when bloody and costly and we still have yet to see any clear plan for it then it's . the book. and a lady on that note because that is it eight o'clock for one of the stories we covered go to our t.v. dot com slash usa you can follow me on twitter at lauren lyster we'll see tomorrow for more news. you know how sometimes you see a story and it seems so you think you understand it and then you've lived something else and you hear or see some other part of it and realize that everything is art you knew you don't know i'm sorry welcome to the big picture.

you can. no longer welcome to cross talk i'm curious about is it time to write the obituary 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. taking. steroids. across the uk 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 princeton across to andrew moravcsik he's professor of politics and director of the european union program at princeton university's woodrow wilson school all right gentlemen with 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 head germany of the us 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 mortal flaw 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 to a monetary union retaining their fiscal solvency at a time of crisis that cannot work here as existential problem is that it's 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 in greece 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 a second germany sees inflation anywhere on the horizon children are lending one of the possible solutions is a fiscal union or transfers it is quite obvious that the limit or for the money to do. for the euro is coming through. and my guess is that at the end of the day it's hard to say when that will happen it will be germany the. terms of the like 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 year obama is sure which involves a major jump in its debt servicing requirement the weekend has underlined the chancellor merkel's coalition could crumble if she goes any further than what she has 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 much attorney for across our team. ok randy and i go to you first in london are you writing the obituary for the euro right now because it would be 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 the obituary and history cards germany 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 funds 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 police

that it's rather more stable we're looking at something in which all the countries of europe are in debt which is unrepeatable if you take greece it's. its government debt is percentage of g.d.p. was one hundred fifteen percent but it's results of the austerity measures it's going 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 they don't understand that always putting money out at interest and not worrying. really clear 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 do you think why are you writing the obituary for the for the euro. i think it's too soon to be a bit you are 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 your show and they do it not because they're 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 were talking about right now greeks would be hurt if the euro collapsed because they have to pay that back one way or another and if they if the currency collapses it will be even more difficult to pay back ok get your opinions are going to be going to finally interdependent going one way or the other ok

daniel i mean the and i mean it is finished they're highly interdependent normally the 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. merkel suffered a 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 it's pure common sense ok. well i would like to add the big three 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 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 older 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 benefiting from it and even though there's no democratic k'naan for it you know it really it's 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 the 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 this currency can be saved . yes but it would not save it because in fact at the levels that are much too high

you see behind the partner of the euro 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 now that is collapsing on an even larger scale that in fact europe and there is a certain arrogance behind those who promoted at great universities in america like a 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 is export it all its jobs on the grounds that this is suitable for everybody it's not the whole system is fundamentally a class thing and part of that is the problems and the collapse of the euro ok and your ideas are salvo shot over europe your powder you want to reply. no it missed because we're not debating 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 to the germans right the point the problem america faces is she is going to have to pay for the debts which german banks the money the german banks have lent to countries like greece one way or another so if they europe 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 these other rabin's 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 until 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 daniel it's very interesting because you know the way the perception it is in the media we're looking at sovereign countries with their sovereign debt i began to brings up a really good point it's really about saving all these tanks and a lot of very very wealthy people connected to political power in these countries. well i think what i did saying is one sided with respect because there would be costs involved with on riding the euro or withdrawing from the euro zone but i think there are also very high costs involved with maintaining the euro zone 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 is though that it's having a crisis now because it's 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 your as an 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 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 mean. well you may get a greek default but you may get it the other way round which is that there are many unfilled and. possibly the benelux countries i'm not sure about that perhaps holland may pull out the other way round because you see the whole thing is going into a crisis and it's a fundamental crisis which has actually been building for at least sixty years and that is not understood nor is understood it's the great shift in the way wealth is actually produced a result of these big factors and it's now in the euro and in europe and the

politicians and in you that you us say this complete lack of understanding of how serious the situation is and there is not a free market but you let me jump in here. and after a short break we'll continue our discussion on the year old state with r.t. . if you. want to. the latest in science technology from the realm of. the future are very.

much.

ok. welcome back across town people about to remind you we're talking about the eurozone crisis. came. 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 as we go through this crisis where it's pointed out just how different these economies are if we look at the paid 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 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 the convergence between the various european economies it hasn't done that and that means there is 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 together 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 are 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 in 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 know the answer daniel if i can go to you it's seems to me that eight 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 european union itself a central bank steps in and just saves the bank there but there's always going to be this temptation to finance here's part two you know bait these countries because a lot of money could be made off of their debt a very expensive debt 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 to them particularly confusing is i would say there's 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 banks and so on there's an economic crisis which i think rodney was alluding to in some extent 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 without themselves it has to be a democratic process it has to be something which the ordinary people of the eurozone are involved in and at the moment it's just a completely elite enterprise that is trying to impose solutions without really working out what people want from the whole process you know iranians arranging life like it had going to happen if i could just 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 does not actually forward the really economy in the spreading of the real economy so the has to be a challenge and that elite 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 in to find a ugandan you brought up and it is very 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 o's from germany south work i think it's much more a question of whether or not there is that reform capacity particularly domestic

reform capacity in countries like greece or italy or spain and lost and you didn't find any changes because it is a line these economists say other but this is this really the biggest problem here is that you know we have a monetary union without a fiscal side i mean 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 daniel's quite correct the problem is a monetary union without convergence of under law and social and institutional structures of the economies which is a different thing you're not going to override those differences between countries by shuttling money from one country to another instead you're going to have to 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 jumping ahead. pieces mindset

is that there is only a little reform 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 a month's blacks and hispanics he's not saying that all very fundamental. and as a result the euro is going into crisis as he is the usa is going into crisis and all he talks about is the latest reform and nothing is happening in the usa usa and the nothing is really going to happen in europe and 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 reform what is wrong with daniel fine go to you what is one of the things that is made all right and you're jumping is 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 work after it i'm actually agreeing with danielle that there is a severe tension within this system attention 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 the way they will 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 reforms 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 and say what am i getting out of it i'm paying taxes here to bail out some guy grow growing all of us in greece why should i be doing that 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 what's it 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 goes much deeper than that i think what you have is a huge gap between the euro elites if you want to call them that which are not just financial they're political they're industrial kind of 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 already there's no kind of popular demand for that. so i think first with us are 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 in germany they've also suffered a serious ever long period randi what do you think about how democratic is it is the euro is the zone well the the german people. probably not in favor and the french are probably not and the touchup probably not and the u.k. has kicked out the real question is what that he was hitting on it's about and he leaked concepts and the least 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 set them back so that they stayed in in the politics of it so i will tell you all that this is a quest it's an elitist project and not one which ultimately is based in the science of the people and you know what i think everybody agrees that for this system to work it has to be reform but there is there enough time because you know

we have to go we have to look at the master treaty in the lisbon treaty and if you see really what it was supposed to do what they can do we all know that they treated does allow our countries to be bailed out but did we see a process of their going on there let's say they go off they go back and they change it is there enough time for the euro to go on to work through this process as the democratic process in 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 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 in the face of crisis so 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 born this time 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 of going to stop it 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 the german 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 all right you know what i'm afraid we've run out of time but it's really it's a sleeper so this program a year from now and see where the euro stands me thanks to my guest today in london and princeton thanks to our viewers for watching us here darkie see you next time

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