60 Minutes Covers the European Debt Crisis

By on April 12, 2012

Louise Cooper - BGC PartnersSteve Kroft reported on the economic troubles facing Europe in a fascinating piece aired this week (available below). The footage included many scenes of protest and strife.

Kroft interviewed Christine Lagard, Managing Director of the International Monetary Fund; Louise Cooper, markets analyst at BGC Partners in London; Wolfgang Schäuble, Germany’s Minister of Finance; and Greek economist Yanis Varoufakis.

Kroft stated the European dilemma is one of the things that could derail the U.S. economy. It is not unlike the financial crisis of 2008, but rather than banks failing, it now involves entire countries.

Cooper says we’re in a debt crisis whereby Euro zone countries have way too much debt – have gorged on debt – and we’re living beyond our means. After 10 years of booming economic times it is now payback time, “we’re paying back our credit cards which will prove very painful and costly,” Cooper states.

Kroft said it already has proven painful with 10 European countries in recession. In Spain, where the unemployment rate is 23%, there have been general strikes and civil unrest. In France, three of its largest financial institutions teetered on the edge of insolvency until the European Central Bank came to the rescue with more than $1 trillion in easy credit to shore up the system.

Kroft stated that seven European countries have changed leadership because of the crisis. Greece reneged on $133 billion in debt.

Cooper described Greek’s default as an extraordinary event. She stated, “one member of the elite Euro club can’t pay its bills – a western developed country has defaulted – we haven’t seen that since 1940 when Italy defaulted in the second World War – when it refused to pay its enemies.”

Kroft warned that the financial markets are worried that the same fate could befall Ireland, Portugal, Spain, and Italy which are already in crisis and losing the confidence of international investors who have bankrolled their debt.

The expose’ continued with a discussion of Europe’s search for a solution to the problems, Lagard’s comments on the challenges involving a single currency, the power of Germany within the EU, the challenges facing Greece where the economy is contracting at an annual rate of 8%, and speculation as to the impact on the U.S.

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