germany and the other successful northern europeans. the european central bank. the private banks, who are now negotiating their haircut in greece. and the international monetary fund. they're all trying to fob off shares of the rescue packages to the others, and preserve their own negotiating position to do so. therefore, none of them wants to say he or she will take care of the whole problem, even though, in fact, they will. that's very unsatisfactory for the markets. the markets want to hear given, even and firm words of though i'm confident that those rescues will take place. and, therefore, the market situation is likely to remain unsettled and volatile, even though i'm confident that the outcome will be successful in the sense of successful financial engineering to avoid financial breakdown. but that's not getting to the recession and the underlying economic problem which is still there. i want to draw two or three major conclusions for the united states and answer more questions on the european situation per se. first, as you said, mr. chairman, the united

for all the other european legislation, for all the directives, the supreme court, the european court of justice can sue a country that would not have applied the directives and the country must apply them. ls said okay, we're going to do the same with the stability pact. all the heads have said oh, no, no, no. we're not going to do that. it's so important because it's hitting our budgets. so we don't want the european court of justice to meddle with that. and we saw that it doesn't work, especially when you have a common currency. then it should be even more binding. so it's not a question of a transfer, it's a question of finding a way to apply what we had already committed ourselves to. and if we don't, we'll be sued. but within every country there are transfers. in germany there is a transfer. you asked me if the pact was a fiscal union. i said no. so now you are asking me are there transfers within countries? of course. in every country there are transfers. in germany we have a history of that is 60 years old where we compensate the finances from one land to the other. there is a

we have to create a european public, a european space. we don't have that today. during european crisis, for instance, everybody talks about countries. we talk about greece. everybody is talking about greece, pointing their fingers at greece. but when you look at the press in europe, everybody in europe talks about this crisis in a different perspective. and we need a europe with the mobility of workers. it also means that we need transfer possibilities so that everybody can have portable pensions, for instance. if you work in five different countries, you need to be able to take your pension with you. and also we have to harmonize the retirement age. in some countries it's 55. in germany it's 67. we have a lot to do. that is to say the social dimension is one of the aspects. but it's far from being the only one. but what we have to create is of course as students you are more together than our workers, for instance. but we need more of a european public. we have to know that we all belong to the same area, for instance. >> translator: thank you. now i have a ques

in a european state. it would create the armed forces of a country which does not exist. but life is single currency. it would have damaging consequences in the here and now. in the first place, it contains the germs for a major rift. secondly, it has no religious benefit. in fact t has severe potential military drawback. even a french general admitted that during the gulf war, united states forces were the eyes and ears of the french troops. without america, nato is a political talking shop, not a military force. nor is that likely to be changed in any reasonably foreseeable circumstances. defense expenditure has been falling sharply in almost all european states in recent years. even if this process were now halted and reversed, it would take many years before europe could hope to replace what america presently makes available to the alliance by way of command of control facilities, airlift capacity, surveillance and sheer fire power. defense policy can't be built on political symbolism and utopian prug

what's a aaa asset in the european context? sovereign debt, including greek debt, people were convinced, and mr. bergsten said the same thing. greek and german debt were similar in their credit risk, they're not. they're fundamentally different. the entire approach is deeply flawed, not only that, senator conrad, but the way tease being implemented is very problematic, the french and germans by all accounts are backing away from even what they signed up to in basel. anthe federal reserve has for i systemically important financial institutions have indicated there will be a surcharge, that's not enough relative to the losses we face. requirements, what are the capital requirements in the basel round? >> well, it depends on exactly what kind of financial institutions you're talking about. and the headline number is between 10 and 12%. i would say the kev sill in the risk weighted assets. and if you -- if the risk weighted is so fundamentally flawed that they've missed completely the sovereign debt crisis and the true risks that a

exports go to our european trading partners so what happens to the european economy could have a very real impact on u.s. manufacturers and u.s. workers. with that, we'll turn to senator johnson who is filling in for senator sessions this morning for his opening remarks and then we'll turn to our witnesses for their testimony and, again, i want to thank senator johnson for filling in for senator sessions this morning. i just say to colleagues, there are many competing meetings of other committees this morning, including mark-ups in some, which means that colleagues who would like to be here simply cannot be here and participate in the work of other committees on which they serve. so we understand that this is a meeting in which there are many competing priorities for members of this committee. senator johnson? >> well, thank you, mr. chairman. obviously i'm here because this is my top priority. certainly the greatest threat that faces our nation is our debt and deficit issues. and all is tied into our need to really achieve economic growth and that's what the threat of europe poses to

the european banking system is currently being asked by the european banking authority to raise a good bit more capital. and, of course, their liquidity situation is being satisfied almost entirely by the european central bank rather than by private markets. >> sto that would explain. was a little confused about page four you continue to monitor the european xp europe european exposure of u.s. financial -- >> yes. >> how long have you been watching the exposure of u.s. firms to financial -- to the european financial -- >> the european situation was about -- came prominent about two years ago. so pretty much throughout that period. >> i guess my question is then about the new york fed that gave primary dealer status to mf global and so two years ago would be somewhere in the time frame that they were making application, february of 2011 is when they got the application done. that's when it was given. and so this watching of exposure mf global had gone up by $4 billion during that very time period. why didn't new york fed catch this exposure if that's something y'all were concerned about

they still have not been able to get the european monetary union to encompass european wide financial regulation. and so the problems we have as you're describing are compound the in the european case by their failure to add that dimension across borders. now, there's a similar problem because these exotic financial instruments really do cry out for regulation. that's what basel tries to do. we've got to take the big leap to do a globalized dodd-frank. because without it, the kind of slipping around controls takes place across borders and you have an escape hatch for whatever regime is in place. >> i have to dash away. i apologize for that. it's been a great discussion. i hope we can really continue to wrestle with these issues of international monetary strategies and institutions. and i wanted to mention that it was a number of years ago that i remember an article in which warren buffett was replacing his investments to be denominated in foreign currencies because of his expectation that the dollar wasn't going to be the global currency. that is also an instrument or a change that wo

european stock markets well i.now the now the there are mixed view now as you can see they gave is the greek situation which is keeping me of the investors on their toes a foot see has just recently gone into the red in the dax is holding on to a quarter of a cent of games the russian markets now they all closed the most it's finished a third of a percent up by the r.t.s. was a point six percent we're going to see what happened on the individual shares on the my sex most of the blue chips have a good day sped by gained almost two percent there one point seven you can say call finished higher supported by those stronger crude prices but bucking the trend towards food retailer seven continents become the company made an offer to buy back shares at a discount to market pries it all pro higher from troika dogs says investors are lurch ahead of chinese inflation figures to out. investors are expecting. important news from china which will be released this night this is a number you for we see that inflation is slowing d

fund, sorry, with the european financial stability funneled and the future permanent european stability mechanism. can i interject the notion that one of the main problems brought about by the euro crisis has been the resumption of old stereotypes about allegedly inherent and unchangeable characters of different people, sometimes constructed on the mere basis of the latitude of their countries. and, of course, it was the two originating forces of the stability and growth pact for germany and france which broke down its credible 2003. provided a complicity in all of this because it was italy in the chair of the council that allowed the two large member states to break the rules. and after all, it took from 2004 to 2012 to rebuild again a credible pact. and, of course, that was made even more difficult by the fiscal indiscipline in the meantime intervened, particularly in some southern countries. but traveling on the wide open road created by the nonacceptance of the rules by germany and france in 2003. so we all have a responsibility to build a better european integration and many if not

the overwhelming imperative in all european countries is to hold the european union together. and that now means holding the eurozone together. that has become, for all practical purposes, the definition of europe. they know europe is wrapped up in sustaining the euro and they will do it. there are two simple reasons for that. one reason is the ghastly history of europe. remember why they created the european union in the first place, to overcome the previous millennium of slaughter in europe, most dramatically, the first half of the last century. i happened to visit the holocaust museum again. if you've done that recently it gives you plenty of memory of why the europeans have pulled together to avoid letting europe, again, explode into kind of holocaust and disaster that they experienced. so they're going to hold europe together. in addition to that, they have an overwhelming economic interest. germany, which is the pivotal country, has a nirvana economic situation in europe, in the euro. germany is the largest surplus trading country and it bases it's whole economy on an ex

we how these european you know voice and the more we all seem to be able to install the united kingdom through the usa i think it will still be there well when the tories win a tory saying it is up to you but i joined this old scottish fellow fashion industry for will remember. tell me just let me be here when you surely know. i was just glad if you're hearing me and is signing up to the common fisheries policy case i want to talk about the ocean anymore so i don't want to talk about an issue any more i want to talk about the facia of the european union david thank go to you ok we have this issue with scotland we have an issue also in belgium where we have. a fragile state to say the least here what is the future we're going to see more states with with what we see is the european union and we are going to fragment even more and is that a good idea but maybe it is a good idea because it might be more democratic as you pointed out. well but putting aside whether we say split belgium in half and then we can divide antwerpen in half again to sort of recreate the previous division of germa

have to rebut it would an independent counsel appointed how it would have to be a member of the european union i would imagine it was a real exception process and why it's already in it there's a huge difference it's already you've got about it already in the year i mean i've already look at a work on the hard very hard and book of scottish independence by joseph martin's he expresses doubt if you look at the hughes how it was one of the s.n.p. his favorite economists well i'm surprised you're one of the first ministers favorite color missy relies on him to back a bit ahead of you so i don't know innocent that's always said this alleged time easy i mentioned i've never had it i've never seen it ok well this is complete you know exist you can or you saw the militarization stage of you by and you can become saluted by a copper today again it would well if you would be named for some part of the european union all right croatia so may opt to go into the single currency as part as conditions for entry latvia is joining the euro we have already seen that is the possibility we're not in the po

the overwhelming imperative in all european countries is to hold the european union together. and that now means holding the eurozone together. that has become, for all practical purposes, the definition of europe. they know europe is wrapped up in sustaining the euro and they

this means that each of our governments has to submit to the european commission and european council of ministers. in the first half of the year before it goes to the national parliament, a draft budget, this is incredible if you think of it. this was asked by the european commission for years and years and always rejected by member states isn't this -- to the parliament. it's in place. that's one aspect. then the acceptance of a much enhanced economic surveyance, there is operational influence of supervision by the eu. so the in itself slow structure of the 27 or of the 17 members of the euro area has moved, has moved considerably, thanks, one should say, to the greek -- if i say in one year time, i would imagine a euro area that would have composition more numerous than the current one. i don't see honestly countries going out of the euro. i see some countries coming in the euro in the next few years. i believe that the permanent crisis management system, esm, which we will put in place soon will be there as an ordinary instrument for crisis management. the eu was not contracted to

to nations on an equal police and the european union in terms of related health boards we brought in a couple years ago i don't know where the professor's been and i don't know if he's keeping in touch but talking about central planning. no political party in the u.k. is in favor of central planning. all the countries all the political parties are active in parliament and westminster and indeed i actually believe in the mixed economy to one degree or another so i think that professor is completely out of touch with viewpoint on these issues in terms of the european union i think it's preposterous to suggest that if you in europe somehow you know independent friends notably did not send troops to iraq and independent scotland if we'd been in power would not have done so that's real independence not having. weapons on your soil the decision not to have them is real independence having control of. your social security system pain sions you know that is independence of having a role and in the world i mean do you see the silly seriously think we are going to all of somalia to police comm

but they still have not been able to get the european monetary union to encompass european-wide financial regulation. so the problems we have, as you are describing, are compounded in the european case by their failure to add that dimension across borders. there is a similar global problem, because the derivative trading in particular of all of these exotic financial instruments really does cry out for international regulation, and that is what this tried to do, but it has been very inadequate. one of these days, we have to take the big leap to do a globalized dodd-frank, because without it, the slipping around and controls takes place across borders and you have another escape hatch from whatever domestic regulatory regime is put in place. >> i have to run away. i apologize. apollo to close by saying it has been a great discussion. i hope that we can continue to wrestle with these issues of international monetary strategy and institutions. i wanted to mention that it was a number of years ago that are remembered and article in which warren buffett was replacing his investments to be deno

europeans have failed to get ea

already in the european union why would they have to re reply they are to ever vote that the scottish people devore voted on that professor baines rense a very good as a lot when i was a lot of scholarship in criticizing the concept cross of the trusteeship decide which is the city of these are you currently producing as it were a nurse or can rule people without their consent for their supposed that old good why are the scottish people good enough to vote on whether they're going to be ruled from london why don't they have the right to vote on whether they're going to be ruled from brussels nobody has ever asked them to vote on that what are rightly these are issues and you did a. poll and the it was one nine hundred seventy five and you know these issues are decided let's learn. parties who stand their parties who stand who want to take britain out of the european union and they are humiliated to every single general election that happens so i think the vast majority of the british people want to stay within the european union we do have to reform the e.u. look you're right it does

president and the european commissioner say that how chinese economy and european economy are interconnecting, are interdependant. i think china takes that view as well. china's exports also have been hit, and that would influence the china's economic growth for the whole year. so in a way. it's in china's interest that china contributes to resolving the euro crisis. >> yet it didn't seem any specific pledge was forth coming. i mean, is it possible china will not directly contribute to the economy? >> it's quite possible. if you look at the debate within china, there's quite a strong feeling that the european country should be the main factory in resolving this. and also china has its own economic problems, and it cannot be counted on to save in europe. they simply do not like that kind of phrasing. but like i said it's in china's interest to help. but there's a big question for debate. >> police in thailand say a man they believe to be iranian is reported to have lost both his legs. he was said to have been carrying a bomb that exploded and they went to check a house he was renting. what mor

we have to create a european public, a european space. we don't have that today. during the european crisis, for instance, everybody talking about countries. we talk about greece. everybody pointing fingers at greece, but when you look at the press in europe, everybody in europe talks about this crisis in a different perspective, and we need a europe with the mobility of workers. it also means that we need transfer possibilities that everybody can have portable pensions, for instance. if you work in five countries, you need to be able to take your pension with you, and also, we have to harmonize the retirement age. in some countries it's 55. in germany, it's 67. we have a lot to do, but it's to say the social dimension is one of the aspects, but it's far from being the only one. what we have to create is, of course, as students you are more together than our workers, for instance, but we need more of a european public. we have to know that we all belong to the same area, for instance. >> translator: thank you. now i have a question about the relations between germ

and the international monetary fund the european central bank and european union are imposing on but if a countries greece italy spain portugal it's economics one hundred one is very simple to understand that i mean if these countries. with problems and you force the. public spending you. push them deep into recession like greece spain billions in foreign debt held largely by germany and france it's money which wouldn't be paid back less painfully. schools without heating teachers without jobs came listeners and unemployment on the rise makes for a bleak prognosis and as the country tips into the second recession and with more protests planned for later in the week seems like these could be set to become much more common on the streets of spain so. it's a. sturdy protests are familiar sight on the streets of greece germany set to vote on the next rescue package that would save the country for a painful default it was agreed by e.u. leaders last week at a cost of massive new cuts patrick young from investment advisory firm devi advisors things greece should have left the currency unio

school are to encourage european and global perspective and to probe the emergence of a european identity from an early age but the question is what does it stop being education and start being a propaganda when the suggestion is being. a better europe is automatically more europe than i have a problem with that as do angry m e p's he say that targeting youngsters and their education with a potentially one sided political view may just be a little too sinister does our cilia r.t. brussels later our finance guru max colace are brings you his assessment on the health of the global economy.

what means the european union. what we owe the european union and what we expect from the eu. we summarized all this in the berlin statement, which mentioned first that war is over, and we talked about the freedom, about good living standards, friendship. this would be the new normal. we talked about multiplicity and diversity, and we talked about the conviction that the great question of the time can only be solved together. that was the basis of what we wanted for the future in the 21st century. we can only answer the questions if we are together, and i think in this berlin statement we summarized very well what we wanted for europe. and we concluded and i quote -- "the citizens are europe are fortunately united. we are fortunately united." europe defends freedom, democracy, freedom of the press, all of this is anchored in our freedoms. and thanks to economic success in unity, and when we read huma. freedom of the press. we can see that in a world of 7 billion people, there are many people who still have to fight for all of this. so if it doesn't go by itself. we shouldn't t

and european stock markets pared losses on thursday afternoon karajan data from the u.s. showed signs of economic recovery in the world's largest economy stocks fell after moody's investors service threatened to downgrade more than one hundred financial institutions hey. in russia markets ended in the red with the r.t.s. losing one and a quarter of a percent. half a percent but check on the index what was otherwise x. banking stocks were along the main which reaches of the days of one percent of the to be closed one point four percent in the red is january net profit growth sixty percent of that russian accounting standards bucking the trend all companies have gained a quarter of a percent. russia's economy will have a dynamic start to the year but is set to lose stream in the second half at least that's the verdict of standard and poor's ratings agency which says that the country's growth will drop to three and a half percent this year among the reasons the central bank slowing growth to cut inflation wrists and continued capital outflow. russia's largest lender has fina

school are to encourage european and global perspective and to promote the emergence of a european identity from an early age but the question is what does it stop being education and start being a propaganda when the suggestion is being that a better europe is automatically more europe then i have a problem with that as do angry m e p's he say that targeting youngsters and their education with a potentially one sided political view may just be a little too said mr tess are cilia r.t. brussels. tens of thousands of people have been rallying across russia to back prime minister putin's bed for the presidency next month in the capital thousands of supporters took to their cars and circled the city's gardening chanting slogans and brandishing russian flags and banners while in the premier's native st petersburg some sixty thousand people gathered in the city center along with a number of prominent citizens who addressed the crowd out there to see good peace can offer as more. the last few months we've seen a real jump in public activity with various times up around these markers and drive taki

school are to encourage european and global perspective and to promote the emergence of a european identity from an early age but the question is why does it stop being education and start being a propaganda when the suggestion is being. better europe is automatically more europe then i have a problem with that as do angry m e p's he say that targeting youngsters and their education with a potentially one sided political view may just be a little too said mr desiree cilia r.t. brussels. well a little later our finance guru brings you his assessment on the health of the global economy and we're going to cause report that we ask you what google is trying to achieve by offering you five dollars in exchange for your search history . so you need forty acres and a mule and another give you five bucks to spy on here and i would be surprised if you have people from overseas rushing to america to get five dollars from google people in greece for people in greece five dollars twenty five dollars that's a whole six months of pay and it shows you the whole neo feudal system ok now these economies these

i think that professor is completely out of touch with viewpoint on these issues in terms of the european union i think it's preposterous to suggest that if you're in europe somehow you know independent friends notably did not send troops to iraq and independent scotland if we'd been in power would not have done so that's real independence not having nuclear weapons on your soil the decision not to have them has real independence having control over taxation your social security system pain sions you know that is independence of having a role in the world i mean does he see the sli seriously think we are going to suggest or. to police commissioners of all gold and give our. people who is this guy. will you my view is any way to william here what about how i ask the reverse direction here is when you know in english themselves are not so wound up about this issue i mean obviously the scots are but there's a lot of difference but it's not an issue that you have fire in your belly about or maybe i'm wrong ok i mean the average englishman is not overly worried about scotland staying in the un

scotland achieves independence will you allow the people of scotland to vote on whether to stay in the european union and ask our labor party friend why the let the people of scotland vote on there and why not let the people of the united kingdom as a whole vote on that why should laws be made in brussels that apply to people in the united kingdom or in scotland if it's independent when the people of scotland in the united kingdom have never consented to surrender their sovereignty to a bunch of bureaucrats in brussels ok i can if you want to go you want to answer one of those questions or both is a completely separate to be i mean so many things that have been mentioned here are complete annoyances in l.a. to police i've been in politics for three years six to view the sixteen of those in the late to do it is in of and i've never had a single person come to me ask me for a lot to beating forward you seem to think i should be a focus of a political party i joined the s.n.p. because i want to go on to an equal nation among all of the see the united nations on an equal police and the european uni

capital markets, european capital markets. that's really i think what european policymakers mr. going after, the notion of extending these negotiations so everybody understood what the problems were. and it's been successful that is why you didn't see a big sell-off today. >> susie: so then i think a lot of investors are wondering what do i do with my money. i don't know what you are telling your clients. some people feel is it okay to keep myoney in the u.s. or is it still important to have a global portfolio. what are you recommending? >> well, certainly looking at the u.s. economy it's stronger right now then the european economies both in terms of employment trends and general output. so the european economies don't look as favorable as the u.s. so u.s. stocks look more sound. additionally u.s. companies have done a whole raft of cost-cutting over the past couple of years which means they've had tremendous earnings power. so on average i would say u.s. stocks are better than most overseas stocks, less speculative, more solid. so u.s. stocks really seem to be the way to go. >

let's take another look at how the european stock markets are faring. we're about 90 minutes into the trading session today. as you can see here, we are seeing a sea of red. this is largely thanks to moody's decision to downgrade six european countries and put another enormously important countries outside the eurozone and inside the eurozone like the uk, france and austria on credit watch negative which means they could be earmarking them for a downgrade. that's got the likes of the too ftse 100 down by 0.3%, the dax down 0.1%, faring slightly better than the other european markets. the cac 40 being weighed down by the french sovereign rating as well. that market down by nearly 0.5%. britain's finance minister has given his reaction to moody's warning the uk may lose its aaa credit rating. george osbourne says it's another clear sign britain needs to deal with its debt problem. >> if we don't deal with our debts in britain, there will be no growth, no jobs, people won't invest in our country. britain has to confront its problems. that is the clear mess

a european russia. the outer space control center has given instructions to track an artificial earth satellites and. all modern racial information is fed to the outer space control center. of the first so i get a quiet classification official it says lloyd dismissed fourteen fifty as m of three hundred thirty three. the stuff makes no secret of the fact that the russian radar transmitter sees european air space in great detail. on the station's unique radar tracks even submarine launched missiles in the barren sunlight sees the sea of a whole sky and around the north pole. our system is being expanded in response to the expansion of the european missile defense shield. the the aim is to match the measures being taken in europe that the new stations are being commissioned here to respond to nato as activities. thrown at them. we will buy new means limited or alter our plans for the deployment of missile defense components in europe. russia has not closed the deal it will continue dialogue with the unite

parties who stand their parties who stand who want to take britain out of the european union and they are humiliated every single general election that happens so i think the vast majority of the british people want to stay within the european union we do have to reform the e.u. look you're right it does have become more democratic we have to look at strange things there was somebody in the room how is this going to relate to any pieces located can it go ahead jump in with scala needs a voice still needs a voice in the european you know it's preposterous but luxembourg which is aligned as it through is able to send someone to the council of ministers to talk about stretching and strong is a huge fishing industry and yet we're not going to be presented and to suggest really that scotland would be an exception to the scene we can easy you can see his attorney says professor milner well can he sell down through that carriage in twenty five years ago. william guy had any you ought to look you ought to look at what the head of the scottish fisherman's federation betty armstrong has been sa

school are to encourage european and global perspective and to promote the emergence of a european identity from an early age but the question is why does it stop being education and start being a propaganda when the suggestion is being made that a better europe is automatically more europe then i have a problem with that as do angry any p's who say that targeting youngsters and their education with a potentially one sided political view may just be a little too said mr tester cilia r.t. brussels there were flying fireworks and scenes of jubilation on the streets of libya as the country first marked the anniversary of the uprising that toppled colonel gadhafi but a year on it's the militia that's in charge of almost every aspect of life the national transitional council is accused of being weak and able to control them there are also reports of torture and abuse against the remaining gadhafi loyalists libya's leaders say they are willing to integrate the militias into the security services but anti-war activist jim brown says for now these are just empty words. the chair of the national tra

school are to encourage the european and global perspective and approach the emergence of a european identity from an early age but the question is what does it stop being education and start being a propaganda when the suggestion is being. a better europe is automatically more europe than i have a problem with that as do angry m e p's he say that targeting youngsters and their education with a potentially one sided political view may just be a little too sinister just are cilia r.t. brussels. tens of thousands of people have been running across russia to support prime minister putin as political course and his bid for presidency next month in the premier's natives in petersburg some sixty thousand people gathered in the center of the city they chanted slogans and brandish russian flags and banners in support of a number of the city's prominent citizens also addressed the crowds the demonstrators spoke out against social disorder and a revolution in the country saying they wanted a strong and stable russia a country also sore several mass rallies against the current leadership after

what can the european union to? one thing is certain it's not enough just to decide this humanitarian assistance however important that may be. i think that we know that the military action is not the alternative of the united nations in the european union together with others set up a political front can use all means available and imaginable. to ensure that this country which is so dependent on the outside world can be influenced. we have information which is available and must be made available. and we must show solidarity. we must bring pressure on china and the russian federation and and we must put an end to the arms trafficking toward syria and we need >> the european parliament passed a resolution the who poses new sanctions on the syrian government. it also urges cutting off of my third contact with the country. the general assembly voted to condemn the actions and calling for president bush here all of saab -- president assad to step down. on friday secretary of state hillary clinton said the u.s. is evalu