well that's because i found what's considered to be a shot in russia a shot of vodka look at the town and all those was just it took the gold rush. with a few of those and you'll be taken out 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. growing bilingual 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 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 that 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 saw 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 gird give 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 president of russia again are. 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 play. 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 some of the russian billionaires investing in u.s. space 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 here max the first headline max franc 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 up audience here what this means well the interest rates in switzerland are really cheap close to zero so people would borrow money and then low rate and 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 again . and and 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 well people knew us to 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 playing well just to put into context how much these mortgage holders have

been 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 its at 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 a they're anticapitalist know they're anti criminals. well that's 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 gorg he barks chief economist at hungry bank and he says this is a better option than banning banks from for clues and loans this created a moral hazard a banker should really talk about moral hazard as peat 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 compared to the fed's balance sheet they have a long way to go basically you have to suspend your sovereignty 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 the european union and into. national 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 then 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 bellows 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 they even 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 took all the money you got the austerity 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 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. but argentina. so you know let's look at another former eastern european point former soviet bloc nation which threw off the chains of command and control communism only to brace the commanding. troll 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 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 age and incredibly stupid banking tricks for their benefit and

everyone else's detriment of course i'm looking at the lafayette economy collapse and something reminds me of jeffrey sachs out of that remind me and jeffrey rosen oh never mind 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 are other i.m.f. loans and became part of the brics. growth and then finally talked about social

media that here's the 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 fewer crash banco and lot fia which crashed branka crashed bank wasn't much money at the crash or bank there was a run on that bank and it collapsed after snorer us bank and lithuania is taken over by the lithuanian state anyway and then there were rumors that the government saying was via twitter so lothian authorities 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 are financialization model and these are the same guys that do spread false rumors in order to you know better fit from that credit default swaps they've bought on any of these banks our nation's falling apart 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 on the 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 everyone plays all starry measures it's all about the rumors are i think sam or thanks so much for being on the kaiser report thank you much i know you're. well be right back don't go away. well with. technology innovation. developments around russia we've got the future covered.

casual welcome back to the kaiser report time now to go to double and speak with economist professor constantine good yeah constantine is from moscow and now teaches at trinity college dublin welcome back to kaiser report doesn't thank you much all right now detained if it were to happen what impact would a euro zone breakup have on russia there i read it two ways in which the euro can break out and we can call it or there disorderly in the orderly case of the default or breakup of the euro what will happen is the monetary months that money in circulation currently in euros will be gradually over a number of years displaced out of the existence whether in one country such as greece or in a number of countries such as all that very pro countries there are different permutations and that case in this case the disruption will be the most minor and

the impact on russian trade and the russian personal savings and investments will be very minor the worst case scenario calms when there's disorderly default or the sort of the structure of the currency markets and there's a lot of the what happens as overnight you will see the exist in a number of countries and there's a lot of the other countries euros will be comedy prices as well so in this 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 will directly or through both processes themselves as the countries will be when they can eurozone countries which as the eurozone itself will be in and they get on some of their obligations especially for the customers and for foreign savers there will be also just actions that investment markets which will impact the russian companies especially corporates which are least adult side of our island where they trade and even shares. in point both and also there will be disruptions to the investment market so the new

investment will be disrupted and flows of investment into russia in either case there will be need price in the european assets and in that case russian companies . 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 bug but the destruction will be very significant right now or 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 or even three tiers of russian banks first at the very top the high all the banks the likes of b t v for example they probably are less exposed to the crisis in europe and they are less exposed to the crisis that mystically as well they also have very strong capital ratios and most of their capital comes to see of the government as a result of this high quality capital that would call so we would expect far less

disruption there and there is also implicit sovereign guarantee in the case of those banks there is a need the range here which in itself is relatively healthy some of the industrial base into the industrial assets and doesn't result 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 will share 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 asset side because very few russian banks have significant exposure to financial assets outside of russia but they have their own problems inside their archer and through their plights the smaller banks two years now the government has given them the central bank of russia being ousted in terms of trying to reform the bacon sector in russia over a number of years of them before. prices because they corrected for so that there

will be problems at the smaller senior bank kind of levels if you want and this process is ongoing will be disruptive will be very 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 wasn't in russia recently been a minute in a world trade organization in w t y changes should we expect to see and twenty twelve as a result russian admission of the w t o is probably one of the invasions one of the longest processes of over session to w t o and so it's function of the ability or conditions of any countries so far in their records they actually stretched over twelve to sixteen years depending on different types of measures the different components of those measures so that is out of that you wouldn't see a significant impact in terms of the w t o ascension in play to twelve 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 the positive it will start and point it well it will continue throughout the period of assessment so the next ten 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 impetus that they industrial and the prices level and also that the certain sectors especially sectors where russia can be very competitive international markets such as the food for example also the new technologies and if their process starts and turns it well this will be a very good market for us to go in for it in terms of achievement both on the earlier mission not just the mission but the sessions we don't need to go but also the greatest benefits that will gain the greatest benefits from that membership as well in the long run i asked part about almost certainly oil is the king. and talking about the russian economy it's 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 the best move the most what we call it let's less so in the short term the montserrat of the economy i don't anticipate that there are market moves in terms of the oil prices because of price currently like the rest of the if you want storable commodities specially if you look at gold if you look at versus metals that we look at the oil . less so on natural gas for example site where you are seeing is that the price of those commodities just. continue to ease and if you were 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 been factored the in and the real loss that's what. kind of

physical tangible assets oh we're not in bali you would expect that to continue not in terms of rising oil prices but the level of oil prices in there is your say eighty five to one hundred five somewhere in the neighborhood yeah of course thing it's a bit of a curse as that because the high oil prices dissuade our disincentive as the economy to move into a less 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 in la scouser there's a lot of talent there is that in the cards going forward certainly isn't the cards both from the government perspective pulls the perspective of. and the incentives that are being put in place and also in terms of the dynamic and they want to be

the younger generation of their actions nowadays are much more focused on the high technology high value out of what you would call sectors especially service sectors they are also becoming increasingly traded sectors russian experts for example of i.c.t. services which is self-regulated services. you know so social networks as you mentioned them done things like that all web based related services has been growing at about forty percent a year and that is going to continue the big problem for us that there is there to continue that momentum you have to stamp or forty deal with the outflow or brains what we call in other words that human capital people collins which is behind that and there are tremendous capacity of talent but unfortunately in the last few years it has been losing that there grassley so the countries outside of washington and in particular the multinational corporations so it is crucial that the russian government policies and now context for example the projects like skolkovo are very interested in those projects are still potentially anchor multi-national

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 their growth and career wise and growth experience wise and skills wise and that is very very much important because russia currently has they 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 of promotional opportunities for growth opportunities and also business station of the two inches so we pair in those two areas read to the corporate side the multinational corporations and domestic business creation in these areas will be very much crucial to anchor in that talent and they are by 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. which 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 the thirty arland how does thirty imposed by the circumstances in most cases is there a difference in never been viewed as chosen by the governments governments always pursue their objective or raising their expenditure no matter what it's really is a matter of consideration how high is the national debt in the case of for example countries like russia some stimulus is warranted simply because it actually is not overboard 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 skills and best we can use of countries like car that isn't truly capacity when you reach the level of debt to g.d.p. ratios of one hundred percent plus like are likely to like greece if you also have

a high especially if you have a car and driver you don't have a choice you have to bring you all of me in the fiscal situation back to the level of sustainability over the long term and that is something that our lives trying to do unfortunately it's best at the times of plenty around the middle of the crisis and of course that is the part of the only which is not working right now for our domestic going to be in effect is not go it's going to need to shrink as a result of those that are so. constant saying cardiff thanks so much for being on the kaiser report things and that's going to do it for this edition of the kaiser a par with me max kaiser and stacy herbert and i thank my guests constantine girl yeah you can follow constantine on twitter g t c o s t or g t cost and 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 there's

a match guys are saying. arab

league observers say syrian leaders have pulled have your weapons out of key cities and release prisoners but the group is still looking for ways to hand young going violence. egyptians are casting their votes in the country's third round of parliamentary elections but with the recent raids on foreign n.g.o.s it's fear the military his grip on power could remain a strong as ever. matter runs missile test in the gulf drop western condemnation but critics say the u.s. vote to iran by slapping down ever more crippling sanctions. this is going to lie for moscow i'm ready and josh the arab league says syria's

government has was drawn heavy weapons from cities across the country and released some thirty five hundred prisoners but the body confirmed snipers are still posing a threat and cold foreign hands to the shooting activists claim hundreds have been killed since the monitoring team arrived last week drawing criticism both from within syria and the arab group advisors to the league said observers should be drawn because of the continuing violence their mission is to ensure compliance for the peace plan of the country analyst patrick henningsen thinks events in syria are being manipulated with western powers and arab allies backing insurgent groups to promote regime change. a lot of these so-called human rights reports definitely skewed in favor of whatever the current western policies coming out of the u.s. or london and what they would like to see happen which is the. people in the u.s. state department the.