:00:16. > :00:20.A sewer much systematically and amoral dishonesty, some of the
:00:20. > :00:24.choice descriptions of some of our bankers. The shock waves from
:00:25. > :00:29.Barclays continues as there are calls for a criminal investigation,
:00:29. > :00:35.and civil lawsuits for fiddling a key lending rate. Bob Diamond says
:00:35. > :00:41.the decision to manipulate the market was wrong, but who took it?
:00:41. > :00:46.Have the people who have almost bankrupted the world economy proved
:00:46. > :00:49.themselves morally bankrupt? Another last-chance saloon in
:00:49. > :00:53.Brussels, with Angela Merkel refusing to budge a centimeter, we
:00:53. > :01:00.will discuss the German Chancellor's stubbornness, or is it
:01:00. > :01:07.admirable consistency, with one of her ministers and a noble prize
:01:07. > :01:13.winner, who thinkss the policies are suicide. As Julian Assange goes
:01:13. > :01:17.to Sweden tomorrow night e gives Newsnight his response. You have
:01:17. > :01:25.been summoned to bell gravia police station tomorrow, are you going to
:01:25. > :01:30.go? Our advice is internationally and domestically in the UK takes
:01:30. > :01:33.precedent to extradition law, the answer is certainly not. Have the
:01:33. > :01:43.scientists finally run the God particle to ground, and can we
:01:43. > :01:45.
:01:45. > :01:50.explain what it does? Good evening, systematic greed, systemic failure,
:01:50. > :01:56.like an epitaph to an age of irresponsibility, just a few of the
:01:56. > :01:59.comments on the latest crass and potentially illegal activity in the
:01:59. > :02:03.banking sector. With calls for banking boss, Bob Diamond to resign
:02:03. > :02:08.were will it lead. While they promised a bottle of champagne for
:02:08. > :02:12.their mates, how much more will the taxpayer tolerate. We begin with
:02:12. > :02:17.our Economics Editor, and Bob Diamond's most public response to a
:02:17. > :02:24.letter to the chairman's committee. What did Mr Diamond have to say?
:02:24. > :02:27.Bob Diamond refers to two things that Barclays did in manipulating
:02:27. > :02:31.this key interest rate, The Libertines. They did it for one
:02:31. > :02:34.machine, to enrich themselves, boost their own trades. Diamond
:02:34. > :02:38.says it was done by junior people, we have collaberated with the
:02:38. > :02:42.inquiry, let's get on with it, the Serious Fraud Office can do what
:02:42. > :02:46.they want, we're sorry, we have taken the fine. Then he refers to
:02:46. > :02:50.the second reason. The second reason was that this interest rate
:02:50. > :02:55.is a good barometer for the financial health of banks. And at
:02:55. > :02:58.one point, between 2007-2009, Barclays were coming out of the
:02:58. > :03:02.daily interest rate setting looking bad. It looked like they were a
:03:02. > :03:04.bank in trouble. Therefore, they expressed, the senior management,
:03:04. > :03:08.expressed their concerns. This is what the Financial Services
:03:08. > :03:13.Authority had to say yesterday, they said senior management
:03:13. > :03:15.concerns resulted in instructions being given by less senior managers
:03:15. > :03:20.to reduce The Libertines submissions, that is fiddle the
:03:20. > :03:24.rate, they say the origin of the instructions is unclear. In today's
:03:25. > :03:26.letter Mr Diamond says he accepts the decision to lower submission
:03:27. > :03:30.was wrong. He also intimate that is decision
:03:30. > :03:37.was discussed with the Bank of England, and even with politicians,
:03:37. > :03:42.for example the Brown -Darling administration at the time. Junior
:03:42. > :03:45.bank managers do not have discussions with Gordon Brown and
:03:45. > :03:48.Mervyn King and discuss whether or not they can legitimately mess
:03:48. > :03:51.around with The Libertines, that decision had to be taken by
:03:51. > :03:55.somebody senior. I asked them the question tonight, who was it? And
:03:55. > :03:59.it is, as it is like for the last 48 hours, it is like asking
:03:59. > :04:03.children in the playground who has done the naughty thing, nobody
:04:03. > :04:07.wants to answer and we are waiting for an answer.
:04:07. > :04:12.The markets, Barclays' shares closed down 15%, and the political
:04:12. > :04:17.response has been absolutely vehement? The normal choreography
:04:17. > :04:21.of this is outrage, and then you take a fine, you collaberate with
:04:21. > :04:26.the SFA, somebody gets prosecuted down the line. Then politicians
:04:26. > :04:30.stand up and say we mustn't let this damage the status of the City
:04:30. > :04:34.of London, and Barclays is an important institution, blah blah.
:04:34. > :04:37.Instead today, they said the absolute opposite, they went for
:04:37. > :04:42.the jugular on Diamond and the Barclays senior management. We
:04:42. > :04:46.heard David Cameron and Osborne go for him by name. The reason is
:04:46. > :04:54.pretty clear, this is a systemic, reputational hit for the City. It
:04:54. > :04:56.is making the City and done as a vein -- London as a venue for doing
:04:56. > :05:00.business very shaky, there is worry throughout the industry about it.
:05:00. > :05:04.That is why the politicians are so hard on them.
:05:04. > :05:12.What exactly is going on at Barclays and how did traders fix
:05:12. > :05:17.the InterBanking lending rate, LIBOR? Make no mistake about it,
:05:17. > :05:20.this rate-fixing scandal will hit the banking sector, starting with
:05:20. > :05:25.Barclays chief, Bob Diamond, like a nuclear bomb. It could prove as
:05:25. > :05:31.destructive to the industry as the financial crisis of 2008. Even
:05:31. > :05:36.though the collusion started in 2005, its origins can be traced
:05:37. > :05:43.back to 1987, Big Bang, swept aside the bowler hatted brigade, and
:05:43. > :05:48.opened up the City to a world where laissez faire ruled, and markets
:05:48. > :05:52.would clarify and lickify. It started with Barclays, Barclays'
:05:52. > :05:57.fair price was in free fall, as the extent of the problem dawned on the
:05:57. > :06:01.market, which doesn't fancy the bank without Bob Diamond at the
:06:01. > :06:05.helm. The next wave is imminent, Barclays got a smaller fine
:06:05. > :06:09.yesterday, in return, no doubt, for squealing on other banks, watch out
:06:09. > :06:14.RBS and Lloyd's. That makes the prospect of US-style lawsuits more
:06:14. > :06:19.likely, benefiting lawyers mostly. One can see an outward mushrooming
:06:19. > :06:22.effect on this, armed with these admissions from Barclays and the
:06:22. > :06:25.evidence obtained from Barclays, e- mail, taped transcripts of
:06:25. > :06:29.conversations between traders, that a powerful case could be built
:06:29. > :06:32.against the others. That, in my view, would concentrate the find of
:06:32. > :06:36.the others, and they will have a choice. Do we too come clean and
:06:36. > :06:39.get the discount for an early admission, or do we tough it out
:06:39. > :06:43.and try to say we weren't a party to this.
:06:43. > :06:49.Then there is the long-term damage to the City of London's reputation.
:06:49. > :06:54.It has already been hit by scandals at AIG, JP Morgan and UPS, will it
:06:54. > :06:59.still account for 10% of British GDP in a decade. The wider economy
:07:00. > :07:06.won't escape either, this scanned kal will almost certainly lead to
:07:06. > :07:09.tighter regulation for banks, which means less profits and less lending
:07:09. > :07:14.to customers. It is the bald eagle bank in the
:07:14. > :07:19.firing line, when a UK Prime Minister, arriving at an EU summit,
:07:19. > :07:23.subjects that a banking boss has serious guess -- suggests that a
:07:23. > :07:27.banking boss has serious questions to answers, it is a message, go,
:07:28. > :07:31.and go now. As I said today people have to take responsibility for the
:07:31. > :07:35.actions and show how they will be accountable for those actions, it
:07:35. > :07:40.is important it goes all the way to the top that have organisation.
:07:40. > :07:46.Other Tory MPs weren't as polite, calling directly on Bob Diamond to
:07:46. > :07:49.resign. The opposition said it was time white collar criminals went to
:07:50. > :07:53.jail. I do want to see criminal prosecutions, and those who have
:07:53. > :07:58.done the wrong thing, those who have committed what I think are
:07:58. > :08:01.atrocious acts, brought to justice. Things stepped up a gear today, Bob
:08:01. > :08:04.Diamond confirmed that he will appear before MPs on the Treasury
:08:04. > :08:10.Select Committee, in the next fortnight. Just's did last year,
:08:10. > :08:14.when he said banker bashing had to end. He will be joined, no doubt,
:08:14. > :08:18.by his chairman, Marcus Agius, seen here on the left, who is running
:08:18. > :08:23.the board at Barclays at the height of this scandal, his head may also
:08:23. > :08:27.be on the chopping block. Today also saw the British Bankers'
:08:27. > :08:31.Association, under whose auspices LIBOR rates have been set for three
:08:31. > :08:35.decade, call on the Government to assume responsibility for them in
:08:35. > :08:38.the future. Meanwhile the FSA is said to be in talks with big banks
:08:38. > :08:42.for financial settlement for small firms, in particular, the City
:08:42. > :08:45.watchdog is also set to announce tomorrow, a new mis-selling probe
:08:45. > :08:51.into the banks, which would sully their reputation even further. At
:08:51. > :08:55.the moment there is something of an omerta going on between the banks,
:08:55. > :08:58.as they lift up stones in their banks to see what traders have or
:08:58. > :09:04.have not been up to, and whether the regulator has any evidence of
:09:04. > :09:09.it. Banks are looking nervously at each other to see which one breaks
:09:09. > :09:12.rank first, and lead to a settlement that makes the PPI pay
:09:12. > :09:17.outs look like pocket money. Tonight it is clear why the scandal
:09:17. > :09:22.happened in the first place, investment bankers who gamble with
:09:22. > :09:26.larger sum, are allowed to work in a set of lower expectations than in
:09:26. > :09:31.the general public -- those who deal with the general public.
:09:31. > :09:34.will take an integrity test in this sector, we help people understand
:09:34. > :09:37.what is integrity and they can prove and demonstrate it, there is
:09:37. > :09:41.no requirement in the wholesale market. We should be applying the
:09:41. > :09:44.same principles now applied in the retail sector to the wholesale
:09:44. > :09:48.sector. Make sure professional people belong to professional
:09:48. > :09:53.bodies, abide by that Code of Conduct, and take integrity
:09:53. > :09:57.properly and for what it is worth. This led to the kind of unethical
:09:57. > :10:01.behaviour at the heart of this scandal, this is something I
:10:01. > :10:05.prepared earlier. John and Simon work at separate parts of the bank
:10:05. > :10:09.and shouldn't be in touch professional ever. John has made
:10:09. > :10:14.bets on a derivative linked to The Libertines rate, needs the rate to
:10:14. > :10:18.go down. John illegally contacts Simon, a colleague whose job it is
:10:18. > :10:23.to set The Libertines rate. Simon is supposed to ignore all
:10:23. > :10:27.communication from John, in this scandal doesn't. At the daily LIBOR
:10:27. > :10:31.fixing session, Simon suggests a lower rate than it should be,
:10:31. > :10:37.knowing it will help John and the bank. Even if it will only work for
:10:37. > :10:42.a few days a month, tiny changes can be worth millions to John and
:10:43. > :10:47.billions to the bank. We will never know how much loss was minimised as
:10:47. > :10:51.a result of this be backle. But it the fall-out means things will
:10:51. > :10:58.never be the same for the banking sector again.
:10:58. > :11:03.The Treasury Minister, Mark Hoban is with me. Is Bob Diamond a fit
:11:03. > :11:07.person to run a major bank? He has questions to answer, why did it
:11:07. > :11:10.happen, why wasn't it identified by its own staff and what change has
:11:10. > :11:13.happened since it happened, what change in procedures, has the
:11:13. > :11:16.compliance operation been beefed up. All these questions need to be
:11:16. > :11:20.answered by Bob Diamond. It is important he goes before the
:11:20. > :11:24.Treasury Select Committee to hear from him what has changed. He can
:11:24. > :11:27.run a major bank for the next couple of week, either somebody who
:11:27. > :11:30.knew what was going on, which would be terrible, or he didn't know what
:11:30. > :11:35.was going on, which would be incompetent? We need answers from
:11:35. > :11:39.Bob Diamond. Barclays did identify this, and raise it with the FSA, we
:11:39. > :11:43.need to get some answers about this. You are prepared to wait for the
:11:43. > :11:46.Treasury Select Committee to have a chat with him in a few weeks time,
:11:46. > :11:50.you presumably meet these people all the time, you have met Bob
:11:50. > :11:53.Diamond? On the basis of what you know, would you be perfectly happy
:11:53. > :11:57.to trust him with running a major British bank? It is very clear, as
:11:57. > :12:00.the Prime Minister said today, that Bob Diamond has questions to answer,
:12:00. > :12:04.we should get those answers from him. Also, there are other banks
:12:04. > :12:11.involved in this. This is part of a long-running investigation, we need
:12:11. > :12:15.to get to the bottom of this. What has happened. A number of
:12:15. > :12:20.Conservative MPs, who I presume you respect highly, say this man should
:12:20. > :12:23.just go? The chairman of the select committee has invited Diamond in
:12:23. > :12:29.front of his committee to get some answers. There is clearly
:12:29. > :12:34.identified a gap in regulation, the regulatory system that Ed Balls
:12:34. > :12:40.designed made sure LIBOR was not regulated. We need to resolve this.
:12:40. > :12:42.People rely on this. Is this a regulatory lapse or complete moral
:12:42. > :12:45.lapse, that there is something absolutely rotten, somewhere in
:12:45. > :12:49.Barclays Bank? I think there are two issues, what happened in the
:12:49. > :12:53.individual banks and how do we get to the bottom of that, but also,
:12:53. > :12:58.why is it this area of market activity was not properly regulated,
:12:58. > :13:02.it was a gap in the regulatory regime we inherited from the
:13:02. > :13:06.previous Government and we are seeking to close it. George Osborne
:13:06. > :13:11.said today we will regulate LIBOR and lock at what needs to be done,
:13:11. > :13:15.and look at criminal sanctions to be put in place. The chairman is in
:13:15. > :13:18.charge of corporate governance, should Marcus Agius think of going,
:13:18. > :13:22.clearly nobody was at the helm here? I think the answer is we need
:13:22. > :13:27.to get to the bottom of this, there are questions Barclays needs to
:13:27. > :13:31.answer, the FSA report takes us so far. Things clearly went astray in
:13:31. > :13:35.Barclays, we need to know why that happened, why it wasn't picked up
:13:35. > :13:38.sooner and what has changed. Would you like to see criminal
:13:38. > :13:41.prosecutions, fraud is fraud, there may be no specific offence you can
:13:41. > :13:45.put your finger on that was mentioned in this, but if people
:13:45. > :13:49.had been cheating and fixing rates, that is presumably, potentially
:13:49. > :13:52.fraud, isn't it? I think the hypocrisy of the Labour Party today
:13:52. > :13:57.calling for criminal sanctions when their rules didn't actually allow
:13:57. > :14:01.criminal sanctions to take place. You can score points if you like.
:14:01. > :14:04.This is the worst abuse of trust in a British bank in living memory I'm
:14:04. > :14:06.asking you as a Treasury Minister what you can do about it? With what
:14:07. > :14:10.we need to do, is there is action going on in individual banks
:14:10. > :14:13.looking at individual people, the FSA haven't completed their
:14:13. > :14:17.investigation, not just of banks but individuals, but we also need
:14:17. > :14:21.to look at every angle possible that we can take criminal action
:14:21. > :14:24.where fraud has been committed. would support the potential for
:14:24. > :14:28.criminal action, you think that would be a good idea if there was
:14:28. > :14:33.found to be fraud committed. You were clear on that, yes? Yes.
:14:33. > :14:38.bonuses should be clawed back from some of these people? The changes
:14:38. > :14:42.we introduced ensure bonuses can be clawed back, previously bonuses
:14:42. > :14:47.were paid in cash and couldn't be Claude back, we have introduced
:14:47. > :14:50.rules -- clawed back, we have introduced rules for them to be
:14:50. > :14:54.clawed back. The very reputation of the City of London is at stake
:14:55. > :14:58.here? I agree, that is exactly why we have taken action, since we came
:14:58. > :15:02.into office, to change the regulatory system in the UK, put
:15:02. > :15:07.the Bank of England in charge of banks, give regulators more power
:15:07. > :15:13.to intervene quickly and not allow problems to fester. We need to do
:15:13. > :15:16.that for London to maintain its reputation. London is a big ployer,
:15:16. > :15:21.two million people involved in financial services across the UK,
:15:21. > :15:28.we need to sort this out to make sure the reputation stays strong.
:15:28. > :15:33.Are you concerned that we ain't seen nothing yet, we have seen HSPC
:15:33. > :15:37.and RBS are subject of inquiries? There are inquiries across a range
:15:37. > :15:40.of banks, we need to get to the bottom of it, Barclays is the first
:15:40. > :15:45.one where a fine needs to be announced. Do you think the people
:15:45. > :15:48.in charge of banks in Britain act morally, or simply in their own
:15:48. > :15:51.personal interest, is there a greed culture that needs to be addressed?
:15:51. > :15:53.Alistair Darling mentioned it today in the House of Commons. He said in
:15:53. > :15:58.the run up to the financial crisis there was a culture of anything
:15:58. > :16:03.goes. We saw that in the way which LIBOR has been manipulated, we saw
:16:03. > :16:08.some of the huge gambles that bankers took in the run up to the
:16:08. > :16:14.financial crisis. We need to tackle it and reform regulation, and
:16:14. > :16:18.tackling investment sides of banks as we did through the Vickers
:16:18. > :16:23.report. Samuel Beckett's great play,
:16:23. > :16:29.Waiting for Godot was described as a piece of theatre where nothing
:16:29. > :16:34.happens twice. European Summits seem to be like, that nothing
:16:34. > :16:42.happens more or less perpetually. We are in Brussels. Has anything
:16:42. > :16:47.happened tonight? I think it has. I beg to differ on the Beckett
:16:47. > :16:53.analogy, at least so far as the politics and diplomacy are
:16:53. > :16:56.concerned. Six months ago we were here, Europe was rallying behind an
:16:56. > :16:59.austerity pact, tight controls over Government spending under the
:16:59. > :17:03.leadership of France and Germany. Today France has a different
:17:04. > :17:07.President, Germany is isolated, the French have joined in the pressure
:17:07. > :17:14.for measures to alleviate the economic crisis, the called growth
:17:14. > :17:19.package. Germany has come here, intent on signing that off, about
:17:19. > :17:23.�100 billion worth of stimulus for the European economy. Where they
:17:23. > :17:27.have failed and the Beckett analogy is appropriate, is tackling the
:17:27. > :17:29.underlying economic causes, and trying to get their own heads
:17:29. > :17:32.straight about whether it is the short-term or long-term solutions
:17:32. > :17:37.that are really the issue. Tonight they have been failing to agree on
:17:37. > :17:40.all sorts of things, because of battle on precisely those grounds,
:17:40. > :17:43.is it the short-term crisis that needs tackling now, or the long-
:17:43. > :17:49.term package that needs to be passed through. That is a battle
:17:49. > :17:54.between Germany and Italy. First the mighty Germans dealt with
:17:54. > :17:58.Greece. To the delight of their leader. Tonight, it was Italy, and
:17:58. > :18:05.then they hoped Spain. In the footy as in politics, Germany likes to
:18:05. > :18:09.call the shots. But unlike the beautiful game, in Brussels, Angela
:18:09. > :18:13.Merkel must take them all on at the same time. So she is now a minority
:18:13. > :18:16.of one. It is basically the other big three, the French, the Spanish
:18:16. > :18:21.and the Italians against her, and she doesn't have allies here they
:18:21. > :18:23.European Commission, she doesn't have allies at the IMF. Every
:18:23. > :18:27.international institution, she doesn't have allies outside in the
:18:27. > :18:30.G8, the UK and the US are pressuring her now. Not even here
:18:30. > :18:34.in Brussels, but in the world now she's incredibly isolated. She's
:18:34. > :18:37.beginning to feel the pressure. My discussions with German officials,
:18:37. > :18:41.they get very defensive. They really feel the pressure right now
:18:41. > :18:45.that they are in a corner by themselves.
:18:46. > :18:50.Arriving, the German leader delivered a positive message about
:18:50. > :18:57.funding growth programmes. An olive branch to those countries that
:18:57. > :19:00.think her vision of austerity stifles any growth. TRANSLATION:
:19:00. > :19:03.Today we will talk about the pact for growth and jobs. We have
:19:03. > :19:08.created a good programme here, in particular, with regard to
:19:08. > :19:12.investment in the future. And moreover, what will create more job
:19:12. > :19:16.opportunities, especially for young people. I hope that we will be able
:19:16. > :19:20.to agree on this today, and with that, make an important signal.
:19:20. > :19:24.Also for the fiscal pact that we need solid budgets on the one hand,
:19:24. > :19:29.and on the other hand, growth and jobs.
:19:29. > :19:32.Of course, everybody here wants Germany to take a bigger role in
:19:32. > :19:36.underwriting the debts of weaker EU countries, but Angela Merkel has
:19:36. > :19:39.come here today saying her position is essentially unchanged, she is
:19:39. > :19:46.prepared to work towards fiscal union, but only in the very long-
:19:46. > :19:51.term, and with a host of safeguards about the way other countries spend
:19:51. > :19:56.European money. What we want first is tighter, stricter, long-term
:19:56. > :19:58.rules so this never happens again. Once we get those rules, then we
:19:58. > :20:02.can start talking about solidarity and sharing. In that sense, it is
:20:02. > :20:05.not a question of backing up on something right now, we need
:20:06. > :20:11.incentives for good public management of money. That is what
:20:11. > :20:14.the Germans the Finns and the Dutch are calling for. That sounds like a
:20:14. > :20:18.continuation of the argument we have heard for months now, which
:20:18. > :20:22.comes first, the rigour or the solidarity, is it possible to
:20:22. > :20:28.achieve agreement on that? Probably, that means the chicken has to come
:20:28. > :20:33.out at the same time as the egg. this summit fixture, Germany's
:20:33. > :20:38.opponents want to change the rules. There are several proposals, a
:20:38. > :20:41.banking union including rules on savers and deposits, a joint
:20:41. > :20:44.European Treasury Department, scrutinising spending plans and
:20:44. > :20:49.enforcing bugetry discipline. For future national budgets to be
:20:49. > :20:54.planned at the European level. But in this game, Germany controls any
:20:54. > :21:00.movement of the goal posts. It is not ready to do so, leading to
:21:00. > :21:04.growing anxiety in Spain and Italy. There does seem to be movement on
:21:04. > :21:08.the Spanish, Italian issue, Mario Monti, uncharacteristically, for
:21:08. > :21:12.the very boring economist as he is, has started pounding the table
:21:12. > :21:16.saying he needs something, his tenure is almost up, he only has
:21:16. > :21:21.six months left as Italian Prime Minister, you remember what Italy
:21:21. > :21:25.is like before me, it will be like that after me, if we want Italy
:21:25. > :21:29.solved we need to do it now, I needing to home to say all the hard
:21:29. > :21:33.work was worth something. Could the meeting help the Italians while the
:21:33. > :21:39.bigger debate is going on? There are a couple of proposals,
:21:39. > :21:43.including this one from the Finns. What Finland has proposed is
:21:43. > :21:47.something called the a covered bond, it is something done in the early
:21:47. > :21:53.1990s, the state issues a bond that is covered, or guaranteed with
:21:53. > :21:58.assets, or equity, or, for instance, earmarked taxes, once that has
:21:58. > :22:01.happened, then the long-term crisis mechanism, which we call the ESM,
:22:01. > :22:05.comes and backs it up. This could be something that brings the
:22:05. > :22:09.interest rates down n that sense it is a compromise but not something
:22:09. > :22:13.that Germany needs to back down on. That type of short-term measure
:22:13. > :22:17.won't bother David Cameron. But in the bigger, long-term agenda of
:22:17. > :22:22.financial integration, there is a fork in the road looming for
:22:22. > :22:27.Britain. One that may well require a national vote. We're saying to
:22:27. > :22:29.the eurozone countries they do need to do more things together, to
:22:29. > :22:33.strengthen their currency and make sense of their currency, but
:22:33. > :22:38.Britain will stay out of that. We want Europe to work for us as a
:22:38. > :22:41.single market, as place where we trade, as place where we co-operate,
:22:41. > :22:45.I'm going in there to make sure we get the safeguards to make sure
:22:45. > :22:50.that can keep happening. Tonight the struggle to win through had
:22:50. > :22:54.gripped the Council of Europe. But it was the football that had
:22:54. > :23:00.mesmerised the waiting press and officials. In this game, outcomes
:23:00. > :23:03.can still surprise. In the contest of European Summitry,
:23:03. > :23:07.the difficulty of reaching atreatment, and the slowness of
:23:07. > :23:12.change, are realities that are all too familiar.
:23:12. > :23:18.With me is the Nobel Prize-winning economist, Joseph Stiglitz, who has
:23:18. > :23:22.written a new book, The Price of Inequality, he argues an
:23:22. > :23:25.increasingly divided society is endangering our future. We have
:23:25. > :23:29.Peter Altmaier, the German Minister for the Environment. He joins us
:23:29. > :23:32.from Berlin. Angela Merkel has been very
:23:32. > :23:36.consistent over the years, but that consistency has brought us three
:23:36. > :23:41.years of summits, with the euro repeatedly on collapse, what will
:23:41. > :23:48.be different this time? We have accepted a number of proposals from
:23:48. > :23:52.our European partners over the last two-and-a-half years. We have
:23:52. > :23:57.created huge rescue operations and funds. German tax-payers' money is
:23:57. > :24:01.involved at a scale of several hundred billion euros. We have now
:24:01. > :24:07.been ready to accept a gross package, that is financed by
:24:07. > :24:12.European tax-payers' money, but we have to insist at the same time
:24:12. > :24:15.that something is also done in implementing on a national level in
:24:15. > :24:18.these countries, in order to restore the confidence of
:24:18. > :24:23.international financial markets. People will understand Angela
:24:23. > :24:27.Merkel's political problems. How she has to convince German voters
:24:27. > :24:30.and tax-payers. However, you are isolated. Debt mutualisation is
:24:30. > :24:33.supported by the council President, the commission President, the
:24:33. > :24:38.Spanish Prime Minister, the French President, the Italian Prime
:24:38. > :24:42.Minister, they are all wrong, are they? No, they are not wrong. But
:24:42. > :24:46.this is the normal kind of procedure in European Summits. I
:24:46. > :24:50.can remember over the last two-and- a-half years, several summits where
:24:50. > :24:57.it seemed to be the case that we would be isolated. But at the end
:24:57. > :25:00.of the day, we were able to organise an enormous and large
:25:00. > :25:04.consensus, that happened last year in November, when all countries
:25:04. > :25:10.agreed on the German-French proposals, and just two countries
:25:10. > :25:14.stayed away, the UK and the Czech Republic. I'm basically optimistic,
:25:14. > :25:18.this summit can become a success story. We are on the first day and
:25:18. > :25:25.we will have very, very tough talks and negotiations, but it can lead
:25:25. > :25:29.us to a consensus. OK, but Frau Merkel is talk about others
:25:29. > :25:32.offering eye wash and fake solution, but the German solution over the
:25:32. > :25:36.two-and-a-half years you are talking about has got us to the
:25:36. > :25:39.state where Greece is ruined, Italy and Spain find it difficult to
:25:39. > :25:44.borrow, and democracy itself is under threat in some of those
:25:44. > :25:49.countries? In Greece we have seen a national parliament election, where
:25:49. > :25:57.reasonable, pro-European parties have made it. And extreme party
:25:57. > :26:02.could have won? But they didn't win, they lost as a matter of fact. In
:26:02. > :26:06.Italy and Spain we have Governments really interested in achieving
:26:06. > :26:13.progress. I'm basically optimistic, and if we can manage tonight and
:26:13. > :26:17.tomorrow to come to conclusions about the long-term reforms of the
:26:17. > :26:21.European Union, I'm optimistic we can convince markets to restore
:26:21. > :26:26.confidence and trust in countries like Spain, and we have made it
:26:26. > :26:33.clear, if Spain would apply for money under the fund, we would be
:26:33. > :26:36.prepared to consider that. OK, let me bring in Joseph Stiglitz here,
:26:36. > :26:40.you have also been very consistent in what you have written about
:26:40. > :26:43.austerity. You have said it is effectively suicidal. Wouldn't you
:26:43. > :26:47.accept that Angela Merkel's position, if she were to say, let's
:26:47. > :26:51.give a lot of money to southern European economies, we don't think
:26:51. > :26:55.they have been run very well, that would be suicidal? Part of the
:26:55. > :27:01.problem is the diagnosis of the underlying problem. Spain and
:27:01. > :27:09.Ireland had a surplus before the crisis. They have a deficit because
:27:09. > :27:16.Europe is in recession. It is the recession that caused the deficit,
:27:16. > :27:20.not the other way around. If you begin with the wrong diagnosis you
:27:20. > :27:22.will get the wrong prescription. Germany has been giving them the
:27:22. > :27:25.wrong prescription. The German prescriptions over the last three
:27:25. > :27:30.years have led to a depression in Spain. One out of two Spanish
:27:30. > :27:34.people are out of work. They want to work, the young people. The
:27:34. > :27:38.unemployment rate has gotten consistently higher. Its not
:27:38. > :27:44.approach -- it is now approaching one out of a four. Those
:27:44. > :27:49.prescriptions have not worked. The case of Greece. They say they are
:27:49. > :27:53.having reform. Number one in the OECD in having reforms. You can't
:27:53. > :27:59.do everything overnight in a democracy, but they have done a lot.
:27:59. > :28:02.Number one in reform. Let me bring in Peter Altmaier on that,
:28:02. > :28:09.austerity may be right for a healthy economy like Germany, but
:28:09. > :28:15.it has been terrible for Spain and Greece? We have agreed on a gross
:28:15. > :28:19.package. This is on the agenda today and tomorrow. First thing,
:28:19. > :28:25.second thing, in Greece some reforms have been implemented, and
:28:25. > :28:31.for the first time we see some signs of a growing economy again.
:28:31. > :28:34.There is a decrease of self- percentage in Greece of growth?
:28:34. > :28:38.depends on the month you are considering, and we have the
:28:38. > :28:42.impression that the Greek economy is strarting to recould have. In
:28:42. > :28:45.Spain we have -- starting to recover. In Spain we have to admit
:28:45. > :28:49.it is just a couple of months since the new Prime Minister has taken
:28:49. > :28:53.over, and he has then introduced a number of reforms, it is probably
:28:53. > :28:57.much too early to see the real effect of these reforms. What we
:28:57. > :29:02.have to provide is solidarity. We made clear we want to preserve the
:29:02. > :29:08.euro as a common currency, for all 70 member states. What we made
:29:08. > :29:13.clear is Germany is prepared to encourage growth by spending more.
:29:13. > :29:16.What we have made clear is all countries have to undergo reforms.
:29:16. > :29:21.Joseph Stiglitz, if you were talking to the German taxpayer
:29:21. > :29:24.tonight who is funding all of this, what is in it for them? Why should
:29:24. > :29:29.they do this without the austerity and the reforms? Because of the
:29:29. > :29:33.cost of the break-up of the euro for Germany is very, very high.
:29:33. > :29:38.Let's talk about the growth part. Everybody agrees that you need
:29:38. > :29:44.growth. They agreed on that last July. A year ago. Nothing happened.
:29:44. > :29:54.What about the agreement they are talking about right now. $150
:29:54. > :29:54.
:29:54. > :30:00.billion or so. Most of that is old money repackaged. I know the
:30:00. > :30:05.political ways. We are known in our country to repackage money?
:30:05. > :30:10.estimation is $10 billion is really new money. Is part of your point
:30:10. > :30:15.that Germany has benefited from being in the euro, you are writing
:30:15. > :30:19.about inequality in all sorts of ways, does Germany have a moral
:30:19. > :30:24.duty to end some of the inequality by spreading the money around?
:30:24. > :30:27.think it is in their self-interest, if they could understand their
:30:27. > :30:30.enlightened self-interest, rather than the short-term self-interest.
:30:30. > :30:35.I think it is in their long-term self-interest in doing this. I do
:30:35. > :30:40.think there is a sense of solidarity. By solidarity I don't
:30:40. > :30:44.mean tying your legs together as you go over the cliff, a suicide
:30:44. > :30:48.pact. I mean solidarity helping some countries who are having
:30:48. > :30:52.difficulty, because of a global downturn caused by the United
:30:52. > :30:55.States. Let me bring in Peter Altmaier, it would be in your own
:30:56. > :31:00.interest to spread money around, not just an act of charity? Indeed,
:31:00. > :31:04.I whole heartedly agree. We are interested in preserving the euro.
:31:04. > :31:09.We are interested in providing solidarity to the other countries.
:31:09. > :31:15.But if it is true that the crisis is the result of the fact that we
:31:15. > :31:19.have spent too much money over too many years, then we cannot cure
:31:19. > :31:24.that crisis by spending even more money that does not exist. That is
:31:24. > :31:26.where you came in on the problem? That is the fundamental
:31:26. > :31:30.misdiagnosis. You heard our discussion earlier about Barclays
:31:30. > :31:35.Bank and the culture of greed that has infected the banks. What do you
:31:35. > :31:42.make of that, are you at all surprised some people were fiddling
:31:42. > :31:45.The Libertines rate? I knew about that earlier -- The LIBOR rate?
:31:45. > :31:48.knew about that earlier, there was no surprise. It is a pattern of
:31:48. > :31:57.behaviour we have seen in banks all over the world N my book I talk
:31:57. > :32:00.about it as moral depravation. It wasn't as good as the word you used
:32:00. > :32:08."the sewer". Do you think they live in a different moral universe than
:32:08. > :32:16.the rest of us? I think they do. It is partly a result of a culture and
:32:16. > :32:21.set of incentives that have been provided for them. The incentives
:32:21. > :32:27.to, a culture of greed, a framework that allow them to get away with it.
:32:27. > :32:30.You will have heard this argument repeatedly in the United States, by
:32:30. > :32:34.Conservative economists who say it is not a culture of greed but a
:32:34. > :32:37.culture of aspiration. It is good people are unequal, because people
:32:37. > :32:43.at the bottom aspire to get to the top. That is how the United States
:32:43. > :32:46.economy has grown for two years, that is the argument? The problem
:32:46. > :32:52.that this Barclays scandal brings out so clearly, is that a lot of
:32:52. > :32:56.what was going on is what I call rent-seeking, in other words, it
:32:56. > :33:01.wasn't creating more wealth, it was manipulating the rules of the game
:33:01. > :33:06.to steal somebody else's money. It wasn't growing the pot. It was
:33:06. > :33:09.getting a larger share of the back, and in doing that weakening the
:33:09. > :33:13.economy. This is a really important point, the kind of thing they do
:33:13. > :33:17.weakens the economy. That's why I have been arguing that we could
:33:17. > :33:21.have a stronger economy, more growth, with more equality.
:33:21. > :33:25.Just as we round up our conversation, Mr Altmaier, we have
:33:25. > :33:32.17 countries in the eurozone right now, do you think in five years
:33:32. > :33:36.time there is still going to be 17 countries in the eurozone? I would
:33:36. > :33:40.say 17 countries or even more. think it will become so popular
:33:40. > :33:45.that people will be clamouring to join the euro zone rather than get
:33:45. > :33:51.out of it? There are many countries interested in joining the eurozone.
:33:51. > :33:57.It is my view that the eurozone has been stablised over the last few
:33:57. > :34:00.days not destablised. Greece is a now a reliable partner, in Spain
:34:00. > :34:04.and Italy we have to cope with the spread in interest rates, but these
:34:04. > :34:09.are sound economies and we can overcome the crisis. They would be
:34:09. > :34:17.sound economies if the policies of austerity were not being imposed on
:34:17. > :34:20.them. If there was real commitment to growth, which would require a
:34:20. > :34:25.European solidarity fund for stablisation. If there were a
:34:25. > :34:30.guaranteed fund for all the banks. Without that money will flow from
:34:30. > :34:37.these countries to Germany, which has, in effect, because the German
:34:37. > :34:42.Government is backing the Germany banks, there is an implicit subsidy
:34:42. > :34:44.toe German banks and an unlevel playing field F you address the
:34:44. > :34:49.fundamental problems, then the strengths of the European countries
:34:49. > :34:51.are very strong. Do you think we see every day, politicians in
:34:51. > :34:54.Europe and we will hear it again tomorrow, this is a political
:34:55. > :34:58.project, we are committed to it, the answer is more Europe. We will
:34:58. > :35:01.hear all of that, is that encouraging to you, given that the
:35:01. > :35:05.economics are not quite going in the way you have described? I have
:35:05. > :35:11.heard them saying that for now for a long time. Having heard,
:35:11. > :35:16.particularly from Germany, the kind of solidarity, the kind of real
:35:16. > :35:19.agreement on, and an understanding, of really the basic of what needs
:35:19. > :35:23.to be done. It is not that complicated, from an economic point
:35:23. > :35:28.of view. If you have a single market, if you have money that can
:35:28. > :35:32.flow easily around that single market, you have to have a single
:35:32. > :35:36.banking system, single guarantee, and a single regulator. I agree,
:35:36. > :35:43.you need a framework that works. You need a solidarity fund for
:35:43. > :35:47.growth, a single one. We will leave it there.
:35:47. > :35:50.The WikiLeaks founder, Julian Assange, is tucking up for his
:35:50. > :35:57.ninth night at the Ecuadorian embassy in ens can heingen to
:35:57. > :36:01.tonight. Earlier today the embassy had a visit from two Metropolitan
:36:01. > :36:05.Police -- Metropolitan Police Officers. They want him to be
:36:05. > :36:11.extradited to Sweden where he can face charges of sexual assault.
:36:11. > :36:15.Holed up inside behind drawn curtains, and sleeping, apparently,
:36:15. > :36:18.on an inflatible mattress, Julian Assange is under diplomatic
:36:18. > :36:23.protection. Police can't arrest him unless he steps outside. The
:36:23. > :36:28.pressure on him is building. At 9.00am, two police officers turned
:36:28. > :36:35.up at the embassy, with a letter, ordering Julian Assange to appear
:36:35. > :36:40.at bell gravia Police Station some morning from 11.30am, where from he
:36:40. > :36:50.will be put on a plane, so, will he surrender. Mr Assange you have been
:36:50. > :36:50.
:36:50. > :36:56.summited to appear at Belgravia Police Station tomorrow, will you
:36:56. > :37:01.go? Our advice is that the answer is almost certainly no, because the
:37:01. > :37:05.law takes precedence over extradition law. It was the release
:37:05. > :37:08.of this shocking footage that first brought WikiLeaks to international
:37:08. > :37:13.attention, and embarrassed the American Government. It shows the
:37:13. > :37:17.killing of a group of Iraqis, including two journalists, by a US
:37:17. > :37:22.helicopter gunship, after fight anything Baghdad in July 2007. A
:37:22. > :37:32.flod of secret US documents on the wars -- flood of secret US document
:37:32. > :37:35.ones the wars in Afghanistan and Iraq arrived, and classified cables.
:37:35. > :37:38.Julian Assange said America convened a secret Grand Jury to
:37:38. > :37:44.tart him and other members of the group. In the United States, since
:37:44. > :37:49.at least the beginning of 2011, a US Grand Jury has been impanelled
:37:49. > :37:55.in Washington, it has been pulling in witnesses, and false testimony
:37:55. > :38:00.from these witnesses, and speened records from Twitter, and they have
:38:00. > :38:04.been working with the FBI. Earlier this year, confidential e-mails
:38:04. > :38:08.appeared from a defence intelligence company that does work
:38:08. > :38:13.with the Pentagon. Julian Assange say they bolstered his fears. One
:38:13. > :38:18.reads, "not for publication", they have a sealed indictment on Assange,
:38:18. > :38:21.another says that he will make a nice bride in prison, screw the
:38:21. > :38:24.terrorist, that he will be eating cat food forever. He's a criminal
:38:24. > :38:31.and should be hunted down and grabbed and put on trial for what
:38:31. > :38:37.he has done here. This guy is a traitor, a traessonist, and broken
:38:38. > :38:40.every law in the United States, shoot the son of a BEEP. We have
:38:40. > :38:44.criminal proceedings under way. Julian Assange sent us a selection
:38:44. > :38:48.of television interviews which showed the depth of feeling against
:38:48. > :38:53.him. He has still not been charged with anything. But the man who is
:38:53. > :38:59.the source of the biggest leak of US state secrets in history has
:38:59. > :39:02.been charged with aiding the enemy. Numerous individuals have said they
:39:02. > :39:06.were compelled to testify before a Grand Jury. On top of that we have
:39:07. > :39:10.had the Bradley Manning proceedings, I have been observing them on
:39:10. > :39:14.behalf of WikiLeaks. Our concerns about the risk of extradition were
:39:14. > :39:22.confirmed in those proceedings. Whatever the reality, Julian
:39:22. > :39:28.Assange, a deeply devisive figure, is now he is centre of an exorder
:39:28. > :39:32.knee -- extraordinary legal battle. He lost his battle in the High
:39:32. > :39:36.Court, and then he walked into the Ecuadorian embassy. The last week
:39:36. > :39:40.has confirmed a lot of what we know about Julian Assange and his
:39:40. > :39:43.organisation, which is they think they are above the law, whether
:39:43. > :39:50.laws about dealing and trafficking Government information, or whether
:39:50. > :39:53.you should be accountable to the same laws as the rest of them.
:39:53. > :39:59.women accused Julian Assange in Stockholm of sexual offences, that
:39:59. > :40:09.is why the Swedish authorities want to question him. Their lawyers say
:40:09. > :40:12.
:40:13. > :40:18.with his asylum appeals he has created a diversion. What do you
:40:19. > :40:26.say to the women and their lawyers in Sweden that they should have a
:40:26. > :40:29.right to charge you? I haven't been charged. You have nothing to say to
:40:29. > :40:33.the two women? What has been said in public record is sufficient.
:40:33. > :40:37.Julian Assange says he's safer in the UK than Sweden, because it is
:40:37. > :40:40.hard for the US to extradite him from here, while he still faces
:40:40. > :40:45.judicial proceedings in Stockholm. Can he really avoid being put on
:40:45. > :40:50.that plane to Sweden? Exdor is still making up its behind --
:40:50. > :40:53.Ecuador is still making up its mind on his asylum claim, even if it
:40:53. > :40:58.does take him in, how does he get there, with the police poised to
:40:58. > :41:01.arrest him. If you think a solution to the eurozone's problems is
:41:01. > :41:07.elusive, how about the attempt to figure out whether a fundamental
:41:07. > :41:13.particle, known as the his bos son, sed said to be the Kiev figuring
:41:13. > :41:23.out the universe, even exists. What what have you been hearing? Towards
:41:23. > :41:26.
:41:26. > :41:30.the end of last year we had the first tantalising glimpses of the
:41:30. > :41:36.Higgs Boson, it is the missing piece in a jigsaw of the standard
:41:36. > :41:41.model, where fist siss understand how the fundamental particles of
:41:41. > :41:44.the universe interact. If they can't find it they are in trouble,
:41:44. > :41:51.and they will have to re-think everything. We will have the
:41:51. > :41:58.results soon from SERN, smashing together beams of protons, two
:41:58. > :42:03.teams working separately looking in the debris to see can they find a
:42:03. > :42:09.sign of the Higgs Boson. These two teams have been gathering data at a
:42:09. > :42:13.high rate, more in the first few months n2012, than they did -- in
:42:13. > :42:18.2012, than they did in 2011. Next week we will get a significant
:42:18. > :42:21.update in the hunt for the Higgs. One respected scientist told me
:42:21. > :42:26.that what we will see is what anybody with any sense will regard
:42:26. > :42:30.as the real deal. I don't think they are going to announce a formal
:42:30. > :42:33.discovery that they found the Higgs Boson. The reason for that is an
:42:33. > :42:41.official discovery requires a level of certainty in their result,
:42:41. > :42:46.called a five sigma level, a five- star rating, last year one had a
:42:46. > :42:49.two-and-a-half-star rating, and the other three-stars, that is about
:42:49. > :42:57.three-stars. This time I'm told both teams have done better. Last
:42:57. > :43:07.year it was a two or three-star significant ma leak in each
:43:07. > :43:07.
:43:07. > :43:12.experiment. Now I'm expecting four stars in each experiment. The
:43:12. > :43:17.calibrations from the teams don't want to collaberate their date tax
:43:17. > :43:25.they want to individually analyse the data until they individually
:43:25. > :43:29.get to the five-star level. Of course, we who are not members of
:43:29. > :43:33.the team, know we will get the computers out and do the
:43:33. > :43:40.calculation, I'm pretty sure we will conclude that the hix has now
:43:40. > :43:44.reached the level of -- Higgs has now reached the level of a five-
:43:44. > :43:47.star level. Have they found this thing or haven't they? They are
:43:47. > :43:52.holding back. The reason they are officially holding back, is to
:43:52. > :43:58.announce a formal discovery of the Higgs Boson is a really important
:43:58. > :44:01.moment in modern physics and they want to get it right. They are
:44:01. > :44:07.withholding as much more international politics as science,
:44:08. > :44:11.each team wants to claim discoverry, and neither wants to combine their
:44:11. > :44:16.teams, several countries has money behind one team, the UK has money
:44:16. > :44:20.in both teams and doesn't mind much if they have to combine data for
:44:20. > :44:26.the discoverry some want to wait until both teams have enough to
:44:26. > :44:30.claim the five-star rating. That won't come until later this year.
:44:30. > :44:34.Before we look at the front pages, here is an extraordinary image that
:44:34. > :44:39.has come too late for the papers, Nadal crashing out of Wimbledon in
:44:39. > :44:47.the second round to Rosol. A relatively unknown player who is
:44:47. > :44:54.ranked 100th. You don't see that very often. Now
:44:54. > :45:04.the front pages. The Times has RBS facing a �150 million fine as the
:45:04. > :45:04.
:45:04. > :46:00.Apology for the loss of subtitles for 56 seconds
:46:00. > :46:06.That's all from Newsnight tonight, after almost 70 years, the
:46:06. > :46:10.surviving scam bomber Boys, finally saw a memorial unveiled in their
:46:10. > :46:15.honour today. We wanted to leave you with pictures of poppies being
:46:15. > :46:20.dropped from a Lancaster to commemorate the event, and a report
:46:20. > :46:26.on a real bombing raid in 1948. master bomber is calling again,
:46:26. > :46:29.giving us, once again, our height, our bombs are going, the flack is
:46:29. > :46:35.bursting under us, we are going over the top now, fire, I don't
:46:35. > :46:41.know how we can stand this, we are sinking with the flack. How steady
:46:41. > :46:47.and calm are the skipper and crew. Now the bombers are bursting there
:46:47. > :46:51.now flash, flash, flash, crash. I'm sorry, I tried to be contained,
:46:52. > :47:01.and steady on this commentry, it is more than I can do. It is a
:47:02. > :47:04.
:47:04. > :47:14.staggering sight that we can see in the sky.
:47:14. > :47:23.
:47:23. > :47:27.The storms have cleared away and tomorrow is cooler and fresher. For
:47:27. > :47:31.the Midlands it is noticably cooler today, the band of cloud in the
:47:31. > :47:35.south-east of England threatens to bring a little rain at Wimbledon
:47:35. > :47:41.tomorrow. A lot of cloud for the south west and Wales and the North
:47:41. > :47:46.West of eing lan. -- England. Northern Ireland, again a few
:47:46. > :47:49.showers around, but again, not as heavy or thundery as we have seen
:47:49. > :47:53.it today. In Scotland we will see quite a lot of cloud, showers
:47:53. > :47:57.across the central belt, and across the south west. It could be a
:47:57. > :48:07.little on the heavy side. Of course, it will be rather cool as well. We
:48:07. > :48:10.