Browse content similar to Kenneth Rogoff, former IMF chief economist. Check below for episodes and series from the same categories and more!
Line | From | To | |
---|---|---|---|
is time for HARDtalk. After months of applying sticking | :00:08. | :00:11. | |
plasters to the ailing global economy, have world leaders finally | :00:11. | :00:14. | |
come up with an effective long-term treatment? In the Eurozone, there's | :00:14. | :00:18. | |
talk of a two trillion euro stabilisation fund and a managed | :00:18. | :00:26. | |
default for Greece. In the US, the Obama administration says it has | :00:26. | :00:36. | |
:00:36. | :00:39. | ||
plans to deliver job creation and deficit reduction. My guest is Ken | :00:39. | :00:46. | |
Rogoff, a former chief economist at the IMF. Is it too late to avert a | :00:47. | :00:56. | |
:00:57. | :01:18. | ||
prolonged contraction in the Welcome to HARDtalk. Thank you. | :01:18. | :01:25. | |
You're a chess grandmaster as well as an economist. Do you think world | :01:25. | :01:28. | |
leaders have made the right moves to avert imminent economic | :01:28. | :01:37. | |
disaster? I am still very nervous about how this will unfold. There | :01:37. | :01:41. | |
are many moves the Europeans Herve but do they have the political will | :01:41. | :01:48. | |
and support to execute them? 80% of Germans are against the euro right | :01:48. | :01:55. | |
now. That is not a very easy thing to go against. Easy to your view | :01:55. | :01:59. | |
that everything we are now seeing in terms of a crisis of economic | :01:59. | :02:08. | |
confidence hinges on what happens next in the Eurozone? I think it is | :02:08. | :02:12. | |
acutely Europe. It is also fair to say the United States has slowed | :02:12. | :02:17. | |
down even more than people had anticipated and there is policy | :02:17. | :02:24. | |
paralysis here in the United States also. That is not quite as urgent | :02:24. | :02:28. | |
but it is also weighing on investors' minds and people are | :02:28. | :02:35. | |
wondering when they will be growth again. In the UK when politicians | :02:35. | :02:39. | |
like the Prime Minister David Cameron used the analogy of staring | :02:40. | :02:47. | |
down a barrel and when George Osborne says that Eurozone leaders | :02:47. | :02:52. | |
have just six weeks to save the euro, does this inflated rhetoric | :02:52. | :02:59. | |
help or hinder? I do not think it is inflated rhetoric. I think we | :02:59. | :03:05. | |
are approaching what we had in 2008 and urgent action is needed, | :03:05. | :03:09. | |
particularly in Europe. They seem to be just waiting for things to | :03:09. | :03:14. | |
unfold and have a disorderly default in Europe. I do not think | :03:14. | :03:20. | |
it is hyperbole. It is a very nervous moment and that needs to be | :03:20. | :03:26. | |
communicated - not just two leaders but to the public, especially in | :03:26. | :03:31. | |
Germany. We have decided that Europe is the key for the moment. | :03:31. | :03:39. | |
What exactly is on the table in the Eurozone? We are talking about a | :03:39. | :03:43. | |
managed defaults in Greece. Do you think They should have happened a | :03:43. | :03:51. | |
long time ago? It absolutely should have happened a long time ago. It | :03:51. | :03:55. | |
has been a farce that they have not had Greece going to significant | :03:55. | :04:05. | |
default already. It will not be able to pay its debts. The reason | :04:05. | :04:09. | |
they have hesitated is they do not know what to do next because after | :04:09. | :04:16. | |
Greece there is Portugal, Ireland, Spain, Italy... They cannot agree | :04:16. | :04:25. | |
on a plant so they have kept Greece on life-support, just giving it | :04:25. | :04:30. | |
money. It is not going to keep up because the Greek public does not | :04:30. | :04:36. | |
want to put up with one austerity measure after the other and five or | :04:36. | :04:39. | |
six years of recession to be in default anyway. That must be | :04:39. | :04:44. | |
settled. You say they keep giving Greece | :04:44. | :04:49. | |
money and I assume you mean European leaders but let us not | :04:49. | :04:53. | |
forget that the IMF is involved in the progressive bailout strategy as | :04:53. | :04:58. | |
well and you were Chief Economist there for three years. Do you think | :04:58. | :05:03. | |
the IMF has got this wrong? There is no question that until | :05:03. | :05:08. | |
relatively recently the IMF has been willing to go along with | :05:08. | :05:18. | |
:05:18. | :05:18. | ||
whatever you reported -- Europe wanted. It went even further than | :05:18. | :05:23. | |
that. By any one year ago, it was insisting that it was impossible | :05:23. | :05:28. | |
that Greece could default as an advanced country despite the fact | :05:28. | :05:33. | |
that this time is different. In my book I showed that Greece was in | :05:33. | :05:39. | |
default every other year after independence. The IMF has recently | :05:39. | :05:46. | |
been retreating and started to realise that it cannot keep saying, | :05:46. | :05:52. | |
whatever Europe once. There needs to be tough love coming from the | :05:52. | :05:58. | |
IMF. This is fast-moving and it is hard to know which way it will go. | :05:58. | :06:03. | |
If you use the phrase tough love, how far should it go? The message | :06:03. | :06:10. | |
from European leaders is that if they can Engineer the managed | :06:10. | :06:14. | |
defaults and get the angry creditors to take a haircut of 50 | :06:14. | :06:22. | |
or 60% then Greece can stay in the euro and survive and thrive in the | :06:22. | :06:26. | |
long-term. I'm struggling to see how that can be the case. The Greek | :06:26. | :06:32. | |
economy will still be a zombie economy. There is no prospect of it | :06:32. | :06:36. | |
escaping from long-term austerity measures. Where are all growth come | :06:36. | :06:45. | |
from? How can it thrive in the Eurozone? It is very difficult. It | :06:45. | :06:50. | |
is in a tough position either way. I think Greece will not end up in | :06:50. | :06:57. | |
the Eurozone. I think whoever is left will be in a tighter bond, a | :06:57. | :07:02. | |
tighter fiscal and regulatory union than they are now. It will be very | :07:02. | :07:12. | |
:07:12. | :07:14. | ||
hard to keep Greece in it. I think the real problem is that it will do | :07:14. | :07:18. | |
fault but that the Europe -- that the Europeans will say we will | :07:18. | :07:26. | |
protect Portugal and everybody else. Countries are way past the normal | :07:26. | :07:29. | |
limit of what the people will tolerate in terms of repaying | :07:29. | :07:35. | |
foreign debt. Portugal is in that category. Ireland has done many | :07:35. | :07:41. | |
great things but they are still in trouble. There is panic in the | :07:41. | :07:48. | |
banking system. They're thinking Italy and Spain that maybe it is a | :07:48. | :07:52. | |
solvency problem but mostly it is a panic. The Europeans want to | :07:52. | :07:56. | |
protect everything. Until recently they said it was unimaginable that | :07:56. | :08:03. | |
Greece would default! You are a respected economist with a lot of | :08:03. | :08:09. | |
experience in international financial crisis. Are you telling | :08:09. | :08:14. | |
me that the two trillion euros mooted as the benchmark price | :08:14. | :08:18. | |
stability fund will not do it in terms of putting a firewall a round | :08:18. | :08:25. | |
Portugal or Italy? Italy is an enormous economy and his national | :08:25. | :08:33. | |
debt is about the same as the German GDP. | :08:33. | :08:38. | |
Two trillion euros is a very good idea and would be very helpful. It | :08:38. | :08:42. | |
will buy time. I think three or four trillion Europe might | :08:42. | :08:50. | |
ultimately be needed. You make it sound easy. Where on earth do we | :08:50. | :09:00. | |
:09:00. | :09:03. | ||
get a three trillion or Fort William from in Europe? -- four | :09:03. | :09:13. | |
:09:13. | :09:18. | ||
trillion. Unita the overwhelming force to prevent the banks falling. | :09:18. | :09:23. | |
They need resources at that level, not that amount of cash itself. How | :09:23. | :09:29. | |
long can Greasby in austerity? It is the same thing for Portugal and | :09:29. | :09:33. | |
Ireland. That is the difference. You need to forgive some of the | :09:33. | :09:40. | |
debts and write them off. The NAB over time they can grow again. | :09:40. | :09:45. | |
Perhaps some of them will need to leave the Eurozone. What worries me | :09:45. | :09:49. | |
with the plan is that they have not made the top decisions. It will be | :09:49. | :09:56. | |
unstable politically as long as they have not decided where at the | :09:56. | :10:03. | |
debt cannot realistically be paid. I understand your distinction. But | :10:03. | :10:11. | |
I want to push you in the wake one cannot push elected politicians. | :10:11. | :10:15. | |
Which countries do you ultimately believe will have to leave the | :10:16. | :10:25. | |
:10:26. | :10:31. | ||
Eurozone? -- of the wave. -- the way. We must see structured debt | :10:31. | :10:39. | |
reduction in Ireland, Portugal and Greece and perhaps in Spain. States | :10:39. | :10:44. | |
and cities default in the US all the time and they do not leave the | :10:44. | :10:54. | |
:10:54. | :10:56. | ||
US. But what I think we will see is that these defaulting countries | :10:56. | :11:01. | |
will leave the Eurozone ended has to be fixed. There must be more | :11:01. | :11:06. | |
revenue-sharing and a tighter fiscal unit. They may wonder which | :11:06. | :11:09. | |
countries that are currently they can really justify having a | :11:09. | :11:15. | |
stronger integration. Some of the newer entrants such as Estonia are | :11:15. | :11:19. | |
also emerging markets that a strong right now but who knows what | :11:20. | :11:29. | |
:11:30. | :11:30. | ||
problems lie ahead? So your message is that the German people have to | :11:30. | :11:34. | |
suck this up and recognise that they will be the guarantors of | :11:34. | :11:40. | |
sovereign debt across the periphery of the European Union? They will | :11:40. | :11:47. | |
pay the price for years to come. am afraid that is absolutely right. | :11:47. | :11:51. | |
The endgame has the German people doing that. Life in Germany is | :11:51. | :11:56. | |
still pretty good. It is hard for the everyday German to feel the | :11:56. | :12:02. | |
risk of what is going on. I think it is similar in Italy. But the | :12:02. | :12:09. | |
system must change. They must have a tighter fiscal union and they | :12:09. | :12:14. | |
must try to sensibly provides support. You cannot just guarantee | :12:14. | :12:21. | |
everything. If they go to Portugal and say, or borrow more money, they | :12:21. | :12:26. | |
need to have some of the debt forgiven. They have not reached | :12:26. | :12:36. | |
:12:36. | :12:41. | ||
that recognition outside of Greece. To use a British phrase, get your | :12:41. | :12:46. | |
fingers out and get real! The Germans really resented because | :12:46. | :12:50. | |
they are looking at the political management of the US economy and | :12:50. | :13:00. | |
:13:00. | :13:03. | ||
say, who are you to lecture last? It is a fair point. -- lecture us. | :13:03. | :13:09. | |
It certainly is. The debacle there has undermined confidence. You | :13:10. | :13:15. | |
wonder who is in charge. The Republicans have been weekend. The | :13:16. | :13:20. | |
President has been weakened. They were talking about shutting down | :13:20. | :13:28. | |
the government again! I enjoy seeing you smile but this is no | :13:28. | :13:38. | |
:13:38. | :13:38. | ||
laughing matter! The IMF and just gave us their latest survey and | :13:38. | :13:42. | |
call it a dangerous phase for the world but they downgrade growth | :13:42. | :13:47. | |
prospects in the US for this year and next. What do you think is | :13:47. | :13:53. | |
going to happen in the US economy? Do you believe that a double dip | :13:53. | :14:03. | |
long-term recession is inevitable now? Not inevitable but I do not | :14:03. | :14:08. | |
think we left the downturn. We are still in 2008. You cannot even | :14:08. | :14:15. | |
think of this as a recession. Output per person is no we knew | :14:15. | :14:20. | |
where it started, up much less getting back to trend. Unemployment | :14:20. | :14:26. | |
has not fallen below 9%. It is in a deep recession in the US and with | :14:26. | :14:32. | |
it grows at 1% or falls at 1% in the short-term, we need to see four | :14:32. | :14:39. | |
or 5% growth. You mentioned the IMF forecast. It was exceptionally dark. | :14:39. | :14:49. | |
:14:49. | :14:54. | ||
US growth was forecast eight. Down You look at the numbers coming in | :14:54. | :14:59. | |
and the IMF have had growth forecast going down to 1.5 % in the | :14:59. | :15:07. | |
US. What do you think it might be? We have entered a phase of this | :15:07. | :15:14. | |
queer, suddenly, after the last few months, that is a best guess. The | :15:14. | :15:21. | |
rest has become very a symmetric. It would have been that slow growth | :15:21. | :15:27. | |
for many years but could be better, could be worth. -- worse. Now we | :15:27. | :15:32. | |
are hoping it stays at that level. There is a lack of confidence. | :15:32. | :15:37. | |
Businesses are freezing up. The economy is not falling but it is | :15:37. | :15:44. | |
not rising. The Federal Reserve has not stepped in yet. There is a risk | :15:44. | :15:48. | |
that there will be dramatic tightening instead of a gradual | :15:48. | :15:52. | |
tightening. It is a very disconcerting moment. There is no | :15:52. | :15:59. | |
order way to put its. I can feel your concern. It is easy to sit as | :15:59. | :16:05. | |
a renowned economist at Harvard University and tell me how the | :16:05. | :16:09. | |
economy is misfiring but it is not so easy to tell me how to fix the | :16:09. | :16:14. | |
problem. Barack Obama has started a new initiative and is committed to | :16:14. | :16:18. | |
reducing the death of -- deficit, what of the measures that you think | :16:18. | :16:26. | |
need to be taken? I think a piece of the President's plan is not | :16:26. | :16:32. | |
particularly controversial. That is extending the tax cuts to low- | :16:32. | :16:36. | |
income workers. If you pull them back, that is quite a tightening in | :16:36. | :16:41. | |
the economy. I would look at this is a patient with a high fever. You | :16:41. | :16:48. | |
are giving them I'd be Provan or aspirin to stop them going in to | :16:48. | :16:58. | |
:16:58. | :17:05. | ||
fever. -- Ibuprofen. They are fighting the 1970s. It is like | :17:05. | :17:10. | |
something that Japan had in the 1930s. It is a mask which year | :17:10. | :17:15. | |
scenario than the thought. Just to be clear, but what you mean about | :17:15. | :17:22. | |
that, you mean more quantitative easing? Printing more dollars? That | :17:22. | :17:28. | |
is inviting inflation in the United States. Exactly. I would like a | :17:28. | :17:32. | |
better form of quantitative easing where they make good form that we | :17:32. | :17:39. | |
will have to tolerate higher inflation for a file. Bedford mean | :17:39. | :17:44. | |
having a law a dust -- it would mean having a law adjusted | :17:44. | :17:49. | |
interested. It could mean changing the value of housing so the market | :17:49. | :17:54. | |
clears quicker. It would be a slight help to people who have got | :17:54. | :18:00. | |
loans, outstanding debt. Four-5% inflation is certainly not a | :18:00. | :18:06. | |
problem. All of the things that are usually wrong with it would be | :18:06. | :18:11. | |
beneficial. I would like to see it in Europe. Central bankers are very | :18:11. | :18:16. | |
reluctant. I find it truly fascinating that you say you want | :18:16. | :18:21. | |
to see inflation take-off and the United States. It drives you former | :18:21. | :18:27. | |
allies on the republican side absolutely nuts. They say that that | :18:27. | :18:32. | |
sort of attitude, quantitative easing, inviting the write-down of | :18:32. | :18:36. | |
mortgage debt, it is simply undermining the dollar and this | :18:36. | :18:42. | |
fundamentally unfair because it hurts those who are prudent savers. | :18:42. | :18:46. | |
You used to be a force for inflation. What has happened to | :18:46. | :18:53. | |
you? I wrote a paper 25 years ago about why it was a good idea to | :18:53. | :18:57. | |
have an independent central bank, why there should be tougher than | :18:57. | :19:02. | |
average -- they should be tougher on inflation, absolutely, I think | :19:02. | :19:08. | |
it is very important. We are facing a once and 75 year, once and 100 g | :19:08. | :19:17. | |
of downturn -- once in 100 you downturn. There has to be a safety | :19:18. | :19:22. | |
method from things like this happen. We do not what is going to happen. | :19:22. | :19:28. | |
You have got to pick your poison. I would like to see some debt | :19:28. | :19:34. | |
forgiveness with mortgages. It is very difficult in the American | :19:34. | :19:44. | |
:19:44. | :19:45. | ||
psyche K. It seems quite unfair. Even if you did that, and you have | :19:45. | :19:49. | |
ruffled feathers in the conservative side of politics, even | :19:49. | :19:54. | |
if you did all that, is there not a much deeper problem that there are | :19:54. | :19:58. | |
global imbalances in the economy and organisations like the United | :19:58. | :20:03. | |
States can only really get their growth going if they see creditor | :20:03. | :20:06. | |
nations and great exporters like the Germans and Chinese | :20:06. | :20:10. | |
fundamentally changing the nature of their economies so that the US | :20:10. | :20:15. | |
can start selling them goods. That is not going to happen. No, it is | :20:15. | :20:20. | |
not. We do need to see that. I don't think it is something that is | :20:20. | :20:25. | |
going to happen quickly. The Chinese cannot easily balance their | :20:25. | :20:30. | |
economy. Frankly, the Germans cannot either. Are you sure about | :20:30. | :20:36. | |
that. Is that not giving them a bit of a pass? Surely the Germans could | :20:36. | :20:41. | |
take some short term measures to boost demand inside Germany and | :20:41. | :20:45. | |
that would make a big difference to the rest of the eurozone and | :20:45. | :20:51. | |
probably to the United States, to. What I would most like to see is a | :20:51. | :20:57. | |
to have a higher inflation rate in Europe. That would put pressure on | :20:57. | :21:02. | |
everyone else's wages apart from the Germans. I think the Germans | :21:02. | :21:09. | |
are reluctant to have a big bang fiscal stimulus because they know | :21:09. | :21:12. | |
their guaranteeing everything. Nobody is kidding themselves, they | :21:12. | :21:19. | |
know that. If you look at Germany's credit rating, they are and a very | :21:19. | :21:26. | |
tight spot -- paid sports. They cannot go too far. -- they are in a | :21:26. | :21:31. | |
very tight spot. Systems are not working. They would like to make | :21:31. | :21:35. | |
good investments and get a higher interest rate but they do not see | :21:35. | :21:42. | |
progress in having Europe move towards greater integration and | :21:42. | :21:47. | |
they are very concerned. You have referred to were concrete | :21:47. | :21:51. | |
contractions. You are saying we are seeing the greatest contraction | :21:51. | :22:01. | |
since the 30s. How long is it going to last in your view? What I found | :22:01. | :22:07. | |
in my booking 2009, I spoke about the great contraction then, things | :22:07. | :22:13. | |
like unemployment can get worse for up to four-five years, that can | :22:13. | :22:18. | |
take the same amount of time of output per person to get out we | :22:18. | :22:24. | |
started. You typically start seeing the out -- the end of this after | :22:24. | :22:30. | |
seven years. I have been saying for a long time that you have to worry | :22:30. | :22:34. | |
about The Vics death -- decade, not just the next six months. You have | :22:34. | :22:42. | |
to look at competitiveness, finding ways to reduce debt, this is not a | :22:42. | :22:48. | |
magic bullet because it is a difficult situation. This has | :22:48. | :22:52. | |
happened in other countries and it does end. Is that not perhaps a bit | :22:52. | :22:57. | |
complacent? You are seeing it is worse than people have realised but | :22:57. | :23:04. | |
perhaps it is a cycle comparable to the 1930s cycle. What of this is a | :23:04. | :23:07. | |
crisis of growth orientated capitalism and that actually we | :23:07. | :23:14. | |
could never go back to the way we were in the 1980s and 1990s? | :23:14. | :23:18. | |
There is an undercurrent of the growth of Asia. That is hurting | :23:18. | :23:23. | |
manufacturing jobs all the world. I do not see that. I think the world | :23:23. | :23:27. | |
continues to have long-term growth prospects. They are certainly | :23:27. | :23:33. | |
things in the system that effect this, inequality has grown too much, | :23:33. | :23:37. | |
that needs to be addressed. Commodity resource based freshers | :23:37. | :23:43. | |
are beginning to look g to look than cyclical. They are definitely | :23:44. | :23:49. | |
not cyclical. We are seeing a rise in metals, gold, that is because of | :23:49. | :23:53. | |
the growth in Asia. You're absolutely right, this integration | :23:53. | :23:58. | |
of people into the world workforce is having a big effect. The ageing | :23:58. | :24:03. | |
population is having a big effect. There are a lot of challenges. It | :24:03. | :24:07. | |
is not as bad as what we're facing right now, we're facing a debt | :24:07. | :24:16. | |
problem, a debt crisis. 100 years, who knows? I think we're definitely | :24:16. | :24:21. | |
in a very difficult situation at the moment. We know that we both | :24:21. | :24:26. | |
want be around. But for now, thank you very much. Thank you for being | :24:26. | :24:36. | |
:24:36. | :24:53. | ||
How low. Over the last few days, we have been talking about things | :24:53. | :25:00. | |
warming up. -- hello there. Yesterday, we had temperatures of | :25:00. | :25:05. | |
27 degrees in France. This is where the warm water demand is going to | :25:05. | :25:12. | |
come from through the week. -- the warm air. Temperatures in the low | :25:12. | :25:18. | |
20s. That trend starts to happen through the course of the day-to- | :25:18. | :25:28. | |
:25:28. | :25:29. | ||
day, particularly through southern areas. -- the day today. Those | :25:29. | :25:34. | |
co coill slowly improve. First thing this morning, and the | :25:34. | :25:44. | |
:25:44. | :25:46. | ||
South, a cloudy start to the day. Misty, foggy, low cloud. Cloudy and | :25:46. | :25:50. | |
misty through southern Wales but for the north-east it will be dry | :25:50. | :25:56. | |
and bright as we head through the day. Into Noy. Into Noland, after a | :25:56. | :26:04. | |
damp night, the sky will Brighton. Lighter, patchy rain in the north- | :26:04. | :26:10. | |
east. We start the day on a cloudy, enjoyed first thing for Yorkshire | :26:10. | :26:14. | |
and Lincolnshire. That is how we look first thing on Tuesday. Slowly | :26:14. | :26:17. | |
the weather will change. The rain across Scotland will ease through | :26:17. | :26:20. | |
the afternoon. Not as heavy with the wind moving as well. In the | :26:20. | :26:24. | |
south, the cloud breaks up with mist and fog clearing away from the | :26:24. | :26:27. | |
coast. Highs of 23 degrees this afternoon. Overnight, a similar | :26:27. | :26:36. | |
performance will happen yet again in the south-west. A bit of low | :26:36. | :26:40. | |
cloud and a bit of mist and fog. Not as extensive as the night just | :26:40. | :26:43. | |
gone. It is going to be a much milder night, 14-15 degrees. For | :26:44. | :26:47. | |
Wednesday, this is the set-up for the next of the week, north-western | :26:47. | :26:51. |