time for a look now at the main stories we've been covering for years colonel gadhafi is the son reportedly agrees to hand in soap over to the international criminal court and strange for his safety for the some leaders in the west that means their links to the old regime could get getting very public airing. the french president says allowing greece into the u.s. was a mistake the new leaders hammered out a deal to stave off the debt crisis in two engulf the entire usa all hopes are now pinned on asia as europe's bailout plan cross heads to china to ask for help. and russia's legendary devotionally theater reopens in its pre-sale big blue ridge the grand isle on friday six years of a massive renovation with countless today's scandals and allegations of corruption . coming up next cross-talk. asks his guests whether the agreement

reached by the is is enough to save the euro. liz. can. start. listening to the old. fellow and welcome to cross talk i'm peter lavelle when is a deal really a deal your leaders say they have a plan to cope with greece's sovereign debt problems and to build a firewall against italy's looming crisis and the devil it would appear is to be found in the details. you can. still listen. to cross talk of the eurozone crisis i'm joined by marshall are back

inventor he is a global portfolio strategist at madison street partners and a fellow at the economist for peace and security in milwaukee we have jeffrey summers he is an associate professor at the university of wisconsin milwaukee and in london we have any myer he is a senior visiting fellow at the london school of economics all right gentlemen this is cross talk that means you can jump in anytime you want i very much encourage it but first tell us how we got to this point on a wing and a prayer. a date with the city to sort out but use that imbroglio was said three weeks ago by nicolas sarkozy and angle a miracle then it was delayed by three days and on the third day it came through after marathon talks which ran until four o'clock in the morning under the new plan will be back to one hundred twenty percent of g.d.p. by two thousand and twenty with greek debt holders taking haircuts of up to fifty percent to four hundred forty billion euro will be used to provide risk insurance needing that after a second one hundred thirty billion greek bailout and other is for ireland and

portugal it could provide up to one trillion in firepower to deal with future crises the plan was laid out by engel merkel head of wednesday's talks. well it's a given similar but the goal of tonight's discussion will be that the with its capacity will have a great effect on the prevention of contagion and mr terence impact must be great enough. to become global markets in the lead up to this week's eurozone summit could be interpreted as confidence that e.u. leaders would pull something off to save the day but after two years of failing to come to grips with greek contagion risk and other e.u. economies and banking system what is grossly under capitalized there's been a growing sense of impatience even beyond europe successful resolution of the current european crisis matters deeply to us here in the united states because our country has no bigger no more important economic relationship than we have with europe we were weak u.s. economic rebound still in its nascent stages and the chinese economy is slowing the

sheer enormity of a new failure by the e.u. to come up with something workable after failing for nearly two years with the specter behind the politicians and officials who are gearing in the small hours but this plan will be scrutinized like no other for weaknesses which markets will exploit a small is the political torture of its creation with the dowser meeting over how it will stand over the long term but i supposably surprising to see something different after two years i wouldn't be surprised at all jeffrey if i go to you first and milwaukee how do you look at this plan that they came i hammered out with and finally after two years of wrangling over because the only thing i got out of it is a lot of. greece lost all of its sovereignty so what's your take on the great deal that was made the european leaders have come to. i think your characterization is quite right peter and in fact i'm quite concerned for the greek people because the greek people are going to have to continue to bleed in order for this agreement to work for instance we already know that they are going to have to privatized some

fifty billion euros of assets and with this latest agreement they're going to have to privatized an additional fifteen billion euros on top of that so essentially what we see is a transfer from the public sector to the private sector and to my mind what is this continued cycle of collection of rents from the public so contrary to the classical economic tradition where we make things more efficient i think what we're going towards is a system where we see increasing inefficiency rather than greater efficiency so my hopes are not high for the future of this agreement by ability and for the. good it will do for the greek people ok hearing if i go to you in london what was resolved has everything been resolved because again when looking at it very carefully it looks like there's a lot of there's a voluntary element to it i mean when do banks not want money when banks forego money i don't understand and i was in investment banking at one time it seems so we

largely call to be voluntary. yeah well the thing is you have to look at this too from two perspectives from a political and from an economic angle if you look at it from a political angle you must look i mean against a backdrop of very reluctant decisions over the last eighteen months or two years or so one has to say this was in political terms a step forward in economic terms as you rightly characterize it there are still a lot of nuisance i mean one of the things is that all of three hakka for the banks i mean the reason why it's well in theory is that politicians don't want any c.d.'s to get but obviously that's one of the cruxes really is a detail in not to the interest of some of the banks actually figure the c.d.'s because it's insurance against losses so there's still a lot of peace has to be hammered out so from an economic point of view i think it is still there's still some way to go from a political point of view showing the resolve to really tackle the problem i think

this is a ride's even if small step in the right direction ok marshall what's your take on all of this here i mean has anything really been resolved or is it just point out this is more of a political ploy right now to calm the markets and they're still biting their nails trying to figure out where they're going to get this extra trillion euros for the for the stabilization fund i mean who's going to pay for that there's no rightly when it's not written down where that money's going to come from that's a lot of money is going to be the german taxpayers. well it will be a number of the tax payers and first of all i agree totally with just characterization that the whole trajectory of policy over the last couple of years in europe has been a nightmare it's been one case of fiscal austerity after another and you know you have the situation where it's like a dog chasing its own tail the the the troika has continued to demand more and more cuts and countries like greece the economy continues to deflate into the ground which means it's impossible to meet its targets which means they get punished even

further and greece is not the objective here i mean greece is being used as an example of what can happen if the perp if the so-called fiscal deviants like italy and portugal don't fall into line so it's it's highly immoral it's bad economics and as forward to being voluntary on the part of the bankers i mean it's voluntary just as if you know i had someone stick a gun to my head and asked me for something and i agree with you there's only one tree but it's hanging fair it's just a tool and sure these credit default swaps don't get triggered these are frankenstein type products that shouldn't be allowed anyway so it's a form of blackmail and in any case the whole notion of haircuts it seems to me that you know we're looking at the problem the wrong way around the haircuts are coming because the bonds are distress and the bonds are distressed because you have this issue of national solvency you have to deal with the issue of national solvency first and then if you can deal with that then the bonds become trading at less to stress levels and at that point you don't need as many haircut so that the

cure is wrong and the punishments are misconceived as well as a terrible program ok if i go back to you in london i mean it seems to me this is compromise sovereignty i mean greece is the example here but to me greece it just rolled off its sovereignty economic sovereignty for you know who knows in a decade and is this is is this is this what people signed up for because we need to be better to have leave the eurozone because other countries and other public during this great contraction going to be saying we're the only way we can get through this is your road it seems to have only been controlled by a small group of people in brussels if you don't have to lose all of their sovereignty to keep that currency i mean that's the xti there you go when you look at what happened here yesterday. yeah i mean first of all i think it's a very important point to disentangle the economic strategy from what was actually decided yesterday i completely agree the repeated poses of austerity they're not going to going to help in order to put any of the european countries on

a sustainable trajectory i mean greece has been insolvent for quite some time people have known this and this steve won't help unless it is a company by different economic strategy that would allow the country to adjust its competitor situation adjust its public private sector and all the sort of things that really have to be just in place while it is growing. it is shrinking if you call me in greece a shrinking by i think five and a half percent this year alone this adjustment will not be possible and it will be a democratic backlash as well as for crees or any country actually leaving the euro i don't think that this will be a good idea and leader for greece nor for any of the other european countries in the euro zone for the simple reason i mean none of the long long term benefits of being a common currency and all and boy now i mean there are obviously syria economic problems but the reason to introduce the euro in the first place are still there second thing is obviously we have to reconstruct the euro zone ok i don't there are some major institution or mistakes night have to be rectified and as long as greece

can go back on to a growth trajectory i think there's adjustment necessary adjustment can be made within the euro zone they put into words a little maybe one thing that bothers me on this program is that we're all agreeing with each other here that's not what this program is all about jeffrey mind go to you one of the things i think is really interesting is that maybe the only thing they can achieve what they achieved yesterday is to stop the rot of the of the eurozone but where is the a plan for growth because all we have how can you have growth with austerity it doesn't make any economic sense to me at all i mean when you look at unemployment rates increase and in spain we will cut cutting budgets is not going to stimulate growth it's simply impossible. well peter at the risk of not being a contrarian perhaps you are going to be i agree feel we do have a problem it's as if it's as if we have a case of gang green on the head and we think we're going to cure the patient by capitated them this is absolutely. beneficial outcomes that they are into

supporting we again i think you really really hit the bull's eye here we have a system whereby growth has been halted how are we going to meet these projected g.d.p. targets under these austerity regimes in which there is not sufficient capital to launch europe not to mention the periphery of europe trajectory of growth i mean i just think that's all very very funny and this is likely your for the break here i mean on top of this what you're saying here is that and then paying off even more debt in a time of austerity i mean where is the just where is the growth to pay for these future debts again it doesn't make any sense you know we're very it's a very it's a very simple truth without generating growth this is the inability argument is not employed and the thing is the proponents of austerity say you cannot spend your way out of a debt crisis well one thing is you kind of cut your way out of the crisis either

you will have to generate growth and growth these investment so spending is not just consumption and just putting money down the drain it's about investing in the right industries in the right services and making greece grow again that's the only way to really resolve the should a long term or a gentleman we go to a short break and i would like short break we'll continue our discussion on the eurozone state. listen to the torn asunder trip to a magical land where pesticides are dumped anymore we're schoolchildren to live and learn without ever opening the paper book for einstein's theories in the laws of physics no longer apply and we're big can't always be dager still be afraid to take

my hand and enjoy the ride on technology update here on our cheap. limited free liquid intake should free in-store charges free. range of three. three. three live moseley braun can plug in video for your media project and a free media don carty dot com. take a. listen to. live . welcome back to prosecute rolled up to remind you we're talking about the crisis of the eurozone live the king. live. ok marshall in denver i'd like to go to you one of the things i mean looking

at all the commentary that's come out since since the deal was agreed to at least its tentative form is that there's an enormous amount of skepticism we've heard that on this program here but then we have the euro officials and some you know central bankers and things like to say you know we're going to it looks like it's going to work you know if we have a political commitment now all the things you hear from politicians that we all get tired of by the way i mean why is there such a disconnect there between you took a we had populations we have media expert media coverage doesn't think it's going to work the only thing that seems to work is a small group of people that sit down in brussels behind closed doors. well there there there in their own little bubble i mean a look this is fundamentally not a democratic project i mean this is government by technocracy it's always been like this you know the the the whole modus operandi of the european union has been you know we'll keep asking the questions and when there is democratic recourse if they don't get the answers they like then they'll just keep asking the question that until they do get be expedited so what people's wishes are you know that's never

come into it i mean that look the the whole of the euro the common currency project that was never submitted to the german people for example by referendum at least you know we should all did it in france and it barely won i suspect they had another referendum again that it might lose its time but certainly if you don't carry along the vast majority of the public with you you have no kind of democratic legitimacy with the obviously enjoy these nice little beanos they get every few months in places like nice or lisbon and you know they all get very nice salaries and they're completely insulated from the reality of what most people are experiencing on a daily basis and plus they have this this disgusting crony capitalists like alliance with the bankers that this this bailout of greece is effectively you know it's all been decided a way to minimize the damage to the financial savings a whole universal banking or which is has been embraced in europe it's completely misconceived to be the politicians won't attack it and that's not just a problem of the european union you see that all over the world to me if i go to

you in london i mean what about the moral hazard here i mean when you said you know we have this stabilization fund you know it is really passivity can facilitate looking at any kind of a possible default i mean it's just moral hazard right there because it just sends the wrong message that if you do get in trouble we have the money to protect you is that the thing that we should be doing right now. well there are two things here obviously the moral hazard issue will have to be addressed institutionally that is why i think once whatever the result lucian through this immediate crisis is going to be the next three or four years will be characterised by intensive debates within the euro zone and the european union as a whole as to how to reconstruct the euro zone in order to make it more sustainable and obviously you know normal capitalism rules have been shocked when the i mean if you invest in something the interest rate is also part of the compensation for the risk you take and the you know the moral hazard argument is obviously there you

know you invest and if it goes wrong the taxpayer picks up the bill i think everybody sees that there have been clear limits to this and the one thing that's going to do i mean if the banks really take the hackle fifty percent now on the on the greek bonds and will have to be recapitalized this will shift the focus of the debate back from the deflection really on to sovereign debt back onto the banking sector because if you're being honest not much has been reformed the last three years so there were there is a debate you would still have to lead and have to do something about carefully why don't we did it change gears here i mean one of the things and i remember we spoke at another program about this i mean why doesn't the european leadership and maybe for once in a while ask the permission of the people of the european union i think despite the polling go down fiscal union as well that way you know if you avoid all these problems of course you throw sovereignty out the window but i mean is it really a choice now between the euro and sovereignty because we've seen greece was the first first to be put on the altar and sacrificed. well you are right i mean it is

like a sacrifice but i would go further and say that this is kind of like an irish marriage in which the priest has told the paired couple that they need to stick it out regardless of how bad it is and that they are not going to be consulted regarding the future of this bond. it's just unsustainable in its current form you're absolutely right and i think peter that we actually need to even have a broader and larger discussion and one which would require engaging the public and that is that the real fix to this is is poorer than just a fiscal union i think we need true banking reform and using the term reform unlikely i think the banking industry needs to be treated as a public utility they have absolutely terrorized. our north atlantic economies whether it's the united states or much of the european union and the results have been an absolute catastrophe we're going to literally have a lost decade if not our last two decades unless we change this unless we start

this rent extraction from the real economy by the banking sector it doesn't matter what we do in terms of the political. union trying to change you know thing coming at least we know merkel and sarkozy aren't speaking that language at all geoffrey marshall i go to you back you and then every other people are going to have to push them there may be you know occupy everywhere is we've been through this program marshall i'm going to you we continue with the fiscal union because that's really one of the only ways out of logical way out medical legal one that's a totally different question if you want to save this currency you have to have a fiscal side in it. we've had a two year deal and that's that's been the. you know that's that's been that's been the fundamental problem since the inception of mean you have this this weird military happy house where you had a common currency with no political union and you know those of us who criticize it

from the start we were queues of being you know dollar hegemony so little england and and frankly you've had historic examples of this in the past particularly here in the u.s. and you had the articles of confederacy in the early united states history and you had the confederacy of the us south during the civil war and both of them had the same kind of characteristics are a minimalist physical structure and a very very powerful power that left at the state level so it became economically dysfunctional and ultimately collapsed so so you're right you have to move toward some sort of a political union and the problem is this is being asked a lot of these leaders in the space of weeks you know you're trying to force institutional changes and so on such a rapid rate when you know the country clearly are ready for it and in any case we have tell us what kind of a fiscal union is it going to be is it going to be like germany's so-called stability culture is it going to be really united states of germany under the guise of being united states or europe or is it could be something very different the omens today suggest that you're getting some weird form of lucy konami's where the

germans basically allow the whole of europe to be deflated into the ground they buy the assets on the on the cheap by writing the check and that's certainly not the kind of you don't need states of europe that i think most people want i was in dublin a few weeks ago and the notion right now the united states of europe absolutely terrifies them because they feel that this is going to be dominated by the germans and they're seeing what the germans are doing to the greeks and they think that their next hearing if i can go to you this whole germany question i mean it's a shame because you know the germans are damned if they do damned if they don't it's a very interesting situation to found themselves in. yeah i think well first of all i think it's wrong to talk about the united states of europe because that leads to a comparison with the united states of america bridges the wrong analogy in many respects the european union comes from a completely different kind of development and i think you know we don't we're not doing anybody afraid of just trying to make superficial comparisons with united states of america fiscal union a yes but the question is obviously what it what it means an opposite me fiscal union is not a matter of now no it's a moral yes it is also

a matter of development and evolution in this so i think i think it's absolutely important as the other speakers have also stressed that we have a more publicly paid intake of people with us and that has been has been neglected over recent decades i have to say but i think that's a trajectory that's going to you it's going to happen and the other thing is i think you already pointed to a very important for blunders going to actually open in the european union it's the eve of seventeen plus that u. turn and the city of london versus banking regulation it's going to be one of the big problems that will divide the eats and maybe let the u.k. it looks like they have a common one so you believe that often on europe countries within the european union and the the euro zone countries which have different economic interests so that's a full time to be watched i thought ok marshall you want to jump in there go ahead . i guess i just wanted to interject you can call whatever you want i mean i use the united states of europe it's a shorthand to connote fiscal union not because i want to you use the u.s. as a model you know in fact if i was to choose

a better model i would say the canadian or strained example of federalism probably our would be vastly superior i mean the united states of europe to clarify it's just a shorthand for the kind of fiscal union that you were talking about but clearly i don't think the american model is the right what either jeffrey again let's take a look at what the taxpayers have to do here with what i find really interesting is when you look at these huge numbers being thrown around and they're looking good going out over twenty twenty twenty forty things like this i mean it is it's a straight a sustainable because ultimately it's the taxpayers that have to pay for this and no one asked them for their permission to do this no one asked them to put them into debt for decades maybe if not for a generation i mean this is going to have some very severe political consequences because we've already seen it going across here. well absolutely and again referencing a prior discussion that we had i think that this isn't clearly fictitious i mean this is absurd to speak about decades out in terms of projections of what g.d.p.

is going to be but more or for we need to get back to this discussion of an even development in europe because ultimately this is what we're talking about we don't have a unified continent we don't have a unified levels of economic development and consequently we're going to require different sets of policies for different parts of europe we cannot have uniformity across a continent which is not even a thought in terms of its level of development so for instance in the periphery we're going to require or we're going to need tolerance for say higher levels of debt and also we need to figure out a way for nations to currently do what their poor hit by doing and that is to. create credit for the purpose of investment in their countries a currently we have a system whereby we are forcing all of these nations to go to the private banking. markets and order to raise capital this increases their cost plus making

economic growth and investment a more expensive proposition if you leave me germany or when you're almost out of time here i have you i want to go to you in london if we needed to if we make a program yes oh year from now on this exact topic what do you think the condition of the euro will be. i mean we all seem so agreed that we need to grow sort of gene order to alleviate the problems i think as opposed to some of the others because i think the imbalances that we see within the euro zone and not just in terms of development but also i can on the balance and fight imbalances that have to be addressed i think we can do it is i mean if you read all right generally with remove all of the time you know we started this program on a wing and a prayer we'll see if it stays that way year from now many thanks and i guess today in london denver and in milwaukee and thanks to our viewers for watching us here are to see you next time remember. to keep.

the. wealthy british scientists out. sometimes. markets by not scandals. find out what's really happening to the global economy in these kinds of reports on our.

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