Browse content similar to Norman Lamont, Constantine Papadopoulos and Mario Blejer. Check below for episodes and series from the same categories and more!
Line | From | To | |
---|---|---|---|
Chile. Now it is time for HARDtalk. Is it time to end the 'Alice in | :00:12. | :00:14. | |
Wonderland' economics inside the Eu Eu acknowledge that | :00:14. | :00:18. | |
Greece is bankrupt? Default will bring with it plenty of pain - for | :00:18. | :00:22. | |
Greece, the Eurozone and the wider world - but the longer it takes, | :00:22. | :00:32. | |
:00:32. | :00:36. | ||
the more corrosive could be the uncertainty and fear. I'm joined | :00:36. | :00:39. | |
today by three guests, from Greece, Argentina and Britain, all with | :00:39. | :00:42. | |
long experience of economic policymaking in the toughest of | :00:42. | :00:52. | |
:00:52. | :01:16. | ||
times. What should policymakers do And Norman Lamont in London, | :01:16. | :01:26. | |
:01:26. | :01:27. | ||
Constantine Papadopoulos in Greece, Mario Blejer. First, to Athens to | :01:27. | :01:34. | |
Constantine Papadopoulos. We do agree that the Greek government is | :01:34. | :01:40. | |
in a hole which just keeps getting deeper? I heard your remark about | :01:40. | :01:44. | |
Greece being back rocked. That is in consistent with the reality on | :01:44. | :01:51. | |
the ground. Right now we are in the middle of an adjustment which has a | :01:51. | :01:56. | |
physical side and a structural reform site. It may look as if we | :01:56. | :02:02. | |
are in a hole, but I can assure you that the physical aspects are | :02:02. | :02:09. | |
getting better by the day. If you have followed it I can believe that | :02:09. | :02:15. | |
next year Greece is expected to move into a primary surplus on its | :02:15. | :02:20. | |
budget which will completely change the outlook. This has been achieved | :02:20. | :02:28. | |
in three years, from 2009 when the primary purpose that was 24 billion | :02:28. | :02:35. | |
euros. This will be changed into a surplus of 3.2 billion euros in | :02:35. | :02:44. | |
2012. So, we are far from bankruptcy. You have a doubt the | :02:44. | :02:49. | |
optimistic case that the figures in Greece are manageable and getting | :02:49. | :02:55. | |
better. You speak for the Greek foreign Ministry. Norman Lamont, a | :02:55. | :02:59. | |
former Chancellor, used to looking at budgets and public finances, | :02:59. | :03:05. | |
when you hear that optimistic noise coming from happens, do you buy it? | :03:05. | :03:10. | |
I would not like to diminish in any way the courage that the Greek | :03:10. | :03:16. | |
government have shown in trying to get their budget back to balance. | :03:16. | :03:20. | |
But the fact is that this crisis has gone on and on and the markets | :03:20. | :03:25. | |
do not believe that Greece can eventually avoid a default. And | :03:25. | :03:29. | |
because this goes on and on it is becoming corrosives and it has | :03:29. | :03:34. | |
affected other countries. If the markets are right, and I think they | :03:34. | :03:39. | |
probably are, there is a strong argument that it is better to lands | :03:39. | :03:44. | |
the boil, have they controlled default. Of course that would be | :03:44. | :03:49. | |
painful and it would affect French banks, but it would be containable. | :03:49. | :03:54. | |
There is an argument to get it over with, rather than have this never- | :03:54. | :03:59. | |
ending crisis, which is affecting all of Europe and countries outside | :03:59. | :04:06. | |
the eurozone and indeed the entire Western economy. Roses are | :04:06. | :04:11. | |
uncertainty, Constantine Papadopoulos. The markets do not | :04:11. | :04:14. | |
believe the references that Greece can manage the scale of public debt | :04:14. | :04:22. | |
we are talking about. And you keep revising the figures. Even in the | :04:22. | :04:25. | |
last 24 hours the estimates you had for the deficit this year and next | :04:25. | :04:30. | |
year had to be revised again in a negative sense. You are not going | :04:30. | :04:34. | |
to hit the target set by the EU. That looks as though it cannot go | :04:34. | :04:44. | |
:04:44. | :04:45. | ||
on. The targets will be miss this year by 0.7% of GDP. Considering | :04:45. | :04:50. | |
the recession, that is understandable. The recession is | :04:50. | :05:00. | |
far worse than we had hoped for. This is partly are the fault, | :05:00. | :05:04. | |
partly the fault of the international situation. Out the | :05:04. | :05:09. | |
main export markets are in Europe and the European economy is | :05:09. | :05:13. | |
stagnant. You have to take these things into consideration. Given | :05:13. | :05:19. | |
that, if we missed the target by 0.7%, that is manageable and it | :05:19. | :05:24. | |
does not affect next year's target. The two have been calculated | :05:24. | :05:33. | |
together. Isn't this the basic problem 'The Burgers are better at | :05:33. | :05:35. | |
The Circle, especially when George Calombaris is making them' however | :05:35. | :05:39. | |
much you cut, the contract the economy, I think it is contracting | :05:39. | :05:45. | |
by a 5% this year, means that her whether much austerity you impose | :05:45. | :05:52. | |
upon your own people, the burden of debt is going to get worse. We are | :05:52. | :05:56. | |
already talking about a national debt that is approaching 200 % of | :05:56. | :06:06. | |
:06:06. | :06:08. | ||
GDP. It is closer to 155, 160. The denominator is shrinking. The debt | :06:08. | :06:18. | |
:06:18. | :06:20. | ||
load is not getting bigger. It is a statistical effect. It seems to be | :06:20. | :06:25. | |
growing all the time, and how are we're going to pay it back. This | :06:25. | :06:30. | |
will be reversed when growth kicks in. The other part is to make the | :06:30. | :06:35. | |
economy more competitive. Do not forget that. Fiscal measures were | :06:35. | :06:41. | |
absolutely necessary because things had gone overboard. Parallel to | :06:41. | :06:45. | |
that is the other programme of reforms which are meant to make the | :06:45. | :06:50. | |
economy more competitive. Eventually, growth will Peakin and | :06:50. | :06:58. | |
then you will see how the ratio will shrink. Mario Blejer in Wayne | :06:58. | :07:01. | |
is there is, you bring experience of dealing with the most difficult | :07:01. | :07:07. | |
of economic circumstances. You were the President of the Central Bank | :07:07. | :07:12. | |
of Argentina won the country went through default. INA you have been | :07:12. | :07:17. | |
looking at Greece today very closely. You have concluded that | :07:17. | :07:23. | |
Greece should be pulled and it's called big. Why you say that? | :07:23. | :07:33. | |
of the things we have learned from our experience... does not do any | :07:33. | :07:43. | |
:07:43. | :07:44. | ||
good. Greece seems to be unbearable. If you compare it with our | :07:44. | :07:51. | |
situation, Greece is 20 times larger. In per capita terms. And we | :07:51. | :08:01. | |
:08:01. | :08:04. | ||
were not able to pay. I understand reforms are necessary. But I think | :08:04. | :08:11. | |
that at a given 0.1 has to face reality. That is what we did. If we | :08:11. | :08:19. | |
had defaulted two years earlier the pain would have been less. | :08:19. | :08:23. | |
Additionally, if you default and pay the price, you can reverse the | :08:23. | :08:30. | |
problem. That's why I think the current arrangement, reducing the | :08:30. | :08:40. | |
:08:40. | :08:44. | ||
value of their debt to 20%, is not enough. If you are the way to | :08:44. | :08:49. | |
accept that fact that you cannot pay the full debt, the haircut must | :08:49. | :08:55. | |
make the remaining debt sustainable. This word hec mac keeps coming up, | :08:55. | :09:00. | |
but what would be the deal on the debt to make a sustainable? How | :09:00. | :09:05. | |
much would be written off was no I would need to do a careful | :09:05. | :09:14. | |
calculation, but 60% would not do the trick. He then the 20% being | :09:14. | :09:24. | |
discussed now is not OK because they're a lot of conditions. Greece | :09:24. | :09:31. | |
has to find collateral. There is also public sector involvement. | :09:31. | :09:40. | |
Even the for Greece is less than 40%. You really need to tackle the | :09:40. | :09:46. | |
problem in an Inter related manner. A significant get out, but, Norman | :09:46. | :09:54. | |
Lamont, is that possible with reasons I the euros and? Yes, I the | :09:54. | :09:57. | |
EU can have a controlled default and remain within the eurozone. And | :09:57. | :10:03. | |
I think that is what is necessary. Postponing the day of reckoning and | :10:03. | :10:09. | |
make it much worse. It is becoming alarming the size of the package | :10:09. | :10:15. | |
that the rest and is talking about. The German Parliament just voted | :10:15. | :10:19. | |
through a 440 begin euros package. They are now talking about her | :10:19. | :10:23. | |
being a two rate trillion euros package which would be highly | :10:23. | :10:31. | |
leveraged. And leveraging is what at the scene to this problem and | :10:31. | :10:39. | |
that this place. The ECB have a capital of 5 billion euros. It has | :10:39. | :10:44. | |
advanced money to banks and the Ritz and, may be only 400 bn. It | :10:44. | :10:52. | |
has bought bombs, may be over 100 billion. This is really making a | :10:52. | :10:56. | |
crisis for the European Central Bank. And who is guaranteeing this? | :10:56. | :11:03. | |
Countries like Italy. It will be is the third most important guarantor | :11:03. | :11:08. | |
of ECB and the bail-out fund, that Italy could not possibly afford to | :11:08. | :11:13. | |
pay the sums of money. So you have countries like Italy and Spain | :11:13. | :11:18. | |
guaranteeing a mechanism in order to bail out themselves. Frankly, | :11:18. | :11:26. | |
this is not credible. That last phrase used: Bailing out themselves. | :11:26. | :11:32. | |
You never stop and look at the miss your country is in and think: | :11:32. | :11:37. | |
Borrowing more money simply to allow us to service the debts we | :11:37. | :11:41. | |
already have two at the European Bates is doing us no favours. It is | :11:41. | :11:46. | |
harming the interests of our and people, simply looking after the | :11:46. | :11:50. | |
interests of the big European banks. Wouldn't it be better for you and | :11:50. | :11:55. | |
people to call a halt to this? course not. Because if you declare | :11:55. | :12:00. | |
a default, it is like committing suicide because you're at us will | :12:00. | :12:05. | |
be destroyed and your economy will be cut off from the rest of the | :12:05. | :12:11. | |
world and we are an integral part of the EU. Mr Blair is living proof | :12:11. | :12:16. | |
that it is not suicide. He was running the Central Bank, I kid in | :12:16. | :12:22. | |
a bit old oak, it had to cut its ties. It was a means, it was | :12:22. | :12:27. | |
painful, but after that we saw Argentina grow for five years in a | :12:27. | :12:37. | |
:12:37. | :12:41. | ||
In 2011, despite the crisis in Greece, it is 38 %. Please explain | :12:41. | :12:47. | |
that to me. You could argue it is because agrees has been living in | :12:47. | :12:52. | |
this fantasy that it should not have been in the first place. | :12:52. | :12:58. | |
will come back to that if I may. We had four years of recession before | :12:58. | :13:02. | |
the default. The default did not cause the recession, it was the | :13:02. | :13:09. | |
opposite. This was in 1998, at the end of the four years we had a | :13:09. | :13:16. | |
default, as a consequence, we did have some problems, of course. The | :13:16. | :13:22. | |
banks did not collapse. We were able to save all of the banking | :13:22. | :13:30. | |
sector. After that we had eight years of growth. I think Greece has | :13:30. | :13:34. | |
benefited largely from belonging to the eurozone that is why I do not | :13:34. | :13:39. | |
think they should leave the eurozone. They should look at the | :13:39. | :13:45. | |
current situation and recognise that it is not possible to serve as | :13:45. | :13:52. | |
this large amount of debt which has accumulated over many years. In | :13:52. | :13:57. | |
Argentina, the recession and the pain was before the default. After | :13:57. | :14:03. | |
six months we were growing again. Of course we had a number of | :14:03. | :14:09. | |
benefits that Greece does not have. I am going to stop you there, that | :14:09. | :14:15. | |
is a very interesting point. I want you to respond to it. The idea | :14:15. | :14:20. | |
being, if you get out of the eurozone, at least for a time, you | :14:20. | :14:24. | |
would not be subject to the Monetary Policy that is driven by | :14:24. | :14:29. | |
the Germans, which seems more suited to a German economy than | :14:29. | :14:34. | |
yours, you would be free to depreciate Euro-currency, you could | :14:34. | :14:38. | |
begin exports, you could restructure your academy in a | :14:38. | :14:43. | |
radical fashion, it would be good for you. Are you asking me that | :14:43. | :14:53. | |
:14:53. | :14:56. | ||
question? Whether I believe in depreciation as a tall? I can tell | :14:56. | :15:05. | |
you my opinion on that. Our improvements as an economy came | :15:05. | :15:09. | |
when we were getting ready to join the EU and the eight years that | :15:09. | :15:17. | |
followed. From 96 until 2008. Greece moved from 40th place in the | :15:17. | :15:23. | |
world up to number 23. This did not happen just because our government | :15:23. | :15:30. | |
was burrowing through the roof. No, this happened because of the | :15:30. | :15:32. | |
improvement in the whole macro- economic situation within the | :15:32. | :15:39. | |
country. There are all kinds of indices to prove that. Do not take | :15:39. | :15:46. | |
my word for it. Between 2000-2008 productivity growth was 2.4% per | :15:46. | :15:52. | |
annum. That was three times higher than Germany, Spain or Portugal. | :15:52. | :15:59. | |
Higher than Ireland, higher than anywhere in the eurozone. That is a | :16:00. | :16:05. | |
product not of free borrowing but a result of lower inflation and the | :16:05. | :16:12. | |
efforts that were made on the part of a Greek businessman to start but | :16:12. | :16:20. | |
is abating in this thing called a single market... -- start | :16:21. | :16:26. | |
participating. I think it is fair to say you whenever a friend of the | :16:26. | :16:32. | |
euro. You have stoutly defended Britain's right not to be in it. | :16:32. | :16:37. | |
The message there are, you know what, the eurozone has been good | :16:37. | :16:45. | |
for the periphery countries. The idea being, yes we are in a crisis, | :16:45. | :16:50. | |
but actually Greece, Italy, Portugal, Spain, these highly | :16:50. | :16:54. | |
indebted nations, in the end will benefit from staying inside the | :16:54. | :17:00. | |
euro to get out of the mess they are in? I do not subscribe to this. | :17:00. | :17:05. | |
Leaving this financial crisis apart, the future of opera for Europe, the | :17:05. | :17:15. | |
:17:15. | :17:18. | ||
Mediterranean countries and Italy is one... -- peripheral. They will | :17:18. | :17:24. | |
be denied their own flexibility of exchange rates, they will not be | :17:24. | :17:28. | |
able to compete with the Germans. Productivity has lacked massively | :17:28. | :17:33. | |
behind that of Germany since the euro was formed. What has been the | :17:33. | :17:39. | |
result? The Italian economy has hardly grown at all. Something | :17:39. | :17:45. | |
under 1% per year since the euro was formed. It was much faster | :17:45. | :17:49. | |
before that. I do not believe that putting countries in a | :17:49. | :17:52. | |
straightjacket in this way is going to make them suddenly become | :17:52. | :17:57. | |
chairman. When EU Commission President said the lesson from this | :17:57. | :18:03. | |
is that there has to be much deeper integration at the physical level, | :18:04. | :18:09. | |
talking about one finance ministry, one set of fiscal rules, taxes set | :18:09. | :18:14. | |
for the entire eurozone, is that not a way out of this? That is | :18:14. | :18:18. | |
correct theoretically. I have always believed that is one reason | :18:18. | :18:28. | |
why I did not want to join the euro. You cannot have a single currency | :18:28. | :18:34. | |
without having a single fiscal system. How can you have policies | :18:34. | :18:39. | |
in Greece, Spain not decided by those countries... It does not work. | :18:39. | :18:49. | |
:18:49. | :18:50. | ||
People of those countries were not accept having their taxes drawn up | :18:50. | :18:54. | |
by another country. Will you accept taking economic instruction at | :18:54. | :18:59. | |
every level, fiscal and monetary, from Germany more than any other | :18:59. | :19:07. | |
country? In the latest opinion poll 70.5 % of Greeks say they want to | :19:07. | :19:17. | |
keep the euro. 19.7 % said they wanted to return. Their country, in | :19:17. | :19:20. | |
essence, will be economically governed from Brussels and | :19:20. | :19:28. | |
Frankfurt. Well... I am afraid there is a misunderstanding. When | :19:29. | :19:35. | |
we say governed from Brussels, we are part of it. The prevailing | :19:35. | :19:41. | |
ideology is another question. We were never against discipline. | :19:41. | :19:46. | |
Despite what you may think. We were never against improving our | :19:46. | :19:50. | |
competitiveness. Maybe you should look out the window. Are you | :19:50. | :19:55. | |
looking at the strikes in Athens? Are you looking at the fact that EU | :19:55. | :20:00. | |
officials cannot get inside the finance ministry to read the books | :20:00. | :20:04. | |
because there are strikers outside barring their entry? Great people | :20:04. | :20:09. | |
do not accept the levels of austerity less the levels that will | :20:09. | :20:17. | |
be imposed in the future. Nobody loves austerity. We know this is a | :20:17. | :20:25. | |
necessary transition from a state which turned into a Lotus giant | :20:25. | :20:35. | |
that collapsed from its own weight. People know that. I see you shaking | :20:35. | :20:40. | |
your head. You are outside the euro, what do you make of this | :20:40. | :20:46. | |
fundamentally important debate? things. I am completely certain | :20:46. | :20:50. | |
that austerity is not going to resolve the problem. It never | :20:50. | :20:57. | |
resolves the problem to adjust in this way. In terms of Europe, the | :20:57. | :21:03. | |
euro is not an economic project. It is a pretty bad project. It is a | :21:03. | :21:07. | |
political project. When you have a project that is political and not | :21:07. | :21:13. | |
economic it has a cost, someone has to pay for it. Who is going to pay? | :21:13. | :21:17. | |
Who is going to pay for the recapitalisation of the banks that | :21:17. | :21:23. | |
is necessary? The losses that they are going to incur? Who is going to | :21:23. | :21:33. | |
:21:33. | :21:39. | ||
pay... Germany, and France? The only economic powers within the | :21:39. | :21:44. | |
eurozone that can indulge in a reconstruction of Greece? Yes come | :21:44. | :21:49. | |
up not only them, some countries in the north of Europe, Austria, | :21:49. | :21:55. | |
Netherlands, Finland, they will pay. But they do not want to pay. It is | :21:55. | :22:00. | |
important to notice that international community's... If you | :22:00. | :22:08. | |
look at the balance sheet of the IMF, 80% of the commitment is to | :22:08. | :22:15. | |
Europe. To third of the commitment is to the countries that have this | :22:15. | :22:25. | |
:22:25. | :22:25. | ||
huge debt. -- two-thirds. Before we end, Barack Obama has said, we in | :22:25. | :22:29. | |
America are scared by what is happening in Europe. The Europeans | :22:29. | :22:34. | |
have not responded quickly enough to the crisis in their midst. Do | :22:34. | :22:38. | |
you believe this euro crisis has the potential to be a fantastically | :22:38. | :22:44. | |
heavy drag on the world economy for years to come? Without any doubt. | :22:44. | :22:50. | |
It is affecting the banking system. American banks are reluctant to | :22:50. | :22:54. | |
transfer money to European banks. The bank market is beginning to | :22:54. | :22:58. | |
freeze up again because people are uncertain about what is happening | :22:58. | :23:02. | |
in Europe. The burden of debt has been passed from one person to | :23:02. | :23:08. | |
another. It started off with the banks, it was passed on to the | :23:08. | :23:11. | |
government, now the Government's are passing it to Germany and | :23:11. | :23:17. | |
France. France cannot absolutely accept this huge burden that will | :23:17. | :23:20. | |
be placed on it. It is a pack of cards that could come crumbling | :23:21. | :23:27. | |
down. Surely the inevitable consequence is that it will come | :23:27. | :23:33. | |
down? I think it will be better to recognise the reality of Greece and | :23:33. | :23:37. | |
have a controlled default within the eurozone. Of course that would | :23:37. | :23:42. | |
harm the great banking system, assistance can be given to the | :23:42. | :23:46. | |
great banking system and the French banking system. Anything you have | :23:46. | :23:51. | |
heard that has changed your mind? That it is best for Greece to | :23:51. | :23:59. | |
accept reality and get the default done now? No, I am more and more | :23:59. | :24:04. | |
convinced this is destruction. Do not forget we are inside the EU. | :24:04. | :24:11. | |
Never before has any other country received so much assistance. It is | :24:11. | :24:18. | |
not transferring funds, these are loans. They are loans if they get | :24:18. | :24:23. |