technology innovation all the developments from around russia we've gone to the future covered. over thirty pm here in the russian capital time for your r.t. headlines the first a cease fire in over a year of violence between syrian forces and armed rebels comes into force following a u.n. deadline meanwhile russia calls for international monitors to help keep the peace. iran's president says and no pressure will make his country give up its rights to nuclear energy the statement comes ahead of this weekend's talks on the issue with major world powers in turkey. and as the world knocks the fifty first anniversary

of the first manned space flight russian scientists unveil ambitious plans to set foot permanently on. time now for the concert report here on out. there this is the kaiser report the exorcism of the life masters is coming to one seventy eight man street tonight at eight pm. reverend billy will be there be there. will be there in spirit i. think there were max i actually got a papercut i think it's from the paper devil life master. out she's. very much looking forward to that tonight but let's move on some of the to these

headlines here because we've just left behind europe and there's a debt storm behind us max europe may be heading back into debt storm a flood of easy money courtesy of the european central bank may for a calm start to two thousand and twelve but a poor spanish bond sale last week signals it may have only been a long before the debt storm breaks analysts warn why i think of it more as a debt fund do really with that boy you take a country like greece you stick it on the fondues fork and you dip it into the debt and then you serve it up to goldman sachs or j.p. morgan. all this is great now spain is being thrown into the debt fondu well this debt fondue has a shelf and it's called the central bankers and apparently they're however not bringing stability and magic recovery to the markets according to jonathan moines

at capital economics widespread hopes that the e.c.b. would use the might of its theoretically on limited balance sheet to fire a so-called silver bullet into the heart of the broader euro zone crisis by buying up or somehow guaranteeing large portions of the italian spanish debt have all but evaporated so let's look at somewhere where they're actually able to maintain stability in their currency so mali is mighty shilling hard to kill a currency issued in the name of a central bank that no longer exist use of a paper currency is normally taken to be. pressure faith in the government that issues it once the solvency of the issuer is in doubt anyone holding its nose will quickly try to trade them in for dollars jewelry or failing that some commodity with enduring value when the ruble collapse in one thousand nine hundred eighty some factory workers in russia were paid and pickles why then are somali shillings issued in the name of a government that ceased to exist long ago and backed up by no reserves of any kind

still in use m.-x. one of the reasons they give this is in the economist is that the supply of shillings has remained fairly fixed rival warlord's issued their own shillings for a while and there are a fair number of fakes in circulation but the lack of an official printing press able to expand the money supply has given the pre-one thousand nine hundred two shilling a certain cachet well that's right the component and the economy is trust and the shelling has left us so that in somalia what you're saying here as a stable economy based on a stable currency whereas in the us or the bank of japan or the u.k. it's completely unstable because the currency is incredibly volatile because people don't trust these governments central planners at all what you identify a key word there is just trust and here the are the central banks i just listed they think they could command and control they can force you to trust when there is

no trust in the system why would you trust any derivative products from j.p. morgan to goldman sachs why would you trust any of these debts that there are any of them are payable why would you trust to ever work and pay your taxes again when as we see in ireland when people are refusing to pay their taxes it's just being transferred directly to a small group of bankers now the congress article brings up this issue of trust and says the shilling has a further source of strength since each party to a transaction is likely to be able to place the other within somalia a system of kinship the shilling is underpinned by a strong social glue. paper currencies always need tacit consent from their users that they will exchange bills for actual stuff but in somalia this pack is a rather stronger individual who flouts the system risks jeopardizing trust in both himself and his clan rights social cohesion. begets trust which begets a stable currency which is the basis of a stable economy in the u.s.

you have social cohesion breaking down people see guys like jamie diamond lloyd blankfein kleptocratic lee raking the economy over the coals stealing billions no penalties whatsoever instead of trusting the currency in america their reaction now is to get to arm themselves or to get ready for the coming war but they don't trust the currency so they're out there buying guns on mass this is another interesting thing here max there are forgeries but many accept the risk of holding a few fakes as a cost of doing business shillings are often handed over in fake bundles of one hundred notes by this alchemy in imitation of a thing which is already of a notional value turns out to be worth something so even forgeries in somalia because of the trust implied within the clan system even the forgeries have more faith in backing them then what the european union currency the euro has that's

what you can have an economy like this and somalia would shellings that have a small percentage of the currency fake counterfeit currency but it gets all kind of baked into the cake and it's not really a big problem to contrast that with the united states where it's almost all forgery it's almost all counterfeits ninety nine percent counterfeit and then there's a very small percentage of business that's done using gold silver and other means of quarter but for the most part it's ninety nine percent counterfeit to us dollars a counterfeit currency is backed by nothing they print shillings and trillions of it to cover the banking crimes trust is evaporating social cohesion. evaporating and somalia is putting america to shame and the other thing actually you can apply this to look at the american intellectual property rights system so here's a group of people without any command and control government no central government for twenty years max no central bank for twenty years and here they're able to say we'll accept some forgeries because it's the cost of doing business and by this

alchemy in imitation of a thing which is already have a notional value turns out to be worth something so you can apply that to the whole intellectual property market that's right have a central planning central command and control problem in the economy with the fed that's blocking free market and competition and the m.p. a motion picture association of america and the recording industry association of america is acting like a centralized command and control intellectual property central bank which is destroying competition or trying to anyway in that industry as well so here you have in somalia it's spontaneous this is spontaneous organisation these people don't need to be told to have faith in this currency too because we are the central government with the central bank i ben bernanke to tell you that that is not money that gold is not money that only the us dollar is currency here is a spontaneous organisation without any of the need for that so what does it say about the whole eurozone or the whole american economy or they trust their fellow

somali if you have a community trust because there's a justice right there is welders justice and there's also a legacy there's a history there's a family there's a clan they contrast that against the united states were they were is shooting dead neighbors so there's no trust people don't trust their neighbor anymore they don't trust the government they don't trust the neighbors they don't trust themselves anymore so there's almost no trust any level and for this reason the dollar is weakening in the economy is collapsing so let's look at more europe. zone absence of trust tea party socialist why the left is getting a tax revolt in ireland so only forty nine percent of households pay the one hundred euro household charge that was due on march thirty first and it's due to become a property tax in two thousand and thirteen and some are now mocking the protestors tea party socialist it is the socialist leading this resistance to paying this new fee but the timing couldn't be worse for the government ireland is facing them

a referendum on the e.u. fiscal treaty and property taxes been mandated by europe and the i.m.f. member commanding control as part of the country's bailout terms and with growing anti austerity sentiment the government could be dealt a humiliating defeat that could lock ireland outside of the european stability mechanism the permanent bailout fund so you see they're threatening irish people saying you're going to be locked out of the european stability mechanism which is a permanent bailout fund so how is that stability to be a permanent bailout on for a certain class of people well it's not but we know from history that there's no country on earth easier to get interest seen in rivalry than in ireland and the british have done it successfully and the international bankers are doing it successfully get these two irish people to go to war with each other and while going to steal their own sovereignty while they're playing with each other so let's move on to another situation where here the irish people are refusing to

participate in a permanent bailout fund so let's look at where a permanent bailout fund is applied and who actually gains from an exclusive greek government rogge public institutions to complete. so it's revealed by the slog our venizelos regime secretly removed seventy percent of major hospital utility and university bank account funds to pay bondholders shortly before midnight on march eighth the eve of greece's private sector involvement completion on friday march ninth on average seventy percent of public you. the funds and various large interest bearing accounts of the bank of greece were rated these included most of the states regional hospital budgets very soon averse cities and it is alleged at least one utility company the greek government used this money in order to purchase government bonds from various bond holders without getting permission from the bank account owners well yeah it was all wrapped up and like the memorandum the document

that they signed off on which i love the troika to socially undermine sovereignty in greece and now they're finding out they owe the fine print it gives them access to all this these retirement funds hospital fund school funds are we lost all of that as well and of course the recourse at this point is not there there's nothing they can do but the cops will dress up like anarchists and beat some citizens and syntagma square and say oh we've got a emergency in our hands was passed some more measures that steal the money from folks yes but max let's bring it back to this issue of trust because this is what we've been talking about from the beginning of the show so somalia has trust in their system because there is justice and there is a consequence to defrauding somebody who are doing business there so in ireland we see people refused to pay their property fee because they say they know it will just go to these bond holders they know the unsecured bond holder angle irish here

you're seeing evidence of that but the money is being stolen because taxes went to the universities they went to the hospitals they went to the utility companies those funds are sitting there to pay for these services and in fact that money is not being used for the services they're reporting also that six of the country's universities say they face the media closure after the recent bond swap reduce their assets to zero and emergency meeting of university rectors on tuesday heard that only thirty three million euros remained of one hundred twenty million euros seventeen greek universities had departed. with the bank of greece for their operating expenses well you know the more i hear the more i want to move to somalia let's let's who say server thank so much for being on the kaiser report thank you max don't go away much more coming your way so stay right there. the official. giong food pulled from the.

video. and. now in the palm of your. car you know sometimes you see a story and it seems so you think you understand it and then you glimpse something else and you hear or see some other part of it and realize that everything you thought you don't. charge is a big. mac. skies are welcome back to the kaiser report time to go to moscow and speak with

economics professor constantine who along with brian lucy edited a new book what if ireland defaults a collected set of essays about the irish debt crisis available for download at amazon constantine welcome to the kaiser report thank you max delighted to be with you. what if ireland defaults you write an essay about the predictable upcoming default by ireland only two weeks ago and they can he insisted ireland would never fault are you telling us that a politician has been caught. lying not exactly this is the whole point of the debate the debate is about first of all what what default looks like we have many definitions and different types of defaults pretty much everybody in the book is by the way coauthored by about twenty one people together their academic researchers there are some politicians political thinkers as well as journalists from all around the world writing about different experiences different countries minister

politics states in the united states i've gone through in order to structure their bets in other words the experience of default historically and also have a set of chapters about the irish situation and the problem is that in the case of ireland the real problem is what we called the overhang and this is really a combination of private sector debt such as the household bacon sector that's which i assume onto the shoulders of the taxpayers by the government and then traditional government debt so whenever they everybody and they carry for example the prime minister of ireland when he speaks about the default in ireland and undesirability of such an outcome he is correct he is mentioned in the default would pertain to the government bonds and that is there would be a sovereign default he also mentioned in the implausibility and the low likelihood of default and for example in disorderly fashion without the cooperation of the european union and our european partners and the c.b. and he is correct as well so there is nothing really that he is lying about he is

almost about that and he is correct and that's consensus in the book as well the really the default itself that we talk about there is a default on bank that's ireland has tremendous amount of bank and which have been assumed either directly by the exchequer directly or through a guarantee also by the exchequer and that weight of that that is currently called an irish economy back from restarting growth recovery and getting back onto the pre-crisis trajectory if you want to write well they came to be made for a faltering on the dat or to go back to the. the the irish pines for example the average pound they all make sense it makes sense in greece to make sense in other european countries but the what makes sense for the local population is doesn't make sense for the bankers who are controlling these countries the outside bankers the i.m.f. the world bank wall street banks they don't want ireland to just fall so since they

have a bigger vote then everybody in ireland we can't really expect that to happen correct we are completely correct with exceptional via my friend i will clarify that very briefly as well if you look at what happened in ireland during the crisis since about two thousand and seven mid two thousand and seven when the first credit crunch started happening there are stocks players have assumed the liabilities of the irish banks to foreign investors primarily the german french dutch breaks and there's a result of that are just more experience now on the for the bank debts that the banks have accumulated visibly the rest of the eurozone also some of the way the united states comes into that equation is that the united states and the writers have written a lot of the c.d.s. contracts and the words insurance against the bank and that and this is out of that they stand to lose if ireland defaults on the bacon that's themselves now as far as the troika goes since the rescue package has been put together over a year ago now i am half actually played the role of proposing

a structured and corporative default on the bank and that i.m.f. has been on the side of the large part spare even before the age government came along and joined that side in fact i.m.f. back in the very between japan has been saying that they cannot understand why the european union and the c.p.a. and dodge garment insist on continued repayment of the bondholders of the brains blown corders because these banks are bust and there has to be some sort of the burden sharing now both i.m.f. and the rest of the troika don't really mean the restructuring as it happened in greece are this entirely different scenario from going. and again irish authorities are very quick to point that out and they're correct in pointing that out in the sense that greece needed to write down and sober and in other words government boards in irish case the government that itself is probably sustainable it's getting dangerously close to the barrier beyond which it is no longer sustainable and certainly is beyond the barrier where it exerts a drag on economic growth in the future but nonetheless it is still sustainable in

the sense that they can be stabilized and drawn back through growth and through a combination of growth and the payments over a long period of time this is clearly not the case in greece even after the restructuring that it has undergone in the second package of restructuring but nonetheless for ideas from our point of view it is very clear that ireland can get out out of that side of the problem where artist problem is is in the banks that and here i am up against play in the irish side rather than the side of the troika itself it's part of the situation in the sense you don't expect i.m.f. to adopt the soft approach and other authorities in terms of restructuring of the debts and yet it does because i.m.f. clearly logically reasonably understands the situation ireland does a piece and it is aware that in order for i.m.f. to be repaid on its loans to ireland for the european union to be paid on its own loan starland. authorities will have to restructure bank that's and as a result of that they will have to default on some of the banks that's and this is really also part of our pool because well i cover in my chapter that very much in

there is a debate between myself and the lecturer from the university coffee who is very informed and very good puts forward an argument that that is not going to be the case i however with very firmly in the camp that we will see a default on paying sooner or later and the sooner it will happen the better it will be for the i.m.f. of course is funded primarily from the united states primarily from wall street and you know spain observer from outside of course this will go under the category of good cop bad cop scenario we see from back american. t.v. shows so they i.m.f. comes in as the so-called good cop with the idea that they're on the irish side and they want to see debts paid off and yet they hire mandate of the i and that i.m.f. is to increase the debt load to roll up in greece to characterize and legitimize their own existence by increasing debt so i would warn against. placer too

much trust in this proxy for wall street which is the i.m.f. they're still paying the i know irish that right constantino they're going to stop paying the billions to ngo irises that are negotiated is that on the table is that going to happen well the repayment of the boards in other words the promissory notes authorities government has extended to the a large bank which is a completely bust insolvent bank which is of the process of being wound out over the period over the next ten years plus that repayment still taken place they are to day month after month and continue to repay the bondholders in that institution despite the fact that it's completely bankrupt it is non-systemic it's very small bank by european standards it's very interesting which you mentioned day about the whole day cortney between the i.m.f. and the rest of the throat there's a better car good car you're one hundred percent correct in a sense that both the good cop and the bad cop have exactly the same objectives however they have the different parts to achieve in that objective and i.m.f.

is a very clearly taken the position which would ease the burden on the c.d.'s on the writers in the united states from the likes of goldman sachs and the rest of them and at the same time will the board of the restructuring of the anglo irish and other insolvent banking institutions in ireland bets on to the shoulders of the european central bank fortunately from irish point of view that is exactly what should happen no matter how you spin it so the better the good cop in this case is actually clueless who could be right and being correct in what he's trying to do that i'm f. is trying to do and the bad cop unfortunately again in obvious case. has only inside the c.b. within the troika being the bad cop has on its side larger government which is completely and squarely and willing to use if you want the card of having the good cop on your side and play that against the zombie all right well say i mean it could be a case of paying kong where we see all the time these stats are shuttled back and forth with no progress being made at all but concertina you're in moscow so let's

talk about the lessons for ireland from the russian default start by comparing how big russia is debts were before the faults what happened to the bondholders in russia's defaults and how far to the economy decline post defaults and then how soon did it recover well in the case of russia slightly different the situation was slightly different the default was treated by the fact that the russian economy assumed breakup of the soviet union all of the soviet union that we have very key in all of the time in western europe and in the united states to criticize russia for example for its stance because i mean the other parts of the former soviet union we keep forgetting the fact that russia did this you know all of the debts of the former soviet republics and it had service those that for a very long period of time in the midnight in the ninety's this debt burden became really unbearable because the russian economy was contracting at the same time as the ruble was declined in the value so there was a wee pressure growing from the legacy that we should inherited from the former

soviet union and by the ninety six ninety nine to seven russia started entering into the order to negotiations to restructure the asian crisis at the same time the currency crisis in the southeast asia has triggered significant pressure on the russian ruble and treated also at the same time significant fiscal pressures in the in russia as well so as a result of that russia was forced to default it's entirely different situation from ireland in the sense that russia inherited somebody else's that ireland has inherited its own bank and that but it also is different in the sense. it was so over and that in russia that russia defaulted sovereign defaults are the hardest. if you want to resolve their hardest to overcome because the sovereign default rules of the sovereign and makes certain that down the road the sovereign caliban finance they feel they liquidity operations of its own budget what russia's response to it was was exemplary in many ways because what russia did it

simultaneously entered this very fast rapid correction phase on the budgetary side so it cut deficits very rapidly it devalued very aggressively to get the medicine up front that it had to take and therefore it back on to the recovery post before within the span of about say six months it was back on the road to recovery and so the most painful phase of the default was these kind of four to five maybe six months immediately after the default. in addition to it it didn't stop there in the arctic circle very important deep structural reforms both on the budget decide on taxation side it introduced later within the bout a year and a half after the default itself it introduced entirely new tax called for personal income taxation which became benign and on to be benign it also recognized the reality that. the russian government would not be able to finance excessive government expenditure to supply services to its population and therefore we should not charge for that as well it was

a it was structural reforms the legacy of which continues today so by about two thousand and one russia was firmly on the growth path and there after it was also aided in the growth path by the increase in prices of commodities which were the primary experts of russia but everybody in the west thinks of the syrians and that is the oil and gas prices which have rescued russia out of the default that is not exactly correct before the oil and gas prices started forming up before the balance of payments started improving on the current account the start improving in russia russia didn't are very significant long lasting reforms the legacy of which still is present and you can see today in the increasingly vibrant domestic economy all right. thanks so much for a time thanks for being on the kaiser report. all right that's going to do it for this edition of the kaiser report with me max kaiser and stacy herbert for the white house council chamber garrett you want to send an email please to kaiser report r t t v are you until next time missionaries are saying.