TEXT OF INTERVIEW
Kai Ryssdal: The economic stabilization agreement that Europe came to last night comes in at just shy of a cool trillion dollars. We've been covering the debt crisis over there for a couple of months now. First, and most prominently, as a problem the Greeks were having. Then more recently Portugal and Spain and also Italy. A good chunk of the south of Europe owes more money than it can pay back and until last night didn't really have any hope of help. Ambrose Evans-Pritchard is the international business editor for London's Daily Telegraph newspaper. Mr. Evans-Pritchard, good to have you with us.
Ambrose Evans-Pritchard: Nice to be with you again.
Ryssdal: This is not the first time that we've heard of a Greek debt rescue package or a European debt rescue package. Is it going to fix anything, this big package that was announced?
Evans-Pritchard: Well, they've been behind the curve for the last four months endlessly promising more than they could deliver and the markets just called their bluff over Greece. But it got completely out of control last week. It was spreading to Portugal, Spain and other countries. The borrowing costs were just shooting up. You had credit stress of a kind that we hadn't seen since the Lehman crisis in September of 2008 and they had to intervene on a serious scale, and that's what they've finally done.
Ryssdal: You mentioned Lehman Brothers. Let me ask you to frame this in terms of the American bailout of the banking system. Is this sort of analogous of the TARP and what we did for the banks over here.
Evans-Pritchard: Yeah. My view is this is potentially more dangerous than Lehman for two reasons. Firstly, the banking system in Europe is already vulnerable. It's already suffered a shock from the last crisis. The thing to remember is that the U.S. subprime and property crisis -- the consequences of that were shared between Europe and America, so the European banks are up to their necks in it as well. So they're taking a double hit. So there's another problem here. During the Lehman crisis, the governments around the world were able to step in. And nobody questioned their ability to do this. They assumed, well, government sovereigns have big shoulders, they can carry this burden. Unfortunately, we've now pushed this to the limits. And the markets are beginning to question whether governments can carry this burden. So you can't just step in and take over the obligations that easily. When you've got some of the government are going to have to provide the money already themselves in difficulties and they've got combined debt levels of over 300 percent of GDP.
Ryssdal: The analysis of the Greek debt problem -- almost from the beginning -- was that it would threaten the eurozone, all of the countries that use the euro, and then destabilize the entire global economy. Can we now take from yesterday's announcement of this rescue package that European leaders finally bought into that analysis and they thought it really was a threat to the whole system?
Evans-Pritchard: Yeah, I mean, to be fair to some of the European leaders, some of them did understand this quite early on and certain people in the European institutions did. The trouble is there is no European government. And that's what's been exposed in all of this. They launched the euro as a kind of... currency, with no EU Treasury, no EU debt union, no decision-making apparatus capable of backing it up in a crisis. And that's been shown. So this is the battle that's sort of going on, and it's very, very politically sensitive. And I think it's the reason why so many outside observers from outside of Europe have not quite understood why they couldn't reach a deal. And it's not just about finding mechanics of a deal on money, it's about what kind of political system is going to run Europe for the next 20 years. That's what this debate is really about.
Ryssdal: In the slightly shorter term, then, what happens next? Do we just sit back and see if this agreement works and hold our breath?
Evans-Pritchard: Well... Yeah, they've bought some time.
Ryssdal: Ambrose Evans-Pritchard at the Daily Telegraph in London, thanks so much for your time.
Evans-Pritchard: Thanks. Nice to be with you.