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David Stockman: Leading to Final Days of EU System

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    Former OMB Director David Stockman on the European debt crisis.

  • Duration 5:16
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-- the Financial Times says the Greek banking system is being propped up by a secret loan approved by the European Central Bank the central bank's financial statements show an estimated 100 billion euros being given to the faltering economy former budget director.

David Stockman joining us now.

With his reaction David you've seen it before they think they can print their way out of this problem.

I don't know it's the same old thing out more money printing in fact they've done so much in the EU -- -- It is putting Bernanke to shame I -- if we look at the whole trillion dollars of so called LT are all.

That was just money printing by the back door they had the banks in various countries by the government bonds.

And then -- discounted those bonds and got cash from the ECB.

So I think they're paying themselves into a corner this can't work its leading.

I think to the final days.

The whole Euro system and really we're in the end stage.

Kind of the keynesian welfare state that can no longer be financed.

And they're desperately trying do prolong the game with money pretty that won't work.

Yeah I mean is so they're trying to find Greece through this emergency liquidity assistance program -- trying to keep the kind of quiet the idea of course is is that -- back everybody knows they're doing this.

-- this sort of shakes confidence even further what do you think is the risk of the strategy.

Well I think it's highly risky the whole strategy going on in Europe is risky.

They ought to allow all of the Greek -- exit the Euro and get it over where.

They ought to recognize they need and orderly process for on winding the whole Euro experiment.

They have to recognize that austerity is not something that is didn't.

Elected it's something that's been forced on them by the world markets nobody wants to buy.

The bonds of the pigs.

And so therefore all of these countries are gonna have to go through direct -- and sustained.

Fiscal.

Restriction in consolidation there's no way out of this.

And they're simply.

Them.

You know trying to delay big -- that day of reckoning but I don't think they have many tricks left in their bag.

All right well as -- -- as they may be going down as a result of there.

System of government intervention in the economy we have a debate going on here in the United States about the government's role in the economy.

President Obama looking towards his reelection supported an -- That goes after Mitt Romney for what Bain Capital was doing as it as a terrible economic model for the United States let's just take a listen.

To the president defending that ad attacking attacking -- And private equity in a press -- yet yesterday.

My opponent governor Romney his name calling card for why he thinks he should be president.

This is business experience -- not brought up their touting his experience in Massachusetts.

He's saying I'm business guy I'm not fix it and this is his business.

And when your president as opposed to the head of a private -- reform firm.

-- -- -- your job is not simply to maximize.

-- So you have -- still economic -- you have one exemplified by Bain Capital which failed sometimes but I think it had a success rate of about 70%.

And you have one of the federal government.

Involvement in the economy which one do you think the American -- is going to support.

Well I I don't know I think the clear and the current federal model is a disaster.

We know where we are on the debt we're gonna have a debt ceiling.

That expires in December and I don't know where the votes are gonna come to increase sentiment if they don't.

Then -- have this huge seaquest here and have all these tax cuts expiring.

It is going to be really a thundering mess so clearly what we're -- with fiscal policy and monetary policy at present.

Isn't working on the other hand I don't think that.

Mitt Romney can legitimately say that he learned anything about how to create jobs in the LBO business.

The LBO business is about how to -- cash out of old long in the tooth companies and how to make short term profit.

-- now.

Now he had I had so many new jobs created for all the jobs that were lost it it was -- that -- you know.

I don't think so all -- jobs that he talks about came from Staples.

That was a very early ventures stayed stage deal.

That you know they got out of long before it got to its current size.

You know the LBO business is legitimate free enterprise business just like.

You know writing a brothel if that's what you wanna do -- a house and gambling -- is not a good model for how we rebuild.

An economy.

Or grow jobs it's not right.

And capital through its best used -- -- but they're trying erratic time.

I'm gonna drag you back on so we can have this debate I'm dying to deal with -- they won't let me do it David thanks for coming on David good decisions wrong about that I don't agree here.

Well --

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