wealthy british soil. that's not hard to. find. hard. to. market why not. find out what's really happening to the global economy because a report on our. american with our team these are the top stories media mogul rupert murdoch is on offensive claiming news corp made only minor mistakes even as the f.b.i. moves in over the possible phone hacking of nine eleven victims. americans to face torture tactics rising up the world for the u.s. training at a sporting brutal interrogators while breaching human rights to the rest of the poor. and the e.u. scrambles to cut spending as a debt hole sweeping the bois threatens to sink italy is the greatest task yet for

the leadership's efforts to keep the wavering currency alive. more on the eurozone debt drain access you know what i asks is guest whether the e.u. has enough financial firepower to save it from ruin. you can start. with. a low end welcome to crossfire peter lavelle a currency in crisis european finance ministers central bankers and politicians remain at odds on how to rescue the euro as pressure mounts for another greek bailout and investors worry about italy is the hero of dysfunctional currency and

who will ultimately foot the bill. came. across not the eurozone crisis i'm joined by dennis gartman in virginia he is editor of the carbon letter in singapore we go to jim rogers he's an author and financial commentator and in washington we go to shows on raymond she is professor of international business finance and international affairs at the george washington university where i focus is crossed i'm going to as you can jump in anytime you want there are different points of view here like here they need a dentist if i go to you first i am i asked a question before we go to the you the facts that are at hand with the euro i posed the question is it a dysfunctional currency what do you think about that. i've always thought it was a dysfunctional currency i thought quite honestly that the only reason the only rationale for the euro to begin with was was to do something on the part of the

northern european countries to tie the great german giants down with as many bureaucratic ropes as they possibly could they have done it to this point i think it is an eminently unsuccessful attempt i cannot imagine that that german is working as hard as they do as many hours as they do saving as much money as they do find anything. out of equal nature with the greeks who simply don't work as hard as they do don't save as much as they do and avoid taxes like they do so quite honestly i think at the core at the edges of this cloth the thread is being ripped and the cloth is finally coming apart jim singapore. is going to go to you anyway go to peter that. peter the concept of a unified european currency is fabulous and the world needs something to replace or to compete with the u.s. dollar unfortunately execution has not been very good they brought in people like greece and and portugal and ireland who weren't paying there aren't paying their bills and weren't paying their bills and that's led to the problem i'm like dennis

i cannot conceive of why honest hard working our strength and dutch and fans should have to pay for a bunch of greeks are sitting on the beach drinking too so i and greek banks i find this is outrageous. to find you in washington ok we have to euro skeptics are you to balance out a little bit. i'll try to bring much the bottom line is this this this is a good project to begin with if the membership had been correct greece portugal ireland spain were never supposed to join and if it was a reasonable six countries that it down we would have had a pretty successful project but in the you know we've got some in the eurozone at this point this is not healthy and i agree with them that this situation is now but it's done it's legalized and no one can step out and no other people can you know sort of change the rules at this point so the germans have to pay the piper they really in this document and these are the repercussions are you know all right.

they all have a right to it and the individual. before they get to the figure for the german the german the germans don't have to pay the piper let greece go break ropey would be good for greece it would be good for the europe would be good for the world if greece went bankrupt and run out of the hands of pay their bills or stop lying then you would have everybody would know it's a strong sound currency based on a strong sound economy well while i'm out and go bankrupt this often in a year or in america we've had stage called we're going to be in serious program growth we've had counties go bankrupt it didn't in the united states and it didn't in the u.s. dollar ok. i'll tell you why because of the four hundred billion dollars of debt that greece has fifty percent is held by german and french banks and those countries don't want to take a second in the financial markets it's that simple. why

should why should taxpayers bail out banks since when do taxpayers have to bail out mistakes made by banks the taxpayers didn't make those mistakes when i make a mistake shares are i can i come to you and let you bail me out next time i start losing money all right dennis go ahead jump in what you should be doing u.s. government. well i'd absolutely agree with jim on this or in this instance why can't they allow them to go to go bankrupt we in virginia understand our rights as virginians compared to anybody else i think that you have the right if you are a country to opt out of that circumstance i think the germans have absolute the right to say we have given up we have watched this for a decade it has proven to be unworthy we are simply stopping a payment to the greeks we're going to stop payment to portugal they have to get their own act in order let them go greece will be far better off allow them to go back to the drachma make their economy stronger again let taurus move that go back to greece again we were talking about this beforehand it's too expensive to go and

nobody is they are greek is a tourist spot and no tourists are there let them become a tourist but by going back to a devalued drug might tell you ok serious i did it was i think you brought up a very interesting point i think we have to go with it still here is that if we just press it in the same with greece then you have this is a knock on effect of this contagion and it is about banks here i mean we can all we can all criticize the banks but i mean we've the banking system in germany and france wants to survive this as well i mean it's damned if you do damned if you don't that's the problem absolutely you are greatly cheers and those are states that are your first then go bankrupt shares are going to. ok well the problem is that if you let them go bankrupt and nothing default and this conclusion spreads is probably going to see people respond in heart writing to me where we're still grappling with it today then you've got a real problem this is not a domino effect in the eurozone this is a break for the rest of the world that's been thrown and is definitely an effect on

markets the europeans can make up their minds hang on the europeans can make up their minds over a two day conference we took a eleven trillion dollars hit and the global capital markets for that i don't think we will get he if he gets it and it's too big to fail at this point chip and used shares are as i. have been going this is years when the time generally point is share it banks have been going bankrupt a hundred shares our banks of been going bankrupt or hundreds of years where we have made horrible mistakes over the past thirty or forty years in the united states we have made unbelievable mistakes in our financial situation so we've got to pay the piper a visually as dennis says when do you stop you're going to run this down for another five years of initially the market's going to say you know they're you going to have a major crisis that you have to deal with at least if you have a crisis now you can organize it and let some people go bankrupt and by the way get as i wouldn't pull out of the euro of my will greece i just go bankrupt and

reorganize i think the euro is good for greece if they reorganize to stop the craziness ok sure is like if i can ask you. if you want to achieve i had. no i just wanted to say you know clearly i think i agree. with jim that clearly greece is feature is within the eurozone but i like the answer and it's both one i think as americans if the u.s. government had not stepped in and done our one trillion dollar bailout where would you be right now you were so grateful that these guys stepped in because we were hemorrhaging and markets are frozen and everybody knows you're no no no no i was never a prayer of any of this bailout what are you talking about i would have bought them all go bankrupt in two thousand and eight in two thousand and nine it is outrageous what we're doing people who tried this such as the japanese have now have lost two decades the japanese refused to let anybody for you know they have the zombie banks and zombie companies and twenty years later their stock market is down seventy

percent this approach doesn't work americans already had one last decade we're going to have two or three at the rate they're going. do you still want to jump in there one of the things i'd like to ask everyone here is that all these governments are going through austerity i mean including the the italians as we speak right now and but can austerity create growth then he's can you can you because i can't think of too many examples where i steer it is because if you want to pay back loans you're not generating enough wealth i mean again it's a damned if you do damned if you don't approach we inside the eurozone austerity austerity doesn't create growth governments don't create growth low taxes getting government out of the way letting markets work that creates growth my favorite example of this is what happened in new zealand in the early one nine hundred eighty s. when they turned their back on everything that the i.m.f. had said they cut taxes across the board they did what they could to strengthen the new zealand dollar and the next thing you knew you were running budget surpluses

you have a. trade surplus they went there for the proper way of allowing the market to freely function if we would do that we would get many of these problems simply subside. i don't go away so austerity i'm afraid is not the problem is not the problem it's the government is the problem getting in the way putting too many blocks in the way of people doing the things that in their own best interest serve everybody else ok well you think about that germany's austerity listen go ahead go ahead and are in the early and the early and the early one nine hundred ninety s. scandinavia had the same problem huge problems and in scandinavia a lot of people went bankrupt they reorganize they had a hard or two or three years but since in scandinavia has been one of the great growth region so the country sweden is probably better off than most nations you know as we speak in two thousand and one south korea had a problem at the end of the ninety's people went bankrupt they had horrible pain but since then they've had a booming economy the list goes on and on people who've taken the pain accepted

reality done something about it and then started over this idea of doing what the japanese did doesn't work doing what the americans have done doesn't work ok shares i don't think everyone's talking about a selective default i mean is that just double speak for when it comes to a country like greece i mean you just don't want to call what you're told is this selective i mean is because it's not built into the euro zone you can't have it happened so are they just trying to kind of fake it and say it's a default but it's not a default. you know we're very close to the line the bottom line is if a restructure will happen and it's going to happen you can call it a default if a restructuring actually does happen the credit agencies have a different view on this they believe a private participants are involved they will consider default when you just step back for one second. austerity needs to happen in a lot of these countries obviously too much austerity will stifle growth has got to be some balance or some some mechanism to grow down the road or there's no hope i

mean unfortunately both examples jim and dennis are giving are in the past in the eighty's in the ninety's when two thousand and eleven the financial markets have mutated we are in a very different environment right now we have a crisis of fear and fear has no economic logic to it and once it spreads it spreads like wildfire and everybody looks like greece portugal ireland spain italy now and the consequences are quite devastating we've destroyed the american middle class wealth already here is an editor john de niro with a break and evacuated after a break after a short break we'll continue our discussion of yours. ok.

three. three. three three. three

. welcome back last hour computable to mind you were talking about the eurozone crisis.

ok jim i'd like to go to you is the is it too expensive to let. the too expensive to keep it going well first of all i should tell you i own the euro for a variety of reasons but we'll come back to come back to that that in a minute i want to go to share point. for hundreds of years hundreds of years we've had bear markets and when you have a long period it exists somebody has to clean out that excess you cannot just keep going and going and going and going and pouring money down a rat hole the world doesn't work that way nothing wrong with a bear market bear markets have been going on for hundreds of years they clean out the excesses in the system and you start over it's usually like a forest fire when you have a forest fire it's terrible but it cleans out the underbrush it cleans out the deadwood and then the forest can grow even better the same way with recessions depression well the pressure and then and even the bear market ok but it sure is arbitrary interesting i mean the analogy of the fall of the forest fire is nice but

we're talking about people and governments and elected officials and this is where it gets really really sticky doesn't. ok it's absolutely are you going for heat i don't want to play fair and i'm very happy with my situation right now ok sure. the bottom line is you know a crisis is different than a bear market in a crisis you know it's like a victim that has just been hit by a bus and is hemorrhaging through a major artery on the road what you want to do is stem the hemorrhaging and then decide you know then taken to hospital and then decide what you want to do but you've got to stem the hemorrhaging because in that hemorrhaging you lose your middle class if you lose your middle class you have decades and decades of pain ok did you see you could she want to jump in there to have the. yeah i did want to jump in shares i brought up the idea that jim and i supported what happened in the united states and that's just not true and jim and i may argue about one thing i think that what the united states government did in october of two thousand and

eight when the financial system really was about to seize up the central bank acted as central banks are supposed to do through history supply reserves in excess in order to accommodate that circumstance and get you past that two or three week or two month period of time what we've done since then however by by continuously allowing the central bank to expand its balance sheet and supporting that expansion of those monetary observes i take issue with that i think we needed to have stopped quite some time ago we did the right thing in october two thousand and eight applying liquidity to the system but continuously doing it and supporting industries that probably shouldn't be supported by supporting businesses that probably should have been supported gets in the way of progress gets in the way of all our in those businesses that really need that new capital that will be created to move forward so i take exception we need to do the right thing at a at a that a period of time of panic but panic has ended panic has done now you need to tell the greeks greeks stagg i think just pay the interest because i think these ratings

are actually just beginning and it's coming back and with the fury right now shares if i can ask you a question well no if we look at what's going on with usually and then we can look at spain and then he gets worse and worse and worse and it's perceptions it's a very important she said if i can ask you to this monetary union it's monetary there's no fiscal side to it is that what's needs to be done to fix this because i think well maybe all of us would agree but you just can't keep pouring money into a system that isn't structurally change it's not fixing the problem you're just dealing with the momentum of the moment and it's called fear. that's right and i think that what you've got you hit it on the head right here it's about perception the problem has been that the european leadership has been so bad that they have mangled the process for the last eighteen months clear decisive action would have calmed the markets a long time ago and we wouldn't be talking about second bailouts in ireland or in portugal and talking about financial crisis hitting italy at this point so the problem is there's no clear decisive action lot of domestic politics going on and

when you have a union like this you can't behave like this that's that simple oh you invite disaster in your shores now you're right this is not a fiscal union but they have fiscal constraints when you join this union and i think that they're now coming aware that the fiscal part of this is war critical the market report at this point ok jim you want to look like you want to. go first i want to ask peter as sure as i want to ask peter ensure over who's going to pay for all of this who's going to pay you know america's the largest debtor nation in the history of the world right now you know who's going to pay for europe to be bailed out all of the west who's going to pay for all of this are you sure is are you peter the germans with the germans you can see the germans getting so they're doing all the time so that brings up a very interesting point and i mean at one point the germans are going to say enough is enough and i think everyone would feel that's justified that's the danger we have here that's. what i. was down in the studio.

yeah it sure is a when you say decisive action what sort of decisive action should have been undertaken decisive action on the part of government always frightens me what sort of the sights of action would you have said would have been proper. it's a clear message that clear message to the market that a fund has been created the bailout will happen the restructuring will happen everybody's aware that greeks are not paid the money back instead of saying you know what one year from now they're going to go back in the private market that was not going to happen even to do the european central bank is not talking about restructuring they do want private investors involved in this plan but the bottom line is everyone knows it has to go that way so the delay the confusion the different talking heads are not helping the situation and creating more confusion in the market when the market is confused it starts to panic when you think about that jim is it shares and everyone can jam. ok we want to.

go to spain of belgium arlan all of their debts are going up over the next few years none of those countries have declining debts a deficit this is just getting worse it's not getting better there and five years from now we're going to look at each other and say my god now the world is coming to an end because the debts are too staggering for anybody to deal with you know here's one of the biggest problems that one of the biggest criticisms of the of the euro zone is that it doesn't really promote a lot of fiscal responsibility because you can these moral hazard out there or you could just you know just wait for the for the lifeboat to be you know to rescue you because you don't have to be responsible i mean is this something that needs to be changed where people are meeting held accountable because like you said when the middle class is gone who's going to be paying taxes. look you're absolutely right you know they they believe that peer pressure and public pressure could keep these

countries in line but it didn't work and i go on and this is presumptuous that we thought it would work and if this market failure the markets believe it could work and you know what possessed the markets to believe that the greek risk would be the same as german risk there was market failure clearly now there are calls for for example the european central bank is calling for a european finance minister and the purpose of this finance minister is really not to represent all of the eurozone countries but basically watch over the bailed out countries so it would be like a mini i.m.f. within the euro zone folk and missions attached to countries that are bailed out and that's coming there's no question ok jim how much that's what brought one of the things the germans are saying for more bailouts are looking at greece particularly their most private sector has to get involved in this the i.m.f. is agreeing with that but there's not a lot of other there's not a lot of consensus across the eurozone on the how much should a private sector be involved in building out these governments i happen to agree

with the private the private sector made the mistakes the private sectors made the loans to their greece made the lowest all these people take your losses i mean you made the mistakes for taxpayers in finland and austria didn't make the mistakes why should they have to pay for all of this i mean this is this is terrible economics and it's horrible morality and not that politicians care about morality that's for sure do you think about that how much of the private world in this i mean a bad. well i made a bad trade yesterday in crude oil shares i would you help bail me out please oh no i think i'll go to the germans and ask them to bail you know i don't have a legal agreement is the same the same money you and i had a legal agreement if you and other married that i didn't hear us on that we're not sure is are you bring up an interesting way we do here is that this is a this is a very different kind of leader addressing the euro zone is ok go ahead jim go ahead hold on that's exactly why not hold on guys there is a link there was a legal agreement with the european union is called

a mastery treaty we were supposed to keep your debts with your deficits under three percent you were supposed to run a sound to contract a sound economy these guys violated the law they violated the treaty and now you expect me to bail them out oh pleading are you going to let their i know you're going to bail me out of here i have a good jurors are going to the bottom line is you're absolutely right they're violated there's no question they violated the cheated on the books they did all sorts of things that were not kosher but here's the catch a legal contract was signed between seventeen countries and now it's a catholic marriage they can get out of it ok it's interesting i mean where you know where you know jim leach we ask you a question here i mean again you know we focus on these national economies ok but really it's go back to really where it goes it's the banks that want these bailouts they want they want governments to bail out these countries so they can pay banks money that owe them so it's really not about people is it it's about making sure banks get their money back private individuals in many cases. peter maybe i mean

since they were clear i would make the banks take their losses i would make them suffer they're the ones who made the mistakes that made you jim against me to break there was a consistent wall street was bailed out because everyone we were all told that we need a banking system so that we're getting the same thing will play now we will be the banking system that's the rationale i'm not saying i agree with it. you said the operative words we were told yes you know who told us that the banks the banks were panicking they called up and said save me save me save it come on let them i want to repeat banks have been going bankrupt one hundred fifty years it's not the end of the world it may be a depression but you know if we let more people go bankrupt in one thousand and two thousand and eight we probably would have been behind this by now other countries have it's been three years we would have had a horrible three years perhaps but you know and i in two thousand and eight out there and drive and oklahoma and texas they were doing fine it was only on wall

street that you had these staggering problems ok shares i'm going to give you the last word what's the future of the euro five years from now five years from now i think you could have a two tier euro zone and that hasn't had knots ok then what do you think should be you would you would you like to see it around in five years. i think it will disappear in five years i think shares that is right i think there will be a northern fiscally responsible euro and i think in the southern states that have proven themselves to be fiscally irresponsible they will all go their own way and will be back to the eschewed oh well back to the drachma we'll be back to the era of let's see what the future holds for the euro many thanks and i guess sitting in virginia washington and in singapore and thanks to our viewers for watching us here are to see you next time and remember of cross talk meals. keep.

and.