that's a get you until seven o'clock and we will be right back here for more news. on . the worldwide manhunt for him lasted for fifteen years. and one million new award wasn't promised for his come true. political must murder for the west. there are so many innocent. general in the serbian army. luggage. on our cheap. guitar sometimes you see a story and it seems so for lengthly you think you understand it and then you've learned something else new here see some other part of it and realize everything you thought you knew you don't know i'm sorry welcome to the big picture.

the money.

can't say. oh well going across knock you know about is it time to write you a picture where for the euro as the single currency reels from one crisis to the next europe's politicians appear to be powerless in the face of a monetary union that is proven to be dysfunctional what started out as a monetary crisis is now turned into a fiscal and political meltdown. you can. still see. across about the fate of the euro i'm joined by rodney shakespeare in london he's one of the founders of the global justice movement also in london we have daniel ben ami he is a journalist and author and in france and across the andrew moravcsik he's professor of politics and director of the european union program at princeton university's woodrow wilson school all right gentlemen this is cross-eyed it means

i want you to jump in any time you feel like you want to say something but first let's take a look at the changing landscape of the european union crisis. it is a global reserve currency the only potentially viable alternative to the gemini of the u.s. dollar and the single currency of the world's largest developed market of consumers but ever since establishment as part of the master treaty critics have pointed to the lack of a single political entity it to oversee the monetary union something that in two thousand and eleven is increasingly becoming the model flawed for the euro and potentially the eurozone it represents the eurozone now rests on the shaky basis of a confederation of states that are committed both to a monetary union and to retaining their fiscal sovereignty at a time of crisis that cannot work the heroes existential problem is that its monetary side the only say that it has imposed as a single currency and the single interest rate on economies ranging from the basket

case increase to the german bastion of fiscal probity this means that italian or spanish exports don't get any cheaper and that interest rates go up the second germany sees inflation anywhere on the horizon chalking off lending one of the possible solutions is a fiscal union or transfers it is quite obvious that the limit or forgive me. for the euro is coming through. and my guess is that. it's hard to say when that will happen it will be determined that. throws out the light on the euro. germany is currently at the center stage it faces the choice of either agreeing to some form of fiscal transfer or backing a euro bond issue which involves a major jump and a step servicing requirement the weekend has underlined the chancellor merkel's coalition could crumble if she goes any further than what she has done in terms of

supporting cash strapped euro debtors and that leaves the euro and possibly the eurozone as the biggest threat to the global financial system monitor and i crossed up our team. ok romney and i got to you first in london are you writing the obituary for the euro right now because it is the news flow coming out about the this currency is just unbelievable and as we speak right now germany may be deciding maybe not today but the ultimate future of this currency. yes i do write me a picture area and this regards germany at the national debt of germany related to its gross domestic product is eighty three percent and that is higher than the similar percentage for the u.k. where i am france and spain and everybody knows that the next ones that go into crisis are spain france portugal and the u.k.

but the german situation is actually worse and it's only maintained by the belief that it's rather more stable we're looking at something in which all the countries of europe are in debt which is an repayable if you take greece it's. its government debt is a percentage of g.d.p. was one hundred fifteen percent but as a result of the austerity measures it's gone up to between one hundred sixty and one hundred seventy percent and it's rising and on top of this none of the academics none of the politicians under things like understand things like the shift from labor production to capital production and they don't understand that always putting money out at interest and not worrying. you are in a car you know i thank you see there you prayed and we got you pretty big money and you and i do you in princeton why you think why are you writing the obituary for the for the euro. i think it's too soon to write the obituary for the year we have

to look at what's happened over the last couple of years this is an arrangement that was set up two decades ago by the europeans and to which they are fiercely committed they've committed almost a trillion dollars to defending the euro and they do it not because they are sentimental or not because they believe in some dream of a united europe but because it's in the interest of almost every country there germany likes this arrangement because it protects german banks because it protects german exports because germany is economically involved throughout europe and because the collapse of the euro would be a disaster for german business for german banks and ultimately for the same german taxpayers who we're talking about right now greeks would be hurt if the euro collapsed because they have to pay that debt back one way or another and if they if the currency collapses it will be even more difficult to pay back ok danny peons

are going to be going to finally interdependent well one way or the other ok daniel i mean the line i mean you just finished they're highly interdependent one of the idea ok but if it's in their interest i go to daniel but it's proving to be dysfunctional i mean how do you marry these two different things together because i mean the german. angle merkel suffered an election defeat a local election defeat in her country because people are saying we don't want to pay for the laziness of the greeks in the in the misfortunes of the portuguese and the spanish and the irish i mean i mean that's pretty common sense ok. well i would like to write the battery to the euro but i don't think unfortunately we're positioned to do that yet because i think your in your introduction person is quite right to say that you have an inherent contradiction within the euro zone where you have very productive countries like germany and growth of the unproductive countries like portugal and greece and when you look them together we can honestly

you create all sorts of economic problems and you create a system where both the southern europeans who are suffering austerity but also the northern europeans like germany benefit so for example if you look at average wages in germany they're more or less where they were twenty years ago so i quite understand why would we germans are unhappy about the eurozone and about the economic circumstances i think the problem is the european elite is absolutely determined to try and push through european integration even though people are not benefiting from it and even though there's no democratic the non for it's you know it really is i think this whole crisis is very interesting expression particularly for the people that really want greater union across stronger union a political union and that would also include a fiscal union this is the only way to a euro will be saved if they go to a united fiscal policy which would essentially destroy the sovereignty of every single member of the european union that's the only way to screen so you can be

saved. yes but it would not save it because in fact at the levels of are much too high you see behind the popular of the euro as the bigger problem of what is called the free market system which endlessly creates that does not put it into the real economy and the spreading out that is clept seeing on an even larger scale than in fact europe and there is a sudden hurrican speak and those who promote it at the great universities in america are like them harvard and princeton where they claim that anything the free market does is for the benefit of everybody it's just not true i mean the united states for example has exploited all its jobs on the grounds that this is suitable for everybody it's not the whole system is fundamentally collapsing and part of that is the problems of the class of the year are ok and your ideas are salvo shot over your bow do you want to reply. no it missed because we're not there baiting the we're not debating the airy abstractions of free market

economics in fact this isn't a free market economics arrangement it's a particular monetary system and the fact is countries are now bought into this system so it would be extremely expensive to get out of it take the germans right the the problem airco faces is she is going to have to pay for the debts which german banks the money that german banks have lent to countries like greece one way or another so if the europe and euro tanks germany still has a problem of their own banks that have lent that money to greece right so germany is trying to manage a crisis in which it is interdependent with greece and these other broad beans talking as if if we pulled out of the euro then germany could just traipse off would have to worry about anything but in fact america if you didn't have to pay

greece would have to be bailing out of our own banks and we know from the united states that isn't any more popular than bailing out greeks ok dan daniel it's very interesting because you know the way to the perception of is in the media we're looking at sovereign countries and their sovereign debt space i think andrew brings up a really good point it's really about saving all these tanks and a lot of very very wealthy people connected to the political power of these countries. well i think what i did saying is one sided with respect because there would be costs involved with unwinding the euro or withdrawing from the euro zone but i think there are also very high high costs involved with maintaining the euro because you're maintaining a system which cannot really be stable you cannot look greece and germany or portugal and germany together in the same economic system and one is very very productive and the other is to be unproductive you create all sorts of problems if i the really remarkable thing about the euro zone is not this having a crisis now but they just lost it for so long i think it's only lasted for ten

twenty years however long you want to measure it. because if we had a relatively stable world economy over that period but now we're entering a period of more instability i think it could be very hard to maintain euro zone intact despite what the politicians wants ok rodney what do you think about that i mean let's get a worst case scenario is that we have to start kicking countries out like greece i mean you keep one country out in the whole house of cards falls apart right that's what we keep hearing in the media. well you may get a great thing for a lot but if you make it the other way around which is that there are many unfilled and. possibly the country's i'm not sure about that perhaps holland may pull out the other way round because you see the whole thing is going into crisis and it's a fundamental crisis which has actually been building for at least sixty years and fatties not understood nor is understood it's the great shift in the way wealth is

actually produced and a result of these big factors but it's now in the euro and in europe and the politicians and in your book you us say this complete lack of understanding of how serious the situation is and there is not a free market ok let me jump in here. and after a short break we'll continue our discussion on the euro stayed with r.t. . to.

but. you. can. still. welcome back across time people about three miles you were talking about the eurozone crisis. can. start.

and i'd like to go to you in the context of this crisis here how much has the euro made these economies more alike because that as we go through this crisis where it's pointed out just how different these economies are if you look at a pig countries for example i mean it's still the disparities between them that was trying to the euro was supposed to. measure out and level out it hasn't done that and i think that's one of the thing that's this whole crisis has revealed. well this is where david has a very good point that the presupposition of the euro system from the start was it was supposed to lead to a convergence between the various european economies it hasn't done and that means there's constant tension within the system and it's true whereas on the one hand european countries will go as far as they can to try to keep this system think the

other because it is very much in their interest to do so and they will pay tremendous short term costs if this system breaks up but on the other hand it's true that there are structural costs that they're paying all the time because this system basically isn't suited to the real economies they have so the question is whether this crisis can trigger domestic reform and countries like greece or spain or portugal and also perhaps in germany that will alleviate the situation and that's a question to which we don't yet know the answer and daniel if i can go to you it's seems to me that as we get on this crisis moral hazard is there the slippery slope is there is it ultimately to save somebody banks or german banks and french banks the state is going. to central bank steps in and just saves the bank there but there's always going to be this temptation to finance a year's cart to bait these countries because a lot of money could be made off of their debt very expensive get i mean it's seems

to me that no one is allowed to fail that's why this system will ultimately fail because no one is allowed to fall fall apart within it. i think there is certainly vested interest involved and certainly the banks will put pressure on the respective politicians to bail them out when necessary but i think one reason why this discussion i'm talking general terms not about them think it is confusing is i would say it is not really one crisis there are three crises there's a financial crisis which is very obvious the kind of turmoil in the financial markets problems with the plants and so on there's an economic crisis which i think broadly was alluding to some extent and there is a political crisis and i think ultimately the solution to the problem. is with the politicians but it's something they can't just sort out themselves it has to be a democratic process it has to be something which you would need people of the eurozone are involved in and of the moment it's just a completely elites enterprise are just trying to impose solutions without really

working out what people want from the whole process you know randi it's very interesting life like it had going to jump in if i can just out ahead if i could just add to what daniel said the real problem is that the it is thought that the interests of that financially elite automatically then results in furthering the interests of main street and that is simply not true the financially controls a vast part of the economy and rips off the feast for its own purposes and in its actions last not actually for which the really cannot be in the spreading of the real economy so there has to be a challenge on actually lete there has to be a challenge on the bankers and in practical terms they have to be made to go bankrupt as the only way of forcing a substantial reform reform if you find do you did you feel you brought up an interesting easy go ahead i was going to ask you go right ahead. but that but

that's crazy that's a nine hundred thirty scenario look nobody in any society likes a situation in which bankers are padding their coffers but at the same time there is the issue of systemic stability that banks go belly up and it can bring down the whole economy that's what we learned from the one nine hundred thirty s. and that's what sensible people are worried about so policymakers are facing a very difficult situation here but the question is what's the solution to this problem and i don't think that any european policymakers think that the solution is something like fiscal union shuffling large amounts of of your ose from germany southward i think it's much more a question of whether or not there is the reform capacity particularly domestic reform capacity in countries like greece or italy or spain and los angeles is interesting money and really does it is a line these economies this is another but it's just this really the biggest problem here is that you know we have a monetary union without a fiscal side and we can

a monetary union of this magnitude actually work without more coordination of fiscal policy you know that's not the problem the problem is not a monetary union without the fiscal side the angles quite correct the problem is a monetary union without convergence of underlining social and institutional structures of the economies which is a different thing and you're not going to override those differences between countries by shuffling money from one country to another instead you're going to have to it's i think the question is whether countries are willing to make domestic constitutional commitments to make this thing work germans are not going to pay unlimited amounts of money ok keep greece afloat ok write me jump in go ahead. peter peters mindset is that there is only a little of the full needed and everything will be hunky dory he doesn't for example understand that he's own country unemployment is not nine percent it's least twenty to twenty two and it's forty percent upon amongst blacks and hispanics he's not saying that very fundamental to. and as

a result the euro's going into crisis as he is the usa is going into crisis and all he talks about is a late street form and nothing is happening in the usa usa and the nothing is really going to happen in europe he doesn't see the fundamental problems in the situation here and in the usa he's just in fact saying oh everything will get back into balance with a bit of reform but he's wrong then i think daniel find out to you what it is one of the things that is made all right and you're jumping is this crosstalk go right ahead no excuse me i did i didn't say anything of the sort everything i said had a question mark after after it i'm actually agreeing with daniel that there is a severe tension within this system and tension that might be impossible to overcome but if but european countries will try very very hard to overcome it because they have a tremendous interest in doing so and if they are to overcome it the way they were overcome it is not by a fiscal union they may engage in things like euro bonds and so on but this is sort

of an i.m.f. plus kind of arrangement the major heavy lifting that has to be done to keep this system in place involves domestic reform and that's the point i'm making and it may or may not succeed myself i'm increasingly pessimistic daniel on what is the element of democracy here because we had these elections in germany maybe this is the beginning of some wave a lot of people on the ground are saying this is the euro in principle maybe in theory we have an interest in but for a lot of people on the ground they'll say what am i getting out of it i'm paying taxes here to bail out some guy group growing all of us in greece why should i be doing that and i think that's a good you know if it's real or imagined a lot of people feel that way that there's this incredible disconnect between the principle of the euro which is supposed to do and how it helps the average person. yeah but i think it's not just ordinary germans resenting people in greece or portugal i think is not steeper than i think what you have is that huge gap between

the euro elites if you want to call them that which is not just financial they're political the industrial country elites in general and the ordinary population because you have the elites of the different european countries pushing through toward some kind of more unified integrated europe. but doing it against the will of the people or thirty there's no kind of popular demand for that. so i think first of all that's all desirable because if you're a democrat you need to accept that only people have a say in it and of course it means people are extremely cynical about the whole european project quite understandably because as i said they have already benefited from it it's not just the people in southern europe who suffered austerity in northern europe as well in the netherlands and germany they've also suffered a serious ever long period robbie what do you think about how democratic is it is the euro is the euro zone well the the german people.

probably not in favor and the french are probably not and that probably not and the u.k. has kicked out the real question is what he was hitting on it's about and he leaked concepts and then little idea and in fact the mass of people have been sort of browbeaten into it as in the case for example of island where they had to vote twice. to make sure that they stayed in in the politics of it so i'm with daniel that this is a question it's an elitist project and not one which ultimately is based in the science of the people andrew what i think everybody agrees that for this system to work it has to be reform that there is there are enough time because you know we have to go we have to look at the master treaty in the lisbon treaty and and to see really what it was supposed to do what we can do we all know that the treaty does allow countries to be bailed out but if we see a process that they're going on now let's say they go or we go back in a change is

there enough time for the year old to go on to work through this process is the democratic process and each individual nation state or deals with this because as we speak right now the german constitutional court is dealing with this issue. well at the european level the european union system has a reputation for being extremely bureaucratic and there are all those gnomes in brussels who muck up the works but in fact it's extremely sleek. over the past year and a half it's been extraordinarily innovative creating new funds and creating new procedures and so on one reason is because the monetary system as opposed to other parts of the european union is in fact largely in the hands of the heads of state and government and the central bank which is a small group of people who can make decisions and they've actually been able to move quite quickly and the face of crisis i'm not worried that they cannot do things technocratic lee i'm worried as my other colleagues are that they won't be

able to do things politically so it's true that if the german constitutional court or the german were to block something it would be difficult to do i doubt that the constitutional court will do so because that's not their tradition the bundestag might but let's remember one thing and this gets back to the question of democracy right the germans have made away like bandits from the system but german and german exchange rate is forty percent below what it otherwise would be which makes germany one of the great exploiting nations of the world with a trade surplus oranges a lot i'm afraid we've run out of time but it's let me say sleep through this program a year from now and see where the euro stands me thanks to my guest today in london and princeton thanks for viewers for watching us here darkie see you next time and remember crosstalk.

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