The debt crisis in Italy and Spain

Watch the full 27-minute video at http://www.goldmoney.com/schwartz-macleod-interview. In this video Pedro Schwartz, professor of Economics at Madrid’s San Pablo University, and Alasdair Macleod of the GoldMoney Foundation, talk about the problems in Italy and Spain. Macleod states, that the problem with financing Europe’s debt is basically that the central bank can’t support sovereign debt by printing money. Schwartz brings up the possibility of severe cuts in state expenditures to create budget surpluses. As opposed to Italy, for Spain the problem is not so much the public debt, but rather the private debt. However the private debt will become public debt, if it’s too large for the banking system to handle independently – as seen in other countries since 2007. Spanish banks are in deep trouble because of their real estate exposure and it will take a lot of time to write down bad loans.

This interview was recorded on November 15 2011 in Madrid.