Julian Callow, Chief European Economist at Barclays Capital, spoke to CNBC this morning about a sense of denial in Europe around debt and moving forward.
- 0:50 Big issue of budget deficits, but the German economy has been strong, and the German budget deficit is well under control. We are asking Germany to underwrite the whole system, and we need more support from France, Belgium, the Netherlands, and Italy.
- 2:10 This is a tortuous process of reforming the fiscal federalism of Europe, and Germany is in the right to demand more from the fringe.
- 2:40 Europe has become much more financial integrated than economically, and states were not playing by the same rulebook.
- 3:10 Europe has a history of managing things, but gets caught up in political wrangling.
- 4:00 The U.S. and Japanese government debt problems are serious, and somewhat bigger problems than the European one. The U.S. position is based on an assumption. Q2 U.S. GDP deficits for Q2 were 11%, higher than Spain or Portugal.
- 5:20 Brady bonds could be a good idea for countries that are in a debt trap.
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