Roger Altman On Austerity In The Eurozone And U.S. Sequester

Roger Altman, Chairman and co-founder of Evercore Partners

, and former United States Deputy Secretary of the Treasury under Bill Clinton, appeared on CNBC's Squawk Box on Friday to discuss austerity in the Eurozone being driven by financial markets opposed to politicians. He also commented on the sequester in the United States. "As we watch this very fierce debate, and it's really reached ferocious levels, over austerity, especially in Europe, but also here in the U.S., you see so many of the critics of austerity saying it's Germany, and Germany's allies that are forcing this harsh , cruel, tightening, fiscal tightening, banking tightening on the weaker southern countries because that's the ideology," said Altman. "And my answer is no, that's not what's happened." He said that the credit markets closed to Greece, Spain, and others, meaning that they could obviously no longer borrow. According to Altman, it doesn't matter what type of body you are, when you loose the ability to borrow, you must restructure. He went on to say that the markets are acting how they should act, and that they're not being lead by politicians, as many in Europe believe. He called it a market event, not a political one. Altman said that there are many arguments from people that never mention markets, and only speak of cruel conservatives that are kicking the poorer countries when they're down, mainly because they feel like it. To him, that's simply not the situation in the case of a market event. He also mentioned that the yields on Spanish and Italian debt are almost back to pre-crisis levels, which suggests that the austerity measures are working. According to Altman, that means that the budget tightening can be eased slightly as a result. He said that many of Europe's leaders in the Eurozone believe that there can be an easier time table for deficit reduction, like in Spain and France, and provided it's done carefully, it should be acceptable to the markets. This means that growth could even occur. Altman said that ideally, you would just take the tax hikes and reduce them now, stretching them out over a longer timeline. He noted that while it can't work the same way in every country, there is an opportunity to take fiscal tightening slower. As for the U.S., Altman said that the sequester is half to two-thirds of the work in reducing our debt, that is if it sticks accordion to its timeline. He said that he's not happy about the way it's being done, even calling it dumb. He commented, however, that even though it hasn't been done in the right way, it has happened. Altman also noted that there still needs to be more longterm austerity measures taken for deficit reduction. "The heart of the problem, entitlements, has not been addressed," said Altman.