welcome back this is our live from moscow does a recount of all our top stories as nato packs up was libyan mission to kill colonel gadhafi his key son could blow the whistle on deals the west wants to bury if he gets his day in court international prosecutors say they're holding indirect talks with saif al islam possibly surrendering to the new he's wanted for war crimes. but agrees join the euro was a mistake the french president doesn't hold back in his beleaguered e.u. call leave after leaders sign off on another massive rescue deal or europe's now turning to asia for a cash kickstart for the bailout fund having to ask for help to save the euro. the bolshoi is back it's a day millions of theatre lovers have been waiting for as moscow's lamarck theater avails its first performance in six years after

a massive from furbish. coming up next for you is our debate show cross talk with peter lavelle to stay with us right here in our city. liz. can start. to. flow in welcome to cross talk i'm peter lavelle when is a deal really a deal if 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 see the

slim. to cross talk of the eurozone crisis i'm joined by marshall are back and enter 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 where. a date with destiny to sort out the years that imbroglio was set three weeks ago by nicolas sarkozy and angle america 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 greek debt will be back to one hundred twenty percent of g.d.p. by two thousand and twenty with greek debt holders take a haircut of up to fifty percent before hundred forty billion euro e.f.-s. earth 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 ahead of wednesday's talks poised to give the signals that goal of tonight's discussion will be that. with its capacity will have a great effect on the prevention of contagion and this deterrent impact must be great enough. the calm global markets in the lead up to this week's euro zone 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 economies and a banking system that is grossly under capitalized there's been a growing sense of impatience even beyond europe successful resolution of the current european crisis not as deeply to us here in the right states because our country has no bigger no more importantly economic relationship than we have with

europe with a 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 was the specter behind the politicians and officials still arguing 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 dollars for a meeting over how it will stand over the long term but i suppose it be surprising to see something different after two years i wouldn't. surprise you know jeffrey if i go to you first and milwaukee how do you look at this plan that became a hammered out we're in finally after two years of wrangling over because the only thing i got out of it is a lot of loose ends and greece lost all of its sovereignty so what's your take on the great deal that was 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 believe in order

for this agreement to work for instance we already know that they are going to have to privatized some thirty 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 it 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 we're going towards 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 henning if i go to you in london what was resolved there is anything 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 you banks not want money when banks forego money i don't understand and i was an investment banking at one time it seemed so we logical to me voluntary. yeah well the thing is you have to look at this to from two perspectives from a political opponent economic angle if you look at it from a political angle you must look i mean against the 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 and economic terms as he rather characterize it there are still a lot of loose ends i mean one of the things is the voluntary hakka for the banks i mean the reason why it's voluntary is that politicians don't want any c.d.'s to get but obviously that's one of the cruxes you see really is in the detail in my paid interest of some of the banks actually to trigger the c.d.s. because it's insurance against losses so there's still a lot of details to be hammered out so from an economic point of view and 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 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 heading your 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 aid there's no one right and it's not written down where that money's going to come from that's a lot of money is going to the german taxpayers you know it. well it will be a number of the tax payers and first of all i agree totally with your characterization of the whole trajectory of policy over the last couple of years in europe it's been a nightmare it's been no one case of fiscal austerity after another and you know you have a situation where it's like a dog chasing its own tail the the the troika has continued to bend more and more

cuts of countries like greece and economy continues to deflate into the ground which means it's impossible to meet its targets which means that 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 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 in and asked me for something and i agreed to it i mean there's something about its having said it's just a tool to ensure that these credit default swaps don't get triggered these are frank and slime 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 haircut so coming because the bonds are distress in the bonds of distress because you have this is your national solvency you have to deal with the issue of national solvent see first and then if you can deal with that in the bonds become traded at less to

stress levels and at that point you don't need as many haircuts but the cure is wrong and the punishment misconceived is well it's 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 when tony greece just wrote 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 restricted leave the euro zone because our other countries and other publics during this great contraction would be saying the only way we can get through this because your road it seems to have only been controlled by a small group of people in brussels and we're going to lose all of their sovereignty to keep our currency i mean that's the xti ergo 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 repeat of those of us territory they are

not going to going to help in order to put any of the european countries on a on a sustainable trajectory so i mean greece has been insolvent for quite some time and people have known this and steve on help unless it is accompanied 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 increase while it is growing. it is shrinking of the economy in greece are shrinking by i think five and a half percent this year alone and this adjustment will not be possible and there will be a democratic backlash as well as for cories or any country actually leaving the euro i don't think that this would be a good idea and leader for greece nor for any of the other european countries and the euro zone for a simple reason i mean one of the long long term benefits of being in the current currency and boy now i mean there are obviously syria economic problems but the the reason the interest the euro in the first place still there second thing is obviously you have to reconstruct the euro zone and here i don't there were some

major institutional mistakes made and these have to be rectified and as long as greece can go back on through a grocery tree i think there's adjustment necessary adjustments can be made within the euro zone ok to put into words a little bit of your own thing that bothers me on this program is that we're all agreeing with each other here that's not what this program is on our jeffrey if i 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 that perhaps you want me to be a great deal we do have a big problem 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. absolutely it's not going to produce the 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 be 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 very very. much for the break here i mean on top of this is 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 we're just 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 ability 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 can't cut your way out of the crisis either you will have to generate growth and growth needs 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 so this isn't making greece grow again that's the only way to really resolve fissioning i'm so sorry gentlemen we're going to a short break and i'd like short break we'll continue our discussion on the eurozone state party. welcome to the joining us on a trip to a magical land where pesticides anymore for school children can live and learn without ever opening the paper book. and the laws of physics no longer apply and

we're big can't always be figure you'll be afraid to take my hand and enjoy the ride on technology update here on a lark eat. the legacy that survived the russian revolution and that's. the most showing is by looking more splendid than the din for over a century. the grand decorum czarist times is dazzling the audience again after a six year week. long awaited resurrection of the bolshoi theatre. on t.v. .

q. welcome back to crossfire computable about to mind you were talking about the crisis of the euro zone. kick. start. ok marshall in denver i'd like to go to you one of the things i mean looking out of the commentary that's come out since since the deal was agreed to at least it's 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 yeah we're getting it looks like it's going to work you know if we have a political commitment now all of 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 the two ok we had that populations and we have media

expert media coverage doesn't think it's going to work the only people it seems to work is a small group of people that sit down in brussels behind closed doors. well there there in their own little bubble i mean a look this is fundamentally not a democratic project i mean this is government by technocrats it's always been like this you know the 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 the mail just keep asking the question that until they do get the answer like so what people's wishes you know that's never come into it i mean that look the the whole of euro the common currency project that was never submitted to the german people for example by referendum at least you know metre all they did in france and apparently one i suspect they had another referendum again that it might lose this time but certainly if you don't carry along with the vast majority of the public with you you have no kind of democratic legitimacy but you know they they 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 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 this bailout of greece is effectively you know it's all been designed in a way to minimize the damage to the financial sector to build a whole universal banking or which is has been in place in europe it's completely misconceived to and put the politicians told to tack that 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 what about people moral hazard here i mean when you set up so you know we have this stabilization fund you know it is there you can facilitate looking at any kind of a possible default i mean it's just moral hazard right there because it is 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 did two things here obviously the moral hazard issue will have to be addressed institutionally that is

why i think once whatever the result of this immediate crisis is going to be the next two for years will be characterised by intensive templates 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 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 a whack at a fifty percent. on the greek loans 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 in the last three years so there were there is a debate we will still have to lead and have to do something about jeffrey why

don't we didn't change gears here i mean one of the thing and i remember we spoke on another program about this i mean why doesn't the european leadership and maybe for once in a while ask permission of the people of the european union i think just by controlling go down fiscal union as well that way you know if you avoid all these problems of course you throw sovereignty out the window pane i mean is it really a choice now between the euro when sovereignty as we've seen greece was the foot first to be put on the altar and sacrificed. well you're 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 because this is 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 just a fiscal union i think we need true banking reform and using the term reform likely 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 a last two decades unless we change this unless we stop this rent extraction from the real economy by the banking sector it doesn't matter what we do in terms of the political. changes i think you know we merkel and sarkozy aren't speaking that language at all geoffrey marshall i go to you back you would then every other people are going to have to push them there maybe you know occupy

everywhere is we've been through this program marshall i know you. continue with the fiscal union because that's really one of the only ways out of logical way out not a political one that's a totally different question but you want to save this currency you have to have a fiscal side in it. we've had a two year deal that's that's been the. you know that's that's been that's been the fundamental problem since the inception i mean you've had this this weird military halfway house where you've had a common currency with no political union and you know those of us who criticize it from the start we were being you know dollar german it's a little englanders and and frankly you've had historic examples of this in the past particularly here in the us you had the articles of confederacy in the early united states history and you have the confederacy of the us south during the civil war and both of them had the same kind of characteristics are a minimalist fiscal structure and very very powerful powers at the state level so it became economically dysfunctional and ultimately collapsed so so you're right

you have to move towards some sort of a political union but 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 on such a rapid rate when you know the country clearly are ready for it and in any case we have to ask 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 of europe or was it could be something very different the omens today suggest that you're getting some weird forward to seek anomalies 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 united states of europe that i think most people want and 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 terminated by the germans and they're seeing what the germans are doing to the greeks and they think of it there next. to you this whole germany question i mean it's interesting because you

know the germans are damned if they do damned if they don't it's a very interesting situation that they 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 of the united states of america which is the wrong analogy in many respects that is the european union comes from a completely different kind of development and i think you know we don't know you know to anybody afraid of just trying to make superficial comparisons and everything out of sense of america fiscal union a yes but the question is obviously what it what it means and obviously fiscal union is not a matter of now no it's a moral yes it is also a matter of development and evolution and this so i think i think it's absolutely important as the other speakers have also stressed that we have a more public debate and take the 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 them that's going to actually open in the european union it's the eve seventeen plus that you and the city of london versus banking regulation

it's going to be one of the big problems that will divide to eat certain maybe led by the u.k. it looks like they were kind of wants to be the leader of the known euro 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 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 strain example 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 school union that you were talking about but clearly i don't think the american model is the right one either jeffrey again we're going to take a look at what the taxpayers have to do here 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 fings like this i mean it is it's

a state of sustainable because ultimately it's the taxpayers that have to pay for this and no one asked them for their permission to do this and 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 europe. well absolutely and again referencing a prior discussion that we had i think that this isn't fairly 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 over 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 level sort 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 unified in terms of its level of development so for

instance in the periphery we're going to require we are going to need tolerance for say higher levels of debt and also we need to figure out a way for nations to currently deal with are prohibited 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 for us making economic growth and investment a more expensive proposition leads me to the euro we're almost out of time here i heve i want to go to you in london if we need to prove if we make a program yes year from now on this exact topic what do you think the condition of the euro will be. i mean we all seem so great oh we need to grow some of the gene order to alleviate the problems but i think as opposed to some of the us because i think the imbalances that we see within the euro zone and not just in terms of

development that are also i can on the balance the site imbalances that have to be addressed i think we can do this i mean if you read our i generally agree more all of the time here we are in this program on a wing and a prayer most even states how a year from now many thanks and i guess a day in london denver and in milwaukee and thanks to our viewers for watching us here are to see you next time remember. the egypt. story. the opening to the in. the easy. to. see.