it's fantastic well that's because i found 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 russia and here it goes from good the best friend faster. growing bilingual and 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 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 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 together 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 greatly improved so. 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 here 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 well the interest rates in switzerland are really cheap 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 well people knew us you say that they haven't engaged in the scary trade 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 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 inside 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 most 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 was told on a 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 they're anti criminals that's right now macs. an effort to stem the rise in 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 gore gay 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 stopped 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 international monetary fund are pressing home. great 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 right. there 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 being the user 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 bells 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 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 you know let's look at another former eastern european put former soviet bloc nation which threw off the chains of command and control communism only to brace the commanding control interest rates. heading 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 as 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 courage to carry trade collapse as well so well it's a common thing throughout the history of these collapses it's 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 and jeffrey rosen oh never mind well it took a temp point two billion dollars bailout from the e.u. and i.m.f. and the author of this article is arguing that mafia 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 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 here crashed bank 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 taken over by the lithuanian state anyway 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 benefit from the credit default swaps they've bought on any of these banks or nations falling apart crash and rumored to be bankrupt about grumpy and sneezy.

well yeah 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 everyone plays austerity measures it's all about the rumors are right things never thank so much being on the kaiser report thank you max you know you're. well be right back don't go away.

max 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 constantine thank you monks 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 and we can call it or there disorderly in the orderly case of a default or a breakup of the your will how does the monetary mass or that money in circulation currency and 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 the peripheral countries there are different

permutations in 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 rita calms when if there is disorderly default or this sort of the structure of the currency markets and as a result of the what happens as overnight you will see the existence of number of countries and as a result 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 all directly or through both processes themselves as the countries will be when they can eurozone countries which as it's eurozone itself will be in and they're going to. some of their obligations especially to foreign investors and for foreign savers there will be also just the russians and investment markets which will impact the russian companies especially corporates which are least adult side of our island where they trade in either in shares or in bonds point both and also there will be disruptions to the investment

market so the new investment will be disrupted inflows of investment into russia in either case there were beauty price in the european assets and in that case the russian companies. some 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 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 the same mix of toxic debt that are 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 the high all the banks the likes of bt being 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 their distro capital ratios and most of their capital comes to see of the government as

a result of this high quality capital who 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 their industrial base linked to the industrial assets and as a 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 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 asset 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 given them the central bank of russia being ousted in terms of trying to reform the banking 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 if you want and this process is ongoing will be disrupted 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 a w t why changes should we expect to see and two thousand and twelve as a result russian admission of the w.t. oyster i believe one of the invasions one of the longest processes over session to w t o and so it's a function of the ability or conditions of 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 out of that you wouldn't see a significant impact in terms of the w t o session in twenty twelve when it is likely that we will see inflated twelve is 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 a net positive it will start in twentieth well that will continue throughout the period of a session so the next eight years that we will see an obsolete in terms of the positive valuations on the east side over our shares again trading partners investment destination on the russian side i certainly hope that in twenty two well we will see an increase drive towards improved impetus that the industrial and the prices level and also that the certain sectors especially sectors where russia can be very competitive in the commercial markets such as the food for example also the new technologies and if that process starts and towards it well this will be a very good market for us to go in for it in terms of. achievement both for the earlier mission not just for the mission but rather to go but also the greatest benefits that will gain the greatest benefits from the membership as well in the long run our last part about oil will certainly oil is king and talk 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 constantine well i think it will impact the economy it will impact the fiscal dimension of the economy and it will also impact the investment the most what we call it let's less so in the short term the mon side 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 there especially if you look at gold if you look at precious metals only look at the oil. less oil and natural gas for example site where you are seeing is that the price of those commodities just flicked anticipation of continue to ease and if you were in the united kingdom in the united states and also so globally there was 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 that in and the real loss that's what. 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 the level of oil prices in there is your say eighty five to one hundred five somewhere in the neighborhood now of course think it's a bit of a curse is that because the high oil prices dissuade or disincentive the economy to move into a less a more technology based initiatives and where as it drops 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. technology our social media certainly we saw social media are 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 policy perspective 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 and it will cost sectors especially service sectors they also become increasingly traded sectors russian experts for example of i.c.t. services which is the soft radio services and 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 they're just tremendous capacity of the talent but unfortunately in the last few years it has been move their grassley to the countries outside of washington and in particular to the multinational corporations so it is crucial that the russian government policies and now contacts for example projects like skolkovo are very interested in those projects to 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 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 the personal income tax rates which is a very significant incentive for people with high quality care with human capital to be there and to stay in their russia but unfortunately it doesn't offer the same quality of promotional opportunities for growth opportunities and also business mission of the two it is so we pair in those two areas redo the corporate side the multinational corporations and domestic business creation in the. it would be very much crucial to anchoring the talents and thereby benefiting from this growth as well because it's a regret 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 this therapy arlen how does thirty imposed on sort of by the circumstances of most cases stared at her husband never being really 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 or there's a lot to me the government does 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 ireland that isn't really capacity when you reach the level of debt to g.d.p. ratios of one hundred percent plus like are likely to be like greece if you also

have a very high especially if you have a car driver you really 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 part of this trying to do unfortunately is the best 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 going to need to shrink as a result of those thirteen so all right cause i'm saying god 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 me max kaiser and stacey hammer our thank my guest constantine girl yet . 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 ru and stacey read it it's all next on this match guys are saying.

quite. provoking tension the pentagon says u.s. warships will continue to sail in the arabian gulf despite an iranian willing to stay away meanwhile to iran successfully test fire as missiles during naval exercises claiming its prepares to hit upon if that's not just. the first talks between israel and palestine in fifteen months and with no breakthrough new construction of tourist settlements on occupied lands remains the main obstacle to resuming stalled peace i'm going to say it's. the winds of trains the russian army marches on wards to modernization with the crown and king to return to somebody or military might. as the headline is up next on live finds out what it takes to become a top what smith as i'll go north talks to screenwriting teaching at special robots

. a little yellow welcome to spotlight the interview show on our feet and all we know and today my guest is robert mckee. before making the first real street screen driving something straight at least the huge move that writers names may not even appear in the credits their work is essential for each and every film or t.v. show and their earnings are sometimes way on.