05/08/2011 Newsnight


05/08/2011

In-depth news investigation and analysis, with Stephanie Flanders. Newsnight examines the state of the global economy amidst instability on the stock markets.


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Good evening and welcome to Good evening and welcome to

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Newsnight, also being broadcast tonight on BBC world News. Five days

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ago global investors were pondering the possibility that the US

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government might default on its debt. Then they were told they could

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relax but instead they started to worry about the American recovery

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grinding to a halt and European governments hitting a brick wall

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their efforts to fix the single currency. Tonight, after the

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week for the Dow in more than two years, an US broadcaster is

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reporting that the key ratings agency, Standard & Poor's, is about

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to stop giving American government debt a Triple A rating.

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the end of another hair-raising day, here is Andrew Verity to explain how

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we all landed up in so much trouble again.

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There's no time like August for an There's no time like August for an

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There's no time like August for an international financial crisis. Two

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international financial crisis. Two international financial crisis. Two

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There's no time like weeks ago, markets across the

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had enough confidence in Europe's institutions to be convinced by

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leaders' assurances that they could deal and were dealing with the

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crisis in sovereign debt. This was the week that that confidence

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collapsed. Now it's as if Europe's leaders are giving up trying

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reassure the markets; instead, have taken to attacking them. The

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market unrest witnessed in the last few days is simply not justified

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the grounds of economic fundamentals. Such dramatic changes

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in the markets are from of view incomprehensible. On this,

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the busiest trading day of the year, shares in London dropped again by

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2.7%. Over the week the top companies have lost more than 10% of

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their value, around �150 billion, with similar drops across Asia and

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Europe. It has been the worst since the banking crisis. 2008,

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almost exactly four years credit crunch which caused that.

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What happened in the credit crunch of 2007 was that the banks became

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reluctant to lend money to each other. It was as if all of the

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here at Canary Wharf were looking each other, thinking:

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how many billions of pounds you have lost on these bad assets, I don't

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know even how many billions of pounds I've lost so I'm not sure I

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want to lend to you when I know if I will get it back.

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lend but only if you pay a fat rate of interest to compensate me for my

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risk. The question now is: same phenomenon happening again?

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What caused it back then was concern over the value of billions of

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dollars of assets. The same concern; different assets. Those who have

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lent money to eurozone countries by buying their government's bonds are

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worried they won't get all their money back. Here is how worried. If

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you bought a bond from the Spanish government the markets reckon

:04:10.:04:20.
:04:20.:04:24.

will get back only 96%. .

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With that much uncertainty, there With that much uncertainty, there

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isn't a credit crunch now, but there may be soon. Well, at the moment the

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fundamental case is that a lot of European economies in common with

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the UK and US borrow from overseas investors. At the moment, overseas

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investors haven't got confidence in our domestic economy so they are

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more likely to wait before putting more money in, and that's what

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causes the shortage of funding which manifests itself as a credit crunch.

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These foreign investors need austerity measures, a degree of

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political consensus, and that will give them confidence

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safe to lend to these again. The way the credit crunch

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resolved four years ago was nanny came to the rescue in the

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shape of the state. It was governments and Central Banks that

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told the other banks: if you bad assets that no one else wants it

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buy, we will buy them from you. They told them: if you can't get funds

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from other banks, we to you. The question now is: who is

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willing to play the role of nanny? Not Angela Merkel, who has been

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very aware of just how far German voters aren't willing to go to

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out member states who lack fiscal discipline. Today she spoke

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telephone to Nicolas Sarkozy. They have to come up with

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what? The first thing that needs be done is that the European Central

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Bank should start buying Italian and Spanish bonds on the

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secondary market and therefore bringing the yields down. It

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to do that pretty quickly. yields have gone up significantly

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and that means for that the debt - not all the debt -

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portion of the debt, that has become very expensive. We are not

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suggesting it will be hugely expensive for the whole lot, but

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they need to calm markets nevertheless so that when countries

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go back to the markets again they can borrow at lower rates. Claiming

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Italy is under attack from speculators, Italian Prime Minister

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Silvio Berlusconi has called an emergency meeting of G7 finance

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ministers to take place within a few days. They must act or they will

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have a hectic holiday season. I think there needs to be a political

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consensus across Europe and that is nigh on impossible to

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the moment. I think therefore we have to wait until the crisis

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possibly looks worse and this game of brinkmanship comes to a head

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whereby European politicians realise there is no alternative but to all

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get together and act multilaterally. The banking system didn't stabilise

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itself in 2009 until global governments made it clear they

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defend the system no matter what. Now it's up to politicians to defend

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The markets are telling Europe's top The markets are telling Europe's top

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bankers and politicians that they are unconvinced by their assurances.

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They don't really believe them. But perhaps Europe's leaders can agree

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with the markets on one thing: they are not giving eurozone countries,

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institutions nor leaders much credit.

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Andrew Verity there. Anyone working Andrew Verity there. Anyone working

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Andrew Verity there. Anyone working in the financial markets will

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in the financial markets will in the financial markets will

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Andrew Verity there. probably just be glad that the

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weekend is final here. A huge of red ink has hit dealers' screens

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over the last two days and they had another seesaw ride. We

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asked three correspondents in key global financial centres to tell us

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what it has been like for them. First Lucy William

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First Lucy Williamson in Here in South Korea the sun has set

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on a very dark day for the markets. The index fell 3.7% today, the

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biggest in a series of losses over the past four days. It's now facing

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its steepest decline in almost three years. Government officials held

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emergency meeting today up to road - up the road here and are

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insisting there's no reason to panic. Korea's economy is being

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shaken but uncertainties in America and Europe but 70% of its trading

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partners are emerging countries. There's not much comfort elsewhere

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in Asia. The Nikkei fell 3.7%, Hang Seng in Hong Kong by more than

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The main stock market index here in The main stock market index here in

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Germany the Dax fell by 13% over the whole week. The main index in France

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fell by 11%. In Italy it was 12%. It's all part of a relentless slide,

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as stock markets start to realise that that deal apparently done less

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than a month ago to stabilise the euro may not now be the last word on

:09:02.:09:12.
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the matter. At the Stock Exchange here you get the feeling activity

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goes on. Angela Merkel is apparently relaxing in the Alps but there's no

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doubt that that is short-lived. has been engaged in conference calls

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with other leaders of eurozone countries. Her big constraint

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public opinion here in Germany. The opinion polls indicate that people

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by and large want the euro. There is no great yearning to go back to the

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Deutschemark. But the polls also say that they are absolutely split down

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the middle on whether to pay more of their money, taxpayers' money, to

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keep that euro in its current form. .

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Here in New York, it has been one of Here in New York, it has been one of

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the more dramatic weeks for the the more dramatic weeks for the

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Here in New York, it has stock markets. On Thursday, the Dow

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Jones industrial suffered its worst one-day loss since 2008 falling 4%.

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The Standard & Poor's index didn't do much better. So what's behind

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this sea of red? Well, the is that the US economy is

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back into recession, and here is why. The week started with a debt

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deal that cut US government spending, putting the US on

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austerity path just when recovery appears to be faltering.

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Manufacturing and consumer spending data was also weaker than expected

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and today's jobs report simply offered only a tiny amount of

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relief, just showing that employment picture wasn't actually

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getting worse. .

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Well, all day we have been hearing Well, all day we have been hearing

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the comparisons with the dark days of autumn 2008, the credit crunch

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and the great banking crisis. say the parallels over the top, the

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banks for starters, are different; others say it's worse. With

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Baroness Vadera who had a ringside seat on the last crisis, working

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with Gordon Brown in the Treasury. You played a big part in writing

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that bank bail-out plan time many people credited with

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turning the situation around and taking the markets out of the sort

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of death spiral that they were in then. Does this feel similar to you,

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the last few days? I think it has similar feel. It feels as scary

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it is different and I am in the camp where I think it's

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potentially worse. The reason potentially worse is the governments

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stepped in all over the world saved the banking system in order to

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save their economies and now who is going to step in to save

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governments? Secondly, when we went into that crisis interest rates

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quite high so we did have policy to use as a tool and now we

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are at the outer limits of that. Lastly, we are currently facing

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quite a lot of inflationary pressures, particularly coming from

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commodities and emerging markets, so we've actually got a little bit of

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pressure on the other side, so our room for manoeuvre is a lot more

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limited. As someone who has been an insider for so long on

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of crises and you played a big part in the G20 meetings as well, if you

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were in the French Treasury tonight or if you were sitting at the ECB,

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what are the calls that are being made? What are they going to be

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thinking about over the next days? I think that the problem

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they have currently is they don't have a functional system for making

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decisions. They don't have institutional mechanism for making

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decisions in the way they need to be made. The crisis in the last few

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years has taught government some lessons. You have to act really

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fast. You actually probably have to act without the market expecting

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to. You have to overshoot market expectations. You have to be

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comprehensive and see off all of the avenues of attack and most of

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you have to communicate fighting with each other and so far

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the eurozone has not managed to single one of those things. So I

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think what they will be doing now is talking about liquidity for

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Italy and for Spain, and the only source of liquidity - Liquidity,

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giving them cash in some way or another? Giving them cash,

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not the same thing as risking putting in a huge amount of risk,

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the numbers are large, and the only source of ready cash is the ECB.

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Because they haven't really pre-committed to the EFSF, so this

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is the only source of funding and the ECB of course has a duty to

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financial stability, so has a duty to act, but they will be very

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reluctant to do so without reforms. But a lot of people

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has been a talk in the last weeks and months, people

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European leaders are kicking the down the road, even US governments

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maybe have been putting off difficult decisions, but isn't there

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an argument that says you guys put off all the difficult decisions

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well? You were faced with a crisis, a lot of debt sitting on

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balance sheets, ultimately a lot of the problematic debt in the bank

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sector didn't get written off as maybe it should have done, it got

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shifted on to the balance sheets governments and now we are dealing

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with the second leg of a crisis that you sort of left us with? Actually

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it's not true because the response at the time stopped essentially

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position that would have been a lot, lot worse. We would have been in a

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much worse position today if we hadn't done what we did all over the

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world. We would have been in depression and deflation. We did not

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assume the debts of the banking system. But a lot of these debts,

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if they were not going to be repaid, why were they not written off

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That is what people ask now. Yes, would have been difficult but aren't

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we just now dealing with that has been passed along for

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several years? I think that what did in the response in 2008 was to

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stop that debt spite, but it was always going to take - always

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to take a long period of time to deal with the overleveraging of

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whole system, whether in banks, governments or in households and it

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was always going to take a long time to deal with the level of toxic

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assets. We didn't assume - for example Ireland - we did not

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assume the debts of the sector. Briefly, you don't think

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you should have been tougher and gone further in dealing with the

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fundamental problem which is debt? I don't think it was

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at that time without actually tipping us over the edge

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gone further, but it was always going to be - some of these problems

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now are self-inflicted. The cost of dealing with them has increased

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because of the delays in dealing with them and that is the real

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problem of the eurozone crisis and in of course the US has also been

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self-inflicted. Baroness Vadera, thank you very much. Thank you. As

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we have been discussing there are deep economic problems lying beneath

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all of the yearses in the markets because - gyrations in the markets.

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But most worrying for some has been the politicians' inability to

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confront those issues. There is one big difference between now and

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Back then, the worries centred on the banks. Today they are in the

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frame, but the focus is on the paralysis of politicians on both

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sides of the Atlantic, whether it's American budget policy or the

:16:12.:16:16.

troubles of the eurozone, governments just don't

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able to confront the problems they face, but perhaps we shouldn't

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that so surprising. I think policy paralysis is actually a really big

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difficulty because politicians have to assume, have to be optimistic

:16:29.:16:33.

about the future. They assume that growth will somehow rebound. That's

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the experience we've had for the last 40 or 50 years. When things go

:16:37.:16:41.

wrong, they correct pretty quickly. This is really the

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first time when we've seen things going badly wrong and they haven't

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corrected particularly quickly. The consequence of that is that it

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forces politicians to have to consider and contemplate really,

:16:51.:16:56.

really tough decisions. Some say the problems go even deeper, that

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integrated global markets and national democracies just don't mix.

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To come together to fix global problems, countries need to

:17:07.:17:11.

some national sovereignty and that's not something that democratic states

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find easy to do. You see this in trouble the G20 leaders have had

:17:18.:17:21.

resolving imbalances in the economy and you surely see it in

:17:21.:17:26.

acute form in the struggles of eurozone. We have a policy crisis

:17:26.:17:29.

worldwide. Policy is deliver vision. We want to see,

:17:29.:17:36.

can America, how can euroland along with a perspective? How

:17:37.:17:44.

able to get the economic the table? Now we are not ready and

:17:44.:17:48.

not able obviously on a basis to solve these problems. The

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moment of truth in financial crises comes not when governments run

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of options but when they come out of politically possible ones, like when

:17:57.:18:01.

Norman Lamont raised interest rates to 15% to defend Britain's place

:18:01.:18:04.

the ERM in the middle of a recession. That was when the

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knew the game was up. After the events of the past few weeks,

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Europe's politicians must battle now to convince the doubters that they

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haven't exhausted the realms of the politically possible.

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With me now, Holger Schmeiding, With me now, Holger Schmeiding,

:18:21.:18:26.

chief economist at Berenberg Bank in London; David Riley,

:18:26.:18:31.

rating agency Fitch Fitch; the economist and author, Noreena Hertz,

:18:31.:18:36.

and fund manager Joanna Kryklund from Schroders. David Riley, can

:18:36.:18:39.

start with you, to pick up on something in my piece there,

:18:39.:18:42.

a sense that there's now with the euro. If they are going

:18:42.:18:46.

to hold it together, they have to take a big step towards fiscal union

:18:47.:18:51.

and yet it doesn't seem like anyone in Germany or in a lot of

:18:51.:18:54.

places is ready for that to Is that the basic fact that we are

:18:54.:18:58.

facing? That seems to be really what the market has been now

:18:58.:19:03.

concluding and demanding, which is either we have effectively a United

:19:03.:19:08.

States of Europe or the not viable and the euro will

:19:08.:19:12.

disappear, certainly in its form. I think what's

:19:12.:19:18.

that increasingly the market is pushing policy makers and Germany

:19:18.:19:21.

particular closer to the position where it's going to have to

:19:21.:19:25.

some of the policies which it has not wanted to do, which will take it

:19:25.:19:29.

closer to fiscal union, example I suspect they will start

:19:29.:19:34.

dusting off plans for a common euro bond, which will issue for

:19:34.:19:36.

everybody, will be joint and severally guaranteed. If

:19:36.:19:43.

increase the size of the fangs stability facility,

:19:43.:19:46.

essentially the rescue fund that, could ultimately become a sort of

:19:46.:19:48.

debt management agency if you like for Europe, so I think they are

:19:48.:19:53.

being pushed towards fiscal union but kicking and screaming

:19:53.:20:02.

way. Holger Schmeiding, two weeks ago the

:20:02.:20:09.

ago the Germans were not ready even for that kind of bond, does it just

:20:09.:20:12.

take every few weeks another market crisis to push Germany down

:20:13.:20:16.

road? There is something to that, yes. It takes one crisis sort of

:20:16.:20:22.

after the other to push the Germans towards that, but the Germans will

:20:22.:20:26.

always exact a price. What the Germans will always be asking for

:20:26.:20:30.

each stage is, if we the Germans have to issue stronger guarantees

:20:30.:20:34.

than you our partners, please subject yourselves to stronger

:20:34.:20:38.

fiscal surveillance. So it's a mutual process. If Italy is ready to

:20:38.:20:43.

put a balanced budget amendment into its constitution then the Germans

:20:43.:20:47.

are ready to grant more. So it's a mutual process of the two

:20:47.:20:51.

coming together. OK, but Noreena, we are talking about - when you talk

:20:51.:20:54.

about surveillance, you are talking about Germany getting more and more

:20:54.:20:57.

- in return for the money, Germany getting more and more control

:20:57.:21:01.

other countries' policies. Mmm. you think that can happen? Do you

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think that's something democratic that could happen? I think it's

:21:04.:21:07.

very worrying and I think in Germany in particular Angela Merkel

:21:07.:21:14.

having to walk a very tight line between what Europe needs and what

:21:14.:21:18.

her domestic electorate are wanting. We've got to remember that she had

:21:18.:21:23.

bad election in the federal elections, the CDU, and so for her

:21:23.:21:27.

to sell to the German people this plan and Germany bailing out

:21:27.:21:30.

essentially the rest of Europe is going to be problematic. Then,

:21:30.:21:35.

imposing in return austerity programmes potentially on countries

:21:35.:21:39.

that are barely coping is to be good for Europe. It's not

:21:39.:21:46.

going to be good for any of us. But that's a good point, do you think

:21:46.:21:51.

that countries are getting forced into policies that actually could be

:21:51.:21:54.

counterproductive for growth, for their economy, or as far as you are

:21:54.:21:58.

concerned you are managing billions of dollars worth of assets, you can

:21:58.:22:01.

never have too much fiscal austerity? How does it work? Well,

:22:01.:22:05.

no, unfortunately we do need the politicians to get ahead of the

:22:05.:22:10.

curve, to some extent they have to shock and awe the markets. What if

:22:10.:22:13.

they can't? The problem is the last few weeks we seem to be seeing

:22:14.:22:17.

they can't. What they will continue doing, I think, is

:22:17.:22:20.

buying themselves time so in short term the markets are going to

:22:20.:22:23.

have to keep on focusing on sort of news flow and the

:22:23.:22:26.

that we are not going to get sustained rise in equity prices

:22:26.:22:30.

while this situation is ongoing, and that's particularly while economic

:22:30.:22:34.

growth globally is weak. So I really for markets to enter

:22:34.:22:37.

sustained uptrend we need to the one hand a credible solution out of

:22:37.:22:41.

Europe. I think that will long time. On the other hand,

:22:41.:22:43.

something that maybe will come sooner is some kind of improvement

:22:43.:22:46.

in economic statistics which we not seeing at the moment. I am

:22:46.:22:50.

interested to ask you, it has mildly nauseating the last few days

:22:50.:22:54.

the way the Chancellor has sort of crowed here about how we

:22:54.:22:56.

haven and no one is worried about our commitment to cutting the

:22:56.:22:59.

deficit. I assume that you are piling into the UK in a big

:22:59.:23:03.

way with your fund? I wouldn't say that, but I think that certainly the

:23:03.:23:06.

UK has one major advantage relative to the eurozone and that

:23:06.:23:09.

to weaken their currency relative to some of the member states within the

:23:09.:23:12.

eurozone and I think that has huge advantage. I think that comes

:23:12.:23:16.

back to the point that you were asking me about earlier which is

:23:16.:23:20.

from the perspective of an is there any such thing as too

:23:21.:23:24.

austerity? Well, actually there is. Ultimately we want to see growth,

:23:24.:23:27.

especially if investing in the equity markets and the fact that

:23:27.:23:31.

there's this fundamental rigidity the eurozone and the countries

:23:31.:23:35.

are struggling can't devalue currencies, which is the way the

:23:35.:23:40.

Asian economies for example got of their crises, is a concern. So

:23:40.:23:43.

it's a careful line we are treading. On the one hand we want European

:23:43.:23:46.

policy makers to show they of the curve but at the same time we

:23:46.:23:50.

don't want measure measures that are too extreme because ultimately that

:23:50.:23:54.

means a lost decade for growth in Europe. Exactly, like the problem

:23:54.:23:59.

in Japan in 1996/97 when they did try and balance the budget far too

:23:59.:24:02.

quickly and ended up with this decade which we are now potentially

:24:02.:24:06.

facing in Europe. But there was political paralysis at the heart of

:24:06.:24:08.

that as well. That is why it's an example of what I was talking

:24:08.:24:13.

in the film, that the politicians were - but do we have the

:24:13.:24:15.

capability, capacity and leadership here in Europe to move

:24:15.:24:19.

out of a out of a state of paralysis? I'm not

:24:19.:24:23.

sure. There's a big difference to that, namely when we look at what is

:24:23.:24:25.

happening in Europe, look through the turmoil, we are actually

:24:25.:24:31.

a wave of structural reforms. We are seeing the labour market reforms,

:24:31.:24:35.

that is Europe beneath the surface, but Neath the noise is actually

:24:35.:24:39.

delivering all the the end will make the place better,

:24:39.:24:44.

which is if Europe manages to buy time, after that time is over,

:24:44.:24:48.

Continental Europe will be in a much better shape than it is today. But

:24:48.:24:53.

structural reforms, another way of putting it - And in that process, we

:24:53.:24:58.

are going to have millions more people unemployed, we are going to

:24:58.:25:01.

have consumer confidence David Riley, the point is, that is

:25:01.:25:07.

a worry, isn't it, say we assume that there's just going to be slow

:25:07.:25:10.

movements, Germany with a gun to its head, moving closer and closer to a

:25:10.:25:15.

fiscal union; doesn't that, the best of all worlds, doesn't it

:25:15.:25:20.

condemn large parts of Europe to very slow growth for years? It does

:25:20.:25:23.

potentially, but I actually don't think that's going to be a viable

:25:23.:25:27.

strategy. I think what actually needs to happen, the markets are not

:25:27.:25:31.

going to wait for structural reforms to transform Italy into a dynamic

:25:31.:25:38.

economy. Essentially, there was a real risk now of a self-fulfilling

:25:38.:25:43.

not just a self-fulfilling liquidity crisis but a self-fulfilling

:25:43.:25:47.

solvency crisis. Italy and Spain are solvent but if the market is saying

:25:47.:25:51.

we are only willing to lend at 7 or 8% over the medium term then

:25:51.:25:56.

will become insolvent so the ECB must intervene. But can the

:25:56.:25:59.

European Central Bank be a stop-gap in this? It hasn't got any -

:25:59.:26:03.

would say that was a fundamentally political act and it is

:26:03.:26:06.

independent institution; it's not supposed to be just doing the job of

:26:06.:26:10.

governments. The European Bank can do exactly what the Bank of

:26:10.:26:15.

England does, what the Yes. The European Central Bank is

:26:15.:26:19.

an extremely powerful institution. If they step up to the plate, which

:26:19.:26:26.

they reluctantly will likely do, they can defuse the crisis and if we

:26:26.:26:31.

again make these comparisons, always remember the eurozone has as a unit

:26:31.:26:35.

a fiscal deficit much smaller than that of the US and the UK which

:26:35.:26:38.

means if they want to they can get things under control. They just

:26:38.:26:42.

to be pushed to do it. Actually, we haven't very much longer and

:26:42.:26:47.

obviously this news about the US is quite important tonight, and I

:26:47.:26:49.

we have been talking about of politicians and we started

:26:49.:26:53.

week looking at rather paralysed American politicians. David,

:26:53.:26:56.

should get your reaction to the about Standard & Poor and them

:26:56.:27:02.

taking away the US Triple A rating. Yes, I think

:27:02.:27:07.

Poor's signalled their intent to downgrade the US. I don't think it

:27:07.:27:10.

will come as a surprise. Are we going to see a real market reaction

:27:10.:27:18.

to that on Monday? Is this the end of the world? Yonks, no. I suspect

:27:18.:27:22.

not. I think at the moment they care more about that than downgrades. I

:27:22.:27:24.

think at the moment we need stabilisation in the economic data

:27:24.:27:28.

because if growth improves that helps put some of the sovereign debt

:27:28.:27:31.

concerns on the backburner. With respect to the potential

:27:31.:27:34.

of the United States, the it is still one of the most highly

:27:35.:27:38.

rated economies so it won't a sell-off in US bonds necessarily.

:27:38.:27:43.

It might provoke a sell-off in lower rated bonds as people shuffle their

:27:43.:27:48.

portfolios. So basically the US stays top dog and everybody else

:27:48.:27:56.

loses their Triple A as well? don't know about that but it is

:27:56.:28:01.

still favourable for the US Treasury at the moment despite the downgrade.

:28:01.:28:05.

Do you see some of the same kind of paralysis in the US? Do you think we

:28:06.:28:09.

are being too kind to American politicians? I think we

:28:09.:28:12.

politicians? I think we actually are seeing worse paralysis in the

:28:12.:28:15.

US. In the eurozone we experience over the last 18 months.

:28:15.:28:19.

I disagree with that. There's a crisis, they always react and in the

:28:19.:28:25.

end they manage to defuse the crisis. In the you had we have this

:28:25.:28:29.

stupid situation, they cannot agree to borrow for a while so the

:28:29.:28:32.

eurozone has problems but it's not that dysfunctional, it just is

:28:32.:28:36.

rather noisy. You are saying noisy. I don't think anyone looking at the

:28:36.:28:39.

eurozone in the last few weeks recognise your description of them

:28:40.:28:43.

fixing the problem. No, not here, but once they react to problems

:28:43.:28:47.

now they have one and we will see on Monday how they react. I think

:28:47.:28:50.

that's a particularly toxic cocktail right now. On the one

:28:50.:28:54.

the US, very flat growth, flatlining, we have unemployment

:28:54.:28:57.

high there, yes the unemployment figures were a little better but

:28:57.:29:00.

still high, and this potential downgrade, and on the other

:29:00.:29:04.

have Europe with the eurozone now widening the crisis to Spain and

:29:04.:29:08.

Italy. One on its own would have been worrying. Two together, can the

:29:08.:29:13.

world cope? I'm not sure. I think double dip ahead. Is the answer,

:29:13.:29:19.

you are an investor, just to get of America and the US? Go to

:29:19.:29:24.

emerging markets? Certainly island avoid Europe for the time being,

:29:24.:29:26.

yes, but in the meantime I there are opportunities

:29:26.:29:29.

United States and emerging economies. Thank you very much to

:29:29.:29:36.

all of you. I just want to look at tomorrow's front pages. The FT

:29:36.:29:43.

predictably it's a big day: week echoes depths of 2008 crisis.

:29:43.:29:47.

On the Independent: where are you, On the Independent: where are you,

:29:47.:29:52.

EU? Britain takes �150 billion blow as debt chaos hits economy. So not

:29:52.:29:56.

such a safe haven according Times. And that story we've had

:29:56.:30:03.

today: the British team killed by polar bear in Norway. And the

:30:03.:30:09.

going its own way: Eton pupil killed by polar bear.

:30:09.:30:11.

That's all from Newsnight tonight, That's all from Newsnight tonight,

:30:11.:30:14.

we will leave you with the site of Nasa's Juno spacecraft

:30:14.:30:18.

Nasa's Juno spacecraft heading for Jupiter. It will fake five years to

:30:18.:30:21.

get there by which time if you are an optimist you might say this

:30:21.:30:25.

planet's economy might just have sorted itself out. Ignition, and

:30:25.:30:35.
:30:35.:30:35.

Apology for the loss of subtitles for 40 seconds

:30:35.:31:15.

lift-off. MUSIC

:31:15.:31:20.

you have outdoor plans. The weather will keep us on our toes. A

:31:21.:31:25.

promising start for many. Showers will get going, and as you can see

:31:25.:31:28.

by the afternoon they will be fairly widespread much pretty heavy

:31:28.:31:33.

aisle-moving ones too - slow-moving ones.

:31:33.:31:36.

Some brighter spells and a lucky few Some brighter spells and a lucky few

:31:36.:31:39.

will stay dry through much of the day but showers never far away which

:31:40.:31:45.

will keep temperatures down. Feeling breezy around southwestern coasts so

:31:45.:31:50.

not ideal holiday making down Devon and Cornwall. Limited

:31:50.:31:53.

brightness with showers coming in the breeze. A similar story across

:31:53.:31:57.

Wales, a lot of cloud with from time to time. Northern Ireland

:31:57.:32:00.

seeing some sunshine, I think, but even that will not help temperatures

:32:00.:32:06.

much. 16C in Belfast and for Scotland some sunshine across more

:32:06.:32:10.

northern areas but shower building up and turning pretty wet

:32:10.:32:20.
:32:20.:32:23.

into evening. and east of Scotland.

:32:23.:32:27.

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