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 debt crisis in Europe, with special emphasis on the outlook for Spain and Greece. Schwartz says he witnessed many crises in Spain, but also how they were overcome. If the newly elected government does the right thing then the Spanish economy and society could function again, he states. While he has no faith that they will do the right thing, he thinks that circumstances might force them to be more responsible. Macleod and Schwartz agree that it would be healthier in the long run if the European Central Bank did not monetise government debt, and forced governments to make painful decisions. Schwartz thinks that insolvent countries should be allowed to leave the euro for a while with the option of reentering again later. During that period local currencies – the drachma in the case of Greece – should be used as parallel currencies in co-existence with the euro, as currently practiced in some Latin American countries. Greek bondholders should take losses for making bad investments.

This interview was recorded on November 15 2011 in Madrid.