to complete the process so we have to first have to complete over political market access to negotiations we should. be able to develop and to have to assess of documents its terms of access to russia services for market and total for access to russia's smock of so called schedule so concessions for benefits. to us rights was very important to get admitted to the two but suppose it's in a decision making process. and also to be engaged in trade negotiations some access reach from time to time but. that's all for now i'll be back with more.

you're. today. these are the images the world has been seeing from the streets of. bangkok for racial. every month we give you the future you understand. what tomorrow brings the best in

science and technology from across russia and around the world. join us. on a. season had lines here in our team the u.s. sees a spike in his long phobic rhetoric and the hate crimes as american society for a story to bike anomic hardships is also led by racial tensions many fear of the country previously known as the biggest preacher of tolerance in the world is now swapping piter of history for nationalism. the european parliament's divided over washington's demands to provide more personal data of e.u. citizens so it says it can root out potential terrorist traveling to the u.s. the requirements include fingerprints d.n.a.

samples and cross border payments. an alleged russian. good is awaiting a decision on his extradition to the u.s. after a thai court cleared the way for the handover the family of a so-called merchant of death for your for use wife and say you may be forced into a confession. next an r.t.a. is crosstalk and peter lavelle this time asks his guest whether a global currency war is really at hand and what could be the consequences. imagine your life big city. girlfriend. crystal clear water. organic food. living in harmony with nature. sounds

impossible. some people have already chosen. a place under the sun going on. and you can. start. following well them across not computable is it a race to the bottom countries all over the world or trying to better their neighbors and gain a leg up for their exports by cheapening their currencies if left unchecked the global economy risks not only recovery but truly devastating consequences. if you. start. to discuss currency imbalances i'm joined by martin henniker in hong kong he's an associate director at the tycoon in new york we go to daniel ten dollars or head of emerging market

currency in rate strategy at bank of america merrill lynch and here in the studio with me is erich krauss a moscow based fund manager and international consultant and another member of our cross talk team you know and the hunger all right gentlemen crosstalk rules in effect that means you can jump in anytime you want martin you've been on the program before thanks for coming back are we in the middle of a currency war a global currency war and if we are give me evidence of it. well some people are just looking at looking at china and saying on china's manipulating the currency so they are causing global problems but first of all i think what investors and the general public needs to realize i think the united states and europe they have very much by the war just to keep their own kanzi from collapsing you know that may two thousand and ten so you're away actually close to falling apart all by have said it was on any war happening i mean it's a wall of actually meeting the dead. more as and as i want the u.s. is in the same situation even ben bernanke addressed one yesterday that is the u.s. the debt was on an unsustainable and we have been saying that for quite

a while i said was a fiscal gap of two hundred trillion to two hundred two trillion u.s. dollars actually which is fifteen times the nation. debt level if you include the unfunded liabilities of the us like the medicare medicaid and the social security fund so it's two hundred two trillion the shortfall of money that they don't have and they will have to increase in the print of this money so it's a struggle for survival in the rest and i would say the u.s. is going to export the inflation around the world and this is why some of the other countries are now saying well we don't want our counties to appreciate too much you know from brazil to japan china and so on so everything for and investors the most important thing to understand about the cons of all is that globally we are likely going to see a much more much of a rise in inflation and commodities are going to rise as a result in gold and so who are some of the best investments and not expensive yet ok daniel thank you to you in new york is it is your head is it is better smarter

brains go ahead. yeah i think that i mean first of all a war usually is fought over a call on the ground so it's a two countries are trying to fight to get you know a piece of land or because they disagree or something i think that at this stage you have two parts on this that are trying to achieve very different objectives so keeping that in mind you you must understand where where for instance japan is coming from and where brazil and china are coming from right i mean to develop just to tag along you know the thing that you have been discussing so far is trying to fight deflation and as a result try to keep monetary policy is as easy as possible and for into japan case for us this is very easy for them to print yen right and buy dollars because that's a source of easing and adding liquidity to their own markets on the other hand on the emerging world you have a situation where they are receiving all those flows and they're trying to small

depreciation so i don't think that the brazilians or the chinese are really trying to fight meaning for their strike to slow the flows and again that just things are very different from each other and i would agree yes the end result of this will be inflation higher inflation especially in the emerging world but i would disagree that this is this is imminent i don't think this is a story for the next six months ok eric you've been just waiting to jump right in here yeah i would kind of agree that we're certainly not ceasing a lot of inflation of the west they're fighting deflation through good reason the problem is the fiscal situation is unsustainable the whole thing is going to end in tears for the time being everybody is that tempting to bail as hard as they can the americans want to push the dollar down the dollar was crashing going into the crisis into the two thousand a crisis when the crisis hit there was sort of a panic move and everybody went to dollars and because the european banks had huge

american assets which were all of a sudden no longer assets they had to. refund them they have to get dollars they sold down the euro quite brutally this was actually very good for europe cheapening europe as one of the trooping euro was one of the things which allowed the europeans to fight their way back now we are back to the trend the euro has been putting on the bed a big figure a day we've gone from a low of one thousand nine hundred to one thirty eight yesterday and i think it's going a lot higher from there and the europeans are going to start to get uncomfortable with this the problem is not everybody can push their currency down at the same time you have to push it that is what everybody's trying to do with everybody that's been doing and that's why it is a race to the if i can go back to you mark i mean it's a race to the bottom i mean who wins getting to the winner how do you define a winner and how you define a loser and when you do that. yeah i was going to say eric actually he is saying of a there's a i mean they're fighting deflation there's no inflation issues i just want us all question about why you are single it instead of us going up right now because he

would be. saying that they would have to bail out the rest of europe. is that people are afraid of all of the currencies people are buying gold and so vince overhead is going though everything going up this is gold and silver haven't gone up so much if you compare him with if you really want to make money you were in there you were in zinc you were in industrial metals basically hard assets real assets are being bought because everybody wants out of currency i mean it's the old story guy calls his banker says you know i want to sell a million dollars he says against what he says i don't know yet i just want to sell the dollars. go ahead you were arguing. that it's going to daniel daniel first go ahead. also i mean between do europeans and i and this is a very important point i don't really think that the u.s. means to weaken the dollar ok i don't think that the this is really at the top of

the. thank you so jan i think the president of the federal reserve in the u.s. is very more focused on the on restart growth and shaping up to develop its the household balance sheets in the u.s. not to weaken the dollar i think the biggest problem that between the g three so that's us japan and europe is that the europeans just can't operate heroes or as did the americans they can't print treasury they can't print dollars and the japanese can't print t.v. is it is they just cannot print deals he is printing sorry the he is already i mean he was. back but between limited extent i mean like thank you but again they're committed to buying them back it's all done through repose and they have to take those euros back at some point whereas the way of the americans and the fed and the b.o.j. they eventually will take those dollars back but it's uncertain one they would do it whereas of the europeans it's certain those are the report agreements that are done so they take the money back i think it's

a very different get here this is one of the reasons that the euro is strengthening because of the perception that the europeans are less committed to quantitative easing then are either the americans or the japanese that's correct but the point is that it's some point if they have to they will find a way to ease to i mean they've already changed the rules quite substantially i think the fiscal situation of europe is bad but it's infinitely better than either the united states or japan and their monetary policy is slightly less insane but they're going to be faced with a rapidly appreciating currency which is going to hurt daniel but i mean i think it's very difficult to actually you know on allies the european situation because we just don't know. what exactly is the situation i.e. the banks' balance sheets i mean we didn't know what was happening with irish banks until six months ago right so and again you know yes july was helpful to come up with a report and and distress test but clearly there is still quite

a bit of bad news in the. and we just don't know about them coming out of your ok martin i wouldn't be so how would you. know what you want let me ask you a question maria erick said something that's very very interesting you talk about really currencies have lost their values and i think you know we don't have to go into an academic discussion but from one nine hundred seventy one you know current currencies took on a totally different meaning if we didn't have to really be backed up by hard you know definite wealth right now and now we've got into this situation where there's nowhere to run really there are very few currencies or people running ward. what do we go ahead and the ones they're running toward there's not enough room for everybody like the swiss franc martin. i mean no no currency is saved at all because. of this because of this you know that nobody wants their currency to appreciate too much so no candy at all it's a major same it's going to be all sinking together just at different speeds and inflating and i just said different speeds but all of them i have high risk and

also just sorry i just need to order one question or two or a back to denny and saying a bit of bad news is still out of the i mean two hundred trillion us fiscal gap two hundred trillion us dollar fiscal gap is a bit of bad news i mean i don't like. ok ben bernanke said in one thousand nine hundred ninety seven that this sub prime crisis was contained and there was no contagion whatsoever on the banking industry and nothing i mean this genius ben bernanke realizes that the u.s. fiscal situation is on an unsustainable policy even said that yes and you said this . i mean that's one thing the other thing is you say the federal reserve is working hard to restore growth i mean how do you think you know creating more money and more debt is going to solve the problem that has been created by. artificially low interest rates and too much debt in the first place i mean how is it possible of me going to happen and for europe the e.c.b.

it's just the same one zero zero. thing as the u.s. is doing. this. or that you guys when you say europe is not that different i mean what the irish did last week is that right i mean they also increased yeah right i mean for their fiscal gap last week so i don't see a big difference between those two are absolutely absolutely i don't see it is out but i say you know that that doesn't make the us any better i see that you have the u.s. and europe sinking together and in fact in europe last week the e.c.b. is a is a sovereign bond part as i said one point zero four billion euros it was ten times them on previous meet and then the start of the bailout i then saw them again am i being a little it's highly to say this next year ok i'm all right it's not be ok maybe a little bit too christmasy we're going to go away because after a short break we'll continue our discussion on the battle of currencies stay with r.t. . if. you . want to.

displace make sound. but another's it sparkles and unexplainable interest in. a place where supernatural things are. those. showbiz stuff entertainment value is absolutely spread. high production.

graphics. all of this is a way of focus people's attention by using take center sensitive and now during this war we had. military entertainment. if you. want to. welcome back across time computers about to remind you we're talking about currency wars.

but before let's see which currency russians prefer all we on the brink of a global currency war as mall the world's economy is weak in their current says the low exchange rate makes their goods and services more competitive but the race to the bottom may mean an open consequence like it's on the cards so which currency do russians trust most six to seven percent of opinion poll respondents consider the russian ruble the most reliable of all another twenty two percent will seek refuge in the euro during recession but only six percent see any safety in the u.s. dollar that's for most russians the safest car a city to keep is the one they know best. ok if i can take control of my program after the first part if i want to talk about china now because china is very much in the rule in the news right now and there's a lot of talk we shall congress go through the motions yesterday i'm sorry last

week. and you know the chinese currency is undervalued that's why middle class americans can't find jobs that's the headline ok i very much doubt if it's true martin if let's say for example you know the congress got its wish and overnight china increased the value of its currency twenty five percent which a lot of people think is fair would it make any difference at all on the american economy. number one first of all briefly i agree that the chinese are undervalued on a purchasing power base basis from an investor's point of view we actually do invest in that currency i mean not that much because again globally we have this inflation issue but if you don't like china and chinese assets and the yen but anyway if there was to happen that the u.s. gets the what they want there's also a big problem is that i mean one problem is a large part of the population has depend has become quite dependent on cheap

imports from china and on many goods items or when that happens is the trade deficit could actually worsen because there aren't that many industries to be frank in the united states that can be stimulated back in into life by a bit of a he would ration of the u.s. dollar you know a lot of the manufacturing industries they have gone and it's not easy to get them back and so all the other thing is of course the chinese government a whole lot of treasuries and if you're a values a renegade about twenty five percent that's an immediate loss for them of twenty five percent so maybe they would also be thinking more cars are unable to buy more u.s. dollars that continue depreciating on r. and then again you have a big mess in the united states from that and so i think at this stage it wouldn't even have the u.s. too much if you saw this big revaluation so there is no easy fix for the u.s. problems i think it's more of a policy issue than than a conversation to which you had to issue with the fact that if they revalue their currency sharply become competitive with china for resources for energy for

basically everything with china imports is going to be very very tough it's going to send it's going to benefit all of the research producers it's going to hurt all of the consumers including including the united states but what we're missing is there's basically a fundamental global shift which is happening right now and we just think the currency wars are just one symptom of it which is for all of the twentieth century all of the economic the economic center of gravity was limited to the can. we now think of as the g. seven i mean a small piece of western europe the united states and latterly japan now basically you have all of the economic growth moving out into the asian basin and into other emerging economies so you know when we hop on the plane and go to thailand for vacation oh it's so cheap well it wasn't always cheap but it won't always be cheap and as these countries come up to a higher standard of living and their relative weight becomes greater their currency is moved up and the governments are trying to block that right now we're

seeing it in brazil we're seeing it in. the in korea we're seeing it pretty much around the emerging markets except for russia for the last month or two for sort of mysterious reasons the ruble is relatively weak and now it's coming back but basically it's inevitable these currencies are going to move up whether the u.s. is devaluing its currency intentionally i think it is but i can't prove that the emerging currencies are going to strengthen and asia especially ok daniel if i go to you i'd like to stick with the china i'd like to stick with the china issue because that's what a lot of people are not financially have great financial knowledge are talking about what they're told about two and again i'd like to pose a question to you repeating it if china increased the value of its currency it's not going to have a dramatic effect on the ills that are happening in the united states or the rest of the global economy. you know i would tend to agree with that statement i think that and actually i would add even a nother layer of that right the chinese currency actually reached

a pretty strong level during the crisis against a basket of other currencies and there isn't was because again it was trading relatively stronger against the dollar again visit to thousand and five when they started appreciating and in the meantime the u.s. dollar weekend all the way to one sixty versus the euro so if you look at the not mean effect of exchange rate so the it was actually trading pretty strong ok it has weakened since then ok so that's point number one point number two is that china is actually trading quite strong against the main of the other main. trade partners of the us mexico is probably the best example again the mexican peso is meaningfully cheaper than the chinese currency so that's that's that's the other additional point here the third point which is very important is that from the chinese perspective they would rather see their currency appreciating as the world trades more in running be denominated transactions and that's why the whole process of

appreciation will be gradual and it's so important that what they have decided in hong kong to deliver there in in be in hong kong for trade transaction is a very important step that the market is actually missing here and i think that that's actually the beginning of a more meaningful flotation or flexibility on the right i'm going to it's really interesting because that's what every country wants to create a major currency in the world if i go back to you martin let's stick they take a look at some of the thing that is not a cozy is proposing at the g. twenty of having some kind of a new. global global regulation of currencies do you see that in the cards in any way i mean he's trying to court the chinese i mean what all the way to the extreme of currency controls i mean there's a whole spectrum there. yeah i doubt that this is going to happen because i'm just too pessimistic if you wonder on the sovereign debt problems in the western world

and i did expect that there's a high chance of these currencies the u.s. dollar sterling and euro to integrate which reached a day from from doing it in. in the case of the euro and may two thousand and ten and then that can still happen you know because the problems and fix that ireland is broke now basically and spain isn't coming up at all and so the eurozone is going be a mess and the same for the u.k. and u.s. so i think those countries can actually fall apart or go into hyperinflation as many senior economists have been predicting said this financial system is broken in the red so i'm going to miss it on this or but if you're one of bet on one currency again that that might become a new world reserve currency i would think it's maybe one option is gold and another option maybe the renminbi or makes of all it was china by pfizer strong as economy in the word in our view and if you're really looking at the industry and the consumption there in many areas they're already exceed the united states as the number one economy so we would bet on the renminbi not on the chances of an

artificial kinds of coming through our fixed exchange rate because the prospects for the rest are just not looking good in the long term really be a much more optimistic on days in currencies daniel you just. maybe a little hopefully more optimistic ok martin martin comes on this program and he's pursued mr gray's usually right go ahead. i actually i like the that concept of buying emerging currencies against the developed world is the right concept that's what i like to do i think that all of the next couple of years people tend to underestimate the impact that emerging markets will have in global growth on a p.p.p. basis the emerging world will become a higher dirt share in the global growth it will be higher than fifty percent of the next couple of years so the impact that emerge. markets will have going forward and the global economy will increase and that should be quite positive in my opinion so i'm actually i would take the more optimistic side even though we might

have some short term bumps of course because again the sovereign debt crisis is a real problem that needs to be dealt with but i think that in the medium term emerging markets will continue to drive growth and that's like a two to three years but i'm not sure i mean i think a. currency is falling apart i mean our best trade this year was buying greek debt and buying the euro when everybody got hysterical i mean they spent fifty sixty years building a real job and it's a no maybe maybe it was a money that they made there. but the point is that there's going to be an end to what's going to happen five or ten years down the road is a good way to blow up in this business i mean the germans are sure they're sending the germans had a little way and you had better. of the of the euro they basically it prevented the italians of the spanish and the greeks from devaluing moody's is talking about

upgrading greece right now you know this doesn't go in one direction and everybody i mean i agree that these currencies are it's not so much the currencies which are in trouble it's the economies which are in trouble how they choose where the strain is going to go i think in the states the strain is going to be taken by the currency they're going to weaken the currency very substantially to help them out of the debt problem and to attempt to attempt successful or otherwise to stimulate the economy i don't think the europeans are going to let the currency take it i think that we are peons are going to take it in terms of slow growth growth or a second dip of the recession martin i'm going to give you the last forty or you say yes because or you say as you say i agree i agree it is. not i'm not pessimistic on every way out that merging markets actually have much lower. over and then the rest so they're not much better but in case of them here are saying that he is just completely you know doesn't understand anything much about the financial system was the norwegian no and then i know what's happening on the

identity or are you even aware that it's at mithibai all the european leaders said in may two thousand and ten on that one weekend they had already they were about to ditch the your it was about to fall apart or are you even aware that in two thousand and eight the whole financial system they have admitted in the u.k. and germany and then the us the banks were about to close ok what are you learning how to jump in here and there's very little to do here and i'm sorry you didn't get your reply i will do this again gentlemen many thanks to my guests today in new york here in moscow and in hong kong and thanks to our viewers for watching you tube r.t. so you next time and remember crosstalk rules. you . start. to. greet for the full story we've got to. do.