IMF's Lagarde: Rescuing Europe will take years

(CBS News) WASHINGTON - Spain is Europe's fourth largest economy, but the government has borrowed so much money, it's been forced into huge cuts in spending and layoffs to try to pay what it owes. One of the people working to rescue Europe is Christine Lagarde.

She's the head of the International Monetary Fund and one of the most powerful people in world of finance. The IMF is essentially a massive bank that helps countries manage debt and international trade. At her headquarters in Washington, we asked Lagarde about the struggling Spaniards.

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Christine Lagarde: I feel very, very bad and very sorry for the people. Because I know how hard it is. And I know how difficult it is for people who lose their job, for families who find it difficult to make ends meet. But equally, I know that it's necessary. And it's a process through which countries have to go in order to restore their situation and be able to grow again and create jobs again.

Scott Pelley: How long do you imagine the troubles in Europe will go on?

Christine Lagarde: It has been going on for a long time. A lot has been done. You know, the Europeans have been serious about strengthening their fiscal architecture, but they need to do more.

Pelley: But what are we talking about here? Two years, three, five?

Lagarde: It's hard to say. I think it will take a long time to restore public finances in the Eurozone, because it has been long in the making. It will be relatively long in the fixing, as well.

Pelley: Years then?

Lagarde: Oh, certainly, yes.

Pelley: The unemployment rate in Spain is over 25 percent. The unemployment rate for youth in Spain is over 50 percent. These are what we in America would consider to be Great Depression numbers. Will the Spanish government have to be bailed out?

Lagarde: The Spanish government is currently taking some very, very courageous measures. Whether you look at bank restructuring, whether you look at structural reforms to make the Spanish economy more agile, flexible, able to capture growth -- to help people create jobs. They're also taking some fiscal measures in order to reduce their deficit. So all of that is hard. But it's courageous. And it needs to be supported.

(Watch the first part of Pelley's interview with Christine Lagarde, in which she warns against the U.S. fiscal cliff.)