02/11/2011 Newsnight Scotland

may be of little comfort that Tonight on Newsnight Scotland:

We will have more on the crisis in the eurozone. One way or another

the European Union has dominated debate both across the UK generally

and here in Scotland for the last 30 years. But is tonight the night

the European ideal meets its doom? And this evening the Occupy Glasgow

protesters in George Square voted to move to Kelvingrove Park. We

have been down to the camp to find out if their message is getting

through. Good evening. The current crisis

may seem rather abstract as European leaders argue about

'haircuts' on debt and a Greek referendum, but the consequences of

jitters in our key export market will be felt here all too soon.

What makes the eurozone crisis so confusing is that it's actually

several crises rolled into one. And even if one crisis is resolved, it

doesn't mean the others are, too. And to make matters worse, they are

all intimately connected. The headline crisis is in Greece.

The EU's deal last week may right up enough of its debt to allow the

country to stay afloat, but they will still face years of savage

austerity. The trouble is that the proposed referendum introduces

complications no-one was expecting. The Greek people might turn out the

deal. Even if they don't, Greece could run out of money and

credibility. In the worst-case scenario, Greece will simply

default on its debt. That means banks and government who have lent

to it could lose all their money and that leads us to the next

problem. The nightmare is that some European banks which have lent

heavily to Greece could go bust, or lose all credibility, triggering an

crumbs, as happened to Northern Rock. No-one wants another banking

crisis. Remember what happened at - - happened after Lehman Brothers

went down? There is a feeling of that many European banks have not

given a full account of themselves. Take this bank which has been

nationalised. A few weeks before it went belly up, it passed stress

tests set by the European Union with flying colours. That brings us

to the next problem. If banks start failing, only estates can guarantee

their survival. So what happens if these they've run out of money?

That is what has happened in Ireland where public finances are

in the hands of the EU and the IMF. It has happened in Greece where the

public finances have been an MS for years. So, where next? Some

countries have a liquidity problem and some countries have a solvent

problem. Without the bail-out, Greece would probably not be able

to pay off its debt. That is a solvency problem. In Italy the

country is solvent, but because of panic in the markets, it elite is

having problems raising money. That is a liquidity programme. Confused?

Join the crowd. At the beginning of the financial crisis in 2008, the

ball told but banks have liquidity problems and not solvency problems,

until they started going bust. To head of the crisis the eurozone

countries will have to commit a limitless amounts of money. Doing

there would guarantee but it default would not happen. The money

committed to be eurozone bail-out fund is not enough, say some

economists. Each element of the bail-out fund is affected through

the mechanism of the financial markets to every other. As they say

in Cannes, bonne chance. I'm joined from London by the

former chair of the Treasury Select Committee Lord McFall, from

Edinburgh by the Executive Editor of the Scotsman Bill Jamieson and

here in the studio by the economics commentator, Alf Young. Standing

back from this immediate situation we are facing tonight in Greece

just a little bit, do you think this is an Exocet still --

existential crisis? We are on the edge off a precipice. No-one can

deny that now after the announcement by the Greek

government of the proposed referendum. The possibility of that

been a No vote will be a boat for police to exit the euro. It could

not remain in the euro after voting know. The it is also difficult to

imagine circumstances which it could vote No and leave the

eurozone and not immediately default on all its debts.

Absolutely. That is the number one worry. The emphasis is on how you

can have a eight policy contagion that could affect Italy. It takes

us right back to the 1930s and we are thinking in large terms about

what has to be done on a global basis the to beat this. Even the

attitude of the rest of the US- owned to graze his ambiguous. Some

are saying that Papandreou is playing a clever game. There are

rumours and signs that the eurozone might decide that Greece is out and

they will give up on it. That will concentrate on how to protect the

rest of the EU. It is still very difficult. It and it -- at the

heart of the year was so there is the ongoing crisis of how are we

going to have this financial stability implemented? -- eurozone.

Will the Chinese come in? There is also the unresolved issue of what

the European Central Bank players in all of this, whether it is doing

anything, or is it still a safe got on inflation, as the Germans see it.

It is a critical part of the story because it had not been resolved.

Fundamentally, people talking about going back to the 1930s, we have a

problem with leadership, both within the eurozone and I suspect

at Cannes as well. This is starting to look chaotic. We're getting all

sorts of threats. Angela Merkel and Sarkozy has suggested they will not

authorised the payment of the next 8 billion euros of the existing

bail-out funds agrees. But degrees are depending on their to pay civil

servants wages. This is getting quite nasty. Be is really nasty.

Tonight I met a prominent economist on the Scottish government's

Council of economic advisers. I cannot name him because it was an

informal conversation. I asked him about the future and he said he was

scared. People do not know where they are going and I'd been the

European Union should be planning at the moment for Greece coming out

of the eurozone. In doing so, we must guard against contagion here.

It is the immediacy of things. The Dutch have said if the Greeks are

having a referendum, we are not bound by the terms of the deal. For

example, if been learnt cent you are having a referendum on whether

or not to accept our money, we can have a referendum on whether we

would give it to you. It is getting chaotic. It is. People need to keep

their heads. There's no point in retaliating. We are all in it

together. 60 % of our exports go to Europe. For the UK that is �160

billion. Then is to be time to reflect. We need to keep the euro

together because I can't imagine what it will be like if that went.

It has got to be kept together. We have to sacrifice and it we have to

sacrifice Greece, in these to be done in an orderly way. -- it needs

to be done in an orderly way. There is a huge problem, but people need

to keep their heads and say, what are the main issues. The eurozone

is to be kept together. I don't want to make a bad situation sound

worse, but even if you could quarantine the Greek situation, a

lot of people are sceptical about this bail-out, as was agreed last

week, even without grease been part of it. People are concerned about

the circularity. The markets are concerned about the Italian bonds.

Nation by nation, Italy is responsible for 18 %. If you are an

investor, why should you take any more seriously and Italian at bail-

out fan -- bail-out funds over at the Italian debt. I would take

issue with Lord McFall because I do not think the primary issue it is

saving the integrity of the eurozone. The primary issue is

avoiding an almighty financial crisis, which could unfold during

weeks, leading to a second great depression. If the price of trying

to avoid that is Greece leaving the eurozone, it is a price worth

At some point the European Central Bank has to become a bank of last

resort. I think so, but it has to overcome that great German folk

memory of what happened the last time the central bank resorted to

printing money. I think this is a step that has to be taken, and if

that cannot be done then we have to think as I was saying earlier on

megatons, we have to think about a super enlarged IMF that can take

this on. The problem here is that the

politics of this book on the streets and a amongst the

electorate in northern Europe are now in absolute contradiction to

the economics. I absolutely. The interesting thing is that on the

streets you are hearing lots of other voices on the inside of the

circle saying that they and understand the feeling, and you can

see... We heard the head of the OECD saying that earlier. Anyone

who watches that television tomorrow at the G20 in Cannes, will

see that the major sponsorship for the discussion will the banks.

Societe Generale will have their emblem on the podium. This is crazy.

This point about the secularity - at some point there has to be some

form of European integration so you can have a proper central bank.

is all very well saying that, how do you do that in the time frames

with which we are trying to do it? It is really difficult. Lord McFall,

even if you sort out Greece, until these fundamental issues are

resolved you are really just putting off the crisis for a few

weeks or a few months down the road. They have been picking the can ban

the road for ages, and that is the problem. We now have a new head of

the European Central Bank. Really what he has to do is to sit down

with Angela Merkel and say I know there are political obstacles here

in terms of the European Central Bank being a last resort, but if we

do not have some form of Treasury in Europe than contagion will not

be stopped. That is the main issue, but the timescale for it is at slip

be urgent. Just before we leave that subject, I will tell the

viewers that we have just heard that apparently George have

Papandreou has just said that the question in the referendum will now

be, not do you accept the bail-out plan, but do you want Greece to

remain a member of the eurozone, which is the question that Nicolas

Sarkozy and Angela Merkel were insisting that he posed. That is

the question that will be asked. Thank you all very much.

Protesters at the Occupy Glasgow camp on George Square have voted

tonight to move to an alternative site proposed by Glasgow City

Council. The group will relocate to Kelvingrove Park. David Allison

reports from George Square on their message and whether or not it is

getting through. It might look simple enough in

black and white, but what does that mean in terms of a demand put to a

Government. Anchor here it is the message coming from this camp here

in Glasgow? I think the message is getting through, but I think it is

also pulverising people. When anybody's lifestyle is threatened

they become more defensive, and I think that is starting to happen in

London. There is also the image thing - people think we are a bunch

of hippies, which we are not. That is hard to get across to people.

People find that hard to grasp, even people who have come along to

join the movement. I think people are listening a bit more. They want

to come all over and asked why we are here, what are stories are. And

what we want to achieve. And we have had a lot of support, people

coming over and giving us food and jumpers, and basically helping us

to continue. A lot of people do not want us to move.

But getting the message across is not always straightforward. At St

Paul's the resignation of the clergy has been a distraction, and

here in Glasgow there has been an alleged rape. They have had to do a

bit of PR to say that that is completely unacceptable.

It is all a long way from the early days of the original wall Street

protest when local businesses like this fed protesters in New York

with pizza. Ending the careers of church and at St Paul's was never

on the agenda. Today the Archbishop of Canterbury suggested that

society generally was impatient for the banks to return to business and

bonuses as usual. We have not seen much... It is time we tried to

focus and especially with the G20 beginning we have to hone in on a

number of specific questions which have to be asked. Nobody has

solutions, but it is important be asking the right questions.

whatever the difficulties in the message itself and getting it

across, when you get the Archbishop on side saying perhaps that

protesters have a point, then maybe the arguments here and the feeling

that there are starting to come together.

Do you think there is a connection, when you have the Archbishop of

Canterbury on one side and people writing in Greece because they do

not want to suffer the type of austerity they are said to endure,

do you think there is a connection? Of course, and there is a

connection all of the the world. People are doing different things

to make themselves heard. He in George Square we want a peaceful

camp. They are light -- they are lucky that this is peaceful,

because it could be a lot worse and people could be a lot was. People

need something done, and there has always been a guidance in the past.

While threatening eviction, Glasgow City Council has offered an

alternative location, and the core protesters are expected to move

ahead of legal action and Remembrance Sunday. We feel that

despite the events coming up for Armistice Day and 14,000 parents

buying tickets for Christmas events, that we need to keep these people

onside. We also do not one to alienate ourselves from the council,

because a lot of cancer people will be losing jobs and facing cuts. --

counsel people. So there is a general consensus that we have to

move not just for the sake of that but for a better secured site with

better facilities. The council have been excellent with giving us

concessions on that. A camp has been here for over two

weeks, and tonight could be the last night they are here depending

on the meeting and what they actually do about it in the cold

light of day. Ms Edge Hill is likely to go on. -- their message