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Special Report

All-Star Panel: Eurozone woes at G-20 summit

This is a rush transcript from "Special Report," June 18, 2012. This copy may not be in its final form and may be updated.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: I think the election in Greece yesterday indicates a positive prospect for not only them forming a government but also them working constructively with their international partners in order that they can continue on the path of reform and do so in a way that also offers the prospects for the Greek people to succeed and prosper. 

(END VIDEO CLIP)

JOHN ROBERTS, ANCHOR: President Obama at the G-20 summit in Los Cabos today, sounding a note of optimism after the Greek elections yesterday that they may be on the road to try to figure out something to do about their financial crisis.  He sounds like he is confident. Charles, are you filled with the same confidence? 

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: No. I lack a little of it. We have heard about hope and change. And I think what strikes us -- strikes me about his statements in Mexico is, is anybody listening, does anybody care? What strikes me is how diminished is the role of the U.S. in all of those international meetings. Everybody cares about what the German chancellor says, not what Obama says. 

Is he going to lecture the Europeans on debt after he runs up $5 trillion in one term? Is he going to lecture them on unemployment when his unemployment is eight percent – is over eight percent for his entire term? No. All they care about is what Merkel is going to say because the Greeks elected a government that is willing to stay in the euro. However, the winner of the election announced on election night that he is going to renegotiate the terms. Well, Merkel has said that they are not going to renegotiate. And she demands enforcement of the terms. You can understand the Germans. Here's a country with a retirement age of 67 subsidizing a country in Greece where hairdressers retire at the age of 50 because it's listed as hazardous employment and they are tired of being what used to be called the Uncle Sam of Greece, but nobody today cares about the real Uncle Sam. 

ROBERTS: On the topic of what Chancellor Merkel is saying about all of this, here is what she said to at Los Cabos at the G-20 summit. 

(BEGIN VIDEO CLIP)

ANGELA MERKEL, GERMAN CHANCELLOR: We need to ensure that the troika will very quickly go to Athens. We agreed on a Greece program and the framework needs to be adhered to. This means that we must be sure that Greece sticks to its commitments. 

(END VIDEO CLIP)

ROBERTS: The most important part of that phrase there is make sure that Greek sticks to its commitment. Mara, what do you think the chances of that are? 

MARA LIASSON, NATIONAL PUBLIC RADIO: Well, Greece is going to want to adjust the commitments, it's going to want to ease the bailout, the terms of the bailout. And right now Merkel is sticking to a pretty hard line. But in the end, she needs the Eurozone. Even if Greece exits she needs the rest of the countries who are in trouble, like Spain and Italy, to stay in. That's important for the German economy. So I think in the end they are going to have to make some kind of accommodations. 

ROBERTS: Jonah you were saying when we were in the break that you thought a different outcome of Greece's elections over the weekend might have actually been better. Why? 

JONAH GOLDBERG, AT LARGE EDITOR, NATIONAL REVIEW ONLINE: I think Angela Merkel was secretly disappointed by those results in Greece. If the left-wing party had won and rejected the bailout, then Greece could say well, we're done with you. Go away now. And now there's going to be this long contentious negotiation about renegotiating the terms which puts her back in the hot seat. 

And the simple fact is, Greece is in economic free fall, it's an economic catastrophe. I think its GDP has dropped 16 percent in the last three years, it's scheduled to drop another seven percent this year. It cannot pay for what the terms of the bailout. And so instead what we're gonna do is keep the fuse burning. And we're going to be -- to mixed metaphors -- kicking the can for a good long time now. But eventually, I think Greece has to default and has to drop out of the Eurozone. 

ROBERTS: So if this is a long sort of slow drip, drip, drip, Charles, what happens here to people's savings and their 401(k)? 

KRAUTHAMMER: I think the Greek situation is the least of EU's troubles. Because it's a relatively small economy. And if they had the will, it could be sustained indefinitely on life support. The problem is Spain. Spain has now, its long-term interest rates are over seven percent. At six you are in the danger zone. When Greece hits six, it went over a cliff. Spain is hanging there. And then Italy is next. It's got extremely high interest rates, which is impossible to sustain. Which means it's not gonna be able to continue to borrow. It's the third largest economy in the EU. 

This is all patchwork. I think everybody understands that the train is headed over a cliff. But they patch it up slightly so you get an extra couple of months. But I don't see any way in which Europe is able to pay off the extravagant living it's been on, the social entitlement state it's been on for 65 years. It can't be done. It's gonna stop. The only question is it going to be a crash or is it going to be something more slow motion? I think it's gonna be a crash. 

ROBERTS: So, Mara, bring it home. How are Americans affected by all this? The market just a couple of months ago was at 13,400. Then it went down to 12,100, now back about 12,700. 

LIASSON: I think from the point of view of White House, they feel that if Europe can avoid a full-blown contagion and a kind of wild collapse, that American banks are insulated against that, and that even though it's a headwind we will be OK. Now if the whole thing falls apart and implodes, then I think it will be very bad for the U.S. economy. We can weather just a Greek pullout. 

ROBERTS: 30 seconds Jonah, any way to fix it? 

GOLDBERG: I don't think so. I think Milton Friedman was right from the beginning when he said the euro made no sense because it just wouldn't work with that structure. And I think the great irony here is that Obama came into office saying we need to be much more like Europe, that will fix all of our problems. That doesn't sound like great advice now. 

ROBERTS: Thanks, all. That's it for the panel. Thanks so much. But stay tuned because if you have a weird pet, they've got a home on YouTube.

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