this has perverse incentives i'll put it where the 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 road 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 were 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 is is greece is just 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 a 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 currency that 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 with 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 germany 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 but tween just shuffling more money from germany through agrees and cutting them off ok it's interesting i don't agree you are 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 saw of course have put it in lead or france and germany and greece want the euro to continue and of course also the banking system that has done banking system the french broken system it has lent to. banks and the greek government but

it's not and maybe also some export of us from export us want to continue but for german consumer this is not a and picks player this is not a very good deal with the mark. they could import cheaper auto companies could import natural resources cheaper they could be occasions cheaper and we we could buy vacation houses much cheaper. so they are now losing then it would be better to trace the difference in the conflicts in these terms of political and bankers versus to come and take space and consumers carries out if you go back you know in washington when one of the things is interest i mean if i could just interject hearing it i mean philip 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 federal 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 it's a little more than that you know in crisis you know yes banks bail out other banks 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 precipitating 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 filling up next we're trying to prevent a financial crisis to repeat itself for what happened last spring and that will affect not only europe but all of us here in the united states as well ok and remember it's kind of a slippery slope scenario here because this is what's happening i mean there is this. you know well i'm in trouble on

a par with all this money i lied about it especially in the case of greece and now we need help so germans really come out and pay for it i mean we see this time and again. so here's the question cher assad's 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 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 oh take a haircut or pay some of the costs of settling the debt problem which is the whole issue of restructuring this debt in the medium term in 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 and 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 if you do it maybe star voth real reform in the euro zone. of course and things have been shifting in progress as had from this financial crisis on who until now to extend its center banks and the senate takes it if he has bought already more than one hundred billion euros so. it's from banks of. covered bonds from german banks but also a weak government bonds portuguese government bonds 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 actually stand for in the through this financial crisis in the first place if people thought our bankers saw it they would be paid i would if they would have probably a lot of government but still available to me jump in here so you're saying don't bail out the makes what would happen then if the banks one bailed out how we just affect the euro zone if it wasn't golf course the problem to fan interest system would. what 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 to go andrew jump in go ahead. but this is the this is the kind of radical thing we want to avoid i mean 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 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 to her. and you let me jump in here after a show break we'll continue our discussion on the euro crisis stay with r.t. . if you. think you can. wealthy british style such as the tightly. guarded.

market finance scandal. find out what's really happening to the global economy with much cause or there are no holds barred look at the global financial headlines to come as a report on r g i am mission free acronym cation free comes for charges free colorations three kids free stooge types free. download free blog just plug in video for your media projects and free media dot r.t. dot com.

and. you can still. listen to the. live. welcome back across i'm peter lavelle remind you we're discussing the euro and its prospects live can still see

live. ok andrew i'd like to go back to you before we want to 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 your euro zone is it really having a positive impact because if we see the contagion spreading not contract being 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.

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 she decided to ask you in washington i mean how much more austerity is that entail 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 obviously just someone just visiting for a few days i mean what point is it politically viable for this thing to think 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 middle of ground there we've been talking about andrew they have a middle ground in principle it's relatively simple they have a huge federal pot of money was a useful bail out so they have to establish to 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 field so there's i 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 here 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 the most dangerous of the euro that the euro produces this crisis

through the centers. in this crisis of any use for more centralization versus. step forwards towards central government a cent from supposed to brussels so this is. the problem to see i don't i don't think it will come back when really it's a good idea or it would be in any case justified to make german or french taxpayers pay for deficits or below german banks. i think we could through you really in a moment a little bit ok good here's a japanese guy had this is the way this program works where i'm jumping at 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're playing with

the big boys you know and they have to stand on their own this is an opportunity when they join 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 ok i should explain the conference consequences for i think germany when we have drawn attention richard pay the cost for troop don't. 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 additionally now 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 or a collapse in germany without it and they should pay for it because german banks lent the money and may put 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 lent the money except being less than one dollar per dollar of debt owed that's what happens in normal and 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 the crises and that's what should be applied in europe go ahead philip jumpy and go ahead but i don't see them or i room invited them takes food should be liable for any action that some german bank did so i think that the i think what they did to the owner of this was to get it and and i think it's the myth it's the myth that the low

exchange rate makes makes it any richer i mean if germany would have you don't see much put his impala to put his goods from the eurozone from outside they are losing by this it might be that some export of what and my point is what we need is you should use this moment to do or form a through or foremost financial system that this could should not happen again like a one hundred percent goes then that would make all of these high bits and deficit and both of those cities that you want to jump in there go ahead. yeah i do want to jump i think is forgetting that when the german class is a letter the german government would sign the master 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 going to 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 in they got married to the greeks and now

there's no divorce what 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 does why would he be responsible for the signing of them must be true. since i don't see this responsibility philip you have a 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 interests 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 it why everybody is response every government is responsible for its actions in the modern world and for your 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 adjust to kape whether maybe it was a misunderstanding i didn't even want to say that would be responsible for their

governments for you would recommend. to the fort and the government ok here's i don't i was pretty my next question why don't the greeks just do it ok just say we we don't belong if you don't we screwed up we lied through our teeth our german friends and our italian friends and our french 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 leave if they leave the euro zone will be in the dark ages for the next fifty years their only future lies within the euro zone and we basically 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 a delegate or andrews or the greek city to be in the gutter for good measure no matter what they do they'll be in the gutter for at least a decade or half a century that you could be in the gutter for a long time all right i'm going to switch sides here so i can argue in shares with charizard against goa because i don't believe a gold standard is appropriate to the modern world but the reason i don't believe in the old standards appropriate to 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 charizard 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 pick a middle solution then if you really don't understand weaker countries should get out of the euro we should go to a true tier system cheers i go ahead. yeah and there's a big difference been defaulting on this particular loan and getting out of the euro zone 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 the greeks are going 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 greeks i mean the real last one of the program what's the

future of the euro well it depends certainly on the words politicians do and what population still really turned off if the drum relation to people would be subservient to their government and not protest and if the big parties want to see them see you and if the people want to move about more roads or if there is might be a tea party rule lutenist indicated before and of course in the countries ourselves thirteen measures. it will be if they are willing to go forward with thirteen 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 archy see you next time and remember crosstalk.

well the british.