text: Why Crises Mount, Persist: Who Should Pay?
  11/9/2011 5:32PM
  Both in U.S. and Europe, the financial crisis like so many others before is being prolonged by delays in deciding who gets stuck with the losses. David Wessel explains on The News Hub.
  on ... the ... like Altly thinks Kleist is us that what it's all to do with the pennies that according to David Wessel joins us now from Los regional and Washington DC ... and it ... an ANA for his capital column that's that's willing to discuss now David Dodd ... facing crises Last is the absence of fixing them is not ... here's the problem ... it's been ... two years since the first ... bailout of Greece and Europe ... it's been five years since the bursting of the housing bubble in the United States ... we know in both continents that there is an enormous amount of ... economic difficulty calls by boosting ... the European economy is doing lousy ... the US economy's doing a lousy the debt crisis is one part of in Europe causing another in the US so the question is do we know that the policies that right are working ... so question is ... why don't they get better policies ... and the answer I think is exactly what you said ... that in every financial crisis there comes a point where someone says ... lot of people lost money ... was to take those lost ... the debtors to creditors to taxpayers ... and the process of making that decision ... is very proliferates post but it's close and ... there's always a lot of delay ... that increase the cost of crisis ... that's what happening on housing in the US ... that's a bad thing in the sovereign debt crisis in Europe ... David a three-year survey ... I think you've done this ... survey of history over time I would love to read a chart ... that goes through modern financial crises the last two hundred years that answers your question on a ... debtor creditor taxpayer makes their awful What and you've found ... on a historical record ... well I think it is it's always a battle and it depends on ... the political power of the various players ... so for instance in the case of Argentina ... they basically stiff their foreign creditors they default on their foreign credit ... and as a result the they were shut out of the markets for a while but some people think they're doing pretty well now ... I e man in the nineteen thirties ... Franklin Roosevelt abrogate in what was known as the gold clause ... which said that ... if the dollar was Devang in ... that people would buy corporate bonds ... would be adjusted to compensate ... and the ... Roosevelt every of the clause ... Congress OK then immensely Supreme Court said it was OK ... in a research on the irony President University of Chicago ... is it basically ... the private sector was better off in that circumstance you know look like they were getting screwed ... it turned out that the companies were healthier and more able to pay back their debts ... under the chains of before ... so there is no one rule that has to do with who as the political power ... and what you think is most likely in and this particular Crysis or set of crises that Warren is the most likely answer to who pays ... while the taxpayers always get to ... the question is the idea that they get her ... in the US the question is going to be ... can we get out of this housing mess ... without reducing principle ... without telling some people will forgive party alone ... critically if your house is worth less methane work ... and when that day comes ... they will be an allocation between the banks to mortgage backed securities holders ... and the taxpayers summer that's being discussed right now in the settlements that are going on with the attorneys general ... over the robo signing scandal ... in Europe I think it's a differed issue ... to really boils down to ... how much will the German taxpayers have to pay ... directly or indirectly ... to keep the euro together because that's what's gonna take in the and ... to prevent the whole thing people are right but of course is missing right now on Italy ... the German taxpayer can only go so far to the ... right thing to think the problem with delay is exemplified by him ... Italy is supposedly insolvent country ... Italy has is running what they call a primary budget surplus ... which means that if you don't and interest payments ... they're actually taking in more money than they spend they spend the government ... it's not like Greeks ... in supposedly salt ... yet ... he cannot ... go on paying seven percent plus ... for money ... and the doubts there been raised about whether Greece will pay its debts whether Portugal pay its debts ... has now spilled over to Italy ... and that's more than the German taxpayers can and will ask whether such a crisis ... if they dealt with ... Greece two years ago ... the paywall of Greece and say OK ... but swallow hard ... to creditors to take a haircut to German taxpayers an abundance of money ... that that Greece last to make these changes ... as they dealt with the band ... Italy would be in crisis today but they didn't ... because delaying always makes things more expensive ... Odyssey that's that's the big say when the government still way always makes things more exciting it expensive