they're doing is they're using sellotape or plaster on a festering wound which is greece today ireland portugal italy and so on so this is what europe is doing it is creating a very severe medical issue by means of course we are in a little bit of ice cream ok and what about the greek people there you are in athens that the measures agreed upon. further cuts of fifteen thousand jobs learn the minimum wage obviously pensions being affected can you give us an illustration of what sacrifices greeks are really having to make to remain in the eurozone from your point of book point of view being forced to remain in the euro zone. now that these sacrifices are being made for them to stay that you can stay in the euro zone very easily while while be faltering you don't have to get out of the eurozone if you default but what is happening here is that greeks are being threatened less they keep borrowing money from germany from france from the i.m.f. from the e.c.b. we know that the keep repaying of the northern european and greek banks then they're going to be through another years of the. this is of course an

numerous other national banking systems within the euro area since the eurozone crisis began ireland portugal italy all to name a few now a unilateral default by the greek government now would force the e.c.b. to realize huge losses on bonds that it is either bought through the secondary market or accepted as collateral by greek banks ok these are sunk costs though and they have nothing to do with whether the e.c.b. should continue to accept collateral from greek banks in an effort to prevent a banking system collapse in that country if. anything the finances of the greek banking system and government will be vastly improved after a default this makes the logic for withdrawing liquidity support to the country's banks one teaching a lesson ok they would be punishing greece and sending a very clear message to any other country that is considering similar steps if you dare default you're going to have a banking collapse ok that's the message so we just wanted to make this very clear a greek government default as bad as it may be does not have to be compounded by a disorderly euro zone exit could that

asked for capital this is just greece like i said portugal ireland italy and spain also got a bit of the pie got away with it why can't we get away with it you know again there's no way around this except for everybody to recognize that the jet has been destroyed value is gone back at the market and start over again but you have a situation where the people on top want to remain on top so if you wipe everybody's capital out. mark everybody market and many banks no longer exist you know many of this is because it's several countries are wiped out and wars only asses so in order for them to stay in place they have to create a new set of rules because capitalistic market pricing is not working if you kept with the market pricing they're bankrupt so they say we're no longer mark you know a bonds to market it doesn't matter what people want to pay for them that's not where they're worth their words what our model says they're worth that's the model if that doesn't work then they say well so you what the e.c.b. which put most of these greek bonds doesn't have to take right but everybody el

countries like portugal and ireland, they might look and say if greece can default on its debt -- debt, why can't we? a general lack of lending to countries like ireland, portugal, perhaps even italy. that is why it is not going to happen here because the fear of default, greece leaving the bureau, is simply too great at this stage. >> thank you very much. still to come on "gmt" -- falling further than anyone has fallen before. it daredevil's -- a daredevil prepares for his latest stunt. a jump from the edge of space. >> time now for a quick look at some newspapers from around the world. the wife of syria's present a brief silence on the violence gripping the country in "the times of london." the paper says the british-born woman sent a carefully worded in the two officers in which she appears to offer support for her husband and calls for dialogue. the international herald tribune focuses on life in iran as well -- western-bank -- western- backed sanctions begin to bite. some panic in tehran were some people are apparently spun toward food and fuel. the gulf news reports on greece's missed the deadlines on the austerity measures, saying there is still hope for a deal despite dela

the figures, they were heavily exposed to the eurozone, so they got stung on the likes of portugal, ireland, italy, greece, and spain. but they lost around $39 billion on that, $25 billion of those losses in the eurozone related to ireland. that's where they got stung. >> not surprising, i suppose. well, thank you very much indeed for all of that. now, peru has a trial here for the alleged execution of rebel fighters during a 1997 hostage rescue operation. the case is being brought to the american court of human rights by relatives of one of the rebels. he and 13 others invade the lima residence of the japanese ambassador and kept 72 people hostage for four months. during the rescue operation, two demanders and one hostage died. it was claimed that all the rebels were killed during the fight. it is alleged that he was captured alive. some pictures from bolivia to bring you. these are pretty extraordinary scenes, really. it's from la paz. police clearly expecting something of a confrontation, but this was a protest due to take place outside the presidential palace by dozens of disabled people. some

no it's finished for them ireland some italy is toast no hope for them whatsoever portugal under the bus spain no italy they have twenty five hundred tons of gold if they can hold onto it they're in good shape but i suspect that the current government will sell that italy's gold oil is a deal with the i.m.f. because they're totally corrupt and this leaves only germany if at the end of the day well max this super committee of blue shirts i think we've decided on my heart on the final say here christine legarde she was up at davos i think she had it right you know here we saw that greece is no longer going to have these austerity measures or the i.m.f. is afraid of it christine legarde also said in davos that portugal spain all the rest of europe all these peasants they're a little bit too close to paris london and berlin and maybe they're a little bit too afraid of austerity measures here thought was thought more about that stays there were thank so much being on the gaza report thank you max don't go away much more coming away stay right there. mission. critical three. more charges.

with respect to italy, spain, portugal, ireland and greece, there were sovereign limits in place to support the european brokerage activity prior to mr. corzine joining mf global. these limits were well within the company's approved risk appetite, adjusted when conditions deteriorate in greece and i believe positions in march 2010 were less than $500 million total across these issuers. in june, july 2010 i received requests to adjust the european sovereign limits from business units. i reviewed the positions and limits in detail with the business heads and with mr. corzine. i expressed my cautions on the request, outlined potential capital risk by the credit default swap market. along with continued political and financial uncertainty in relevant countries. while mr. corzine and i had different views on default risk we agreed on a $1 billion limit across sovereigns. by mid september i recall that the position limits increase $15 to $2 billion. during this time period i expressed increasing concerns with regard to potential capital risk associated with growing positions and began to express

as you well know, in greece and now in portugal, ireland and arguably also in italy, these debt levels are not sustainable under their current arrangements. now, even minor optimistic colleagues from whom you'll hear in a moment, i think will agree. the outcome in europe is going to be deep recession, austerity. that's the good scenario. high unemployment, low growth and that's got not good news for our situation. the down side scenario that i would emphasize, my second point, is much worse. the spillovers from their sovereign debt problems to their financial system and from their megabanks that frankly, are very badly run, have far too little capital, those issues were clear already in 2007/2008 when i was the chief economist at the imf, that they have not addressed those issues, they have not made the system safer. and it's a dagger pointed directly at our financial system. and in terms of what you both care about, in terms of the direct negative impact on our economy and our budget, this is a huge risk. this is a risk we can take steps to mitigate. we cannot solve the european's pro

portugal, ireland, italy, at these debt levels are not sustainable under the current arrangements. even my more optimistic colleagues will agree that the outcome in europe is going to be austerity. that is a good scenario. you have high unemployment, low growth, and that is not good news for our situation. the downside scenario is much worse. spillovers from their sovereign debt problems and their financial system and from there mega-banks -- those issues were clear already in 2007 and 2008. they have not addressed those issues and they have not made the system safer. it is a dagger pointed directly at our financial system. in terms of the direct negative impact on our economy and our budget, this is a huge risk. it is a risk that week he can take steps to mitigate. we cannot solve their problems for them. that would be extreme arrogance on our part. we can build better protections for ourself. the financial-services roundtable has a report out this morning claiming that all is well in our banks and that we had a fortress balance sheets. it is not true. that is not an accurate depi

because clearly the yields of marginal debt in italy, ireland, spain, portugal, have in fact come down. but the action has caused banks to take on this sovereign debt. so over the short term we're seeing real stability. but longer term, do you worry that in fact this actually is creating even more risk, because the banks have taken on the sovereign debt? >> no, i believe, first of all, this move by the ecb was a smart move. and it was perfectly inside the mandate of the ecb. secondly, i believe that banks -- each bank found a different balancing act between its liquidity, its deposit in the ecb itself and going into different assets. that has pn easing a bit to different degrees in different countries to refinance the real economy. and to some extent, also has induced banks to indeed hold more, and buy more treasury securities. ncr question is not weakening the banks at the very moment when the ecb provides them with liquidity. i don't think so. because there is partly a virtual circle here. if all this brings to some decline in interest rates, then those governments, which are putting

these debt problems which various countries are suffering from including of course italy but also portugal spain and ireland these debt problems are the inevitable consequence of the way the euro is structured they are the inevitable consequence of it and the measures which are being required of these countries to as it were remedy the situation are only making things worse so even if greece were to be forced out of the euro my prediction is that the markets would then realize that the eurozone is not impregnable and would turn their attention to other countries as well whose position is very similar in particular political. now let's take a look at some of the stories from around the world here in our team first hundreds were fire in the main market district in the capital injured at least eleven people and destroying eight hundred stalls several blocks were involved in flames sending think plumes of black smoke over the city much of the market area was outdoors reducing the possibility of people trapped in placing buildings it comes as funerals were held following one of the worst prison fires on brecker

but i think the second thing in ireland, in portugal and spain and italy, we have new administrations. administrations that are focused on austerity, but also on the more positive aspects of labor reform, and again, development of the capital markets. >> of course, we're going to have further development of the capital markets, thanks to the regulators. we have new regulation coming onboard. number one, are you expecting the volcker rule to get implemented in july? i've asked many of my guests this question. you've got to give the firms 90 days to prepare. we're getting close to that 90-day window. do you think it gets implemented in july or no? >> i had heard that chairman bernanke said that july wouldn't be the date in an interview. but i didn't hear that myself. i heard a story of that. i think that makes sense, that it will possibly get extended. you know, i think the volcker rule, there's been a lot of regulation. and strong banks want strong regulation. and capital levels are better, leverage levels are down, liquidity is vastly improved. i think for our operation, we've never h

these debt problems which various countries are suffering from including of course italy but also portugal spain and irelandthese problems are the inevitable consequence of the way the euro is structured they are the inevitable consequence of it and the measures which are being required of these countries to as it were remedy the situation are only making things worse so even if greece were to be forced out of the euro my prediction is that the markets would then realize that the eurozone is not impregnable and will turn their attention to other countries as well whose position is very similar in particular political. parties cross star also focuses on greece's financial situation coming up in the next hour the hidden costs of the belo rescue. changes clear in germany you give me the cash to survive given my debt however and i'll give you my star n.c. but will the public actually comply will they agree to accept the pain of this us dearly and will their greatest of men the most important sovereign aspects which is your first call your budget to technocrats in brussels that are not answerable to your populat

but in the periphery economies like italy and spain and portugal, greece, and ireland, a large difference between them and germany. figures coming out of the u.s. on jobs later today. expect to see 150,000 jobs being created over last month in the u.s. this is in stark contrast to the european figures. >> very positive to see this as been stabilization of the euro zone private-sector economy as a whole. we saw this in the manufacturing & service members. both of them are looking at stabilization, not signalling substantial growth. but they do mean there are hopes that maybe the euro zone could possibly avoid falling back into recession in the third quarter. again, those figures showed marginal growth. contraction is easily, but demand is still very weak in the euro zone as a whole. pretty small growth. >> we know that lots of things need fixing in europe including the banking system. spain seems to be trying to get serious about that. >> yes. it has announced plans to get the banks to inject $50 billion worth of -- 50 billion euros worth of capital, i beg your pardon. they have 176 billio

are dysfunctional we will loan you more money, you are on the same situation as portugal, and ireland, and greece, and italyebt, deficit, and interest is the same direction as those countries on the ropes. and italy hanging by its thumbs only owe $2.6 trillion we owe $16.2 trillion! >>neil: but doesn't that save us, people say, well, they are deflecting our attention because they are so bad and you are aing we are actually worse. >>guest: well, as bowl. s says we are the healthiest horse if the glue factory. that is where we are. >>neil: thank you, simpson. he called it when a lot people were afraid to talk about it. [ male announcer ] the inspiring story of how a shippingiant can befriend a forest may seem lie the stuff of fairy tales. but if you take aw the faces on the trees... take away the pixie dust. take away the singing animals, and the storybook narrator... [ man ] you're ft with more electric trucks. more recycled shipping materials... and a growing number of lower emissions planes... which still makes for a pretty enchanted tale. ♪ la la la [ man ] whoops, forgot one... [ male announcer ] sustain

but it's going -- the same will apply to portugal, ireland, italy and spain over the coming months and years and that's a major headache for anybody who is holding that debt at the moment. the game is to offload it as far as you can and to buy collateral the ecb in exchange for cash, the ltro and i guess they will all be engaged in the game but still the proper write-down of that debt has yet to be grasped really. >> erik, to what extent do you think these financial houses over in europe will now start to look elsewhere for growth? for instance they'll go to emerging markets like asia to expand in a big way in search of that growth? >> although 0 i think it's more likely they're going to be in a risk off kind of environment not try to build more risk into their portfolio but just reduce the size of that portfolio altogether. >> the eba is forcing them to sell all the good assets to raise capital. >> indeed. it's a vicious circle. that's exactly how it goes when you are approaching a credit crunch. it was the same last time the companies and the financial market participants were short

these debt problems which various countries are suffering from including of course italy but also portugal spain and ireland these debt problems are the inevitable consequence of the way the euro is structured they are the inevitable consequence of it and the measures which are being required of these countries to as it were remedy the situation are only making things worse so even if greece were to be forced out of the euro my prediction is that the markets would then realize that the eurozone is not impregnable and would turn their attention to other countries as well whose position is very similar in particular political. some other stories from around the world an explosion in northwestern pakistan has left eight people dead and four injured according to reports it's thought the militants may have been targeting local police the area had witnessed fighting between security forces and insurgents the night before on friday twenty people were killed when a suicide bomber blew himself up at a busy market in the nearby city of. do indoors now or a fire in the main market district in the capital injured at le

these debt problems which various countries are suffering from including of course italy but also portugal spain and ireland these debt problems are the inevitable consequence of the way the euro is structured they are the inevitable consequence of it and the measures which are being required of these countries to as it were remedy the situation are only making things worse so even if greece were to be forced out of the euro my prediction is that the markets would then realize that the eurozone is not impregnable and would turn their attention to other countries as well whose position is very similar in particular political right john laughlin director of studies at the institute of democracy and cooperation thank you very much for your analysis from paris this hour. well arty's cross talk was also focusing on greece's financial predicament coming your way in just under fifteen minutes the hidden costs of bailout rescue. the changes clear germany you give me the cash to survive given my debt problem i'll give you my sovereignty but will the public actually comply will they agree to accept the pain of this a

these debt problems which various countries are suffering from including of course italy but also portugal spain and ireland these debt problems are the inevitable consequence of the way the euro is structured they are the inevitable consequence of it and the measures which are being required of these countries to as it were remedy the situation are only making things worse so even if greece were to be forced out of the euro my prediction is that the markets would then realize that the eurozone is not impregnable and would turn their attention to other countries as well whose position is very similar in particular portugal. the euro zone's austerity drive has also hit spain as tens of thousands of people have marched out across the country protesters are angry at the government's labor reforms the largest rally is taking place in madrid for trade unions have organized galleries and fifty seven cities across the country protesters say reforms were unfair to work person would destroy jobs the changes make it easier to adjust employees schedules and wages and have staff fired last week similar rallies turned v

these debt problems which various countries are suffering from including of course italy but also portugal spain and ireland these debt problems are the inevitable consequence of the way the euro is structured they are the inevitable consequence of it and the measures which are being required of these countries to as it were remedy the situation are only making things worse so even if greece were to be forced out of the euro my prediction is that the markets would then realize that the eurozone is not impregnable and would turn their attention to other countries as well whose position is very similar in particular portugal. ok let's get the latest on the ground in now there is jacob greaves joining us live now to take up a night of incredible pictures coming out of the greek capital raising violence tell us what is happening in the greek capital right now. based on those pictures as events that took place last night really getting a sense here that the government the greek government is under attack from all sides now you've got the e.u. euro zone international monetary fund really increasing the pressure s

investors interpret to mean that europe will not stand behind the sovereign debt of italy or spain or ireland oregon po portugal. the real issue is italy. spain would follow closely. so -- and i think a disorderly default in greece has the largest community of communicating that particular set of negative news. the eurozone continues to resist the most fundamental principle of a monetary union. the basic principle is that the full facing credit of the whole must stand behind the full facing credit of each part. that's why we have never had a default of a u.s. state in the united states. the united states is the first modern monetary union. and it was established on that principle. that is the first bank of the united states assumed all the debts. the revolutionary war debts and the debts from the confederation of every state. and it was a hard deal to make and they made the deal. and from that point forward it was clear that the full faith and credit of the united states stood behind the full faith and credit of every state. >> it's pretty clear things like the euro bond and the idea of suggesting the end, the

>> reporter: that's a worry for portugal, ireland to a lesser degree maybe spain and italy. portugal and everybody around the situation insists they are not another greece. they have an intact economy, a small economy, that needs to do some homework. they are doing homework. they are sticking with the program. of course we all know as much as portugal might be the poster child for the reform progress, if the rest of europe doesn't reform and help it along and if there is a great deal of fallout from greece, then the markets will punish or very likely punish portugal as well and the re-entering into the market would be a very tall order indeed. i want to talk with this about a man for a long time because he has central bank experience, sev central bank governor for quite a number of years here in portugal and now in the private banking sector. thanks for joining us here today. >> thank you. >> reporter: from your experience, pre-euro, we know that there were flaws in this monetary union. especially countries like portugal are suffering from. how can it be fixed? >> it's a long

themselves but they failed to do that so it's finished for them ireland similarly is toast no help for them whatsoever portugal under the bus spain now italy they have twenty five hundred tons of gold if they can hold onto it they're in good shape but i suspect that the current government will sell that italy's gold deal with the i.m.f. because they're totally corrupt this leaves only germany if at the end of the day. the former head of britain's m i six spy agency server mark allen is being sued by a pair of dissident libyans he allegedly helped capture and sent for torture under qaddafi back in two thousand and four investigation may have uncovered several other backroom deals between the u.k. and the former colonel's regime or bennett explains. abducted imprisoned and tortured for six years all thanks to british government held those are the claims of two former gadhafi detainees who say they were captured by m i six flown to libya in two thousand and four abdul haq is now libya's military commander along with sami el saadi he was part of the libyan islamic fighting group and they're suing a former british spy chief for complicity in th

themselves but they failed to do that so it's finished for them ireland similarly is toast no hope for them whatsoever portugal under the bus spain no italy they have twenty five hundred tons of gold if they can hold onto it they're in good shape but i suspect that the current government will sell that italy's gold deal with the i.m.f. because they're totally corrupt and this leaves only germany if at the end of the day. after decades of drilling russian scientists in antarctica have uncovered a rare natural wonder an ancient lake buried thousand or thousands of feet of ice or he's shawn thomas toward the frozen continent a year ago and explains what this discovery could mean. vostok research base in antarctica it is the coldest place on earth and the deepest drilling location on the continent the main research was to drill the great your eyes as big as possible to get these tiny bubbles off they are a force preserved for about. four hundred thousand years at a certain point researchers made a new discovery lake vostok team of russian scientists have drilled more than two miles into the ice and have reached the surface of the sub lake its

they fail to do that so it's finished for them ireland similarly is toast no help for them whatsoever portugal under the bus spain now italy they have twenty five hundred tons of gold if they can hold onto it they're in good shape but i suspect that the current government will sell that italy's gold at will is a deal with the i.m.f. because they are totally corrupt and this leaves only germany if at the end of the day. coming back now to our top story negotiations between negotiations in damascus between russian foreign minister sergei lavrov and the syrian president bashar al assad russia's ambassador to the u.n. commented on the outcome in the situation of the country in general for on this we go live to our he's a marine a poor and i is joining us from new york so marina one of the main points that ambassador vitaly churkin touched on. that's why russian envoy to the un vitaly churkin addressed the media just a little while ago reaffirming russia's commitment to bring a peaceful solution to the conflict in syria of course addressing the fact that russian foreign minister sergei lavrov is there right now and trying to ha