:00:08. > :00:13.Tonight, rising unemployment and no growth to speak of, what happens to
:00:13. > :00:17.plan A when there's apparently no plan B. He must be only person in
:00:17. > :00:21.the world who thinks you spend more to get out of a debt crisis.
:00:22. > :00:26.So the message to all those people who have lost their jobs, is the
:00:26. > :00:30.Prime Minister is not going to change course.
:00:31. > :00:34.And as unions announce the date for millions to strike, we ask where
:00:34. > :00:38.Labour stand, we will be joined by the Shadow Chancellor, Ed Balls.
:00:38. > :00:44.Is Europe in denial over Greece and the debt crisis, America is urging
:00:44. > :00:49.action, but all France and Germany can say is Greece stays in the euro.
:00:49. > :00:53.If Greece can't be thrown out, what price the rules of the eurozone.
:00:53. > :00:56.The assassination of Libya's rebel commander has raised some troubling
:00:56. > :01:00.questions about the nature of the anti-Gaddafi forces.
:01:00. > :01:10.I will be asking who killed the Chief-of-Staff, and why is matters
:01:10. > :01:11.
:01:11. > :01:21.so much to Libya's future The journalists, Johann Hari hands back
:01:21. > :01:23.
:01:23. > :01:29.a prestigious writing prize, we ask his editor why he hasn't sacked him.
:01:29. > :01:33.There is famously no plan B for the Government. What happens when the
:01:33. > :01:37.unemployment rises to the highest in two years, and the worst hit are
:01:37. > :01:43.young people and women, and when growth is nowhere to be seen, and
:01:43. > :01:48.even our coalition parters, in the form of Nick Clegg himself, says
:01:48. > :01:53.Britain's economic outlooks a gotten worse. With the threats
:01:53. > :01:57.strikes, millions of public sector workers preparing forea day of co-
:01:57. > :02:01.ordinated action. How to difficulty up the goodies, how to keep
:02:01. > :02:04.everyone happy and make sure everyone gets a slice. Well, the
:02:04. > :02:09.easiest answer, of course, is get a bigger pie, and it is the same with
:02:09. > :02:13.the economy. All the main parties agree growth
:02:13. > :02:17.is the answer. Why? Growth puts more people in jobs, they pay more
:02:17. > :02:23.tax, they claim less in benefits, they earn more, they spend more,
:02:23. > :02:28.confidence goes up. The country has to borrow less, and as a proportion
:02:28. > :02:34.of GDP, magically, our debts shrink. But the news on the economy today
:02:34. > :02:36.was bad. Unemployment up 80,000 to 2.51 million. People will laugh
:02:37. > :02:41.when I write this down, I would say the most important thing is
:02:41. > :02:44.actually being able to listen. Except it seems, when being advised
:02:44. > :02:48.to change your economic strategy. The Prime Minister was
:02:48. > :02:53.brainstorming at a Jobcentre in London today. The Government had
:02:53. > :03:01.been counting on private sector job growth, more than compensating for
:03:01. > :03:06.public sector job losses. There was bad news on this today. What is
:03:06. > :03:08.particularly worrying about today's particularly worrying about today's
:03:08. > :03:12.unemployment figures s that some of the biggest increases in employment,
:03:12. > :03:16.and falls in employment have taken place in London and the south-east,
:03:16. > :03:21.the east, so the greater south-east around London. And of course, much
:03:21. > :03:25.of the country's most successful private sector is in that area. So,
:03:25. > :03:30.if there is a problem there, it will radiate out, potentially, in
:03:30. > :03:34.the medium to long-term. Not surprisingly Prime Minister's
:03:34. > :03:39.Questions in the Commons today was dominated by jobs and the economy.
:03:39. > :03:42.His claim, and the Chancellor's central claim, that you could cut
:03:42. > :03:49.the public sector and the private sector would make up the difference,
:03:49. > :03:53.isn't happening. For every two jobs, for every two jobs being cut in the
:03:53. > :03:59.public sector, less than one is being created in the private sector.
:03:59. > :04:02.Isn't that the clearest sign yet that his policy just isn't working.
:04:02. > :04:05.Let me say to the honourable gentleman, there is not one ounce
:04:05. > :04:10.of complacency in this Government about the need to do more, to help
:04:11. > :04:15.people back to work. We have a growth plan, that includes cuts in
:04:15. > :04:18.corporation tax, freezing the council tax, cuts in petrol duty.
:04:18. > :04:22.Introducing the regional growth fund, making sure we have
:04:22. > :04:25.Enterprise Zones in every part of the country. But in every week and
:04:25. > :04:29.every month we will be adding to that growth programme to help
:04:29. > :04:34.people get back to work. Growth isn't looking good at the moment.
:04:34. > :04:40.So far the official forecast has been downgraded for this year, from
:04:40. > :04:45.2.3% to 1.7%. And maybe, revised down even further. In the half year
:04:45. > :04:48.so far, the economy has only clocked up 0.7% of growth. Some
:04:49. > :04:51.suggest that means it is time for a plan B.
:04:51. > :04:56.Essentially there are only two approach that is the Government can
:04:56. > :05:00.take to try to stimulate growth. The cheaper, but far more long-term
:05:00. > :05:06.option, is supply-side reform. That means sorting things out like
:05:06. > :05:10.planning, bureaucracy and red tape and benefits, dependency.
:05:10. > :05:14.The other approach is called demand-side reform, far more
:05:14. > :05:18.expensive, but quicker to take effect. Splashing out lots of money
:05:18. > :05:22.on infrom structure projects, or cutting taxs to get people spending
:05:22. > :05:30.again. When people talk about plan B, that
:05:30. > :05:34.is what they are talking about. Stkphrl but, say the Government,
:05:34. > :05:38.plan B risks scuppering the whole economy. That argument is
:05:38. > :05:41.strengthened by the worrying scenes we are seeing coming from the Euro-
:05:41. > :05:47.area. It is clear what happens to countries that doesn't have a
:05:47. > :05:51.credible plan to deal with their he have sits. Securing economic growth
:05:51. > :05:55.looks set to be harder for the Government, after what happened at
:05:55. > :06:00.the TUC conference today A wave of public sector strikes, potentially
:06:00. > :06:06.three million workers balloting on day of action for November 30th.
:06:06. > :06:16.The issue, a change in public sector pensions. I and all of our
:06:16. > :06:18.
:06:18. > :06:20.unions most certainly do not take this step likely. We remain
:06:20. > :06:25.committed to solving this through negotiations. For that to succeed
:06:25. > :06:30.we need the Government to take a new approach, to bring new
:06:30. > :06:33.proposals to the table. I think the union bosss are behaving in a
:06:33. > :06:36.deeply irresponsible way. Deeply irresponsible, because talks are
:06:36. > :06:42.still going on. Deeply irresponsible because at a time
:06:42. > :06:46.when the whole world, including wrin, face as real economic -
:06:46. > :06:49.Britain, faces a real economic challenge, this will only affect
:06:49. > :06:53.prosperity and jobs in this country. Are we heading for more of this,
:06:53. > :06:58.the potential strikes add another political dimension to an already
:06:58. > :07:03.difficult situation for the Government. For the opposition too,
:07:03. > :07:10.a dilemma, to support or condemn the big public sector union, who,
:07:10. > :07:13.after all, pay most of the Labour Party's bills. We ask for the
:07:13. > :07:20.Government - we asked for the Government to provide a minister to
:07:20. > :07:25.talk about this, they said no-one was available. We have the Shadow
:07:25. > :07:28.Chancellor, Ed Balls with us. Do you think you should call for the
:07:28. > :07:35.unions to call off the strikes? Nobody wants to return to the
:07:36. > :07:41.strikes and divisions of the 1980s, it takes two sides in sorting out
:07:41. > :07:48.this. When you see the relish in George Osborne's eyes, he wants to
:07:48. > :07:51.get out of the problems in the economy by concentrating on the
:07:51. > :07:55.strikes. Have you said to the unions call off this ballot, call
:07:55. > :08:00.off the strikes? The unions have been saying all along they want
:08:00. > :08:03.proper talks to get to a fair deal. The Government pre-empted all of
:08:03. > :08:08.that by a huge rise in pension contribution. You won't ask them to
:08:08. > :08:13.call off the strikes? It takes two sides to sort it out. As one side
:08:13. > :08:18.will you ask them to call off the strike?Ly Say to the unions to get
:08:18. > :08:21.round the table. They can only say that if the Government wants a deal.
:08:21. > :08:25.The Government won't want a deal, they want the confrontation.
:08:25. > :08:28.are happy for them to ballot members on this? Of course, it is
:08:28. > :08:32.their right to ballot members. Nobody wants a strike, if, in the
:08:32. > :08:36.end, there are men and women in their 50s, who feel, even though
:08:36. > :08:39.their pensions are low, that they will be told to pay more and work
:08:39. > :08:42.longer for less money, of course they are going to be upset, but the
:08:42. > :08:47.Government can sort this out. George Osborne and the unions can
:08:47. > :08:50.sort this out, if they want n fair way. The Government has got a big
:08:50. > :08:53.responsibility here. If we get to pint after a ballot where we have
:08:53. > :08:57.strikes, for millions of public sector workers at the end of
:08:57. > :09:02.November, will you be telling them how economically damaging this is.
:09:02. > :09:06.That this is a pivotal point for our economy now? We don't want
:09:06. > :09:09.strikes, they are a last resort, we want talks and a fair deal on
:09:09. > :09:12.pensions. What George Osborne wants to do is blame a flatlining economy,
:09:12. > :09:17.and rising unemployment on the trade unions. It is his decisions
:09:17. > :09:21.which are getting us into this mess, not the trade unions. Let's look at
:09:21. > :09:27.your plans for growth. You have been urging the Government to roll
:09:27. > :09:33.back the VAT back to 17.5. Why wouldn't you do the same with other
:09:33. > :09:37.taxes? I said a year ago that if you tried to get the deficit down
:09:37. > :09:41.this fast it would lead to flatlining economy, to potentially
:09:41. > :09:46.rising unemployment, back then the Government said what nonsense, they
:09:46. > :09:53.said if you cut faster in the public sector, it will lead to more
:09:53. > :09:56.private sector jobs. You are sticking to your guns, you want the
:09:56. > :10:00.lowered VAT rate. The evidence is I was right and they were wrong.
:10:01. > :10:04.won't you do the same with the 50%? It is up to the Government to come
:10:04. > :10:08.forward with proposals on how to get the economy moving. That is
:10:08. > :10:12.growth crisis. But you have been banging on about the 50p tax, why
:10:12. > :10:18.wouldn't you say if cutting VAT could work at one end, then cutting
:10:18. > :10:22.the 50p tax could also work at the other end? The reason why
:10:22. > :10:28.unemployment is rising and consumers aren't spending is lack
:10:28. > :10:32.of confidence and squeezed living standards. VAT is hit, �450 a
:10:32. > :10:38.family. The idea that the best and fairest way to get the economy
:10:38. > :10:41.moving, to get unemployment down s to only cut taxes for people
:10:41. > :10:48.earning over �150 though though it is families and our country
:10:48. > :10:52.suffering worrying about the jobs. Let's have some stim Louis to get
:10:52. > :11:02.the economy - stimulus to get this economy working.
:11:02. > :11:02.
:11:03. > :11:07.Why not do it at both ends? January we had a rise in VAT had a
:11:07. > :11:10.has hit families, we have unemployment rising, and you are
:11:11. > :11:16.saying the priority should not be a temporary cut in VAT for families.
:11:16. > :11:20.I'm not talking about priority, I'm talking about the IFS, which you
:11:20. > :11:24.often quote, saying the 50p tax may raise nothing and it could cost
:11:24. > :11:30.millions. Why keep it, it could be economic lunacy? Let's twit see
:11:30. > :11:33.what George Osborne's study says. If he were to deliver on his
:11:33. > :11:37.convictions, he would ask the independent OBR to do this study. I
:11:37. > :11:43.think it is a nonsense to say the top rate of tax doesn't raise any
:11:43. > :11:48.money. If you want to act any money. The VAT cut will cost �1 million,
:11:48. > :11:52.you can't a- �13 billion, you can't afford that? If you want the
:11:52. > :11:55.economy moving, you cut the VAT a more balanced approach to the
:11:55. > :11:58.deficit, reinstate building schools for the future. Today we had a
:11:58. > :12:02.speech from Nick Clegg, which was an insult to the intelligence,
:12:02. > :12:06.after all the hype, what did he say? Absolutely nothing at all.
:12:06. > :12:11.There is no plan B from this Government, and the longer they put
:12:11. > :12:15.politics before substance, and just come along with these parrotive
:12:15. > :12:19.lines, the more people will lose jobs and the economy will suffer,
:12:19. > :12:23.and will not get the deficit down if unemployment is rising. Your
:12:23. > :12:25.leader, Ed Miliband, admitted yesterday, that some cuts the
:12:25. > :12:28.Government is introducing will be impossible to undone. What are
:12:28. > :12:33.those then? We came forward in Government with cuts to public
:12:33. > :12:39.spending and tax rise, the rise of National Insurance, the top rate of
:12:39. > :12:42.tax, in education I set a billion pounds worth of cuts and in
:12:42. > :12:45.policing. Of course there has to be tough decisions and get the deficit
:12:45. > :12:50.down, fundamentally the economy is not growing, and unemployment rises.
:12:50. > :12:53.If there is fewer people paying tax, more people on benefits, that means
:12:53. > :12:58.billions more in spending, the deficit is higher not lower. This
:12:58. > :13:01.is not working. What we have is a Government which wants to use
:13:01. > :13:05.political language but it flies in the face of economic reality. We
:13:05. > :13:09.see that in the evidence. Yet when you were in Government, and the
:13:09. > :13:12.economy was tanking, you blamed global forces, you blamed the
:13:12. > :13:16.global situation, and this Government is now fighting a
:13:17. > :13:20.globally bad legacy as well as what they would say is the mess they
:13:20. > :13:23.have inherited from you? It was a global financial recession. And is?
:13:23. > :13:28.And is, there is no doubt about that. The question you have to ask
:13:28. > :13:32.is why is it the case over the last year, Britain has grown more slowly
:13:32. > :13:37.than all these countries. Why did we go into the downturn before
:13:37. > :13:40.people in the last year. The reason is because we are cutting faster
:13:40. > :13:44.than any other major economy, and it is not working. I said this a
:13:44. > :13:47.year ago, and the Government said don't talk nonsense, they said,
:13:47. > :13:50.look the economy is strong, we are out of the danger zone,
:13:50. > :13:54.unemployment is falling, what has actually happened in the last 12
:13:54. > :13:58.months is they have got it so badly wrong. What is what has happened in
:13:58. > :14:03.the last month is Government ministers have started carrying
:14:03. > :14:06.around the autobiography of your former Chancellor, article tear
:14:06. > :14:09.Darling who admits there is no credible policy when you were in
:14:09. > :14:13.Government. He said there was a plan to half the deficit, George
:14:13. > :14:18.Osborne ripped it up and went faster. He said if you went faster
:14:18. > :14:22.on public cuts t would lead to private confidence. There was never
:14:22. > :14:25.any evidence or history or economic theory to stand up to that
:14:25. > :14:30.political rhetoric. He has been proved badly wrong. When the public
:14:30. > :14:34.is asked in Times poll if they can see Ed Miliband as the next leader,
:14:34. > :14:39.they say no, it doesn't matter what you come up with, they don't see
:14:39. > :14:45.it? We lost the election last year, we have a new lead, and we all have
:14:45. > :14:49.a lot of work to do. Did they get the wrong Ed? No. The more they see
:14:50. > :14:53.a Conservative Government making the wrong calls, unemployment
:14:53. > :14:57.rising, the economy flatlining, the deficit not coming down. The more
:14:57. > :15:01.they see their pensions being cut and school buildings not being
:15:01. > :15:06.built. They will ask is it fair what do we hear for the Government,
:15:06. > :15:11.cut the top rate of tax over �150,000, what planet are they
:15:11. > :15:15.living on. In the eurozone, curiously, little
:15:15. > :15:21.appetite for plan B either, dire predictions from the Polish finance
:15:21. > :15:28.minister, that the end of Europe could mean a war within a decade.
:15:28. > :15:32.The US secretary, Timothy Geithner, calls for action. But it seems
:15:32. > :15:37.there is a steadfast refusal to deal with the problem that is
:15:37. > :15:40.Greece? In the last 24 hours, we have had a big, flagged up
:15:40. > :15:49.teleconference between Merkel, Sarkozy and Papandreou, the Greek
:15:49. > :15:55.Prime Minister. It happened at 6.00. After an hour, a man came out in
:15:55. > :16:00.the parliament, likes one of those announcements you get in the sold
:16:00. > :16:06.Soviet Union. All it says is Greece stays in the euro, and should meet
:16:06. > :16:09.the conditions of the bailout. If you read the grammar, one is for
:16:09. > :16:15.definite and one is maybe. We are left asking what happened. The
:16:15. > :16:19.reason we have been waiting for this meeting is because 8 billion
:16:19. > :16:23.euros worth of bailout money hangs in the balance. There are IMF and
:16:23. > :16:27.EU inspectors in Athens looking at whether Greece is meeting in the
:16:27. > :16:32.commitments. The whole idea of the week is they had to meet the
:16:32. > :16:35.commitments or they wouldn't get the eight billion. When I read the
:16:35. > :16:45.short and pithy statement to mean is that Greece will stay in,
:16:45. > :16:48.whether or not it actually meets any of these conditions.
:16:48. > :16:53.Default is the word on everybody's lips. Some thought Greece could
:16:53. > :16:57.throw in the towel today. So the big guns came out with big warnings.
:16:57. > :17:01.If you think about the basic lessons of financial crisis, it
:17:01. > :17:06.take as certain number of things to solve them definitively. You have
:17:06. > :17:11.to have a clear, unequivocal, unified commitment to do whatever
:17:11. > :17:21.it takes to solve T tough use overwhelming force. And the Polish
:17:21. > :17:27.
:17:28. > :17:32.Finance Minister got into the The problems centre on Greece,
:17:32. > :17:42.facing mass protests, unable to make austerity stick, its economy
:17:42. > :17:47.shrinking. Negotiators had just walked away from handing over eight
:17:47. > :17:51.billion euro's worth of lifeline - euros worth of lifeline money. At
:17:51. > :17:56.6.00 began the phone call that many believed to bring decisive action
:17:56. > :18:00.on Greek debt. An hour later, no decisions, no joint statement, but
:18:00. > :18:06.only words. France and Germany are convinced the future of Greece is
:18:06. > :18:11.within the eurozone, decode that. It is simply a commitment by Angela
:18:12. > :18:15.Merkel and Nicolas Sarkozy, that even though Greece will not meet
:18:15. > :18:20.its austerity targets that were agreed on in the national deals, we
:18:20. > :18:24.will still give them the money. If you look at the report that the IMF
:18:24. > :18:29.produced last week, it was clear that Greece falls way short of its
:18:29. > :18:33.targets. For example when it comes to raising taxes.
:18:33. > :18:37.Yet Merkel and Sarkozy, and other eurozone countries have to pay up
:18:37. > :18:46.this money to Greece in order for this country not to go bankrupt and
:18:46. > :18:52.possibly even leave the euro zone. The stress now is in the banks.
:18:52. > :18:58.Overnight two French banks were downgraided for their exposure to
:18:58. > :19:03.Greek sovereign derb downgraded for their exposure to Greek sovereign
:19:03. > :19:06.debt. There are others in trouble. The current expected losses on
:19:07. > :19:12.Greek bonds are somewhere in the region of 80% of the value of the
:19:12. > :19:17.bonds. Given that the French banking system holds at least 89
:19:17. > :19:20.billion worth of euros of exposure to Greece, we are looking for
:19:20. > :19:25.billions of losses on the French balance sheet. Parts of that will
:19:25. > :19:29.be sured, as a result of that there will be also - insured, as a result
:19:29. > :19:35.of that there will be calls for the insurance companies to underline
:19:35. > :19:37.those as well. The wave of problems, will, if you like, continue across
:19:37. > :19:42.the entire financial system of France itself.
:19:42. > :19:46.But it is the Greek and Cypriot banking system that stands in
:19:46. > :19:51.danger of collapse. These banks are on the frontline of exposure to
:19:51. > :19:55.Greek Government debt. Right now the markets are giving clearer
:19:55. > :19:59.signals than the politicians. Greece is counting the days before
:19:59. > :20:04.it defaults at this stage. It doesn't matter at this stage what
:20:04. > :20:07.the European Union leaders are saying, the markets have made the
:20:07. > :20:13.determination. Looking at the yields on bonds of Greek Government
:20:13. > :20:19.debt, you know it is in the triple digits currently, as a result you
:20:19. > :20:25.know it is an insolvent country. But, for tonight at least, the end
:20:25. > :20:30.game is on hold. Paul is still with us. There is
:20:30. > :20:35.talk of eurobonds from the European Commission today s that feasible?
:20:35. > :20:40.Let's explain what eurobonds are, it is like lumping all of Europe's
:20:40. > :20:46.debt into one IOU. When it is issued, it is like when a parent
:20:47. > :20:52.backs the mortgage of one of their inkol vant children. Germany stands
:20:52. > :20:55.behind - insolvent children. Germany stands behind them. Within
:20:55. > :20:58.an hour the German economics minister stood up and said it is
:20:58. > :21:03.unconstitutional in Germany, and illegal in Europe. That is the
:21:03. > :21:09.level of agreement we have on eurobonds. They don't serve Greece,
:21:09. > :21:14.these are long-term proposelias. terms of the actual - Proposals.
:21:14. > :21:18.In terms of the actual time scale, how will it pan out? What is in
:21:18. > :21:22.everybody's minds is research and scenarios of what will happen. I
:21:22. > :21:27.have been privvy to it from the consultancy and banking research
:21:27. > :21:32.flying around. Let me give you an example, the Europeans banks right
:21:32. > :21:37.now, their shares are priced as if there is a 50/50 chance of Portugal,
:21:37. > :21:41.Greece, Ireland, Spain and Italy leaving the euro zone. That means
:21:41. > :21:46.they are trading way below the book value of the bank itself. What does
:21:46. > :21:50.this mean? If you go along, I have it in front of me, I shan't reveal
:21:50. > :21:56.the detail, it is frightening, you could go along a list of banks and
:21:56. > :21:59.say, busted, busted, busted. That is folk cushion minds. What does it
:21:59. > :22:02.mean, every time Merkel, Sarkozy, anybody else, comes to negotiate
:22:02. > :22:07.with the Greeks as they did by phone tonight, as they will do on
:22:07. > :22:10.Friday. They look at them and say we will force you to do this or we
:22:10. > :22:15.will kick you out of the eurozone. Then they look at the remember
:22:16. > :22:20.search and say, not such a great idea. That is where we have been
:22:20. > :22:25.for beaks and will be here for weeks until - for weeks and will be
:22:25. > :22:31.here for weeks until something happens. Balls, their hands are
:22:31. > :22:36.tied, they can't have see know option? I'm not sure we have week,
:22:36. > :22:39.I think Europe is staring down the barrel of the gun here. It is
:22:39. > :22:43.potentially catastrophic, for Italy to have its debt in doubt in this
:22:43. > :22:46.way. For the European Central Bank to be unable to act and the German
:22:46. > :22:50.Government still refusing to support action, this is potentially
:22:50. > :22:54.totally catastrophic. In the end it is a political failure. In the
:22:54. > :22:57.eurozone, if the countries don't stand together, if the markets
:22:57. > :23:07.doubt this, as they now are, you could have complete disaster, not
:23:07. > :23:08.
:23:08. > :23:12.just in it low. What should happen - what should happen now? They need
:23:12. > :23:17.to guarantee Italian debt, but they can't do that without all the
:23:17. > :23:20.countries backing it. If they don't, either the eurozone collapses or
:23:21. > :23:24.Germany has to leave. That is their fundamental choice F they can't
:23:24. > :23:29.face up to that, we have the American Treasury secretary flying
:23:29. > :23:35.in on Friday, to plead with the Europeans to sort it out. George
:23:35. > :23:38.Osborne should be backing him in 100%. Although it sounds technical,
:23:38. > :23:43.economically this could be bigger than anything we have seen in the
:23:43. > :23:49.last three years. We are staring down the barrel of a 1930s-style
:23:49. > :23:57.crisis and political leadership in Europe is not. There
:23:57. > :24:02.We will take this further with our guests.
:24:02. > :24:08.Lapavitsas Professor of economics in London. One of the men who is
:24:08. > :24:17.thought to have predicted the Liam man crash, Magnus.
:24:17. > :24:21.Do you think that political leaders are in absolute denial here? Yes. I
:24:21. > :24:25.can't believe they aren't having privately the type of discussions
:24:25. > :24:29.that many of us have about what should be done. They are doing a
:24:29. > :24:34.very good job of pretending their not addressing the key issues. That
:24:34. > :24:38.is the vicious circle that exists between the deteriorating credit of
:24:38. > :24:41.Governments and the deteriorating credit of banks. If you don't,
:24:41. > :24:45.sense you can't solve the Government problem overnight, you
:24:45. > :24:54.can solve the banking problem. They could bring it to a very quick stop,
:24:54. > :24:58.actually. By doing what? announce ago credible programme to
:24:58. > :25:03.retap kalise, not all banks, but the systemically important ones
:25:03. > :25:06.that hold huge amounts of debt in the peripheral Europe. A lot of
:25:06. > :25:13.people looking to Angela Merkel saying where is the leadership you
:25:13. > :25:18.need to be showing on this one? has never been a strong and quick
:25:18. > :25:23.leader. The expectations were a bit high. The political problem in
:25:23. > :25:25.Germany is that, the Germans are willing to stump up a large amount
:25:25. > :25:30.of money, but they want total control of it. They want to put a
:25:30. > :25:36.cap on it. With what they don't want is any unpreliminary ited
:25:36. > :25:43.commitment to bailing out their neighbours. - unlimited commitment
:25:43. > :25:48.to bailing out their neighbours. That is what we have gotten in to?.
:25:48. > :25:51.The second problem is recapitalising the banks. It is
:25:51. > :25:59.unpopular in Germany to bailout southern Europeans who got
:25:59. > :26:03.themselves in a mess because they spent too much. It is even less
:26:03. > :26:06.attractive to bail out the bankers again. That is the problem for
:26:06. > :26:12.Angela Merkel, her party criticising her, the coalition in
:26:12. > :26:17.tatters, and the media against any further money being made available.
:26:17. > :26:22.There is to chance that Greece is going to leave the euro, it is just
:26:22. > :26:26.the slow lingering propping up? think that it is important to
:26:26. > :26:30.understand that the programme applied to Greece a year half ago
:26:30. > :26:33.has failed totally. We have to start with that. It hasn't failed
:26:33. > :26:39.because of the weakness of Greece, but because of the nature of the
:26:39. > :26:44.programme itself. It was badly thought out and badly applied. What
:26:44. > :26:49.is caused in Greece is economic and social devastation, people need to
:26:49. > :26:53.be clear. Unemployment is at 20%. There are networks of Barter
:26:53. > :26:58.emerging in the poorer areas, the hospitals are collapsing. People
:26:58. > :27:02.are returning to the countryside to make ends moot, the country is
:27:02. > :27:07.regressing rapidly. The programme is untenable and won't survive.
:27:07. > :27:10.What is the solution? The solution is very clear, Greece will have to
:27:10. > :27:14.default. Greece cannot carry the incredible of bebt imposed on it at
:27:14. > :27:22.this stage. It will have to default, and in a democratic and sovereign
:27:22. > :27:26.way. Lift the burden of debt. Once it defaults and does that. It can
:27:26. > :27:31.exit the euro and set its economy on a proper path. Do you mean
:27:31. > :27:37.something that is controlled and agreed by the other Governments?
:27:37. > :27:41.Default is two types, led by the creditors, or the debtor. We have
:27:41. > :27:47.seen ways in which the fault has been led by the creditor, it hasn't
:27:47. > :27:51.worked. The must be led by the debtor, in this case, to have a
:27:51. > :27:56.significant amount of debt. Greece needs 70% writing off of debts.
:27:56. > :28:02.Could it be controlled if led by Greece? I would put it slightly
:28:02. > :28:05.differently. A default can be orderly or disorderly. If it is
:28:05. > :28:08.disorderly we will face a collapse of the financial system, great
:28:08. > :28:16.depression, terrible political outcomes. You don't want to think
:28:16. > :28:22.about them. It is an order default which, is I hope what the leaders
:28:22. > :28:26.are building towards t will be done in a very messy way, but the system
:28:26. > :28:30.can survive and we can move on after that. If Greece defaults,
:28:30. > :28:34.when it defaults. Do you think it is defaulting
:28:34. > :28:39.already? I don't think there is any question. Tough prop up the Greek
:28:39. > :28:45.banking system or it will collapse, as Paul's package haid clear
:28:45. > :28:50.earlier. You have to do the - made clearer earlier. You have to do the
:28:50. > :28:54.same for the rest of Europe. The thing that Angela Merkel hasn't led,
:28:54. > :28:59.in my point of view, is the choices are starker. It is not a question
:28:59. > :29:04.of bailing out foreigners and German banks, you have to do a bit
:29:05. > :29:10.of both, that is the pain of being a creditor country. Even still, you
:29:10. > :29:15.have a situation where this is wallpapering, nobody is pretending
:29:15. > :29:19.that Greece is getting better or becoming more able to deal with its
:29:19. > :29:23.problems or solving them? Again the Germans are not that worried about
:29:23. > :29:28.Greece, Greece is a small country. That is a euphamism. They can have
:29:28. > :29:32.their own problems? There is a consensus, even in Germany, that
:29:32. > :29:37.Greece can't repay its debt and it needs restructuring. They are
:29:37. > :29:40.trying to buy time to stablise the situation. And then have that
:29:40. > :29:43.orderly default. If you could contain it they would have let
:29:43. > :29:47.Greece default a long time ago. They are worried it will spread
:29:47. > :29:51.liblg a wild fire through the rest of the - like a wild fire through
:29:51. > :29:56.the rest of the eurozone. Now it comes to the point where they have
:29:56. > :30:00.to bail out a large economy like Italy. They haven't proven that
:30:00. > :30:03.they can tell even tiny Greece to do their hope work, to clean up
:30:03. > :30:09.their economy, to implement their reforms. They will make very large
:30:09. > :30:15.sums of money available indeed to Italy. They still can't tell the
:30:15. > :30:21.Italian Government to reform. Then you have the open ended fiscal unit,
:30:21. > :30:26.that scares people. The point Ed Balls raises is instead of worrying
:30:26. > :30:29.about everyone else, it is like Germany going and saying it is
:30:29. > :30:33.better off without the pigs? German Government is committed to
:30:33. > :30:38.Europe, not only as it is, but to further European integration, that
:30:38. > :30:42.is what the surveys have shown. They want to make sure they don't
:30:42. > :30:45.land themselves in a situation where suddenly trillions of euros
:30:45. > :30:48.have to be made available to countries, where you have no
:30:48. > :30:53.control over what happens to that money? That is not an option,
:30:53. > :31:00.really. If Germany leaves the euro, the project is dead and we have,
:31:00. > :31:06.you know, that terrible dark consequence unfolding. Why is that,
:31:06. > :31:14.the Polish Finance Minister was saying today, it sounds slightly
:31:14. > :31:17.apocalyptic, war within a decade in the euro is over? Gulp, possibly,
:31:17. > :31:22.because historically, when monetary unions have collapsed. This is
:31:22. > :31:28.koind of what happens. Obvious - kind of what happens. This is an
:31:28. > :31:32.outcome nobody wants. Nobody? euro has failed, the euro is a
:31:32. > :31:36.mechanism for recession. It has created an impossible situation in
:31:36. > :31:42.Europe, it is split between core and periphery, the periphery has
:31:42. > :31:46.suffered and the core benefits. The periphery is now forced to go
:31:46. > :31:51.through an enormous recession for no obvious outcome. In this context,
:31:51. > :31:57.and I can only speak for Greece, which I know more about. The only
:31:57. > :32:01.option is to really get out of this advice, to break the advice of the
:32:01. > :32:08.hard currency, - vice of the currency and the euro, there is no
:32:08. > :32:12.future for Greece in the euro, or the peripheryy in the euro.
:32:13. > :32:15.It was an assassination that shook international confidence in Libya's
:32:15. > :32:19.rebels, at the height of the campaign against Colonel Gaddafi in
:32:19. > :32:23.late July, their commander and chief, General Younis, was murdered
:32:23. > :32:29.and mutilated, apparently by men on his own side, after being arrested
:32:29. > :32:34.on the orders of the rebel leadership. With the murder
:32:34. > :32:38.unsolved, there is mounting anger of the a powerful tribe, they say
:32:38. > :32:42.senior officials of the National Transitional Council, conspired
:32:42. > :32:45.with Islamic extremists to kill general. A claim that is strongly
:32:45. > :32:50.denied. This is a case that is threatening to stablise the
:32:50. > :32:57.beginnings of new Libya. They helped overthrow Gaddafi's regime.
:32:57. > :33:02.Now elders of one of Libya's most powerful tribes, are threatening
:33:02. > :33:08.vengeance against his successors. The extraordinary and prominent
:33:08. > :33:12.debt of their most prominent member, has shaken their confidence in the
:33:12. > :33:16.country's new leadership. General Younis was the biggest defector
:33:16. > :33:22.from Gaddafi's regime, NATO's main contact in Libya. But on the eve of
:33:22. > :33:32.a major offensive in July, he was arrested by his own side. And later,
:33:32. > :33:32.
:33:32. > :33:36.brutally murdered. Leaked documents, seen by Newsnight, revealed a day
:33:36. > :33:40.earlier, official of the general national transitional council, had
:33:40. > :33:48.arrested Younis without the proper authority
:33:48. > :33:57.The conspiracy was concocted at the executive council, and they now who
:33:57. > :34:01.is behind it. They issued a summons to General Younis, they lured him,
:34:01. > :34:08.lay in wait for him, and did what they did to him.
:34:08. > :34:11.There is no proof of that, alt council denies t but there is a
:34:12. > :34:16.mysterious chain of events, revealing deep divisions within a
:34:16. > :34:22.revolution that so many died for. And with outside showers, including
:34:22. > :34:26.Britain, to support it. The murder of Abdel Fattah Younes, dumb
:34:26. > :34:31.founded international backers, raising questions they tried to
:34:31. > :34:34.avoid about the nature of Libya's opposition and the potential to run
:34:34. > :34:38.the country. Even today those questions haven't been completely
:34:38. > :34:46.laid to rest. The killing of the commander cast as long shadow over
:34:46. > :34:53.Libya's future. General Younis was a controversial man, for 40 years a
:34:53. > :34:59.key aid of Colonel Gaddafi, laterally his Interior Minister, he
:34:59. > :35:03.changed sides during the revolution. Street talk in Benghazi claimed
:35:03. > :35:10.that his loyalties were still divided. In July, five months into
:35:10. > :35:17.the war, he was planning an attack on Gaddafi's lines at Brega, west
:35:17. > :35:23.of Benghazi when rebel militia men arrived with this warrant. Trand by
:35:23. > :35:27.a head of the transitional council, it ordered people to be taken into
:35:27. > :35:33.custody. In the middle of the night he was escorted back to Benghazi, a
:35:33. > :35:39.council source said he and his aids left calmly in just two cars.
:35:39. > :35:45.Family members present remember it differently.
:35:45. > :35:49.TRANSLATION: We went with a reinforced guard, two and three
:35:49. > :35:52.brigade, they were in front and behind us. This was very tough and
:35:52. > :35:57.very suspicious. Eyewitnesses say they were arrested
:35:57. > :36:03.and escorted, not by regular council forces, but by independent
:36:03. > :36:08.militia men of a unusually religious appearance.
:36:08. > :36:14.TRANSLATION: The number of cars was 80 or 90, but increased at everyone
:36:14. > :36:21.checkpoint. Every car was full of civilian rebels, fully armed. They
:36:21. > :36:27.were chanting, "traitor", and "Gaddafi", there was no-one from
:36:27. > :36:35.the police or the other people there, just people shouting into
:36:35. > :36:39.the dawn. The Defence Minster, scribled this extraordinary note at
:36:39. > :36:45.4.30 in the morning, counter manding the arrest warrant. He said,
:36:45. > :36:49.it had been issued by a non- combatant authority and might
:36:49. > :36:55.damage morale at the front. Soon after sending the note. According
:36:55. > :36:59.to the council, the Defence Minster left for Egypt, on urgent business.
:36:59. > :37:04.His order had no effect, the general was brought to this
:37:04. > :37:08.military camp, his son and the son of his aide, were allowed to leave.
:37:08. > :37:12.They never saw their fathers alive again.
:37:12. > :37:19.It is still a mystery what happened to General Younis, after he was
:37:19. > :37:22.taken behind these gates. The family came the following day to
:37:22. > :37:31.find out what happened, but the place was already deserted, as it
:37:31. > :37:36.still is today. The following morning, thousands
:37:36. > :37:41.attended the funeral of Younis and his two aides in Benghazi's
:37:41. > :37:44.Liberation Square. All three had been found burned and mutilated, in
:37:44. > :37:48.a valley outside the city. At the end of the day, when the family
:37:48. > :37:51.said it had been assured by council officers, that the general was safe,
:37:51. > :37:55.even about to appear at a press conference.
:37:55. > :38:00.The council said two men killed them, of whom one has already been
:38:01. > :38:07.arrested. Part of a wider group of 16 suspects, linked to the case. It
:38:07. > :38:13.has released few other details from the on going inquiry.
:38:13. > :38:17.But members of this tribe say they have seen testimony that Islamic
:38:17. > :38:22.extremists, including at least one Egyptian were involved? They were
:38:22. > :38:32.an Islamic radical group, who committed this execution. According
:38:32. > :38:37.to the eyewitnesses, who have been with him. His guards, sow that - so
:38:37. > :38:42.that people looked at the strange shape, with the long beard, with
:38:42. > :38:48.their vocalisation, the way they spoke, it obviously looks like
:38:48. > :38:55.people from extreme background. The council has said the killers
:38:55. > :39:03.were members of one fundamentalist brigade, Obaida Ibn Jarrah, named
:39:03. > :39:10.after the friend of the Prophet Mohammed. It has now been disbanded.
:39:10. > :39:13.The council's chairman, Libya's new lead, said they weren't following a
:39:13. > :39:19.religious agenda. TRANSLATION: nature of the killings suggests an
:39:19. > :39:24.act of personal revenge, it looks back to something well before Libya,
:39:24. > :39:33.something Younis was involved in, as a commander of the special
:39:33. > :39:39.forces. He's talking about a time here. The Gaddafi regime tried to
:39:39. > :39:43.flush out suspected Islamic fighters. But his former family,
:39:43. > :39:46.and activists say the general wasn't involved.
:39:47. > :39:51.Younis could have been killed because of suspicions that he was
:39:51. > :39:56.double dealing, although there is no evidence. Or as the family blofs,
:39:56. > :40:03.because he planned to disband - believes, because he planned to
:40:03. > :40:07.disband military militias. TRANSLATION: Younis was their most
:40:07. > :40:11.dangerous enemy, a tough old soldier. He wanted to disarm these
:40:11. > :40:17.people and force them back to civilian life. He believes the
:40:17. > :40:24.circumstances of the general's arrest, shows the militias have
:40:24. > :40:29.supporters on the platform. TRANSLATION: Why army militias,
:40:29. > :40:34.only because there is a relationship between the board and
:40:34. > :40:39.the council itself. These are the events leading up to
:40:39. > :40:43.the general as arrest. It questions the legitimacy and independent of
:40:43. > :40:47.the special judicial committee that issued the warrant. Saying that the
:40:47. > :40:52.decision to appoint it was tarnished by shortcomings. One of
:40:52. > :40:55.those behind the decision, was religious affairs minister, until
:40:55. > :41:05.recently, Imam of a Manchester mosque. But he can't tell me
:41:05. > :41:07.anything about the case. TRANSLATION: Anything related to
:41:07. > :41:13.the martyrdom of General Younis, must be left to the he of the
:41:13. > :41:17.council, there I will stop. To Younis's supporters, the
:41:17. > :41:24.irregular process, that led to his arrest, looks highly suspicious.
:41:24. > :41:29.But it could just show incompetence. It was a conspiracy that killed him,
:41:29. > :41:33.or simply a series of unfortunate managal mistakes that
:41:33. > :41:42.unintentionally delivered him into the wrong hands. A case of maltad
:41:42. > :41:46.minutes traigs. That is certainly the - maladministration. That is
:41:46. > :41:51.certainly preferred by the cab. The cabinet have been investigated, and
:41:51. > :41:57.in the light of it they have decided to reshuffle the cabinet.
:41:57. > :42:02.He says the mistakes had nothing to do with the event. Younis's death
:42:02. > :42:08.certainly raised guess about Europe's independent military
:42:08. > :42:14.brigades. Enthusiastic volunteers of all kinds joined them, but most
:42:14. > :42:19.are now returning to civilian life, leaving a committed core, including
:42:19. > :42:22.many from Islamist backgrounds. TRANSLATION: These militias are
:42:23. > :42:27.outside the law, their aim is to control the Government of Libya.
:42:27. > :42:31.The council has been weak in taking action against them.
:42:31. > :42:36.international face of Libya's largely unknown and tested rebels,
:42:36. > :42:42.as they began their fight against Colonel Gadaffi, was an audacious
:42:42. > :42:46.shot in the dark. Britain, France and others argue it has been
:42:46. > :42:52.triumphantly vindicated. Yet, even though we know surprisingly little
:42:52. > :42:56.about the exact political reflection of Libya's new
:42:56. > :43:00.leadership. We can't yet accurately engage the strength of an Islamist
:43:00. > :43:10.element, that is certainly becoming more evidence, and some argue, more
:43:10. > :43:11.
:43:11. > :43:16.Before taking their leave of Younis's family, the visiting
:43:16. > :43:22.elders of his tribe, are entertained with verse.
:43:22. > :43:28.It is a political rant. Warning against division the. But they all
:43:28. > :43:32.know, since the general's murder. That post revolution Libya and
:43:32. > :43:35.peace will be much harder to achieve than most.
:43:35. > :43:40.The Independent columnist, Johann Hari, is returning his prestigious,
:43:40. > :43:47.or well prize, following an investigation and admission of
:43:47. > :43:52.plagiarism. Writer, who admitted attacking critics under a pseudo
:43:52. > :43:59.name on twittweter, is taking a leave of access. He will keep his
:44:00. > :44:04.job and be asked to pay for the course himself.
:44:04. > :44:10.This all happened under your tenure, are what was your conversation you
:44:10. > :44:16.had? The first conversation was me expressing my shock that this had
:44:16. > :44:23.had happened. I was really quite devastated for the readers of the
:44:23. > :44:28.Independent, for his colleagues. How did he explain this? All sorts
:44:28. > :44:33.of reasons, really. Going back, he did have some health issues. He had
:44:33. > :44:38.some health issues, that was a factor. I think one key factor, and
:44:38. > :44:43.it weighed heavily on my mind when I decided what to do about him was
:44:44. > :44:53.he really had so little training. That, in a way, impacted and
:44:53. > :45:01.reflected badly on the Independent. He only left university in 2001 and
:45:01. > :45:06.wrote a few articles for the New Statesman, and suddenly is now
:45:06. > :45:11.propelled into the stark economist. I thought no-one has taken apart
:45:11. > :45:16.his columns. Which respect I'm not sure what you mean about health
:45:16. > :45:22.issues, you don't want to adopt a pseudonym from Wikipedia and attack
:45:22. > :45:26.people through it? That actually was, he gave that as the reason, we
:45:26. > :45:30.did check. The bulk of those centuries were made in that
:45:30. > :45:37.period.? He freely admits he was on prescription tranquillisers and
:45:37. > :45:40.came off them. I said you can't use it as an excuse, it is the same as
:45:41. > :45:44.one of the rioters claiming drunkenness, they still go to jail.
:45:44. > :45:51.The thing that weighed heavily on my mind was the lack of training,
:45:51. > :45:57.that is why he's going for training. Presumably in the Independent among
:45:57. > :46:01.other newspapers, sanctimonious, rightly, maybe, about phone hacking,
:46:01. > :46:07.you don't start asking the same questions of young tabloid hacks
:46:07. > :46:14.could go that? Well, I'm not sure. I would say on the plagiarism issue,
:46:14. > :46:19.at the time, nobody complained. You're not going to say go and do
:46:19. > :46:27.more training? It reflected padly on the Independent, you are right
:46:27. > :46:35.to say that. If he had been older, wiser or more trained, I didn't, I
:46:35. > :46:40.took a view the he's 32 years of age, and only been a columnist and
:46:40. > :46:44.interviewer. No grizzly old news editor has taken apart his copy and
:46:44. > :46:48.said does which bit come from, he was were President Yeltsin into the
:46:48. > :46:53.stardom and has to start again at the - propelled into the stardom
:46:53. > :47:03.and had to start again. We will take you to through to the
:47:03. > :47:03.
:47:03. > :47:08.JK Rowling is named as a core participant. The jobless totals too.
:47:08. > :47:14.Sarah Palin, political future in doubt, after a report she had a one
:47:14. > :47:24.night stand with basketball player and cocaine. The Telegraph 300,000
:47:24. > :47:24.
:47:24. > :48:07.Apology for the loss of subtitles for 43 seconds
:48:07. > :48:11.That is all from Newsnight tonight. Goodnight from all of us here.
:48:11. > :48:15.Turning chilly overnight. A cold start to tomorrow morning, fog
:48:15. > :48:21.around as well. Taking time to clear. Essentially it is a fine,
:48:21. > :48:26.early autumn day, with plenty of sunshine on offer, certainly on
:48:26. > :48:31.northern England more sunshine. Manchester, Leeds and Hull all up
:48:31. > :48:36.to 1. Cloudy in the Midland, is sunny spells will reach 20. There
:48:36. > :48:39.will be some mist and fog across the southern counties early on. By
:48:39. > :48:43.mid-morning they should have cleared. They may well linger
:48:43. > :48:48.through the morning rush hour, could be misty in parts of South
:48:48. > :48:51.Wales, some sunshine here. Cloudy across parts of North Wales.
:48:51. > :48:56.Cloudier times through Northern Ireland. When the sun is out
:48:56. > :49:01.feeling pleasant in the afternoon, 16-17w we are losing the strong
:49:01. > :49:04.wind across Scotland, feeling warmer here again, blue skies for
:49:04. > :49:08.many during the afternoon. By Friday, cloud and outbreaks of rain
:49:08. > :49:11.will drift from the west. Turning to heavy showers in the afternoon,
:49:11. > :49:15.across parts of Northern Ireland and North Wales. Parts of the south
:49:15. > :49:19.may well stay dry on Friday. There could be sunshine, certainly for a
:49:19. > :49:24.while, overall the weather patterns do change. After a fine and settled