>>Stephanie Flanders: We're still talking about bailouts. We've had bailouts a year
ago of Greece, then Ireland, now Portugal. Some of these countries, certainly Greece,
now looks closer to default than it did when it was saved. Just tell us, you do think we're
still at the beginning of this crisis? Are we in the middle? Are we near the end, as
many politicians hope? >>David McWilliams: As somebody who lives
in one of these countries, who's suffering this bailout, firstly, the expression "bailout"
suggests we're all in kind of a canoe and you're bailing me out, helping me. If you
live in one of the countries involved, you realize what's actually happening is the European
central bank is making the taxpayer of Greece, Ireland, Portugal, potentially Spain -- let's
see how it goes -- bail out German, French banks, who lent recklessly to our banks. So
that is really the ultimate issue. You're not bailing out us. We are actually bailing
out banks. And what has happened in the case of Ireland
is, it seems to us that the -- there has been almost a financial coup d'Ètat of the center
of the E.U. We're a very pro-European country. Which is the ECB has taken control of economic
policy and has a veto over economic policy around Europe. And this is creating a problem,
because we all know, anybody here in business knows, if the problem of the country or a
company is too much debt on the balance sheet, you never improve that balance sheet by incurring
more debt. You improve that balance sheet by incurring less debt. So this is the consequence.
Then you have the problem of austerity. If you have austerity, as we have in Ireland
and they're having increasingly with Portugal, with no debt forgiveness, the economy just
gets smaller. It doesn't get bigger. So the ability to generate the tax revenue to pay
these huge debts diminishes. And as a consequence of that, we're at the position you see now
where Greece needs more money and Ireland will need more money and Portugal will need
more money. And the problem for business people, it's twofold it seems to me. For business
people, what we have, if you look at this audience, the idea is, when do you allow business
to fail? Do you fail quicker? And by failing quicker, does it make you stronger?
In this situation, the ECB is not allowing our banks to fail. So a country like Ireland,
which receives twice as much -- it's amazing when you think about it -- twice as much American
FDI in the last 15 years as China and India combined, which absorbed in more immigrants
a year per head than France did. So a reasonably dynamic country is getting destroyed to keep
dysfunctional banks alive in order to actually keep German and French banks with a balance
sheet that makes sense. That's the economic side.
The political side is that it creates in Ireland and in Portugal and in Greece an anti-E.U.
sentiment that we've never had before. And that's a very crucial issue, because unlike
yourselves in Britain, we don't have a Euro-skeptical gene in our body.
[ Laughter ] >>David McWilliams: And although the queen
is coming to Ireland tomorrow, you know. So we might just give the place back to you.
[ Laughter ] >>David McWilliams: It was a rush of blood
to the head. We didn't mean it. >>Stephanie Flanders: As a parentheses, you
can see why he stopped being a banker. >>David McWilliams: The thing about the politics
of it, right, on the debtor side, on our side, you have Euro skepticism that you've never
seen before, on the creditor side with the true Finns, the Finnish people are saying,
"we don't want to bail out Deutsche Bank," you send out a signal about what types of
economy you want to do business in. That is important for Ireland and the other peripherals.
From a political side, by forcing the people to pay the debt of the banks, you generate
Euro skepticism, which is precisely the opposite of what the bailout is supposed to do. So
you've got to think about it again.