>> this is "bbc newsnight." funding for this presentation is made possible by the freeman foundation of new york, stowe, vermont, and honolulu. newman's own foundation. and union bank. >> union bank has put its financial strength to work for a wide range of companies.

from small businesses to major corporations. what can we do for you? >> in the economic crash of the 1930's, countries blamed each other. we look at the parallels and how we can look at repeating a -- avoid repeating a decade of global recession. is the political leadership there to make it happen? >> who is going to lead them? >> i also on the program, with the end of rem, michael stipe and mike mills on why the band split. the g 20 leaders who met this week did not have much time for sleep as they struggle to come up with a plan to rescue greece

and avoid the collapse of the euro. some essential reading would have been economic history of the 1930's. this is what happens when the world economy enters end of the crisis. what can we learn from the mistakes made then and how can we avoid repeating them? >> the depression of the 1930's began in wall street with a share price crash. how did get from wall street to the rest of the world? that is the story of the banking crisis and social unrest. the breakdown of an international currency system. if that sounds familiar, it should turn to what is haunting the world's leaders as they prepare for the summit is a repeat of the early 30's.

in the 1930's, there is a great fracture of globalization. countries which had been used to operating all took to doing their own thing. they kept doing their own thing politically and economically. the world that collapsed in 1931 was an ultramodern world. the economic recovery produce art deco, luxury for the masses. for the lead to come out what could possibly go wrong -- for the leaelite, what could go wrong? when the crisis started, it looked like just a blip. this was trade based on gold. this would destroy almost

everything else. >> this is what they thought would promote globalization. the gold standard was a system of fixed exchange rates that oblige governments to balance their books long term. and the worst hit countries, sticking to gold forced governments to make austerity worse. today, some worry that what happened with the gold standard could happen with the euro. ed harris to the rules is forcing some countries to impose harsh austerity. the european political class is saying that no one can leave the euro. >> this is a single currency and the countries are tied together.

the parallel is the gold standard. some countries believe that the gold standard was the basis for prosperity. the reality was that it was imposing numerous deflation. >> this forms a case study in how the events can disturb a currency peg. amid defense costs, the royal navy mutinied. >> this led to the parts of the royal navy fearing that they would have large salary caps and this had a mutiny. the flagship of the navy. this triggered a very widespread panic.

they really panicked in respect to the u.k. pound -- to the u.k. and germany and japan came of gold in the same year. the industry as output figures showed those that ran for the experts -- the exits first, recovered first. the depression was felt worse by those countries that were last to abandon their commitment to the global system -- america and france. >> we know what happened. within a decade, the big powers were involved in wars and military conflict. the problem today is that you can just see the beginnings of some of that. when the usa decided on the

second round of quantitative easing, the result was to boost inflation in the rapidly developing countries like brazil. the brazilian finance minister called it economic war and retaliated. japan, fearing that its exports would be hit by a cheaper dollar, intervened to weaken its own country. japan did it again this week, so did argentina. that has led some to hear the breakup of globalization, others to welcome it. >> globalization as the way it is construction has caused some of the problems that led to the credit crunch. is this what we really want going forward, companies and labor power.

the asian governments are gaming the system. >> last week's deal projected more friction into that argument. your knees to borrow a trillion. when the man doing the borrowing turned up in china, he was told to stop criticizing over currency and then we will see. thehe early 30's even as global economy slipped towards breakup, the band played on. this is a world in which radio was growing rapidly, public morals were getting looser. today, it seems impossible that are global system could disappear. so much of our culture is bound up with it. in some countries within a decade, the whole world of jazz, loose morals, modern art was gone.

♪ ♪ >> there is no legal justification whatsoever for france not to pay the current installment on her debt to us. >> two things cost the breakups, debt that has become politicized and social unrest. on the streets, once the unrest broke out, it proved on possible for politicians to resist the national route out of the crisis. this time, free-market economists have been at the forefront of defending globalization but now, some are beginning to see the possibility of retreat. do you think it is realistic for us to still be talking about the global multilateral solution to this crisis? >> i think that it is unrealistic. i believe it would be better at this stage for us to look it to

our own ramparts. if we see someone doing better than something we tried, we can copy them. the politicians then blame international coordination. they would say, we have been forced by the germans or the americans or the imf or the u.n. to do things this way. >> in greece, that is already happening. the occupied protests do. they are putting pressure on national governments. here again, there are lessons from history. >> you should not underestimate the social and economic perils

of neglecting the moral aspects of policy. they will ultimately reject that. this can be terrifying. >> this is far worse than the world war. >> today, we are a lot richer than people were in the 30's and that should cushion the blow. the social cohesion is lower to a generation whose future has been cancelled, maybe a little comfort that things were worse back then. >> there are fears that the crisis increase my spread to italy where prime minister silvio berlusconi has been facing mounting pressure to quit. the consequences in italy, the third of this economy, will be far more serious. under pressure, silvio

berlusconi has put forward proposals to cut public spending. italians are finding some of these proposals difficult to swallow. >> his name is ambrose, he is 672 years old. his patron saint is not allowed to rest in peace. this is offered up as a sacrifice to help preserve the stability of the eurozone. >> they have always celebrated this with processions. now come under pressure from the european central banks, the italian government has proposed turning this into ordinary working days and that is causing quite a rally. >> the need for urgent reform is pretty clear. the economy is expected to contract next year by north of

2%. there public debt is 1.9 trillion euros. the borrowing costs have rose to 6.3%. this is regarded as unsustainable. >> the church cannot see how that affects ambrose. >> the italians are very hard working people. i don't think abolishing this is resulting in countries with economic problems. yes, you have to work, but you must celebrate, too. >> the battle over st. ambrose's day is just part of the soul-searching. the country that at times has led europe not only in faith but in art but also in banking, commerce, and in manufacturing skills. they're suddenly told to put its house in order.

they are compared even to greece, a much smaller state with a very different culture. however much that rankles, and it does many italians, they confess that their country has lost its way. no one is sure who can set it back on the right track. here in milan, i am meeting of the few politicians almost everyone respects. he is a businessman not a politician. he is more famous even then ambrose's. he is a man with little time. >> i think that if you build the factories, they have to stay open. >> the revenue was 4.8 billion euros for his company. they put in for hundreds of

trade pact is for everyone that is marketed. the germans have little to teach them. >> this is how we express our being italian. >> the only problem is that most of the production has moved abroad. that is not held was in the postwar boom. there has been economic decline which is due partly to the global trends. >> the ruling class was to basically made by the people that suffered because of the war. they were well aware of the reasons.

>> what is the ruling class to do then? >> this is much more complicated today. the system is creating complexity and not solving problems. the number of laws that we have and our country by far are more than any other european country. >> the labor laws are not -- are not rigid enough to keep them from losing their jobs. you might think that life has become too comfortable for italian workers. this seems logical. there is no money to go to

university if his mother loses her job. -- this seems a logical. >> silvio berlusconi does not make anything flexible. there are 35 and 40-year-old who cannot find jobs. how are we meant to compete and find ourselves a job? >> the real reason that the factories closing is that there is no market in italy for the components that they make. that is because the government is invested in broadband. italy has less than 13 million product access lines last year. this is only slightly larger. for many italians, that is part of a failure of leadership. they are considering the possibility of a new government and the growing demand in

society for the rulers to take risks. in milan, they don't want to take risks. >> a telling growth will not be achieved by taking away a bank holiday. development and growth require real reform, fiscal reform, in the introduction of tax. except small reforms, what is a chance that they will accept big ones that will change their lives? >> who is going to lead them? >> if you know, please tell me. >> in ambrose's time, it was easier. a man who combined intellectual prowess with modesty and charisma, he became bishop by popular acclamation.

it is hard to see anyone getting such a mandate in italy today. >> to their millions of fans, news that rem is putting up was a real moment of sadness. their music was coupled with a variety of political causes in the u.s. and around the world. for some people, it really is the end of the world as we know it. >> the men from athens, georgia or not your typical rock stars. as "rolling stone magazine" said, they produced music like no one else. >> i do think unlike u2, bonn

know comes back with his flag and his letters. it never looked quite like that. morrison and smith but they never looked comfortable doing it. in michael stipe they had a man whose averted what the front man was. -- who subverted what the front man was. rem took a very american rock- and-roll tradition and a sort of gave it a reading list. the songs could be as esoteric as the troubled start, andy kaufman. it is was alternative rock.

you do say this same of the causes that they championed. -- you could say the same. they fought for environmental, feminist, and human rights causes. are they for real or just celebrity liberals? >> they were lumped in with the charity rock aristocracy, they kept to an esoteric agenda as well because you had michael stipe supporting any number of causes and he genuinely believed them. his heart was in rather more than stain, shall we say. than sting, jal we say.

to take this kind of music and fill stadiums with it is no easy feat. >> the in idiosyncratic michael stipe marked their breakup with a new video. did they throw in the towel after david cameron picked one of their tracks? >> did you decide it was just over? >> it was a long moment. we took a while to figure out that we wanted to call it a day. >> why? you could come back a bit. you could do like the rolling stones. >> it was an opportunity for us to walk away on our own terms.

this is something that very few bands have had their presented to do. there are no extra forces making us do this. this is simply our choice. >> we can walk away as friends and feel like we accomplished everything we wanted to accomplish. >> we touched on the politics they're going back to the rate administration, you spoke at the clinton inaugural in 1993. how important was that for you? "that was a moment for america. we had 12 years of what i thought were the darkest political years of my country in my lifetime. we had no idea that bush and cheney were on the horizon and actually trumped his father. to be able to welcome in someone who was relatively liberal minded or least moderate, as the clinton administration started

out to be, was a great moment for america. >> this is a great moment for politics. this is a great moment for that right now, isn't it? >> it is always easy to write about politics in the opposition. even though we are huge friends -- fans of president obama, the fact is that he has been stymied by the minority, which seems inherently unfair to us and this is just as irritating as having a majority be the problem. >> you're not abandoning obama. >> not at all. >> you would support him next year? >> absolutely. >> he is in trouble, isn't he? >> he will not say up front that the administration that he followed screwed things up so badly and he is left to clean up

the mess. i kind of wish you would just say that. it seems on presidential to do so. >> how important is it when anyone gets involved and who is a celebrity? your causes have been darfur, domestic politics. does that actually help or not? >> i think it does. people have come up to me over the course of 32 years and said that i heard this song or a saw this show and i am not an environmental lawyer. thank you for influencing my life choice. that makes me feel like the activism, that might turn off some fans, i think it is important to feel like you can express yourself. >> is there a problem when you are one of the biggest rock

bands in the world doing that kind of thing? this is not entirely popular with some people. >> you certainly risk alienating people. i have to get up and look at myself in the mayor and what i look for is not to be popular with everyone but to be true to everyone and what i feel. if that involves using our platform to make statements and alienating a portion of the audience, that is what we have to do. >> when are you getting back together again? >> we aren't. >> when is the overture going to take place? >> it won't. >> this is bittersweet. this is strangely liberating. >> we feel very comfortable. youhe wall street's, are fans of that? >> absolutely, yes.

>> from all of us, goodbye. >> make sense of international news at bbc.com/news. >> funding for this presentation is made possible by the freeman foundation of new york, stowe, vermont, and honolulu. newman's own foundation. and union bank. >> union bank has put its financial strength to work for a wide range of companies, from small businesses to major corporations. what can we do for you?

>> "bbc newsnight" was presented by kcet, los angeles.