European Union Collapse & War-Fueled Recovery - Chrystia Freeland

  • Aired:  09/21/11
  •  | Views: 22,960

Reuters' Global Editor-at-Large Chrystia Freeland believes the European financial crisis could be bigger than America's economic crisis in 2008. (5:04)

FINANCIAL WORRIES.

HERE TO PROVIDE SOME OTHER

ANSWERS TO AMERICA'S FINANCIAL

WORRIES, PLEASE WELCOME GLOBAL

EDITOR-AT-LARGE FOR REUTERS

KRISTIA FREEMEN.

THANK YOU SO MUCH.

ALL RIGHT.

ARE THE POLISH GUYS RIGHT THAT

IF EUROPE CRUMBLES WE COULD SEE

WAR IN TEN TO 20 YEARS?

>> WAR IS PROBABLY NOT MY

BIGGEST FEAR.

>> Stephen: REALLY?

WHAT FRIGHTENS YOU MORE THAN

WAR.

YOU ARE VERY TOUGH.

>> MY BIGGEST FEAR ABOUT YIEWCH

TODAY, IT'S NOT THE MOST LIKELY

THING, BUT I THINK THIS IS A

HUGE CRISIS.

I THINK THIS IS POTENTIALLY

BIGGER THAN LEHMAN IN 2008,

BECAUSE THE DANGER ISN'T JUST

THE RUN ON THE BANKS, WHICH IS

WHAT YOU HAD IN THE U.S., IT'S A

RUN ON COUNTRIES, AND YOU COULD

HAVE THE DOMINOES FALL.

IT STARTED IN GREECE, AND NOW

IT'S MOVED TO ITALY AND SPAIN,

WHICH ARE REALLY BIG COUNTRIES.

>> Stephen: IF YOU HAVE A RUN

ON A COUNTRY, YOU CAN'T

FORECLOSE ON A COUNTRY.

>> YOU CAN'T FORECLOSE ON A

COUNTRY, BUT IF, FOR EXAMPLE,

THERE IS A DISORDERLY DEFAULT IN

GREECE AND PEOPLE... AND THE

GREEK BANKS ALL FAIL, YOU COULD

HAVE PEOPLE IN ITALY AND SPAIN

SAYING, OH, MY GOD, WE'RE GOING

TO BE NEXT, PULL ALL THEIR MONEY

OUT OF THE BANKS OF ITALY AND

SPAIN, AND YOU COULD HAVE A REAL

ECONOMIC COLLAPSE.

>> Stephen: KISSINGER ONCE

FAMOUSLY SAID, "IF I WANT TO

CALL EUROPE, WHO DO I CALL?"

WHO IS EUROPE RIGHT NOW.

>> THAT IS THE WHOLE PROBLEM.

AND UNFORTUNATELY EUROPE DOESN'T

HAVE ANYONE IN CHARGE.

EUROPE HAS A SINGLE CURRENCY BUT

I DOESN'T HAVE A SINGLE

POLITICAL LEADERSHIP.

>> Stephen: GERMANY'S WANTED

TO BE IN CHARGE A COUPLE OF

TIMES.

>> BUT NOW THEY DON'T FEEL THAT

WOULD BE SUCH A GOOD IDEA, AND

THE PROBLEM IS THE REST OF THE

EUROPEANS ARE SAYING, ESPECIALLY

THE WEAK ONES, LIKE GREECE, LIKE

ITALY, LIKE SPAIN, YOU KNOW

WHAT, GERMANS, YOU'RE GOING TO

HAVE TO BAIL US OUT IF YOU WANT

THIS HOE TO STAY ON THE ROAD.

>> Stephen: ARE THEY GOING TO

DO IT?

>> AT THE END OF THE DAY I THINK

THE GERMANS WILL.

>> Stephen: IS IT A PROBLEM

THAT RIGHT NOW IN GERMANY IT'S

OKTOBERFEST TIME?

ARE THEY GOING TO WAKE UP A

MONTH FROM NOW AND SAY WAIT, WE

BAILED OUT WHO?

>> ANGELA MERKEL DOESN'T STRIKE

ME AS PARTICULARLY AN

OKTOBERFEST TYPE OF GIRL, SO

THAT'S NOT ON MY LIST.

BUT REMEMBER HOW TRAUMATIC 2008

WAS AND HOW MUCH THE...

>> Stephen: OBAMA WON.

>> AMERICANS ON MAIN STREET

HATED BAILING OUT WALL STREET.

THE EUROPEAN PROBLEM IS EVEN

MORE EXTREME IS BECAUSE WHAT

YOU'RE ASKING REGULAR GERMANS TO

DO IS BAIL OUT BANKERS WHO

AREN'T EVEN THEIR OWN.

THEY'RE GOING TO HAVE TO BAIL

OUT OTHER COUNTRY'S BANKERS.

>> Stephen: WHY SHOULD I IN

THE UNITED STATES CARE WHAT

HAPPENS TO EUROPE?

>> THERE ARE THREE BIG ECONOMIES

IN THE WORLD, U.S., EUROPE,

ASIA, WITH CHINA AND JAPAN

MOSTLY.

IF YOU HAVE ONE OF THOSE

BIGGIES, EUROPE, GET REALLY

WEAK, AND IF YOU HAD A COLLAPSE

OF THE EURO, PEOPLE ARE TALKING

ABOUT CONTRACTION OF G.D.P. IN

SOME COUNTRIES OF 40% TO 50% IN

EUROPE, NOT 2% TO 3%, 40% TO 50%

IN THE PERIPHERAL COUNTRIES.

25% IN THE CORE ONES.

YOU WOULD SEE THE U.S. ECONOMY

SHIFT INTO A REALLY SEVERE

RECESSION.

>> Stephen: WHY DIDN'T THE

EURO WORK?

FIVE WORDS OR LESS.

>> YOU'VE SAID IT ALREADY.

IF I WANT TO CALL EUROPE, WHO DO

I CALL?

THEY HAD A SINGLE CURRENCY, A

SINGLE CENTRAL BANKER, BUT NO

SINGLE POLITICAL AUTHORITY.

IT DOESN'T REALLY WORK.

>> Stephen: THEY'RE NOT A

UNITED STATES OF EUROPE.

>> THEY ARE NOT.

AND SOME PEOPLE HAVE THOUGHT ALL

ALONG THAT THE SECRET GERMAN

SCHEME WAS THEY WANTED TO GET TO

A UNITED STATES OF EUROPE, BUT

THAT WAS POLITICALLY

CONTROVERSIAL, SO START WITH

CURRENCY UNION AND EVENTUALLY

YOU'LL GET TO POLITICAL UNION.

THAT MAY HAPPEN.

>> Stephen: PEOPLE REALLY

THOUGHT THAT WAS A CONSPIRACY BY

GERMANY?

LIKE THERE ARE A BUNCH OF

GERMANS UP IN THE ALPS GOING,

"THIS TIME WE DO IT WITH

CURRENCY MANIPULATION."

>> THERE ARE A LOT OF... THERE

ARE A LOT OF POLITICAL LEADERS

WHO THINK THAT WOULD BE A GOOD

IDEA.

AND BECAUSE THE POLITICAL UNION

RIGHT AWAY WASN'T POSSIBLE,

CURRENCY UNION SEEMED LIKE A

GOOD FIRST STEP.

NOW, THE IRONY OF THE SITUATION

IS IN ORDER TO FIX, GET THROUGH

THE CURRENT CRISIS, I THINK THAT

WHAT IS LIKELY IS THEY'RE GOING

TO HAVE CLOSER POLITICAL UNION

OF THE CORE EURO STATES.

IT'S THE ONLY WAY THEY'LL GET

THROUGH THIS.

>> Stephen: IS ENGLAND IN THE

EURO?

>> NO.

>> Stephen: IF EUROPE GOES

DOWN, IS ENGLAND ?AIFTD

>> I THINK THEY ARE BECAUSE

THEIR ECONOMY IS CLOSELY TIED TO

THE EUROPEAN ECONOMY.

THE CITY OF LONDON IS VERY, VERY

CLOSELY TIED TO THE EUROPEAN

ECONOMY.

A WEAK EUROPE IS BAD FOR

ENGLAND.

HAVING SAID THAT, THE BRITS, WHO

TOOK A LOT OF FLACK FOR OTHER

EUROPEANS FOR NOT JOINING THE

EURO ARE SAYING, WE TOLD YOU SO,

THIS COMMON CURRENCY WAS NOT

SUCH A GREAT IDEA.

>> Stephen: BUT THEY SAID IT

IN SUCH A CHARMING ACCENT.

THANK YOU SO MUCH FOR JOINING

ME.

>> PLEASURE.

>> Stephen:

Loading...