so back here with r.t. here's a reminder of the top stories activists claim soldiers in northern syria are turning against the regime but the government says they are just armed gangs posing as threats to the public that use throwing more sanctions in place after a day of clashes left at least nineteen dead. the occupied together as a corporate protest movements that began more of those intercontinental demonstrations are being planned in canada and the u.k. asia and other cities across the globe. spain's credit takes a hit from international rating agencies with warnings of

a further slide that's as its neighbor portugal announces tougher steering measures with people and using the government of working for the rich powerful satellites here in our team time now for some heated debate and crossed up with peter will go . wealthy british scientists are. sometimes spies for. markets finance scandal. find out what's really happening to the global economy in the cause a report on r.t. . can. be. welcomed across talk computor all about

the euro crisis it is a high noon moment for a euro zone looking to stave off another recession while juggling and get it solved once flimsy banks and the specter of economic crisis in the mediterranean this has many seen the worst this is currency can have a future. can. start. to cross-talk year old jitters i'm joined by john daunt in london he is chief executive of vote u.k. out of e.u. also in london we have andrew lilly co he is director and principal of europe economics and in dublin we go to jeff madrick he is senior fellow at the roosevelt institute and author of age of greed the triumph of finance and the decline of america in one nine hundred seventy s. to the present all right gentlemen this is cross i mean you can jump in anytime you want and i very much encourage it but first tell us about this ongoing almost endless crisis there have been quite a few meetings but not much progress the global economy is emerging from one of the

roughest squares yet with intense market volatility it fuelled by the fear that policymakers cannot contain the spreading crisis i mean remains mired in that song that the absence of political will power to avert integration this is the most serious financial crisis we've seen at least since the one nine hundred thirty. if not ever now we're having to deal with very unusual circumstances devising a rescue plan that would pull the monetary union at of a meltdown has so far been met with gridlock and resulted in political stalemate among the governments of europe the need for unanimity has significantly slowed the process with countries that odds over the need to recapitalize the banks and the source of the funds to make it happen germany is ready to recapitalize the banks and we need unitary criteria we are under the pressure of time and we need to take a decision quickly but so far germany and france have been unable to find common ground over how to recapitalize with a letter insisting on the use of the four hundred forty billion here

a european financial stability facility and recently opposition from arguably less prominent players like him and slovakia has threatened to throw any progress made on the issue into reverse all this has time and again highlighted the key issue behind the squabbles in my personal view your work we need to make significant progress towards political unity within the executive branch and to parliament with you as leaders now saying the heroes i will risk as the biggest single impediment to an economic rebound the alarm bells will ring louder until the plan is unveiled and the upcoming weeks after kicking the can down the road for nearly two years the next kick could blow up in the face of the global financial system perhaps we'll see more in the coming days thank you very much for that russia and i forgot to andrew first in london here we had sort of causey and merkel meeting not too many not too long ago and they said they're going to come up with a solution by the end of this month here what solution can they possibly come up with after been talking about it for two years watching this. currency crisis just

continue to spiral out of control. one of the problems we have here is that almost every solution proposed over the past few months has been a variance of the same basic theme which is that somehow germany should become responsible for all of the debts of the eurozone and in particular they should become responsible for the debts of its early and portugal and greece and other countries within the euro zone now that just seems to me to be a silly idea a nonstarter and is any reason why german should feel that they should have responsibility particularly for italian bets that were accumulated from long before the euro even existed all of the seams were posed the parents on this theme so the idea of having a huge stability fund of two trillion euros or leveraging the existing much smaller funds up to two trillion or maybe printing loads and loads of new money your robot or all of those four kinds of ideas are variants of the same debt sharing theme so

they are a nonstarter the way that you should be going here is first of all to be seeking to address some of the fundamental problems in the euro zone banking sector by imposing losses on the lenders for banks people who lent money to them actually in spain and ireland and then dealing with the problems in portugal and italy by having a system of transfers over time an extension of an existing system called the e.u. structural funds which would allow you to send money off each year just to raise the growth rates of those countries a little bit and finally accepting that greece really doesn't have a future in the euro zone so greece let me out here yes i mean cyprus leaves you bring up a very good point here and in it if i go to john here i mean the whole world except for a few leaders in the e.u. in some greek politicians have long ago agreed they view the greece will default on its debts and we still keep kicking the can down the road here i mean why isn't it why is it we just we just take

a huge haircut and just move on ok because after two years of watching this continue down the road everyone just has to pay more and more in more go ahead. well it's like the emperor's new clothes new clothes isn't it someone's going to shout out the emperor is naked somebody has got a shout out greece is already in default it is absolute nonsense as you say that they continue to kick the can down the road greece is bust it's time for greece to leave the euro zone it's time for greece to be able to take back the track and evaluate self-will there you know to use a cliche go on holiday there again and help them rebuild their economy but i mean as you say every man cat and dog and woman knows full well that greece is already finished greece has got to go they've already got folks that haven't they in effect why our leaders it's young researchers i have to just turn grow some and realize that it's not a case unless just get on a move all right jeff in london dublin you want to jump in there you know. i'm

always stunned by the utter insensitivity of these kinds of comments because let them goes if we're not talking about real people as if we didn't set up a situation in which it was a very easy for greece to borrow it in which we did not set up a situation in which germany indeed benefited from that the anger on the part of your two guests that's quite is quite sharp and stunning to me and the lack of a sense of obligation to greece which indeed was absolutely amazing please me here are saying obviously i don't set off but i would tell myself to hold on a second he wasn't related to the british people who went into this he was certain guilty man who took his into this folly we stand outside the euro zone anyway because we've not got the euro but let's let's understand this this pain here in the u.k. as well we're not responsible for creations problems and which oh yeah well i know so and i know so if i marry any serious serious human and you have no it's whether

we want to tell you how you. decided to try greece's economy to the economy of germany there. the guilty men nor do i know citizens of all great country all right jeff you want to reply nobody has the fact is sir and i'm i'm not going to use that kind of the kind of language this man uses i mean he's entitled to say whatever he likes on whatever channel they like so i'd like to have a somewhat more civilized discussion out of it countries as civilized i assume as britain i'm not a big fan of britain's current was staring economic side there but the idea that you can talk with such. such insensitivity about a nation and its people just stuns me the idea that you're a jew would you do that calling them all money. just as jeff pleased to be sure what. nation spying i would like to hear my i do have your moderator to i'm trying to master go ahead jeff and the idea that you can talk yeah yeah i hear you the

idea that you can talk in these terms and with no sense of moral obligation and with no memory and no historical memory of the difficult periods especially after world war two and which europe found itself and so little historical memory about the value of the common market and the idea of throwing nations out when trouble when things get rough is it difficult to save greece yeah you bet it's difficult to save greece and maintain it in the eurozone can greece take a substantial haircut yeah ok do we need a substantial maybe even fifty percent haircut yeah can greece develop have a primary surplus next year the numbers suggest they can of course the debt load is very big and has to be cut. out radically but the idea of saying that they're going to cut their currency by fifty percent were two thirds and somehow they'll just

bounce back because you guys are going to go visit them and spend money there is just. it's as hard for nice to have them gently present. they're sensitive i miss kind but i do kind of anger and i think that andrew on this i mean there's these there's the moral hazard issue here i mean nobody wants to see the greek people suffer i mean i think we all agree on that there but there is the moral hazard issue of you continue to throw money into greece to try to save an economy that most people leave is already bankrupt then you have the other pigs lining up to say will do the same for us i'm not trying to be insensitive care to say you just the system work or not to work and i guess you go ahead and jump in let me just bag and do this you haven't said much of the program go ahead. yes it's not it's not the germans the germans didn't force the greeks to borrow money so the greeks chose to borrow these monies themselves and it's turned out they were unable to pay and of course there were french and german and other banks have lent money to greece and they'd be the participants that would actually lose out when the greeks defaulted

and i'm not suggesting that actually decrease we've taken really benefit by default and i just think it's inevitable that they will do so or they will default and they will exit from the euro at this stage i think things have gone beyond the point of helping them if the if the euro zone or thirty says made more sensible decisions a couple of years ago i think it would have been possible to have a haircut for the greeks and then for the rest of the eurozone to have lent the money to keep them in the euro i just think that that's not really a possibility anymore i think it's also important to understand what the difficulty is on coming up with some alternative solutions at this stage because you have to appreciate two things first is that the euro zone or forty's are terrified of the possibility of an unraveling of the whole euro zone project because if you go back to one nine hundred ninety two and then there were you have found that there was an thing called the exchange rate mechanism a kind of fixed exchange rate regime in europe and as countries gradually started to drop out so the italians drop down and the british and others eventually the whole thing came to bits so that even countries like france in the end which had

been thought to be absolutely core and inviolable members in the end came under pressure they fear that you'd find that the whole euro zone unraveled if you started to let people leave the other thing about this is that the reason why they didn't have a greek default back in twenty nine was because really most of the sovereign debt bell outs were just banking sector balance by another name and so once they start accepting that you get i think felt by the greeks and then you'll get a cascade of losses of various banks around europe we've already had some banks go bust earlier this week for example quite a large banking in belgium called dexia which has actually foreign currency foreign currency obligations much larger even than the state of greece so. this is all you would highlight for me john here we are going to a short break up in a choice will continue our discussion on the hero stay with arctic. luck came to.

this nature and discover is buzy. communicate with the why don't. test yourself and become free. see what nature can give you. on. a very warm welcome to you this is your news today protesters on hold since they have . been canceling your chance to try to get books for example the status of the human experiments given.

the weeks you will see this rap music or was it just goes to movies really trying to make sense of local economies and it's all changelings us financial temples to the research family to maintain our confidence in hmong kids and taking on the british wants to be seems way to balance its risks to keep the missions close to come sing a song like look for close ones. to fail circulates again feelable fighting is us question seven in smashed changelings displacement in the clubs isn't streets beyond the streets male just programs increase the total economy. ok. you can take the story. from the phone.

welcome back to crossfire thank you to all of your mind you were talking about the possible death of a currency. in the phone . book and i to go back to jeff in dublin there's a lot of talk about the european financial stability facility and possibly pumping it up to two to three trillion euros now what is the logic of going into so much debt to pay off debts i mean at what point does it become viable because it also can ask the same can i can ask the same question about austerity i mean how can i stared bring prosperity go ahead. yeah well i agree that austerity in the in the cases of the countries for the most part with one or two exceptions who are following it are is not going to bring prosperity but debt following debt is a long standing idea i mean you've got guys like padgett of the economist you've got our charles condoled berger who wrote probably the best history of bust you've

got a you can interpret keynes in minsky this way always they say when things begin to unravel there comes a point where you have to say you have to throw debt overwhelming force to stop the bleeding now what's happened in europe and i think the two other gentlemen agree with this is they just drag this on and on for structural reasons for. e.u. structural reasons but also because they just didn't want to face the facts and also i think it was alexander who said the private lenders have to take a hit when they've been trying to avoid that obviously in france and other places they have not gotten their private lenders to take a hit now we face this in the u.s. as you all know under the bush administration with paulson and geithner and so forth and we had our tarp we had our f.b.i. see guaranteeing all kinds of debt we had our federal reserve dramatically expanding its balance sheet now that stopped the crisis i don't think it was

implemented and all that well because it did not get the banks lending again it did not change management it did not and serious conflicts of interest we have in america but there you have a pretty darn good example of some people who i don't always admire coming together and i think people forget it's so easy to forget history what a risky step they took and how many people like you just now asked how are we going to solve this problem by throwing debt after debt and in fact they did they did solve the problem well i mean i was a lot of people were saying the problem isn't solved at all. oh it is a very big it's actually a hot political potato and on the debt ceiling just like you know show the good fight and let me finish this one no i'm sorry if i go to john in london i mean either i agree with jeff in principle i mean it's keynesian economics ok but i mean who pays for u.s. debt it goes back to what you're saying earlier in the program i mean why should germans have to pay for the mistakes of the greeks i think that's what

a lot of people are asking the question on point how our american friend did goebel and was talking about the united states of america hand how they try to solve their country's problem now i agree the peter they haven't really solved have that because of the present problems that the states are suffering but that was one country we never asked to be in the united states of europe i mean here in britain all the united kingdom was the euro zone crisis got to do with this but we're still bailing out these paid countries and then when you look at germany for example why should germany be bailing out greece you know grew in greece first joint you know did they tell the whole truth about their balance sheet twenty percent and i just get it either stay with him here and here you where you could ask that same kernel he has what was really a spanish well you know honestly write a story to these nations ok germans economy is going to fit in enormously by x. exports to these nations can i just finish this point apparently you gentlemen

don't understand american history or history very well we have had time and again conflicts in trying to unite this country going way back maybe the history of precedes you both the fact is that there are quiet because you are you you have to talk to you this is still here listen americans they trust they tried to ask the story and therefore see how union of you as i do know my history is moderately to stop to stop to stop the crisis at that moment that they didn't proceed as i said if you would listen to me that they didn't proceed well enough along that they didn't adopt adequate keynesian stimulus that. as for the issue but they did succeed in stanching their crisis at that moment give them credit for that right now we're going to now and really want to understand our problems. because your time go ahead you have the floor go ahead and it's not keynesian economics for the germans it's not keynesian economics for the germans to take on italian debts i

think i think we need to get this discussion beyond greece because reality is that greece is going to mean greece has already agreed to default greece is going to have a full set of faults within weeks certainly by much so that that's not even the issue anymore the issue that markets are interested in is how the how and whether they're going to keep italy in the euro whether they're going to keep the whole euro together and so do the greek thing needs to be off the table so that the real issue here is how do you get enough growth in italy for italy itself to service you sound bets or if you can't do that do you have to have the germans take on the italian debts or have the italians default i think it's just a ridiculous idea that germany should accept trillions of years of debts that arose before the euro zone even existed and that's nothing to do with keynesian economics that's like some other country taking on some of body else entirely take on responsibility for their beds the way of getting back growth within italy is of course partly to do with structural reforms and so on it's also though i think have

to be some transfers some monies will have to be sent from germany to the european union and the european union will then spend those monies in italy it's really fundamental situation isn't that but it's not that heavily indebted country in aggregate it has a bit of government debt obviously but in fact even the middle of the twenty ten's even italian government debt is projected to be lower than that in the united states so the united states situation is in many ways actually worse than that it's only because the united states not only has quite high government it has enormous levels of household and debt in us and the americans haven't in any way address that problem through the top it all that they did was that they were tardy in the moments of having to make a decision about these things. what you do when you when the governments intervene in these ways is at best they put off the problem until later out worse they go the way of ireland and they find that the government then takes on so much that itself that the government goes broke and the reality for a number of countries within the european union is that they face that danger in your opinion perhaps the most egregious examples are spain ireland so united

kingdom but places like belgium and some immune from those currents as well so we know what we need to have is a situation of yours with the banking sector crisis on the one side deals with the gross growth and competitiveness you think it's early and enjoy i think what you're getting at here we're getting at here is actually finding a solution and not something to start here jeff if i go to you what are some of the structural issues they need to address if they really want to fix this currency because if you don't have a fiscal side in the monetary side we've seen what's happened ok it enormous amount of irresponsibility going on entirely to go ahead. i don't entirely disagree with alexander i am a little taken aback however by this idea that it's not so now it's not fair to germany to take over we're not talking about fairness and we're trying to stop a major crisis where's try and we're talking about practicality we're talking about what has to be done even at a cost but let me let me say something about the american economy because because

i'm a little disturbed by this idea that somehow if you'll cut debt america has to cut its debt and therefore it will solve its problems the obama administration did expect to grow faster and debt did not was not going to rise at this level according to their forecast they got it wrong what are they trying to do now well keep in mind we have a lot of taxing ability in america as you guys well know we're almost the lowest tax country in the world if we get the economy back on track we can begin to raise taxes and cover that in fact you may not know this but the obama plan which i don't like because it was mostly tax saving cut government cuts not revenue increases down the road but it will get get down to the level around the level is stabilized at around the level of seventy to seventy five percent two thousand and thirty two thousand and twenty five that's when we have begin to have big health care problems and believe me a lot of us are talking about that so this is casting american in the same light as

these other problems is pretty wacky on the other hand i do agree with alexander's analysis of italy he is talking about a united fiscal policy in the u.a.e. e.u. which i do believe is necessary the idea of throwing greece to the dogs i find i frankly find it pretty innocuous going to let it fall for a major haircut one way or the other people are going to take a loss john if i go to you if we want to talk about having a greater fiscal side to the you the euro the euro then you're going to have a lot more political control centralized with someone in brussels in frankfurt in some place because that control spending and spending has a political price tag attached to it go ahead. well well of course but that control isn't actually going to be in brussels is going to be front for because the germans are going to be paying for it's a bit like when island were bailed out normally when one goes into an election and you go into the booth they sell the story you know it's the economy stupid well if you're in your country and your own politicians are actually controlling your

economy what is the point in voting it actually did huge people their democratic rights and actually that's the way we're heading isn't it because the germans will dominate this bad because they are the ones who are going to bail out because they're the ones who haven't had this rapid expansion and reliance on credit the rest of the euro zone nations of god and that's where it comes to play and it's all right for our friend in dublin to talk about the united states but look at the level of debt mess that look at the fact that they could well default themselves or so they look at they might have to just a few weeks ago so we can only take lessons from them but they are obvious things if you know nicely states over models here we are not there you know we're actually right there on your road when your usual is really doing and we well temporarily i want to show you here i want to refer to the last word in this program going here under. i think there's any all the distinction in the world between an arrangement in which either the germans accept that they have responsibility for italians that some the new town has got to spend as they like or the tally the germans lend money

to the town and that's how the italians what they have to sell and either of those arrangements is a nonstarter the only way that this can work is if the germans send money to europe and europe then collectively parts of the eurozone which is going to have to be its own country will then spend money in italy and other places so it's not a matter of germany dominating anything it's a matter of a new country called europe coming into existence ok. general you have what you want to worry with sad but the responsibility will be yeah i generally agree with that but lead to remember that the responsibility will be germany's as the strongman of the morrow and we've all this time your days you very much gentlemen a lot more years ago i was here many thanks to my guest today in london and in dublin thanks to our viewers for watching us here r.t. see you next time and remember rostock for. any. story. you want.