culture is that so much about the taxpayers' money meant ization nice people lot of people at area b. you're always in crisis we'll have you with us ten years from. seventy six hours of intense fighting. six thousand dead at a beach front battlefields several kilometers long. and now there is only one person who cares. you see we are surrounded by garbage everywhere but also there are. on this beach which of course is very most appropriate signification a symbol of everything that's wrong with our goddamn government allowing not only garbage but to accumulate where so many guys died. a new battle is going on. will the history be protected. return

to terra with julian cooper story on our t.v. . live from moscow this is our t.v. with you twenty four hours a day top stories this hour the russian president pledges drastic measures to create a woman investment climate in the country the centralizing power defeating corruption among the goals voiced by the way to move it at the international economic forum in some pieces but. u.s. congressman prepared to cut off funding for the libya campaign saying a bummer is acting illegally and not seeking formal approval to extend american military involvement poss ninety days the white house however denies it needs permission from capitol and. also reporting. a new wave of protests in syria

as the e.u. moves towards a third round of sanctions against the country with critics fearing it's part of a build up for another libya star intervention. well that's it for me today my colleague shop of all of us should be with you in less than half an hour from now as the news continues not in the meantime cross-talk discusses whether the eurozone is collapsing like a house of cards debate from st petersburg next. stood . alone and welcome to a special edition of crossfire i'm peter will. be your always in crisis will have you with us ten years from now. still.

to discuss the fate of the euro here at the st petersburg international economic forum i'm joined by alec since he's a professor of economics at yale university and roland no she's a senior partner in chief investment strategist at verne zero capital all right gentlemen crosstalk rules in effect that means you can jump in anytime you want roland i want to go to you first the euro is having another very bad few days here markets are spooked. bankers are so who i'm going to ask you the big question are we seeing the end days of the euro and if not what can they do you know a greek tragedy generally speaking has many twists and turns and i don't think we're at the end of that process yet the markets are beginning to price but i think we're we're still a little bit of distance from from that how much has more there's more hesitation now on another supporting quote bailout remember the first one wasn't called the bailout where you know greek tragedies what are they always end and they always ended in tragedy and i think that that is going to be the endgame here

unfortunately markets right now are beginning to price perhaps the greek. of of debt and that's the latest euphemism for the default whether that actually you know what's going to happen after that that's going to be where the lead come out here i'm going to press you now ok in nobody wants to talk about the end here i mean now we're seeing the risks so high right now and in the. normal amount of indecision going on there's so much double talk and how to deal with this problem here and now the markets are all more or less agreed there's going to be a default now what does that mean when if and when it's probably when greek defaults and the greeks say we want the hell out of this project what it what what kind of precedent is that established for the eurozone i actually am very positive on the eurozone in general i think it's far docs of where this crisis is going to be good news for europe in general so what we're seeing now imagine news is good

news the bad news is good news actually in the stand because if well look at greece for a look at spain portugal was saying that for the first time in many years they dealing with where the structural underline the reforms which will cause faster growth over the medium term going to pay for all of the germans going to say hey we'll pay for it we will always pay for it i mean really that's where push comes to shove here in merkel has an electorate ok i mean if if them something isn't done they going to have their own tea party movement you know the feel the first person actually i've heard say that this is this is good news for the year i think the problem is that they're trying to address right now and not the actual problems to exist in in those countries you know by providing more money they're not really solving the underlying problem and they're trying to fool countries through to revalue their currency through through changing domestic prices you know at the height of recession forcing these countries to go through yet another round of austerity and

that's that's that's the wrong how can you find growth when you're when you're doing that when you're in the gutter how do you find growth by going by having more austerity i've never heard of started oxic where there are large fiscal consolidation may be expansionary not not contractionary i think the canonical research points out. the period there have the same effect on the induction often especially span. no the increase in that fiscal consolidation that last not all of that action on that but also at the same effect an increase in grow the devil is in details and what immigrant groups for investors and for bankers it's not in many ways are we at the point now where everybody has to accept a haircut because there's a way to avoid that the banker said because i've always said maybe with a lot of cynicism here these are not sovereign problems these are bankers problems ok and they want their their money back in return on top of it and so this is where sovereignty and the risks that countries were allowed to make in the bankers need

to be get their money back ok i mean is this for the next the complications of the next payload is that going to bail out the banks still again credit is always a big problem right i mean that they're owed this money and they need germany to to effectively bail out the brutal countries the bailout the banks and if that doesn't happen then the banks are left holding the baby and that you know that doesn't solve any of europe's problems the banks themselves all paul sold the euro monetary system and you know again fundamentally right now peripheral european countries have exchange rates which are not competitive and that's how you have said i want to talk about the pigs in a minute of what's the difference between an orderly unwind and a disorderly one online i love this newspeak that is being used by the financial media and by bankers what is the difference between the good or not for the key for me is rather the on the wine list or the increase in the uncertainty was when you know it. would have been i think

a stark stark clearer during the the big financial crisis where that is i think reason uncertainty hurt the markets in the certain person girl in general so i think what the policymakers are worried about is how to get on the wind without increasing the overall uncertain all of it all and all wrong can you do both can you have both because unwinding is unwinding i don't care if it's orderly and disorderly you have the potential for a domino effect. we've seen this in many other parts of the world in the major in one thousand nine hundred seven rusher and in one thousand nine hundred eighty if you unwind one possible to very complicated problem the danger is that you start a series of domino effects and it moves from greece to other countries are already seeing that if you look at the month what was wrong with the first bailout of greece because it was inevitable that we have to do it all over again and plus we have ireland we have portugal spain is knocking on the door i mean what was it all about that was what was wrong with our show. i would have preferred to see. the bailouts to be less of

a free iraq i would like to see more off the imposition of idea of the strength morally buildout way moral hazard that's my biggest nation role and my biggest issue has always been moral i think if you provide an endless stream of money coming from another source of financing then it doesn't put enough pressure on to come countries to to to restructure but you know at the moment i do believe that greece and spain and portugal and ireland i mean they are doing quite a lot to try and deal with this issue the problem is they're addressing the wrong type of issue right now they need to change the value of the currency so i can change the value. i think is going to very difficult for greece to live in your i just don't see that up sides or brakes on that so sure you'll be able to devalue it but they'll probably get burned by removes all the time so that part of your body for that want to drive your i think the cost of living you can't win for losing i

mean i don't i can't see anything tangible upside at all in doing that either you have to make a decision one way or another it's painful to stay in the eurozone it will be painful to be out of it but at least you have control of your finances what's better. what's worse. the least worst option and for a country the value it always seems much worse than off. country devalued russia still that in the one nine hundred ninety eight and you remember everybody said russia is too big to fail you know be level and to russia or a guy in the last generation if the ruble devalues in one thousand nine hundred eight and what actually happened well you know after the devaluation six months later but he wanted to lend to russia again obviously greece is a different type of situation the political capital there is it is much greater but the economics i think are actually quite similar they're going to sound similar by the positive sign that i'm seeing is that at least now the monney are common with strings attached the mining iconica with the necessary to do structural reforms and

of the structural reforms happen especially on the part off cuts in spending cuts in the parts whether you would call punch comes in doesn't it i mean because you walk away from your sovereignty in a financial sense ok part of i mean that's the unspoken rule of the eurozone but then there's the political side of it i mean there are people that are elected ok i mean how do you how do you marry the two or do or quietly divorce the two paradoxical and want the perience office a congress of the a large fiscal consolidation in or a city over the last twenty years there is no evidence that a large fiscal consolidation leads to a loss at the polls so i think anybody who is saying i don't know if i'm critical information improve how do we found the great except i don't know i mean i think recession in general is home to politicians and you're already seeing you know politicians being elected out of office so forth out of office have seen it in some regions in motion early in our lives so you know when you try and implement

austerity really difficult austerity i agree there are big strings attached now to these loans and you try and implement that at the height of one of the biggest recessions in the last hundred years i think is going to be political consequences from what is the what it what are we seeing here is this a liquidity crisis or a solvency crisis i think it's it's it's a solvency crisis i don't i don't see that this is a pin. ron on the banks or on on the greens it's the crisis that we should which came from sustainable economic policy. on the great some not so different from a common a government handle that everybody's throwing around and nobody went to get out when the interesting thing was the unsustainable policies were a direct result of the way in which the euro was sex so you go back to my only point that you were making you know the quite this is themselves they have to take some blame for this i mean they were the ones that were making the loans to to the greeks spanish in what turned out to be an unsustainable economic situation like the paratha will happen i think the markets are

a price on this and i think what the markets are not priced in and here is that the structural reforms can lead to higher medium term growth. well that sas king of the bankers get bailed out and everybody else has to pay for it that's why we have the riots in the streets here i mean is that tenable and it's certainly not tenable in the short term what is going to be learned from that because people are just going to say well just have a better year oh it's going to be hard to convince someone that unemployed or their family is going to be unemployed for the next decade i mean structural reforms have a very large cost associated with them you know spain already has twenty percent plus unemployment there already people out on the streets in greece are you know i tend to agree if the structural reforms all successful and they could be they can be forced through very quickly then that doesn't prove competitiveness and maybe to these countries will grow out of the situation but the key question is is it politically sensible to expect these structural reforms to be to go through at

a time like like now when these countries are facing real deep economic pie and you certainly wouldn't expect a country like the u.s. or or the u.k. to go through something like this and we saw what happened in two thousand and eight when they were going through deep recessions there was a big monitor if this will stimulus and that's the because it's all right and i'm going to jump in here when we return we'll continue our discussion on the fate of the state. student.

from. from. him in. from. home. from things from. today children play war in the old keys me. nineteen forty one these walls were the first barriers and announce the troops on their way to moscow. one by one under c

c. one. in the last show and left a few simple words. but i'm not sure when. he. started. to. welcome back to crosstalk i'm peter lavelle right before we were to the break room we were talking about how the euro is. how some people think it is collapsing in

your big special e if you're unemployed in greece but what are the implications internationally i mean the chinese are very very unhappy about this the united states is just about to end its quantitative easing its part two out of the i don't all three of these fit together i don't think it was really interesting we were talking about the weaknesses in the in the euro but actually the euro has been strengthening against the u.s. dollar and you've got to ask yourself you know why a country or want redefine what is it well actually i think because it's a competition is a race to the bottom between the dollar and the euro both they both have to fight to the bottom they both have a lot of very deep structural issues the u.s. is dealing with them on way and the europeans are trying to deal with it in another way and so far you're julie for your commute to story i said excuse me but you already said. and we're going to three are we going to throw out a fund managers that believe it or to carry through but you know cheery too is that

there is the simplest way to try and solve some of the issues in the in the u.s. and i don't see devalued the the dollar against the euro now what we're seeing in peripheral europe is trying to devalue to the euro against the dollar. out of the chinese looking at this you know how worried are you so i think that the big the right way this from my point of view to think about that the current station between your our eyes dollar is from the point of view of the global imbalances that has been after the financial crisis one of the key things that has happened is the dramatic reduction on the supply of the safe assets think about just how the two thousand and seven what had wonderful triple a mortgages were had all kinds of mortgage backed securities which were supposedly safe now what do you have does it have a long term view as a government that which may not be perfect or has all kinds of issues with it but it's still safe for them watching this can produce especially for the long term securities so what do i see and is despite all the problems in the developed

markets in europe and in the ass there is still so difficult to replicate this long term instruments it's a unique x. part that you asked me i started because there's an alternative is that why. intrinsic value just think about for example a thirty year i think thirty year bond one your issue a thirty year bond what you're selling is yes alan that in thirteen years your economic policy is going to be pretty to get that the country is not going to collapse that the inflation is not going to be found and you can only sell that kind of expert if you had a long history of political system which is consistent with go to come up with policy that could be made by any estimation of the united states is is on the verge of bankruptcy i mean would you buy those bonds i'm not asking you personally but would you. advising an investor to do that i think on the verge of bankruptcy is probably for a little. bit strong but no is the answer to your question i would not be buying

u.s. u.s. treasuries right now i mean it is still the safe haven album but it really is a lack of alternatives and you know you made the assumption that china didn't offer any sort of long absence of purity been in the us i mean obviously the track record of the u.s. is much greater than in china over the last hundred fifty s. but. i'm not sure that you can make the argument now the china doesn't offer longer term security than in the u.s. given the economics of the two regions of money ok let's go back to the euro zone here alone but don't we have just the two tier three tier euro system it was premature we know that the greeks lied openly lied about what they did frankfurt knew about it brussels knew about it but it was the great project that had to succeed well it is utter failure by many accounts by many different people here why don't they is it time to rethink the project completely when it's much more rational where there is some countries are going to be at the children's table in

some countries will be at the adult table think about the theory of why and how my three unions work one of the keeper act was its use in addition to that to the common currency is to have synchronized business cycles and to have good economic rolls so particular the fiscal rules so your bod the credibility of the monetary policy was outsourced to european central bank so now you have the crisis would lead to better fiscal policy i don't want to say this war but european fiscal authorities that on this goodness you were worried that's what a lot of people in the euro zone the freedom of expression i mean someone said to me once well in which all that was really quite interesting is that everybody should stay in the euro zone except for the germans then you should leave the euro zone and then things might work out better what do you think i think very very probably benefit more from the. there and than than anybody else and i think the eurozone actually is a great political invention and has been very successful actually police ecclesia

think about european history and what do you have that's not the heart strings i mean i used to be a professor of european history i can absolutely agree with you i mean creating unity here but can you do that look to can you do that monetary really and maybe it just takes a much longer time than they had expected i mean we have countries like poland that are kind of stepping back now thinking maybe this is not necessarily a good idea if least at this point in time you can have a role in the back if you could have political union without monetary union we you know there was something like the european economic community that didn't work out too bad it was a great up political ambition. the full part of it i totally agree with the full part of it was on that was on the economic side you can't have monetary union without some kind of centralized to school all sorts and that's exactly what's being proved now why don't you take the tools away from sovereign governments to fix their problems when you have something like that you can't default you can't build up debt in the first place and that's that's the issue that was it was the

ability of governments to use and private sector to use low interest rates are very sustained period of time to build up that has proved to be unsustainable david that's very profitable isn't it for some people to do that the model works for some works doesn't work for a lot of other discussions or for the introduction of your many people were saying that it would never happen that if the level of low inflation it would never happen because it was still the title you can monitor it's all there and it's a question that at this for me the euro was a much more successful project that i thought it would be outsource that mine very policy to the technocrats of the european central bank which were more conservative than the average population of europe and that's something like that happens in service policy i think your in your project in the european project it's sort of the fall of. they're all in the same kind of workout while growing can they stop the containment now or is it more likely now or less likely everybody is jittery ok

i think it's i think it's going to be really really difficult now to stop the whole contagion you know they've already tried it several chances in the past they put a lot of money several hundred billion trillion route euros into into defending the the region it hasn't been enough and markets are compare now pricing more aggressively. expected defaulting greece portugal ireland and i think i think spain as well so what happens when the contagions starts. it's its great market share i mean we'll have will we will we have more than pigs only there is. significant danger all the contagion beyond what's priced in the markets. i think it's going to be i think the markets a two percent mistaken too short term a look at on their whole european situation again i'm going to come back to what i was trying to say in the beginning that the period of fiscal consolidation and of

the unprecedented structural reforms would be positive for europe in general so i think there is a contagion is relatively small again you know what about this slippery slope here ok moral hazard i mean if there's always going to be a bailout you know it has to there has to be a contradiction there i mean the money runs out eventually the question is that the question is on its own by you know if it is just a bailout then you know structural reforms don't take place so if it's money that actually results in structural reform then that then that is the exit i just think this is where we really disagree i just think that trying to do structural reforms right now is politically unfeasible in the markets so you just reporting money in some kind of stabilization then go for the structural reforms so let me disagree actually where they're all in on the long unless i think this is exactly the right time to do the structural reforms i think. the kind of it isn't because of fairy or because you think it's i mean i'm looking at a man and woman and child on the street right now is it going to be

a lot more pain that way before there is an olympic movement a different country and compared to japan japan isn't dire in the off structural reforms to get it out of the last decade to try to sell it to the japanese that they have to do all the painful reforms to grow faster why there h. they're growing want to pursue after a huge economy that's kannan but they could grow faster try let's try to think about the u.s. says doing ok there is no crisis there is no acute crisis no good debt crisis and it's that's why it's so difficult to portray that all structural reforms in the production are for. exactly now won the european heat so badly use the time to force all this along later for the european economy so i think you know really looking at these the elections across europe we've seen a lot of wild cards coming out a lot of nationalist parties doing much much better of course is going to be the

element of immigration that always pops up there but there is the euro issue as well and the sense of sovereignty here do you think that the reform reformists for the for the eurozone have enough cards to play to starve off. a growing political reaction because we see that we and i go back to the germans and they say you know. we didn't screw this up you know we use that you've rightly pointed out germany's and quite well by the euro in the longer term but it's a certain point they're going to say it's politically not viable for us to do it because of the moral hazard that's still out there but are going to bail out the belgians next but that again is the point i mean it's up to the germans to make the conditionality so strict that it's there's no consensus be a bailout they haven't done that yet and then it comes down to a point about you know other governments in place and can they be governments in place that are able to follow through on that strict conditionality given the current circumstances that exist in those countries and you know when i look at

places like spain right now and the way in which you know the regions of finding it very difficult even to make payments you know there actually is non payments growing in some of the american states in washington it's a it's a politically very difficult very difficult thing and i have to say the although i think that's a very good point and it's and it's a necessary sometimes to do to reform i'm not sure it's a feasible time to do reforms and i guess that's a front for the last question where we are where you say you're over to stand a year from now. i think it's so difficult for exact one that we have learned is economy is so difficult to predict the current forecast in fact the value of the current at the day so that's going to be much more well. i can't believe it we ended the note on a positive positive positioning i want to thank all of my guests here in the studio and i want to thank our viewers for watching us here r.t. see you next time remember across top. six.