we're still partying here. but. that's because i from what's considered to be a shot in russia a shot of vodka look at the down involved though this is just a typical russian with a few of these and you'll be taken off for a few days or so yeah i think hey max i learned how to say happy new year in russian here it goes from good the best friend faster this. one will be well yes max this is our eastern european special here we're going to start with the headline here on russia russia economic growth bodes well for putin the election this is from forbes and they're reporting on the new statistics which say that g.d.p. is that nearly five percent year over year ending september the key indicator they say to watch going forward will be corporate investment the latest figure of seven point seven percent year over year shows companies have started investing again after investments collapsed in late two thousand and ten and support for the

consumer sector max comes from rising wages apparently there somewhere in the world that wages are actually rising wages have improved and unemployment has dropped to six point three percent from six point five percent with incomes rising more in the last month than they have all year november wages rose seven point one percent higher after inflation well you can spell brick with our brazil russia india china it's an emerging growth story it's all hot as close country in the world well it's also of course has a huge vast reserves of oil and natural gas and i know you're going to be talking to constantine gary did you have about that in the second half he is from moscow and he's an economist but the article does note that russia's g.d.p. is growing faster than brazil's one of the big four emerging markets so as voters look around at their neighbors to the west and see one economic crisis after another putin's chances of becoming. that and russia again are greatly improved so

i guess there are lots of protests going on in moscow and st petersburg and around russia but according to forbes they're saying because the economy is so strong compared to their neighbors all over europe it might boost his chances protests this is an emerging social media ploy. think about it make a transition away from natural resources to social media all those brilliant russian programmers and developers creating all the new generation of the son of the russian billionaire is investing in u.s. based social media companies i should invest in homegrown russian social media companies we know from the people out there in the social media phenomenon that they've got the talent for so let's move over to the rest of eastern europe era max the first headline max frank mortgages cause pain in europe this is just remarkable max this is regarding the carry three that happened on mass across europe now by the time the economic crisis hit in two thousand and seven some two thirds of all

mortgage loans in hungary were denominated in swiss francs two thirds max in poland more than half of mortgages were in francs while other eastern european baltic countries also had high rates now explain to the audience here what this means welding interest rates in switzerland really close to zero so people would borrow money and then low rate then they'd buy real estate in their home countries but they didn't factor in the currency risk you see the thing is that people who are taking on mortgages and these low rate interest environment and foreign countries don't have the same tools to sterilize their currency risk that major corporations or countries do every single day they sterilize their currency risk but if you're out there borrowing in a foreign country to invest in a home without hedging your currency risk then wham-o. you're open to these currency moves and this is what happened. again and again and

again all over the world people are getting slaughtered by these currency rate changes and currency value changes yeah i mean it didn't happen obviously in america so american audience won't recognize this and but a lot of apologists for the banks through his will say well those people shouldn't have taken on mortgages that they can't pay but this story more than anything else demonstrates without a shadow of a doubt max that banks first were engaged in criminal activity because how could two thirds of the mortgages in hungary be written in swiss francs the bankers themselves understand the four x. market they understand how dangerous that is they understand the danger of the carry trade but how did you expect two thirds of the population of hungary to understand what they were engaged in the risks involved oh people the us you say that they haven't engaged in this character a mortgage but the banks in the us have a lapse and then america's on the hook for austerity measures and bailouts and so they are paying well just to put into context how much these mortgage holders have

and hit the franc bought one hundred sixty hungary and forints in the summer of two thousand and eight but as strange as so much that it can command two hundred forty eight for it's that the moment so it's almost doubled the exchange rate you know it's like offering a consumer tainted meat basically that is against the law you can't sell somebody tainted mace and now and people say oh you know this whole wave of anti-capitalism is destructive no it's not about anti-capitalism it's about being anti the sellers of tainted meat i eat meat but i don't want to be sold tainted meat that doesn't make me a vegetarian still a capitalist i just don't want to be tainted meat now these banks offer the equivalent of tainted corrupted maggot infested products that are sold to them to these people and with miss sold to these people that doesn't mean it's to their anticapitalist know their. criminals with us right now max in an effort to stem the

rising foreclosures the hungarian government earlier this year in the first quarter of two thousand and eleven rather they basically banned all foreclosures just for a quarter but then they in order to help stave off the social meltdown the hunger enough already set an artificial exchange rate of one hundred eighty to allow homeowners to convert loans into four it's without going bust they interview good or good barks chief economist at hungary skate bank and he says this is a better option than banning banks from for closing loans this created a moral hazard a banker should really talk about moral hazard as people simply stop their repayments believing that the government would bail them out and then he goes on to say allowing people to exchange their francs at an artificial level is less damaging to banks but it simply delays the debt problems for a few years now max isn't this what all european banks are doing they're exchanging

their toxic debts at an artificial level to the e.c.b. oh absolutely but they're doing so now three or four years after the crisis started so this is why you have the currency war going on in the relative valuation of your overseas dollar the dollar is already exchange with the fed trillions of dollars of toxic loans in the e.c.b. that process is just starting so on a relative basis the euro is a lot better off than a dollar so they still have trillions of euros to go to even achieve parity with the u.s. corruption on the fed's balance sheet the e.c.b. looks like mother theresa looks like the virgin mary comparative fed's balance sheet they have a long way to go basically you have to suspend yourself or into your economic sovereignty and who steps in here but the e.u. and the i.m.f. to bankrupt organizations on their own i mean the i.m.f. is receiving loans from italy and spain and portugal and greece right now that they're lending back it's just so absurd but these people are now lecturing hungry hungry warned against new laws they. european union and international monetary fund

are pressing hungary to postpone action on proposed central bank of fiscal policy laws now before parliament if it hopes to win their approval for a financial safety net to protect the indebted country during the continent's financial crisis. they're totally indebted they have no money how are they bailing out people that are in debt what yet again it emphasizes the theme of medieval ism remember during the medieval period the pappas you would get together and decide and figure out how many angels can dance on the head of a pin you see this was a preoccupation for hundreds of years here and they used to be in the e.u. there figure out how many derivatives can they slice and dice and dance on the head of another derivative while being balanced on the fulcrum of a derivative laced and bells situation balanced on the nose of a central banker who's standing on a beach ball in the middle of a topsy turvy city with this new law that they're proposing going hungry the e.u. and i.m.f. say the financial stability law which would set tax and debt policies could limit

the government's flexibility to negotiate budgetary requirements in any loan package so the prime minister viktor orban said that he was trying to regain economic sovereignty but of course once here in the hands of the i.m.f. even if you give up economic sovereignty budgetary requirements yeah. we take all the money you can just already that's our requirement just to go over some of the policies that viktor orban has introduced in hungary which are called an orthodox from levying a large windfall taxes on banks and other industries to diverting pension funds from private management backed into state coffers that and these have apparently made investors nervous. argentina. so let's look at another former eastern european put former soviet bloc nation which threw off the chains of command and control communism only two. brace the

commanding control interest rate setting banks thursday grand illusion why europe should question wisdom of austerity by alan scherr ter first let's start with this chart which is shows the biggest declines in modern economic history as we see the biggest on the bottom there was one nine hundred twenty nine that's from the u.s. when real g.d.p. declined by twenty eight point nine percent over four years two thousand and seven that's a lot it declined by twenty four point one percent in just two years and then two thousand and one argentina declined by twenty one point nine percent one thousand nine hundred seven max indonesia declined by fourteen point seven percent in thailand by thirteen point five percent you were there at the time that was of course due to the carry trade carry trade collapse as well so well it's a common thing throughout the history of these collapses that generally it has to do with bankers and day and incredibly stupid banking tricks for their benefit and

everyone else's detriment of course looking at the lafayette economy collapse and something reminds me of jeffrey sachs out of that remind me of jeffrey rosen oh nevermind well it took a template two billion dollar bailout from the e.u. and i.m.f. and the author of this article is arguing that lafayette represents a key test case for the economic policies european officials are counting on to revive the region which is of course effectively a pilot study on whether economic austerity i.e. tax hikes government spending cuts wage reductions and other measures to shrink a nation's debt work better than the alternative a fiscal and monetary expansion and of course they use the example of argentina which said you know forget you i.m.f. and they tripled their government spending and in fact their economy ended up booming after that well you know absolutely and in brazil also there were other i.m.f. loans and became part of the brics growth. and then finally you talked about social

media that here's a headline a lot via a lot of your probes rumors behind cash withdrawals well you know like two or three weeks ago there were some run on the banks a lot here crashed bank and lot fia which crashed bank of cash bank allows it much money at the crash of banks there was a run on that bank and it collapsed after snorer us bank and lithuania taken over by the lithuanian state anyway then there were rumors that the government saying was via twitter so a lot the in authority said that a run on swedish banks the lafayette was started by false rumors aimed at destabilizing the country and that is police forces were investigating the matter but of course this nation has embraced the neo liberal banks for financialization model and these are the same guys that do spread false rumors in order to you know benefit from the credit default swaps they've bought on any of these banks or nations falling apart or crash and rumored to be bankrupt about grumpy and sneezing

. well you know rumors of course are as good as anything else the entire global economy runs on rumors goes rumors traded chicago mercantile exchange of c m a c f t c doesn't regulate rumors and create rumors and cash in on the rumors and a lot of plays austerity measures it's all about the rumors are i think sam or thanks so much for being on the kaiser report thank you max you know you're. all be right back don't go away. right to. the square. one.

i'm finding we're just. getting it out here. but not saying hardly any birds squirrels you know. you know i don't know what's going on. concrete.

technology innovation. developments around russia. the future. back to the kaiser report time now to go to speak with economist professor constantine good to have constantine. and now teaches at trinity college dublin welcome back to kaiser report thank you all right. wasn't tant if it were to happen

what impact would a euro zone breakup have russia there i read it two ways in which the euro can break up and we can call it or the disorderly in the orderly case of a default or breakup of the euro what will happen is the monetary must all that money in circulation currency and euros will be gradually over a number of years displaced out of the existence where they are in one country such as greece or in a number of countries such as all the peripheral countries there are different permutations and the case in this case the disruption will be the most minor and the impact on russian trade and the russian president will savings and investments will be very minor the worst case scenario calms when there's disorderly default or this sort of the destruction of the currency markets and there's a lot of the what happens as overnight euro system exists in a number of countries and there's a lot of the other countries euros will be comedy prices as well so in that case there will be significant disruption to the savings a lot of russian savings are currently held in euro's all of these will be in

effect lost over time either to devaluation all directly or through both processes themselves as the countries will be when they can eurozone countries which as it's an enormous on itself well didn't they get on some of their obligations especially to foreign investors and for foreign savers there will be also just actions and investment markets which will impact the russian companies especially corporates which are least adult side of violence where they trade in either in shares or in bonds and those and also there will be disruptions to the investment markets so the new investment will be disrupted and flows of investment into russia in either case there were beauty price in the european assets and in that case the russian companies. saw rebel fund for example will be able to enter the markets and invest in european assets that much better valuations than before and so there is really makes but the destruction will do significant right now all while all eyes have been on the arab and debt crisis how have. the russian banks been holding up are

they exposed to say mix of toxic debt they're taking down banks elsewhere but i think from the russian banks perspective the we have to recognize about two tiers even three tiers of russian banks first at the very top all the banks the likes of v t v for example they probably are less exposed to the crisis in europe and they are less exposed to the prices that mystically as well they also have very strong capital ratios and most of their capital comes to see over the government as a result of this high quality capital who would call so we would expect far less disruption there and that is also implicit so over a guarantee in the case of those banks there is a need the ridge here which in itself is relatively healthy some of the industrial base into the industrial assets and there's a lot of that they also are much more conservative in terms of their business lending and in terms of their development loans and things like that so they probably will be as well ok where the real problem will occur is that the lower tier of the banks the smaller banks which are very light on the external funding

which also relied on foreign funding in many cases as well and as a result of that there certainly exposed to the crisis in europe at least through the front and side of the markets they're not so much exposed on the house that side because very few russian banks have significant exposure to financial assets outside of russia but they have their own problems inside russia and through their life the smaller banks two years now the government has been the central bank of russia being ousted in terms of trying to reform the bacon sector in russia over a number of years of and before the crisis because they correctly foresaw that there will be problems at the small bank kind of levels that she wants and this process is ongoing will be disruptive will it be better problematic for sure i don't think so assuming there are no major blow outs and global economic environment and global markets in general assuming everything continues as it is right now i don't really see a banking crisis of the proportions emerging in russia and i got it in russia recently been amended to the world trade organization the w t l y changes should we . back to sea and twenty twelve as a result russian admission of the w.t.

hoist probably one of the invasions one of the longest process was over session two w. two of its function of w t o conditions or any countries so far in their records that actually stretched over twelve to sixteen years depending on different types of measures the different components of those measures so that is all of that you would see a significant impact in terms of the w t o assessment in place it's well what is likely that we will see inflated twelve was the beginning of the process whereby foreign investors start to be pricing the least in russia as the trading partners for the rest of the trading partner for the for the rest of the world and then it will be in a positive it will start in place if well it will continue throughout the period of assertion so the next eight years that we will see and our police in terms of the positive valuations on the east side over actually is again trading partners investment destination on the russian side i certainly hope that in twenty three it will see an increase drive towards improved competitiveness but they industrial and the prices level and also the certain sectors especially sectors where russia can

be very competitive in international markets such as the food for example also the new technologies and if their process starts and towards it well this will be a very good market for us to go in for it in terms of achieving both on the earlier mission not just for the nation but rather to w t o but also the greatest benefits that will gain the greater benefits from the membership as well in the long run i asked part about oil or certainly oil is king and talking about the russian economy its oil prices manage to stay near one hundred dollars throughout the entire crisis and of course big dependency on oil and gas in russia if the price falls back to the sixty or seventy dollars per range how does that impact the economy and constantine well i think it will impact the economy it will impact the physical dimension of the economy and it will also impact investment them in a corner of the net so less so in the short term the demand side of the economy however i don't anticipate that their market moves in terms of the oil. prices

because they're all price currently like the rest of the if you want storable commodities there especially if you look at gold if you look at precious metals a look at the oil. less so on natural gas for example site what we're seeing is the price of those commodities just flicked anticipation of continue today to ease and into europe in the united kingdom in the united states and also so globally there is an expectation of increase among three mosques as a result of the you know that is expected to inflation future inflation those expectations also being factor of the end and the real loss that's what who kind of physical tangible assets own we're not in bali you would expect that to continue not in terms of rising oil prices but against the floor level of oil prices in the range of say eighty five to one hundred five somewhere in the neighborhood yeah of course think it's a bit of a curse is that because the high oil prices dissuade our disincentive as the economy to move entail us a more technology based initiatives and where is that drop down to

a lower price there is an urgency certainly to diversify but putting that aside for a second is there now some diversification in terms of a move toward let's call it technology or social media certainly we saw social media on display recently and last cow so there's a lot of talent there is that in the cards going forward certainly isn't the guards both from the government perspective government pulls the perspective of the incentives that are being put in place and also in terms of the dynamic and they want to be the younger generation of the archons now days are much more focused on the higher technology higher value of it with all sectors especially service sectors they also become increasingly traded sectors russian experts for example of i.c.t. services which is the software the least services. you know so social networks as you mentioned them done things like that all related services has been growing at about forty percent a year and that is going to continue the. program for us that there is there to

continue that momentum. or for you do use the outflow or brains what we call in other words that human capital people collins which is behind and there are just tremendous capacity of talent but unfortunately in the last few years it has been losing sleep so the countries outside of us are and in particular the multinational corporations so it's crucial that the russian government pull this is a new context for example of projects like spoke about are very interested in those projects too but they're actually anchor multinational corporations research and development centers in russia proper itself that's a given there are younger russian people who work in that sector and in those areas and moreover the opportunities in terms of the growth and career wise and growth experience wise and skills wise and that is very very much important because russia currently compared to personal income tax rates which is a very significant incentive for people with high quality cute human capital to be there and to stay in the russia but unfortunately it doesn't offer the same quality

or promotional opportunities for growth opportunities and also business station of the two inches so we pair in those two areas reader the corporate side the multinational corporations and domestic business creation in these areas will be very much crucial to enter in the balance and thereby benefiting from this growth as well as a janitor at about a minute left i want to talk about an economics kind of you know difference in an approach different countries are approaching the crisis in different ways some are advocating austerity some are advocating. money spending by the government printing now you're in ireland they've chosen austerity how's that working well ireland has not chosen a stereotype ireland how does thirty imposed on the right by the circumstances in most cases this therapist has been never been really chosen by the governments governments or was pursued their objective of raising their expenditure no matter what it's really is a matter. consideration how high is the national debt and in the case of for

example countries like russia some stimulus is warranted simply because the russian is not over board with the going to be the government that is very low in that country there are significant reserves of funds and those can be deployed in a careful way not to overspend but at least to invest in the future capabilities such as infrastructure investment with skills investment we can use of countries like car that isn't true because that when you reach the level of debt to g.d.p. ratios of one hundred percent plus like are likely to like greece in the few also have a very high especially if you have a car you drive or you don't have a choice you have to bring your all to me in the fiscal situation back to the level of sustainability over the long term and that is something that part of this trying to do unfortunately is the best of times of plenty around the middle of the crisis and of course that is the part of the economy which is not working right now for our domestic is going to be in effect is not go it's continued to shrink as

a result of those that are so all right because i'm saying there yes thanks so much for being on the kaiser report thanks and that's going to do it for this edition of the kaiser a par with may max kaiser and stacey herbert our thank my guests constantine girl yeah you can follow constantine on twitter g t c o s t or g t cost you can follow me on twitter as well that's just max kaiser and of course you can follow stacy herbert you can send me an e-mail at kaiser report at r t t v dot r.e.o.'s stacey read it until next time this is max guys are saying. no. to your social obligation to be pulled from the. video. street in the palm of your.

book of august the headline. obama also rises a little giving the military more proud to detain people indefinitely without charges a trial of cloth just terror suspects critics crime naming the new bill violates basic democratic rights the do it seeks to trumpet or elsewhere around the board. warning to the west as iran successfully test pies long range missiles during naval exercises in the persian gulf they need some of the public servants prepares to head back to the times and this comes as the u.s. imposes father son friends top of the ring essential bond and i'm so sad to have on threatens to cut off a commercial well sublimer the response. because the conflict in syria takes

a new toys does it say the regime has pulled its forces back from flashpoint a position stronghold has demanded in a peace plan but there when i say shortfalls that's a sniper says still shooting at protesters and killing of raised one hundred fifty people since tuesday. as the headlines up next the story of a catastrophic environmental disaster now a special report. will rogers once somebody asking about ram they said well i just don't make much of any more and we need. to be good stewards of what he gave us and we did a terrible job here we have better curb drug. knew nothing about. half a football game picher oklahoma back in one thousand nine hundred eighty four it was.