anyway jobs in return is to prosperity and is the pursuit of austerity inherently anti-democratic. to cross-talk austerity measures around the world i'm joined by people in london she is president and founder of principle us asset management also in london we have fragged his close philippe as he is a senior lecturer in international business at the university of kent and in new york we cross to dmitri papa dimitrios he is the executive vice president of bard college our focus is crosstalk rosen a fact that means you can jump in anytime you want me to if i go to you first the new york can austerity bring back prosperity because we have unemployment is on the increase particularly in the zone and that the prospects for employment are pretty bleak how can you have prosperity when there's so much unemployment and people would say austerity creates unemployment because of the loss of jobs in the

public sector. blindness stary the. decline in moment or a decline in the economy is not the right medicine clearly. the economic when there is an increase in demand an increase in demand if you doesn't come from the private sector you need to come from the public sector so therefore when one talks about you want to not be as general to suggest that you can bring prosperity clearly you are in an employment rate of over eight point three percent as it is in the united states cannot happen by itself on the by the private markets unless the forecast showing that the economy actually will grow but the growth doesn't come automatically and we have seen that in europe as well where there would be in the soudan tier southern economies in europe or even in some of the northern columnist

franz. and also germany is actually experiencing some decline in trends ok people what do you think about that i mean i mean we see a sturdy. with a vengeance in europe and we can go to southern europe all the way up to germany the french are be experiencing it as well how can what is this the right formula and dimitri says it's not the right for me and to bring us back to prosperity because a lot more and more people are just being a misery. yeah well i think look the bottom line is it's really interesting people won't agree to us territory or comply with us therapy if things are getting better you kind of need to be in bad times to get people to understand how serious a debt problem is and that it needs to be addressed i mean nobody was interested in addressing the debt problem during the boom it's only during the bust the people start to understand why but it is true that i stared he doesn't alone create price prosperity what does create prosperity are small entrepreneurs and this is really

important two thirds of the net new jobs in all industrialized economies are created by companies that employ less than fifty people now when government is shrinking this actually does create some opportunities for the private sector and new york city recently announced that they can't afford to keep the public buildings clean anymore so they privatized the contracts so some private company got a five million dollar contract i'm all for that but does it create prosperity overnight no and doesn't create prosperity by itself definitely not it's what creates it is innovation and change but the fact is that when you have spent and you earn you can't make your way back to prosperity until you fix your debt problem that's one of the reasons we can't fix the debt problem by adding more debt to it it just pushes the problem into the future so it's not the key to growth that doesn't make growth happen but you also can't have sustainable growth if you don't do it ok if.

what do you think about that what is to formulate and where does austerity play in all of this here dmitri things we're doing at the wrong time it's very very interesting observation what do you think. well i think i think both speakers had some points were very very important yes dimitri made the point about growth and obviously we need to always remember that deads is not just an absolute number is basically as a proportion of their gross national product of its country and then i think people mention one word which is really really crucial which is innovation i think what we're seeing though at the moment and the main problem that we're seeing at the moment is the austerity is not equally distributed amongst the different parts of the population so effectively you get some people paying more than others without necessarily deserving that and the other thing is you you you apply austerity or is on telly and this is going back to what people said about innovation you apply a study do it on telly you achieve nothing the government will still need to build

infrastructure the government will still need to educate people because that's that's the basic role of the government and this is how the through the upgrade of human capital you can actually create people that small and medium enterprises can then employ and innovate and create new knowledge and take the economy forward so i think the problem is not as simple as you know we need to spend more money or we need to allow small in small or medium enterprises to to grow i think what we're liking at the moment is two things these fair distribution of austerity measures that's one and the second thing is this strategy of direction which i don't see it happening anywhere in the world at the moment we're all talking about cuts which is fine yes we need to send all governments need to send a signal to the different markets financial markets primarily who look like they don't need the world at the moment but on the other hand you need to think how you spend your money in the more effective and more efficient way and where you spend

your money is the key question that we need to address i think that's a key question we go back to dimitri's that's a painfully ok people go here but that's a political decision that's very interesting that's a political decision not necessarily. common sense go ahead. but that is the point that all these decisions are general and that's why i want to follow on from the comment to say look austerity is one way and which a state defaults and then real issue here is the burden of debt is so enormous that human beings can't bear the pain of paying it off so what are the ways in which a default can occur well you can do the argentine style will just never pay back and you don't have to do us terribly or you can do what the greeks are doing which is well we'll pay you back but a little later and a little less that's the haircut option we're going to see a lot of that in europe the third is austerity the state to fall so new the citizen makes you pay more taxes makes you work harder makes you retire later all that stuff doesn't pick up your rubbish anymore the fourth option is inflation and that's what the u.k. is doing and i would argue that's how the u.s.

is going to vote on its debt ultimately and then the last option is devaluation which you may or may not be able to do depending on the situation but the point is a stair it is only one way of achieving a default and so it is correct you have to think where does the burden of pain fall on the citizens depending on each of these choices and that is a political decision dimitri you want to jump in there go ahead. but you know i think or study does a very loaded word and i think it's very difficult for us to determine how do we define clearly horizontal list is not the appropriate measure to apply it one has to determine why is it that we are brought to the position to apply osteria do you know as they're doing in the united states is different on the. greens a trip greece does not have its own currency literally it's the united states it has its own its own currency so there's one k's to be made greece could default

the united states cannot default so there is a difference between between those two also when the. allowed to increase we have to find actually why and how did increase it's not easy to suggest but somehow or other since all the counters in the euro zone were allowed to borrow the banks were allowed to borrow at the very low interest rates and pile up on on our government debt which was a little bit higher so they can make their profits this is not all there is to turn out and say well we allowed this to happen but now it's time that the party's over and therefore the population has to pay for that ok do is really think that if i go back to london frankly because i think what's really interesting here is that the greek situation of kosovo it's like going on in the united states is that the greeks have just lost their sovereignty i mean like it or not it's verlyn in

frankfurt and brussels they're vanishing their economy and this is something that's really a stark departure from what people thought the european union is supposed to be about go ahead the problem the problem is that germany and france are not managing the greek economy they're just managing the greek debt. over the last over the last couple of days i haven't heard anything about how we can return the economy to growth we're still looking at very some very deep recession figures for the good economy for the rest of the year last night the indication was that the economy will sink another five percent until the end of this year and someone made the scenario about the return integrals in twenty thirteen which i don't necessarily see happening and the just thing the cation that germany and france are going to create this new fund where all the money that they're giving to greece are going to go in order to pay that the. basically the greek debt off instead of money being

spent on the economy itself to develop the infrastructure it's there not managing the greek economy there's nothing and that's i might's i might be provoked. but here but that's all because the. international monetary fund the people if i go to you i mean yes but i mean you're right you should go ahead dimitri and i will go to the break i had you yes i think i think you should know that greece does not have an industrial base it is basically a consumption economy so you're absolutely correct the one hundred thirty billion euros are going to be used to actually rule over the dead already exists and there are forty two and need to do anything in terms of the growth establishing a growth path for the greek economy to grow so you're right in two thousand and thirteen is a pure fantasy to expect the greece is going to grow it is not possible for greece to actually step to to actually develop. surpluses so they can actually service instead the debt is going to be very high and it's not going to be salvaged with

this new bailout plan a paper five i'm going to you can i you know ok great all right before i could before we go to the break here remit paying off the dead let's be clear it's paying banks ok and this is they're getting a pay magazines and this is this saving the banks and the banking system i mean the average person in the right has nothing to do with the average person in athens. correct and that is why won't be enough for greece to default they have to actually exit the euro and get control of the cards seeing all right we're going to go to you are you going to go to a short break here and after that short break we'll continue our discussion on austerity stay with r.t. . and you can see.

the. wealthy british style. tirelessly. market why not. find out what's really happening to the global economy with mike stronger for a no holds barred look at the global financial headlines tune into kinds a report on our.

story. and. welcome back to crossfire i'm peter lavelle to remind you we're talking about austerity in troubled times. dmitri in new york i'd like to go to you i'd like to read a quote from angela merkel she said in this crisis we have reached a whole new level of cooperation we have arrived at a sort of european home affairs europe is domestic policy that's a remarkable statement because that's that that's a very incredible political statement because we're talking about fiscal and political union to the max now because greece has lost its sovereignty of law it's lost its economic decision making ability and if trends continue others call a small countries within the euro zone will also follow suit. this may

be a remarkable political statement but not an inspiring state because i think that with one talks about it fiscal union or one has to be able to understand what this means the united states of europe need to be thought as the united states of america you know just as america has a center of fiscal fiscal agent that's called the united states treasury that does not exist in europe what exists in europe is that every county cannot have a budget deficit above the three percent and to also furthermore that from now on every continent in the euro zone should not give in have three percent reduction have a constitutional amendment that it should be even much lower than that even a one percent except in some difficult times this is not what i would call the fiscal union this is it is not possible for every member of the eurozone

group to create surpluses so that it is possible to vend the euro the euro zone to be in a an even keel based on the definition of watch until america believes and president sarkozy made a major fan stay with you when you were on if i can say with you in new york of any but when countries joined the european union i'm sorry the eurozone they didn't sign up to this kind of economic policy at all did they i mean this is turning into a straight jacket i mean people didn't vote for this they voted to have a common currency the end we're talking about you know you're right it was a correct because they do euro but you know it's a euro project is an incomplete project you cannot have a monetary union without the fiscal union and along the same lines in the united states and you can have a political union or you know the powers that is created the euro zone was germany

germany and france in the names of francois mitterrand. and also john chancellor kohl new project was incomplete and they expected that those who would follow them will complete the project but what do instead is the development of tremendous imbalances between the into the eurozone countries you does not possible to expect the german you will always have a surplus unless of the counters such as greece and portugal have deficits ok and therefore this is how we've created the let me growth padron let me jump. in here i mean people i mean we just heard that other countries would follow the it would follow the political union thing but people didn't vote for that i find that inherently undemocratic and that giving people a choice ok i mean what happens when they go in the next going comes in in greece are they going to vote against the the this austerity package right if they are go

ahead of course they are and not only in greece we already hear echoes of this and france this is where francois hollande the leading member of the opposition who looks likely to win the next presidential race and france is already saying why do we have to have this us there any and i think this is the key and you can see the leaders signing up for it because the exchange is clear in germany you give me the cash to survive given my debt probably and i'll give you my sovereignty but will the public actually comply will they agree to accept the pain of the suster and will they agree to submit the most important sovereign aspect which is your first school your budget to technocrats in brussels that are not answerable to your population through a ballot box so i think that although there are many europeans who would like to see a united states of europe there are many who would not and this question is what did we all signed up for the issue today is that the debt burden is so severe that

people. will sell their sovereignty for cash right now but will they actually deliver what germany is expecting and i fear that we're going to have a meltdown have a breakdown because even though they promised they're not going to deliver. also in london i mean what is the political will right here because it seems to me and pippa is absolutely right you know merkel just wants to win the next election is not a cozy is praying he's going to get in and then we'll worry about it then i mean it's kicking the can down the road to keep taking it down because the politicians have no political will they have no. fortitude to really deal with this issue because again the at the end of the day which is bailing out banks the bankers get paid everybody else gets screwed. well the issue goes back to what we started our discussion on which is the political will and it's interesting the latest couple of comments because we need to bear in mind that currently greece and spain and italy

story they have governments that are not necessarily democratically elect their technocratic prime minister they both have prime ministers who were technically imposed by germany and france and i'm not sure that if we were having an election tomorrow their result will be that you know the greeks would like mr kopper the most as a prime minister and the would like mario monger's a prime minister you might have a very different result there and it looks like there is a trend develop we mean in some other southern european countries like spain and portugal we've seen the results of the elections in spain that's completely changed what was happening in the prime minister all so i think having him having a union means that you need to think about all your members and you need to be inclusive and at the moment the problem with european union is that although initial stages in its inception was going to be an inclusive union giving to the

less developed member states opportunities to develop sort of structural funds through the financing that the commission of the law established back in the eighty's and we now move to a union which is basically dominated by two if not one country doing whatever they want keeping the common currency low because we need to put that into the equation germany right now has significant exports because the current see the euro is a is a low cut answer them ok guys i've got to go dollars mark i'd like to go to people here it's a little car in c. it's a long car and see actually four of the four of the four germany very high current super bowl. golding greece and ireland ok there's a bit of that was there of activity difference here i wanted to say here just to be really provocative here and i don't want to be mean spirited at all but it looks like the germans won the second world war in europe pippa what do you think about

that well look i think i think that there are a lot of people who are going to look at it that way i think the fundamental issue here is that this is the end of the social welfare state in europe outside of germany not because people are choosing to end it but because they have run out of money to pay for it and i think the critical social question that confronts each of these countries individually is what will be the new deal between the citizens and their state about what is the state going to deliver because the state is not going to be able to deliver retirement at the old age it is not going to be able to deliver the pension benefits that everybody had expected and it's not going to be able to deliver the same size of the civil service that's going to shrink and so these are massive domestic political social questions personally being american and free market i think this is in one way a very very important episode in history the end of the social welfare state in

southern europe is going to give a blast of oxygen to the entrepreneurial class which i welcome but it's a massive social dislocation and therefore we have to understand that's going to be very known but you know it will go through but you have no choice if you have no money ok dimitry jump in there it's a very interesting thesis we just heard but you know but do you know that it's not the end of the world service they didn't germany or even friends it is on the end of the way that everywhere it will pause in greece and portugal and ireland if that is not what the eurozone or european union supposed to be united states of in the united states of america new york sends a lot more tax dollars to the federal treasury that being the receives in terms of government expenditures on life. delaware i've had these in the in the opposite direction he receives a lot more than you'd sense to the federal treasury so you cannot have a euro zone with with only one power to dictate the terms of the game

so clearly one's ones the governments begin to understand these as you say there is an intellect and the ideological shift if you look at the last polls in greece you will see that the left has been gaining as well as the altar right now this is not a healthy situation and i am sure that you will see the same thing in portugal and you will see alternately the same thing in as you're seeing in france for the socialist actually present their katydid to gain support against mr sarkozy who did it has no idea what a european leader was spectacular leadership is supposed to be ok so clearly you will see it on flint transformations that would to be taking place interesting frank is close and in london again do what dmitri had to say following on paper is fascinating because what we have is the center the middle dropping out everywhere and we have going to extremes i mean this whole currency crisis and debt is

creating a really intense political crisis as well because people are looking for written answers that have not been usually considered in the center. well when people are looking for answers the problem is that in greece for example people are looking to to demonstrate their way that they did these like the government the current government so effectively you don't seem forward thing happening because the left or their right wing parties have a solution to offer it's basically evolved i guess the current government and against the current situation so the problem with with all of these southern european countries any goes back to you know what these are started see as what what is the politicians strategy he's all right what is the alternative and we've we've talked about a common fiscal policy and european union the key question for me there is who's going to be responsible for that are we going to establish a treasury in brussels are we going to give more power to brussels are we going to

increase the democracy deficit that we already are in your eyes a new way to many more questions we have time to answer i want to meet all my guests all still awake all of my guests it today in london and in new york and thanks to our viewers for watching us here are going to see you next time and remember cross-talk. it. was.

news today violence is once again flared up. these are the images cobol has been seeing from the streets of canada. giant corporations are on the day.

athens approves draconian new austerity measures as the city explodes with rage and what protesters say is a sellout of national sovereignty to foreign interests. syria brushes off fresh arab league initiatives targeting the assad regime a washington a story limbering up for military action. equal opportunities to study. his plans for social reform his latest. untainted by association the ethics of london's twenty twelve olympic games or undermined the sponsorship deal with a controversial chemical company that activists claim has blood on its hands after

the disaster in india. this is. welcome to the. unprecedented humiliating sellout of greece's sovereignty and future that's the view of a greek protest the approval of a massive new austerity package the. running battles tore through the capital with hundreds of buildings set of plays by and mobs of three hundred m.p.'s hundred ninety nine voted in favor of those who turned down to their parties. the measures were demanded by says the national creditors and for a second one hundred thirty billion euro bailout needs the cash to pay off interest on its massive debts. with the shrinking economy from defaulting.