you with all the live from moscow where snow was three thirty pm on friday the headlines activists claim that soldiers in northern syria are actually turning against the regime and the government says they're just gangs posing a threat to the public. the occupy together and the corporate protest movement stands its ground in new york across america as they go into continental with demonstrations planned around the world. and the european central bank says it's done its part in the debt crisis and governments now have to take the lead twenty

finance ministers meeting in paris to discuss the latest ideas to fix the economy. ok coming up next to. discuss the predicted death of the eurozone crosstalk. wealthy british science says sometimes that's because. the. markets why not scandal. find out what's really happening to the global economy comes a report on our key. you can. start. to. welcome the crosstalk i'm peter lavelle the euro crisis it is

a high noon moment for a euro zone looking to stave off another recession while juggling indebted sovereign slim's the banks and the specter of economic crisis in the mediterranean this has many seeing the worst business currency can have a future. and you can. start. to cross-talk your old jitters i'm joined by john gaunt in london he is chief executive of vote u.k. out of e.u. also in london we have andrew leigh co he is director in principle 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 in the decline of america in one nine hundred seventy s. to the present hi gentlemen this is cross-eyed then you can jump in anytime you want and i very much encourage it but first tell us about this ongoing almost endless crisis. but not much progress the global economy is emerging from one of the roughest squares yet with intense market volatility fueled by the fear that

policymakers cannot contain the spreading crisis and that this europe remains mired in the songs at best into the absence of political will power to avert disintegration 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 out of a meltdown has so far been met with gridlock and resulted in political stalemate among the governments of europe venue 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 a 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 the latter 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 finland and slovakia has threatened to throw any progress made on the issue into reverse poll this has time and again highlighted the key issue behind the squabbles in my personal view you know what we need to make significant progress through a sport if you go to unity with an executive branch and recall you meant with us leaders now saying the hero zone risk as the biggest single impediment to an economic rebound the alarm bells will ring louder until the plan is on bail and the upcoming weeks after kicking the can down the road for nearly two years the next could blow up in the face of the global financial system perhaps we'll see more in the upcoming days thank you very much for that russia and i to go to andrew first in london here we had sort of causey and merkel meeting out to me not to long ago and they said they're going to come up with a solution by the end of this month here what a solution can they possibly come up with after i've 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 vision 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 the german should feel that they should have responsibility to pay for italian debts that were accumulated from long before the euro even existed all of the schemes were closed at variance 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 euro bonds 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 the banks the people who lent money to the max people in spain and in 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 needs to be out in cyprus and so 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 greed the greece will default on its debts and we still can kicking the can down the road here i mean why isn't it why is it we just they 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 in more inmore 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 devalue itself will then 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 dog and the woman knows full well that greece is already finished greece has got to go for already good for could have been they in effect why are leaders returned residues i have to just don't grow some and realize that's the case and let's just get on and move on all right jeff in london juggling you want to jump in there you know. i'm always stunned by the utter insensitivity of

these kinds of comments just like 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 or germany indeed benefited from that the anger on the part of your two guests that's quite as quite sharp and stunning to me and the lack of a sense of obligation to greece which indeed i was afraid of these me here are saying obvious how to shut off our self and i would kill myself to hold on a second he wasn't admitted to the british people who went into this he was certain guilty man who took us into this folly we stand outside the euro zone anyway because we're not the euro but let's let's understand this this pain here in the u.k. as well we're not responsible for creation problems that mature you know well i know so. i'm very early in the only serious i'm going to and you have oh it's whether we wanted to hear i hear you hear you're barely any it soon decided to try greece's

economy to the economy of germany there. guilty man not you would know citizens of all great country all right jeff you want to reply nobody has the fact is sir yeah 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 a light side like i have a somewhat more civilized discussion i don't have a country such as civilised i assume as britain i'm not a big fan of britain's current a scary 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 pouring more money than i should or should i just as jeff pleased to share what is usually ways nation spying i would love to hear my i do have your moderator i'm trying to master go ahead jeff the idea that you can talk it 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 in which europe found itself and so little historical memory about the value of the common market and the idea of throwing nations out when try 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 do 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. 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 my to have them generally appreciative. i know you think she's very sensitive and this kind but i do find of anger and i did andrew on this i mean there's there's the moral hazard issue here i mean nobody wants to see the greek people suffer i mean i think we'd all agree on that there but there is the moral hazard issue if 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 that's able to do the same for us i'm not trying to be insensitive fairfield i just say you just the system work or not yours and i guess you go ahead and jump in let me just go ahead and do this you haven't said much in 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 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 have faulted i'm not suggesting that actually the greeks were

particularly benefit but i thought and i just think it's inevitable that they will do so or they will default and they will accept 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's has 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 thirty'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 it was in a thing called the exchange rate mechanism a kind of fixed exchange rates regime in europe and as countries gradually started to drop out so the italians dropped out 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 and the question they fear they could find a 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 two thousand and nine was because really most of the sovereign debt bailouts were just banking sector banks by another name and so once they start accepting that you get a default 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 bank in belgium called dexia which has actually foreign currency foreign currency obligations much larger even than the state of greece soon. this is all you want highlight your job here we are going to a short break and after that charles will continue our discussion on the hero stay with arctic. odds and you can see. the if. you want to.

observe nature and discover a species. communicate with the wild. test yourself and become free to. see what nature can give you. a very warm welcome to you this is your news today protesters on the walls street play at. least until some of your chance to try to get a good example the status of the human experiment just sitting with thirty weeks

you will see this rap music in which it snows the globe slowly trying to make sense of local economies and it's on changelings us financial temples to the research clambering to maintain our confidence in hmong kids and taking on wants to be seen trade imbalances risk the few missions close to collapsing the supply close close close. to fail so we pull a big stink and steal it will likely get us crashing timonen smashed ceiling it seems to me is like closing in the closet and streaks the sparks mail just programs increase playing the total economy. ok. you can see. the full. welcome back to crossfire computable to remind you we're talking about the possible

death of a currency. case the first story. book and i 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 and also can ask the same can i can ask the same question about austerity i mean how can i was fairly grim 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 kindleberger 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 here to the two other gentlemen agree with this is they just drag this on and on for structural reasons for. you to use truck two 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 well 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 i'm sure the bush administration with paulson and geithner and so forth and we had our tarp we had our f.d.i.c 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 ask 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 would lot of people would say the problem is all of it all. it is a very courageous it's actually hard to let go potato and on the debt ceiling ok if i can go show if i can let me finish this one 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. credit it goes back to what we were 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 for here to anoint our our american friend in dublin was talking about the united states of america hand how they try to solve their country's problem now i agree the preacher they haven't really solved i have that because of that the present problems that the states are suffering but that was one country we never asked to be in the united states of europe or here in britain or the united kingdom what's 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 joined in i did they tell the whole truth about their balance sheet twenty percent and i just get it either stay within me and here you where you could ask that same kernel he has what was your lawyers van if you are honestly like a foreigner to these nations ok germans economy is going to fitted enormously by its 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 precedes you both the fact is that there are quiet because you work you you have to you this is true he listen to me as they trust they try to ask the store unionism and therefore to see how union of euros i do know my history is majority 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 i want to know i want to hear me want to understand the problem in europe and we're going to . go ahead you have the floor go ahead it's not 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 the reality is that greece is going to i mean greece has already agreed to default great greece is going to have a full scale default within within weeks certainly by march so 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 did the greek thing needs to be off the table so the real issue here is how do you get enough growth in italy for italy itself to service its own bets or if you can't do that do you have to have the germans take on the italian bets 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 now going through a keynesian economics that's like some other country taking on some of the else entirely take on responsibility for their beds and 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 there 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 it's not that heavily indebted country in aggregate it has a bit of government debt obviously but in fact even by 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 debt but it has enormous levels of household interactiveness and the americans haven't in any way address that problem through the top it all that they did was that they would be 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 within the european union is that they face that danger with in your opinion perhaps the most egregious examples are spain and ireland i mean i think kingdom but places like belgium aren't some immune from the

crisis well so we know what we need to have is a solution to deal with the banking sector crisis on the one side and deals with the gross growth and competitiveness italy and two i think what you're getting at here you're getting at here is actually finding a solution and not something to start by 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 you know we've seen what's happened ok and you know i miss my responsibility 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 whereas trying 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 that this idea that somehow you'll get america has to cut its

debt and therefore it will solve its problems the i buy my administration did expect to grow faster and dad did not was not going to rise at this level according to their forecasts 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 and 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 and the road but it will get get down to the level around the level of stabilized and around the level of seventy to seventy five percent two thousand and thirty two thousand and twenty five that's when we have to begin to have big health care problems and believe me a lot of us are talking about that so this is casting americans in the same light as these other problems which 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 pretty of doctors 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 know the euro the euro well 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 it's going to be frank for because the germans are going to be paying for it it's a bit like when island were bailed out normally when one goes into election and you go into the booth you sell the story you know it's the economy stupid well if you and 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 because they are the ones who are going to bail it 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 france 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 their life than just a few weeks ago so we thought we'd take lessons from them but they obviously think if the united states of america here we're not there you know we're actually like you're on your own we're in your usual facility and we went in for l.b.j. i want to show you i want to hear the last word on this program go ahead and. i think there's any all the distinction in the world between and arrangements in which either the germans accept that they have responsibility for. that and then the italians get to spend as they like or the tally the germans lend money to the

town and then tally italians well they have a land 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 on behalf of 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're going to want to carry with that 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 modern era and we've all the time your days you very much gentlemen a lot more is going to share it 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 rules. if you. still. want.