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with ordering the killing of protesters over the last four months. israel says its navy is gearing up. from previous threats to. its. radiation exposure. last month government checks are being met with skepticism. program across talk with a host of people. discussing greece debt crisis and whether the eurozone is actually

. cross-talk it will be. hungry for the full story we've got it for. the biggest issues get a human voice face to face with the news makers. to keep. a low is welcome to cross talk i'm peter lavelle the euro and it's meeting with destiny the greek government survives a vote of confidence as its crushing debt ordeal continues unabated but this appears to settle little if anything the u. still has to decide whether it will continue to rescue greece from crisis as doubts mount whether the euro project has a future. if you. can

cross talk the prospects for the euro i'm joined by vanessa rossi in london she's an associate fellow in international economics at chapman house also in london we have robert oulds he is director of the bruges group and in washington we go to garrett jones he's an economics professor with the market to center at george mason university all right this is crosstalk and that means crosstalk rules in effect that means you can jump in anytime you want but before let's look at a report about a country that may bring the eurozone to the brink of collapse. the euro zone is facing a crisis in which few can predict its outcome as financial markets and leading banks grapple with the greek debt debacle there are serious questions about the viability of the euro as a currency and whether greek default will strike a critical blow to the small metairie experiment. overburdened with crushing debts greece is fighting for its financial and political life as lawmakers defend the unpopular us tara to measures meanwhile the european union the european central

bank and the i.m.f. say these measures are the only way to revive a second the commie the country is undergoing a crucial moment we are obligated to ensure the future the future of our country with a sense of national judy facing the present difficult and multi-faceted crisis in a decisive way the upcoming meeting in luxembourg will determine whether european officials are ready to issue a second bailout package worth an estimated one hundred twenty billion euros this will extend greece's year old one hundred ten billion euro deal and funded into the year two thousand and fourteen the package will however until still yet another round of sweeping austerity the first condition to have success if we speak about sheep to greece he said greece. and that greece is able to deliver on its part and if greece this its fourth i think dupion union has

to do its part because it is in our joint it is now our common interest or this is financial woes overblown after all many policy makers claim greece is too small to cross the kind of economic impact that would change the course of the euro and the health of the global economy and during their last meeting in berlin german chancellor angela merkel and french president nicolas sarkozy assured that a compromise agreement would have hurt a meltdown and propose a strategy akin to the vienna initiative of two thousand and nine which tackled mounting eastern european debts so. if we have to move forward on this and i think it makes sense to involve the private sector this is important to us though the vienna initiative may have had its advantages it was implemented with countries that were outside of the euro zone and did not pose a threat of internal contagion and so many experts may be rightfully concerned that if greece were to go bankrupt it would sink the entire eurozone originally conceived as a geo political theory the very concept of the european union would also face

a serious threat a threat that few of that you founders could have anticipated. for cross-talk our team. ok vanessa if i go to you first in london i say around the july third meeting. for greece is really a done deal because they have to bail out greece or the eurozone itself faces a idea crisis that none of us can predict. well i think there's certainly concern about what unpredictable effects may arise if greece goes into a disorderly default but on the other hand we've now been facing this greek crisis for almost two years and this means that many if the players many of for example the banks the derivatives contracts the other private investors have had i'm full time to review and understands their portfolios and there are risks involved and to some extent those have been reduced because of the official intervention more of

this debt is now with the e.c.b. and effectively with the e.u. i.m.f. than was true before so i think we have to be careful about talking ourselves into a global crisis from this i think the potential to ringfence greece is much better this year than it was last year and you can see that confidence in my view is borne out by the way in which the euro has reacted this year last year if greece had moved to a disorderly default we would have been through parity against the dollar very quickly now we're talking about that possibility and yet the euro is holding much higher than it was last year so i think greece alone is not such a problem the difficulty is all that we will have to be very quick at containing any problems that arise in greece. debt or countries that i think is something that the e.u. shouldn't be in hopefully house been working all to be able to prevent the spillover of this crisis ok robert if i go to you in london as well i mean why all the we

hear about the euro i mean the former from of foreign secretary jack straw shed a few days ago that the euro can survive and it should just be given instead of a slow death that should action should be taken to start dealing with going beyond the euro in this but nothing has really been settled with greece is just throwing more money at it. absolutely you know greece is effectively bastien they're just delaying the inevitable what needs to be recognized is that the euro has been a political project which has caused massive economic disaster not just in greece but in italy portugal spain arland it benefits germany at the expense of other nations within the euro zone it was a mistake for those countries to join the euro is a mistaken project and it should be wound up and then only then will their colonies in the mediterranean and in ireland start to grow and get their way out of the debt that they're in the euro is the root cause of the problems they're facing ok gary

where do you stand on this we have two polar different point points of view here where do you stand. well i think they're both finance and robert make good points but that's his right having two years to get ready for this means that they're in a better position but if they are in a better position why are they so absolutely terrified of what they call a credit event and why are they so obsessed with having what they call an orderly default as opposed to a disorderly one. with robert what the question's always for europe has always been what will happen when one part of europe wants to cut rates another part wants to raise it economists across the board knew this would be a problem ten years ago and now we're facing it right now financial what is the difference really you know no evidence of what is the difference between an orderly and disorderly i mean it's still defaults it's still bankruptcy what's the difference between the two well this is the problem we first need to tackle the immediate problem we have which is there may or may not be a long term a show about how the euro zone management can change whether it can change and

ultimately the question is whether it delivers growth or not for its member states but those questions have been around a long time it's not clear that europe is delivering growth with or without the euro there's a big problem with that but we have to talk to you it is delivering in the immediate way you can make the point here you know this was a greek crisis now we know that these not necessarily say you are we have it all i see no it's really we have the crisis in saying we're going to go and now we have up we have a crisis in greece which probably would have been a crisis before anyway greece was in and out of crises before it joined the euro so but we know it was made you cry this is the boiling we already so massively when they joined the euro and the day ended for he had known that depression if you don't use call right now i don't need your vendor is comparing a carrot i'm going to go to you what is the euro zone learn from all of this here and you know i'm not going to pretend to be an expert in international economics all i see is more money being poured into something i don't see real structural

changes in the eurozone no you know of course greece is. going i mean are you dating miles or to the other class. all right international this is getting in around your head of course the first thing that we come back because you asked me that question before and it's disorderly versus orderly we're now in a problem with greece never mind the other debate what is the difference here the part of the problem and it's true is that within the euro if greece defaults then there is technically an immediate problem for the solvency of all this banking system and that partly depends on how the e.c.b. react the z.b. has already been beyond almost the pale in terms of accepting poor collateral in exchange for liquidity during all the crisis now if greece does default and that's made quite clear the e.c.b. it's all going to resume forcible situation of having to ask well what the defense with a sort of the or not this also means they're immediately having to ask but for this money and this means that the greek banking system has an immediate problem as well

now that could push greece to a very quick decision about leaving the euro but i think that part of the reason we're trying to buy time now and we're still trying to buy time is to allow greece to more carefully consider what exactly does it want to do because greece's resumed their lives and over by choice decision to avoid being on the politicians faces that's the key issue here they don't want to admit that the euro has been a mistake so they're doing anything they can to try and paper over the cracks and try and hope the problem will go away i think that if you if you say you know when the euro larry as you know you don't even. have one garrett jump in there go ahead . well the big to me the big lesson of this is not just the economic classes the political lesson which is that the periphery of europe has now learned that they can milk the european court for money for years and years and years and we can expect that to continue happening as long as the voters of germany and france allow

it ok so do you want to go there and the us i mean he's going to this is the same on the nasa first affectively time has been called i mean this is what the latest statements from the e.u. are about they're saying greece we're going to give you a last chance do you want to take it yes or no they're calling time on this but my only point first is that is that it should really be a time out because greece itself you can see this from the demonstrations and the problems in greece there is a democratic deficit in greece itself there's a lack of explanation with increase itself and it's greece that should have to face up to what really it wants to do is the solution does it saying that it would like to leave your is a measure of the e.u. as the e.u. policy is being dictated to you rather you not have power over agrees yes it does you mean you know there's a power over greece is taking the policies the greece must follow through to deal with. its they're the ones that are imposing the also information on gracey they're

not dictating what greece has to do what they're saying is they are because they know they have the money and you say to their terms are you really going to jump in a short break we'll continue our discussion on greece and the euro stay with r.t. . if you. want. i was just thinking about my future before the foreign companies came i dreamed of owning a can cutting factory. but we have less garbage now. some

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you want to. welcome back your rostock i'm funeral doll to remind you we're talking about the euro and its future. and it is. ok garrett i'd like to go to you in washington are a lot of the dissenters of what's going on in decision making with the euro. and with greece is that they claim that bailouts are not for a great greece and not for its but federal budgets and whatnot it's to bail out banks in greece that have a lot of exposure or arms or german banks have a lot of exposure french banks etc in greece this is what the bailout is all about to save banks not necessarily a country's economy how do you how do you see that. there's something to that but

it's greek banks that are most on the hook here and i think greek depositors will be very disappointed if the e.u. just shut off the spigot tomorrow because they find out that all of their breaks have just a faltered but also how do you see that's nothing that any greek voter wants of course of the national how do you see that because there is this there is there's probably a perception out of the problem that this is exactly part of the problem that if there were to be a disorderly default almost immediately the greek banks would probably shut down now actually a lot of people in greece have already worked that out and this is one reason why there's been big increases in gold sales a big about of withdrawals from deposits in order to protect to protect the money so to some extent the whole design is i mean these c.p.g. providing liquidity so we already know this situation has moved a long way towards assuming a default and therefore people are positioned for it but there will be some last poor souls that would lose the money here and that's not a good situation in the banking sector problems could be very persistent it would

take time to overcome that and greece would almost certainly go into an even bigger recession that it's now in if it chooses to go down this road but i do believe so your economic growth will be even worse whether you can recapitalize their economies. you want to leave you with the dates things are really calm i'm sorry but i think you'll you're living in cloud cuckoo land if you think that greece devaluing will do any use for the greek economy greece usually fairly regularly. when the united kingdom you know when the first sterling no really only really you know united you know you need to learn from history things really are in place you . jump in here. jump in here jane is right my news i'm going to be here right now with. the economy grew that is the only way you agree greece does not need to devalue their own common see the value that they

value that come in so you know. we're going to change here you know. right now. for robert robert garrett. so how much do you think of this is that i don't i don't see that there really any solutions out there i mean i agree with that but i said you know they had time to think about this but they really haven't thought it out because they just don't want to let go of the political aspect of this the into political integration of it all and they and that's where the mismatch continues because looking at statistics you know we're going to have the southern part of the euro zone is going to be inimical for years with economic growth how can you match that with the economies further up north that are much more dynamic and i especially germany i mean do how much are they committed to this political integration and of all countries in the in europe germany is most committed with all this from all the german i let me go where you let me go there you were completely for it and this is like talking to let me

let me clear it on this one to me please folks please this is great cross stock up or so but let's go to garrett ok. you know the european project or some of the germans completely believe in. the european periphery is going to make a lot of money off germans but if you know that you're going to take him. ok robert the voters are the voters that you're only going to call the leaders of sports the euro because the economy's benefit to grow you're going to help their exports to other nations within the euro zone and doesn't allow other nations of the eurozone nations to compete. so really that's why the german we believe but we don't have the german prosecution of us and i was only the victim shortly. ok and paul had been asked so this is. in the form of the you. research research well when i say. go ahead please it's

important that germany has been leading the charge together with other parts of northern europe like sweden which is not in the euro zone it's nothing to do with after it's the state of their economies the types of goods they produce but they are selling well into emerging markets into china and that is how we are all you need to cost a very kind of not only no growth really experience right first i don't think you understand they have really are your. thoughts alright alright ok garrett if i could go back to you may not do but just greece is not doesn't go into. export economy it simply will not be changing the currency will not change those parameters there's deep structural issues which need to be toppled if they choose to think that that's better to talk to outside the euro so that's their choice i have no question that would help as i'm sorry with the prime not necessarily in solving markets and. their countries while we spend you know larry. page

eric and i together you and i just going to this is like to go to. washington garrett what are you. my terminology here and i haven't seen this elsewhere ok but it seems to me that the way the eurozone is evolving if it's going to continue to evolve that is it is turning into an apartheid system we're going to have poor euro countries and you going to have relatively rich ones can can a currency union be sustained when you have an economic and financial apartheid system i mean no different than the united states now that's ok it was very different so if you're going to go to america and there's like a transfer system in the united states where you go ahead because you're. indeed that's a perfect example the united states has poor regions and rich regions i'm sure germany has poor regions and rich regions and they all managed to stay within the same political system and man they managed to keep their currency union together but that required a political commitment it's not an economic question there are plenty of times when i'm sure east germany wanted lower interest rates or the southern us would have

liked lower interest rates but we all stuck with it together because an economic monetary union is a political question first and foremost that's why we should be talking about it too has a saying are more and we should be talking about the system to transfer wealth from poor of asians to from richer of age and deviations to offset some of the discrepancies now and that's exactly what greece is because i read you and i just think you were in government we want to national governments and democrats ok so you could have a massive n.s.a. if i could ask you of course but i said let me ask you a question and it's something like what the united states here i mean the people the populations of the euro zone like the euro when things are good when you don't have to think about these type of things up until the crisis in. greece but now things are breaking down some of the contradictions of the euro becoming very obvious then the euro becomes very very unpopular i mean it's just when things are good you don't really care how it works but when things get tough you do and then this is really a good reason to question the entire structure of the eurozone isn't it. oh i

totally agree with that so it's a big problem i have be the critic of many of these problems for years i love course you're not always popular in brussels if you say those things that tenth birthday party was a marvelous success well no not long afterwards with i think these problems you can't brush them under the carpet you have to talk all these fundamental differences how do you create trickle down growth from germany to the periphery for example how do you help these periphery a column i don't think that's going to do it wasn't really i did i totally i totally disagree that the idea is that simplistically somehow devaluation will work there's a lot of other structural if you look for the you know if you're going to be ninety nine but you have to let you know you're right i totally agree i do you want to do the same for the sixteenth century but no i don't know yet who until recently certainly did as it is always of having it and i'm sorry she said it was right sorry but you look at the particular receive the holy spirit and you will learn or your history learn as you are you know what it is you know if you kingdom and

therefore we didn't join forty other countries didn't learn from our example now they should i want to. bring up another empowering issue here age i want to bring up another important issue garrett i'd like to go to you what in moving forward. is do we have to when we look at what's going on in greece i can never get away from moral hazard in the contagion because whatever happens with greece and i think they would say well he's going to have portugal and ireland and maybe belgium and they say well what's there to worry about ok we'll just go through the same thing because the euro one is not going to be allowed to fail in chile completely collapses in on itself because nobody will have any money left including the germans ok that's an exaggerated scenario but what do you think about that's why that's why that's why the markets are paying so much attention to greece there are no time outs in financial markets every time something happens in greece people say whatever is happening here fifty percent chance that happens in ireland thirty percent chance it happens in portugal and so therefore that's why there is no.

contagion even if there's no financial institution these countries between their banks there's news contagion ok vanessa what do you think about that contagion element and moral hazard and i'm stressed moral hazard. well i think there's signs that other eurozone countries either taking medicines they all playing ball in whatever way they're not playing the same kind of game as greece unfortunately with greece i think there's an internal lots of internal problem about the way in which the public doesn't understand the issues how to properly explained and which decisions are being made and this is just going to be a continuous festering sore even if the government now signs up to these fiscal measures will be back again in a few months time to demonstrations on the streets and the uncertainty about whether a new greek. did not want to join the euro they were going to. let me ask you a question let me ask you a question because i think you bring up an interesting point here is that you know if we go through if there is contagion out there there's more hazard out there it's really the people that pay it's not governments it's i'm sorry it's not central

banks it's not private banks they're going to pull through this pretty well at the end of the day but it's populations of those countries won't. well the european central bank has bought up a lot of greek debt by other banks so they will pay but yes it will be then the ordinary population that will pay they paid when the euro was introduced to lead to higher prices in their shops that was deeply unpopular in greece and it's now helping to create a very deep bust within the greek economy so that it is no ordinary people of greece that are paying for something which they never actually asked for where the political elites of you've got together decided that it would be a nice idea to have a common say but of course didn't listen to economic reality and it will be their populations that will pay the price unless of course they recognize that they have made a mistake by creating the euro and they begin to have their own common sense and manage a withdrawal from the euro that would be the appropriate way for all right all

right lee and journey ladies and gentlemen we have run out of time we've all run out of time here and nothing has been resolved on july third many thanks to my guest today in london and in washington and thanks to our viewers for watching us here r t c n x time and remember cross talk rules. if you. want. wealthy british science. is not out to. marcus weiner scandal. find out what's really happening to the global economy comes a report on our team.