This is the Cato Daily Podcast for Thursday, October 11th, 2012.

I'm Caleb Brown.

When he debated Paul Krugman about the Euro crisis, economist Pedro Schwartz was blunt.

He effectively said of economists like Krugman,

they got us into this mess, and now we are expected to sacrifice our principles

so they can get us out of this crisis.

Suffice it to say Professor Schwartz doesn't shy away from an argument.

We spoke during yesterday's Cato Conference, Europe's crisis and the welfare state lessons

for the United States.

Did the fiscal crisis that effectively got started in Greece and then was also

popped up in other countries? Did this have to become a crisis of the euro? Was that a

necessary result, an inevitable result?

The euro was badly designed and some of us said it very early on. I have a collective book of 2004 where we said it wasn't going to work and it didn't

because the euro was designed as a very stable currency independent of politics and where the Central

Bank couldn't lend to governments.

And if a country didn't do what it should, it wasn't bailed out.

But that didn't work because countries just did the wrong thing.

They didn't keep by the rules.

And therefore, once the crisis started and it started because real estate, property fell down in the US and so on.

Once that started, countries were shown to be too rigid

and couldn't adapt downwards to reduce their costs.

And this is what happened in Greece and then in the other countries

...