quality and corporate influence is growing in the us protests ahead into the third week. fury has turned towards the police following a series of arrests and allegations of brutal behavior. are those are the main headlines for this saturday here and do stay with us it's here in half an hour's time but for now it's spotlight. twenty years ago the largest country. to certain places of the. fleet which had been trying. to teach began a journey. where did it take them.

hello again and welcome to. the show on part. and today my guest is. the european economic turmoil the global markets spiraling down that's when to say another recession may be just about to start. its face to financial turbulence filled with sliding in the ruble losing ground against the dollar and you officials insist it's all natural and there's no need to. sell is the second recession jeff a scary story or should we really want. to ask one of the most prominent brushwood . of the new comic school. russian officials say the national economy has almost recovered after the recent recession well prices are bouncing around a relatively high price on the g.d.p.

is growing again but the global markets are unstable and the fluctuations in the having an effect on the russian indices yet another challenge is the resignation of the highly respected finance minister. he has been in charge of the country's fiscal policy for more than a decade and his departure is seen as a blow to russia's financial credibility. oh mr good to have a welcome to the show thank you very much for having me thank you for being with us well first of all the latest political news is there is that the main russian political intrigue the intrigue of the. of the presidential elections in two thousand and twelve has been resolved well at least the candid from the ruling party is going to be played and reputed well this news didn't really influence the markets i mean seriously why does it mean that that that from the money point of view from the point of the of of of the economic financial games they're put in or

medvedev makes no big difference i think i think there is a lesson of this question has not really calmed the market has not really send a strong message here what then you going to make policy will be because i think nobody really have any doubts that what you are putting will continue around in the economy in the country like he used to be in the prime minister and in that sense the main question for the markets is what kind of economic policy he will be carrying out and for there we need to know the key government officials in his new government and there are something that we have not had any answer to yet so it's not so we should wait for the government reshuffle that we may be facing when medvedev instead of being president becomes the new young prime minister i would like to remind you that occasionally the government or shuffle actually happens before the elections even before the parliamentary election so maybe get a shuffle actually happens before december because what happened in two thousand

and seven when the government was for. government downs of god was appointed and if you keep government ministers came in and they actually continued through their actions years will be thought really starting we will we know the one of the key figures and put in the government minister could in whose finance minister and deputy prime minister. he lost his job recently and do you think that may be a sign of a future reshuffle in the government good that has already started over i think i think we know that cauldron will not be in the government well we don't know well we don't know yet but it looks like he's not going to be in the government he said he doesn't want to be in the government however we don't know who's replacing him because the current replacement the acton finance minister under apparently is a temporary replacement so they will be looking for a more politically connected politically important figure who will be actually

around in this very key ministry. is it true you should know that rumor that they're there that couldn't didn't want to stay in the government because because he expected to become prime minister i think i think they're almost there now nothing this is a plausible explanation but i think judging by their public statements both called an innovative man before me and before calling was actually quite unhappy by the military spending program which was mainly and lobbied by the president in bed of president medvedev was correct saying that both prime minister putin and links in minister of finance alex equal that it actually signed up in doris this program and they actually signed on for this program but yet it is through that called in the in play this program and innovative was the key person to push for a. former father who used to called in on the eve of his resignation he said the following i quote the global economy is facing a decade of slow growth that will make it harder for countries to service debts

russia faces risks of a recession if the us and europe economies fall into recession and quote how probable is this negative recession scenario i think i think when we say slow economic growth is actually a positive scenario when you know whether perhaps sorry that it was a slogan or the recession or the will of politicians of such a scale says slow. army growth he means doubtful but you know maybe i think i think i think if the politicians in europe and the us do their job very well still we are facing the decay of slow economic growth simply because they are better over so large that they will have to cut expenses raise taxes and at least in the short to medium run the growth will be slow but i think a cauldron is right in. if you're into a risk of this is a very tangible risk of a recession something like we had in two thousand and eight where a major financial institution collapses and there is

a financial panic which results in what's called a liquidity squeeze and it's very hard to morrow inland and therefore there is an implication for the real economy and the recession and there will of course mean a lot for usha because when people start thinking about to be ascs they try to invest less in the risky assets and russia is a risky company so they'll be a withdrawal of capital from russia and so in russia financial crisis will be felt even in even that well we mentioned the united states the political debate in the united states over dealing with the country's debt has almost brought the world to the verge of another global recession and here's a story on that from spotlight healing energy mean that. it has become natural for the u.s. to live beyond its means the country's debt has been accumulating for decades the reason of the debt ceiling by congress it's been done almost every year since nine hundred sixty the procedure has long been and from now until this year how soon are

you this been given up for the sequel to politico through which the u.s. debt holders in suspense at one point there seemed little possibility that the republicans and democrats would come to an agreement and the danger of. real is just a lewd style last minute debt ceiling do you didn't exactly turn. now to be a happy ending to this school three days off to reach standard and poor's downgraded the country's credit rating for the first time in its history to you wes almost two hundred which three days markets reacted with panic and the sharpest since the financial crisis three years ago. the crisis in the you were sent out strong shock waves throughout the international markets including russia even though the situation even for this there belies there's still the fear of the debt ceiling crisis beating and the west go back into recession and that field will only

grow until i read the call and long term solution to the debt problem is found in washington. well actually i don't share your learning. worries a bad bad bad about the dollar because because i suspect that what happens in the states is more a game power game then real life though what's happening in europe may be more worrying because they're trying to hide the problem you know do you agree i fully agree here i think i think you're right the show really warty by the us she mentioned that us was facing default actually that somebody else was facing the risk of technical default and of course it was as you very sort of a game a sort of a game i think it was it was a big big negative surprise for everybody that u.s. politicians are acting saw the responsibility but yet i think was shown to be rewarded i think the new president clear he is or she is in two thousand and twelve

two thousand and thirteen starts probably to thousand and thirteen starts cutting the expenditures and raising taxes and bringing in their cars and all of their probably before the election so it will not really help when you present even a barber has no chance no it could be in your new democratic president obama but usually in a presidential democracy. in the beginning of a new presidential term the new president comes in and says i have some time let's do them for you. i think the second term of the first couple of years of the second term is that it is the time to do to do to exist. in europe you're absolutely right the politicians have lost credibility you mentioned could have been seen things which are probably more diplomatic i think in europe this game went too far and i think politicians have been slow in doing too little too late and i think they've lost a lot of credibility i think there are risks are very high and i think we should only would involve greece i think greece greece restructuring or a default solid any given think we should worry about bigger countries such as

spain and italy and eve. they can tag on from greece is not is not is not prevent them from spreading to spain and italy and then i think will will be facing the real problem i don't think it's too late now i think there are still a number of things that can be done in europe but i think judging by previous acts of politicians we should be working human to new economic policy that we may expect from a new government in russia. putin i have a quote here also mentioned that the new government a quote will have to take unpopular steps to deal with the global financial tormato and quote so so so put in the storage and i will i will not all know love could be fried little bit here you think your problem is that we'll have to take the popular steps what does he mean by this and i think i think you mean something that. has mentioned many times are. you just call that americans living beyond their means to

russians on paper and live within their means we do have a budget deficit but it's limited to also have very little of that and we have an easier fund but this is only because oil prices high and low price comes down russia suddenly will face the reality that russia has been living beyond its means and for example pension system is not balanced saw over the next over the next ten . you're sort of so rushing you completely that he design inspection system. somehow gets house in order because what we are doing now is sustainable at one hundred twenty or one hundred forty dollars per barrel but it will long be sustainable if oil prices of eighty or so even sixty dollars per bottle so. the new economic school spotlight truly will continue about the possible for the problems with all our friends say with.

the roof. and.

that's. welcome back to spotlight on maldonado and just a reminder that my guest in the studio today is city good evening actor of the new

canonic school mr goody if you just before the break you mentioned one twenty five dollars per barrel has the oil price that is that is reasonable for russia well. as far as i remember a couple of years ago the russian budget the budget of this country could be sustained at a price of around seventy to eighty dollars per barrel and we said well we have two hundred three hundred but we can survive it so now today we see one twenty five one thirty not less so does that mean we mean we've increased the spending it happened it happened because the policy of mr couldn't the finance minister the government to put in medvedev or is it just objective reasons and i think i think i think of the person responsible eventually of course the new reporting basis his government his policy and i think even he little purpose absolutely i think i think

for us that was a reaction to the crisis but then. clearly understands that his political support is based on their ability to raise material standard of living standards of russian population and if you look he spends more and more and you mentioned seventy two dollars per barrel if we compare it to the situation to your two thousand and eight lehman brothers collapse and that crisis and i would remind you that before that year of say year two thousand and seven the russian budget would be in balance of fifty five dollars but i don't know the time is when oil prices are one percent to ten was awful but i remember times when we said thirty thirty's from here thirty one were also one exactly and this is growth in just five four years. from fifty five to one twenty five shows the level of spending impression government has to throw into the economy of government companies to be leasing spendings much as inclusions what are you spending when we're not increasing the military budget we are increasing we are increasing military budget already. you've said we shouldn't

crease military budget which should include even more of the increase in that we will increase even more if we will and this is why mr cauldron is not is not happy about this policy we will spend on infrastructural pensions. by almost a factor of one and a half we raced and we raced spending on the police and they're there all all avenues of spending very rushed is actually spending more and more and more and part of their bodies because i think they call and they call more the russian government is to sustain the popularity through more spending. in the finance minister the former finance minister he was labeled to be a liberal he characterized the liberal the liberal wing of the russian public policy makers russian government. was his financial policy really liberal and are we facing the end of the liberal finance policy in which his financial

policy would be rather characterized as conservative and responsible rather than liberal because it is not the job of finance minister to be liberal or not his job is to keep the budget balanced or in surplus when no price is high to pay for say for the ring in the window of prices goes down and in that sense he did his job he did his job especially we'll see five years to go through the crisis spending manpower after the crisis spending did not go down in the then why does everybody call it a liberal because he was very vocal in this he was very critical of all these strands and he eventually step down. which actually showed that he didn't like what what was happening i think the liberal policy should be done by somebody else and president reagan gave the speech in st peter's american june which could be called a liberal speech where president would have said state capitalism is not my approach my approach is part of it is ation needed deletion improve an investment

climate decentralization of economic and political decisions that will be a liberal in a liberal and more recently the military budget of which president may dispose of the other day at the exact absolutely no not really how we increasing how we increasing the will too but we are increasing the military budget we are not privatizing even though there's been a number of speeches and prime minister putin also said i'm against it capitalism but we only see the increase of the presence of the state in the economy we include receiving could be used by the government we see increased the regulations and in that sense unfortunately we have not seen the new economic policy board member different put in have been talking about some way to go to the moon to get the money for more of their it's a good question that's a good question russia can borrow a lot but i think if oil price goes down they're called happened because of a global recession and that's the situation of the outflow of capped an outflow of cattle exactly there will be the situation where russia will and will not be able

to borrow a lot simply because the investors will not like the indian to countries like russia well. we've been talking here now for about fifty minutes and i get the impression that we are. walking around the classic question which some called guns versus butter you do have is it true is it would rush is facing today guns or butter that's a good question i think i think we don't really know whether russia needs a lot of guns because i think nobody in their in their sober mind would say that. russia threat from neda but that's another issue i think one issue is we need to leave within our means and your critics point and even the we're stuck in the u.s. living beyond their means now being financed by the standard and poor's there and downgrade in and also the markets think russia should also understand that there is

a difference though between the u.s. and russia u.s. has a more than two hundred science areas of service and government that flexible market economy develops financial system so if they live beyond their means it's not their disaster russia doesn't have a currency like dollar and so if russia runs out of cash we've seen that happen in eight years or should they mean done that and then we're going to see as we've seen the ventless of the soviet union twenty years ago we've seen the default in russia in one thousand nine hundred they have me actually happen in the russia if if if russia and south of cash that may actually have a serious economic and political implications would russia have to borrow he said russia can borrow russia can borrow a lot so so i know a lot of specialists are watching our channel today maybe right now how would they should they expect that this country would be borrowing money so there's a lot of there's a lot of if there is

a global recession or even if they just oil prices goes down substantially and russia will have to borrow and in principle russia has a very low debt burden compared to european or only european countries sort of the united states or japan yet it. going to be a risky asset and i think russia will be able to borrow just a little bit and that means that it lot of this grants spend a lot of military spending will have to become and i think this is exactly minister called it's warning. to the president made very different prime minister putin you can promise a lot but it is very unlikely that you will actually have to default on your promise and this is this this is something that happened twenty years ago and soviet union collapsed and military spending went down by a factor of ten or so simply because soviet union and then russia didn't have the cash to pay for these guns or rockets or whatever and that me well happened in russian. president medvedev said that he will continue to work on his modern

ambitious modernization project even if when he when he is no longer protocols prime minister i'll be i'll continue the modernization transit that modernization projects are aimed as they say into the future but they cost a lot today. i have a significant spending in the russian budget how they could compare comparable to the military budget to put the pension budget and so on and of course not when we are talking about the present available space very projects like scald govern other related projects there are not a bit of monkey smaller than actually a two order of magnitude smaller than the military program and that sounds our pension pension spending these are completely different things this is not whether they will be saving money you know they will not be able to save a lot of money by cutting this project so i think i think most of the revenue sources will be privy to zeeshan and i think russian government will have to sell its crown jewels and it is very unfortunate that the russian government has not

done and before stock prices and oil prices were high unfortunately as it is very likely that the russian government will sell the government stakes in rosner treaty because better bond. from when the oil prices law and therefore the market will not be that much for this essence but the russian government will have to look at well experts say that the last twelve months since the order to move last year russia has been experiencing a capital flight amounting to about five percent of the g.d.p. what are the fundamental reasons for for the outflow of capital work well i know you have already mentioned that people would not like to invest in this country but why why do russian capitalists move their money away that's a very good question and i think it is especially striking given that the outside world is not doing that well and given the huge opportunities for investment in the

russia the fact that investment is actually the russian investor themselves don't invest in russia but big data mining our design of the guys who know how to do business in because i'm sure they were born even though the language actually know how how everything moves here compared to europe you know even we just mentioned europe and travel years of travel and yet the russian investors take money out why big probably because investment climate is more than great corruption is high volatility society scoffers critics expropriation is high and we don't know or what the economic policy of the new government will be as far as i know this far as i understand the best the russian carefulness can do whatever russian is losing so you guys are going to march when they move their money away to the west they only do this saving their money they're not making a lot of money there they're making their money here in their own country there they just say these are so this has europe is you are becoming like a savings bank for the russian oligarchs not not not necessarily and there is some troubles actually reduced surprise us in europe a lot you can buy you can buy stock in europe for

a fraction of what what used to be and that sounds better is there even though the market economic situation is so bad i think when we're talking about investment outflow i think this is the indication that something is really wrong in russia. in economy right now or in russian politics i would say that political risk and of course corruption and expropriation are issues that in the subset of most wanted a bomb thank you thank you very much just to remind that my guest on the show today was so gay greene rector of the new economics called the spotlight spotlight good be back with more friends than common song was going on and then outside russia until then stay on our sea to take a. top

stories on our t.v. a deadly situation develops in northern kossovo as nato implements a shoot to kill orders to demolish roadblocks built by local serbs near a disputed checkpoint. people living in tripoli take to the streets anger the former rebels carry gone since the city while people in one of the few remaining gadhafi stronghold suffer from a deepening humanitarian crisis. and also operation occupy wall street gros of the u.s. against an already and corporate influence people's fury turns towards the police following a series of arrests and cases of brutal behavior. and the media makes its judgment on russia's political future in the wake of the mystery that the adults interviewed over his decision not to seek a second term.