Economist James Henry on "Failed State: Greece or European Union?"

Host Per Fagereng speaks with investigative journalist, economist and lawyer James S. Henry, former chief economist at the international consultancy firm McKinsey & Co. He is now senior fellow at the Columbia University Center for Sustainable International Investment. They talk about "Failed State: Greece or European Union?"  

James S. Henry says, "The Greek debt is an unserviceable debt. It didn't get invested in useful assets. Much of the debt was actually accrued after Greece adopted the Euro -- which itself was done under dubious circumstances -- with German and French banks lending money to the Greek government for weapons. Then, when the financial crisis -- which wasn't Greece's fault -- hit, these private banks got paid off and institutions like the IMF assumed much of Greece's debt. Those institutions are harder to deal with than private creditors.

Now, the EU, rather than deal with this like a bankruptcy situation and taking a haircut on the debts, is preaching more and more austerity -- which has failed miserably. The EU is the real failed state here. They're effectively putting Greece in debtors prison. There needs to be a bankruptcy court to deal with sovereign debt."