the program says documentaries and spanish matches. will turn the tip angle of the story. here. i'll teach spanish to find out more visit actuality. you know how sometimes you see a story and it seems so you think you understand it and then you glimpse something else you hear or see some other part of it and realized everything you thought you knew. i charge is a big picture. it's

thirty minutes past the hour you're watching business on r t welcome russia's president vladimir putin is flying to soar to this week to mark the one year to go free anniversary of these sochi olympic games but the sochi games kill ready claim the first place in terms of cost it's setting a world record as the most expensive olympics in history according to the state commission overseeing the preparations for the games its price tag will read fifty billion dollars that's more than ten times higher than that of the last one on one biggs games in vancouver canada our correspondent andrew farmer has all the details of the story. well with a year to go the work continues and so does the rising cost sochi will be the most

expensive olympics in history with the final price tag thought to be around fifty billion dollars that is ten billion more than the summer games in beijing and ten times the amount of the last winter games in vancouver so begs the question why is it so expensive and the answer is quite simple pretty much everything has had to be built from scratch i'm standing in the. region which will host the sliding in skiing events there wasn't much here before the olympics came along and they've had to build the bobsled track for example the ski rams prepare the slopes and create the hotels and the cafes and it's a similar story down at the coast where there is the olympic park around half a dozen venues there they will host the skating and the ice hockey and on top of that you've got the impression just something like five hundred kilometers of road and railings that have to be laid when we talk in general terms like they she can probably see why the price starts to mount so another question is well is it all worth it financially the answer is simply probably not it's pretty rare that we

lympics do generate a profit vancouver for example is generated something like a billion dollars since it's hosted the olympics and it's thought the figure for saatchi could be around maximum two billion dollars so what is the point of all this well socially sort she will benefit afterwards they've got all these facilities to enjoy after lympics leaves secondly you could argue well is there not a better place to invest this money in russia are there not more areas in need we'll probably guess but the russian government will say this this is a chance to improve russia's image around the world this is all about prestigious and thought she represented the opportunity to host the olympics they went for it they won it and now they want to put on the best possible lympics whatever the price andrew farmer for r.t. saatchi. and lie. quickly run through the markets to see where we stand today on wall street stocks are retreating from last week's

a five year high the dow is now losing more than three quarters of a percent so far investors once again worry about europe namely spain which is in the midst of a corruption scandal the domestic data is not helping either the commerce department said factory orders in december came in weaker than forecasted now on the european bourses we're also seeing the inevitable correction following several weeks of extremely robust growth one of the biggest losers in europe is a dutch infrastructure company over oil m. tech and v. is drop forty eight percent on monday after it said it would have to write off one hundred thirty six million dollars on the project in poland on the currency market let's see what's going on there the euro is definitely under pressure to the u.s. dollar on all the bad news from europe and the ruble as you seeing on your screens weakened against the dollar and crude prices dropped on monday it was gaining to

the euro and following a ten week rally the russian equities lost value on monday the my six and the r.t.s. finished the day with about three quarters of a percent and almost one percent respectively both goes stock exchange the main plot form for trading equities in russia is trying to revive the country's capital markets by setting a personal example it will offer it shares to the public next tweet. you simply within the country your g.s. my sex plans to raise about five hundred million dollars the announced price range values exchanges between four and five billion dollars in total its largest shareholder of russia's subdural bank its stake is just under twenty five percent of correspondent a ten a political explains why the. decided to stick to a domestic offering. just planning to float shares exclusively on its

own platform to boost their appeal of moscow as a financial center how to courage more russian companies to go public at home that goes in line with the government's patry arctic intentions president putin of recently said that russia's a massive privatization should be left to capital markets and not to overheat foreign bourses this year russia plans to offer investors massive stakes in three state companies including ten to twenty five percent of russia's second largest banks need to be seven to fourteen percent of the diamond produce our grocer and up to fifty percent of the shipping giant soft cotton flawed analysts say an exclusive domestic placement could hurt the month for the russian lots of billion dollar offerings there is a lack of long term investors in russia last year most co boards had just over one

million clients registered that's compared to over nineteen million individual investors in the u.s. and china the moscow exchange is indeed taking steps to become more attractive to investors it introduced a central securities deposits and shortened time to settle trades so far however these reforms have not been enough to convince russian companies to forsake london and least soul in moscow last year for example all the major russian companies that completed public offerings chose to do it in london while three of them issued shares in london exclusively. and that's the latest from the business team up next on our g after a very short break sophie shevardnadze speaks with laurence kotlikoff an economist professor at boston university about the roots and the repercussions of the global financial crisis.

there are twelve cities in the united states in which half of the people live.

with this is a problem that. there were. people were really focused on this problem you certainly should be able to. play.

laurence kotlikoff economics professor at boston university it's a pleasure to have you with us today it's great to be with you and great to be in russia so you're the one who states that america is broke and is even in a worse state that greece and ireland how so what exactly do you mean by that well we have condiments look at all the bills the government has to pay and and in the us case we have enormous bills that have been kept off the books that are not official debts but they're very real for example paying me my social security

benefits my old age pension that's a real obligation. it's not part of official government debt. but it's you know very important because there are seventy eight million baby boomers who are going to get these social security payments. and in addition medical payments from the government if you look at all those payments they're about three trillion dollars a year so we have these huge bills nobody has thought about paying for them and congress and the presidents over the years are just focused on official debt and basically have not told the public about these big bills he said the amount of the fiscal gap in the united states is in your estimation two hundred twenty two trillion dollars that's right two hundred twenty two trillion if you break this is like an astonishing number it's like three times the world's g.d.p. this is this is more than what the world means twenty times higher than the official debt in the hands of the public which is eleven trillion so if you had all

these spending obligations into the distant future and you compare them with all the taxes and you. in the spending all the interest payments and principal payments on the debt on the official that you have two hundred twenty two trillion in present value now this is twelve percent of g.d.p. on an ongoing basis in other words we need to get twelve percent more of g.d.p. . either in tax increases or spending cuts in order to have the fiscal gap is zero we're doing far too little too late it's. like operating on a person with cancer and you say well there's a big tumor here we're just going to take a little bit out today and we'll come back and in five years and we'll take some more but maybe in five years the patient is dead because of the tumor got bigger so

this is why we are in worse shape than greece and greece it's about ten percent of g.d.p. . they need on an ongoing basis we need twelve percent it only it's about five percent germany it's about five percent so when you look at it from this perspective. it's a whole different story then when you look just at the official debt because these governments are making choices word choices about what to call official obligations or what to call unofficial so are they intentionally hiding they are intentionally tried on this they've been spending in our country six decades running a massive ponzi scheme taking from young people giving to old people and then telling the young people don't worry you'll get yours when you're old promising pensions promising healthcare benefits and you know this is happening in all countries even russia has a pension system but it doesn't seem to be in as bad as shape

as ours in terms of paying for its benefits in the future but i mean this number two hundred twenty two trillion i mean who pays what exact. is this what where is this money going quit spending it i mean certainly not the average american what is it like the one percent of the super rich or the military what is where's it going where's all the spending. well you have again very big you've got a lot of people now they're getting very high benefits about thirty thousand dollars per person it's scheduled to go up to about forty thousand when i retire. which will be about fifteen years. so you can see that. we're just very generous to the old people in our country what do you suggest like cut spending raise taxes that will be suicidal to any american president well we have to be adults of running the country we have to act like adults because i mean right responsibility as adults is to make sure our kids have

a good future so we have to reduce the birth rate of the benefits to the elderly. and that requires. cutting the growth you know being much more careful about how much we spend on healthcare. because this health care benefits have been growing at twice the growth rate of per capita g.d.p. for forty years. these are the government health care benefits for the so it can't continue because it's going to kill the contrary so we have a huge problem it's being hidden it's not being described and discussed disclosed and we're in very bad shape you just mentioned that you need to take care of the future generations clash of generations with. what future awaits for american children paying up the deaths of their fathers but the united states when you look at it really has lived on death ever since world war two and increasingly so in the

past thirty years and they have somehow managed stop to collapse you know and. they have no problem getting needs at why do you think that the new generation won't be able to manage it well over time the official debt will become bigger and bigger as this year of g.d.p. and at some point the chinese and other people will stop lending us money and our interest rates will go up dramatically we'll have a bond market collapse and at that point. the deficit will get even bigger the debt the official debt will accumulate even more rapidly and our government is also printing a lot of money to pay for these bills so inflation can also take off quickly so i see the problems and they may not be in thirty years they may be in five years or two years that the chinese and other people start to understand how bad the situation is and then we'll be in the situation of greece where people won't lend

us money. and then we will have to make big cuts and everybody will be injured. so you mentioned china and i know that china and japan are they top the list of america's lenders right. for one trillion should they just get used to the idea they're not getting their money back and they can't just come out and say hey i want part of the american g.d.p. . well if i were anybody whether i was chinese or japanese or russian i would not be buying thirty year us government treasury bonds that are yielding three and a half percent or something right now because the prospects for us to print we have printed so much money since two thousand and seven it's really unbelievable we have the federal reserve has tripled what's called the base money the money that basic money supply it's called the monetary base it's actually gone from about eight

hundred billion dollars to about three trillion dollars now and so. almost more than tripled so we have a basis in place for a more than tripling of the price level right now we have created the the foundation for hyperinflation already and the baby boomers have yet to retire. so right now twelve percent of all the federal spending is based is being financed paid for by just printing new dollars. that's what's going on so we're acting very much like a developing country in terms of our actual finances and i've been. concerned about this and writing about it and speaking about it for since the late eighty's but and other economists have as well and paul and also some politicians but it's getting worse it's not like anybody is actually. looking carefully at

these numbers the politicians are looking at the official dead numbers and not really discussing the magnitude of what's coming out of people who think like you who are critical of the current american financial system have come out. in the street and they occupy wall street movement and they voiced their concerns and their protests do you think a movement like this is actually capable or able to solve real issues or is it just a red herring well occupy wall street was concerned about inequality and they were concerned about what wall street was actually doing and i think we need to radically change our financial system because we have two big problems and this is true in every country including russia. the traditional banking system the model is one of very high leverage banks more a lot of money promise to repay and then there's opacity they take the money and they do something with it but they don't tell you what they're doing with it so

people get very concerned at some points about whether the banks actually can repay and then you can have runs on the bank just overnight so it's a very unstable situation when you promise people things and then you don't know what you're doing with their money and then and that's what happened in lehman brothers and bear stearns and. merrill lynch and all these companies that one on one under one after the other everybody started worrying because they couldn't see the assets so what we need to do is. get rid of this faith based banking we need to have. no leverage and we have to have transparency the government has to disclose what the assets are the government has to do verification and disclosure we should have a government agency verify that somebody has mortgage is actually. a reasonable mortgage that that person has

a job that person has an income that person's house which is collateral to the mortgage actually has this value so we should not have any liar loans and then we should also have all the. banks be become what are called mutual funds which gesture sell share. heirs. to these funds so that they've taken all the money on an equity basis they don't borrow money they just sell shares of stock the money comes in and then they buy these disclosed assets the mortgages for example and then if you have equity based finance and if the mortgages don't work out somebody doesn't repay the shareholders take a loss but the financial intermediary which is a mutual fund never fails and never goes bankrupt so you have a banking system that can never fail if it's made out of equity financed mutual funds who are buying transparent fully disclosed assets that's what we need. and

that's where they know the protesters are wall street didn't know what they wanted but this is really what they need what they wanted now what we need is also protesters among the young about their fiscal treatment that's a different thing that's the thing that fiscal cliff and the possibility of america defaulting that we hear a lot around it's a symptomatic agony or is it maybe artificial political crisis here young people don't fully understand how bad they're being treated in the in the debates in the entire campaign not a single not one of these two candidates talked about the magnitude of the problems president obama said that our search and security system our basic government pension system has a small problem that needs to be tweaked is what he said well if you actually look at the the system at the trustees report the thing is thirty one percent under financed so it's not a small problem according even to the actuaries it's

a huge problem. so you know he's on a different planet from the reality. romney. felt that we could just lower taxes and. more revenue so he was equally. you know crazy or in this. and unfortunately we have children whose futures are at stake here and they're also under a lot of pressure on in other ways because they're competing with a lot of people all over the world and they're also competing with these new start smart machines that are taking people's jobs away. so in our country when you go to a grocery store or a drugstore. the checkout person is a machine. there's nobody working there it's just a machine these days there's actually maybe one person to help you use the machine

. and so that's replaced lots of jobs so we have young people. who are are having trouble finding jobs even college graduates are having trouble laurence kotlikoff thank you very much for a very interesting insight you get us on the financial crisis and it's great to have you with us again my pleasure thank you. live.

the speech. she gave. her her. mum is so good. live. by me oh. thank you.

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