clay is the perfect material it's a lie you make just a small change and you get a totally different result and what a pretty top knot you have. this is a little complicated. it's like geometry we start by marking out the incision lines as a guide. it's very intricate work. my life has changed one hundred percent. from the field operating table here more than just a very small table as long as i had a flashlight and a working battery and i had a good enough environment to work it. was among them along with some other

terrorist leaders. to him as if he's reminiscing about just. looking at you but at the same time he's somewhere else. going to watch this. and doesn't feel like me at all and. it's someone totally different someone i don't know. hello and welcome to cross talk where all things are considered on people about what is the state of the global economy and where is it going and why are economists using the term new normal.

welcome to my guest today here at the st petersburg international economic forum they are charles robertson he is the global chief economist and head of macro strategy at renaissance capital we also have robert may he is managing partner at robert may consulting group and we have. the chief economist and head of research at deutsche bank russia. to you first we just had at the end of last week g. eight their announcement about the global economy as least as it concerns the g seven g eight point nine i would say they all on the same page. you have a steady in europe and you have suppressed or in the united states you talk about job creation in both don't create jobs well i think the developed economies are very constrained in undertaking a significant stimulus either through monetary policy or through fiscal policy i think part of the reason why you had such a statement was simply because there's not

a lot of arsenal. tools left in the tool box exactly exactly i think if we're talking about fiscal policy fiscal deficits are very high there's not a lot of room for maneuver and then you take monetary policy interest rates in the u.s. it's close to zero there's not much that they can do we'll talk about quantitative easing in a second there charles what do you think about that i mean. how is it reflecting the true condition of the global economy because we would expect from these countries to say the best possible thing they could you know put in the best face on a rather dismal situation still for us unemployment coming down seven point six to being created the employment rates come down so we found stop by my view in the in the twenty years of the greenspan credit boom when debt doubled in the states the number of jobs the employment rate rose from about fifty nine percent where it's been for thirty years to sixty four percent we're now back to fifty nine percent i think five percentage points of americans who would never have got jobs were not

for it unsustainable to say still count the americans that are not looking for jobs as well that's the point that they are dropping out of the workforce they are giving up that's why the unemployment rate can continue to come down even with employment baby illusory isn't it. you stabilize in a different way in a different place ok that's going back well i want to talk about the new normal here. about the new normal yet we hear it's very interesting we heard the plenary session with. chancellor merkel and president putin here at the forum. and they were discussing this point and they were saying that in some respects it seems as though the crisis for two thousand and eight two thousand and nine is essentially not ended in sort of a new normal you're seeing this tightening while they're kind of stepping back and saying things are not as good as they should be we better be a little bit more careful but it's a fairly good point because that's the system they created in the earlier he look at the emerging markets where how are they to react to this i mean the major

economies of the world least in the west are going to be stuck for what a generation well. a tremendous problem for emerging markets and i think they will need most other things to look for new ways to boost trade to boost growth partly that is going to be on their part efforts to boost infrastructural development infrastructure projects so domestic demand. internal means of boosting the economy but also i think say if you take for example a lot of the trade was focused primarily on europe and now russia is trying to diversify into asia into the faster part of the world economy and i add on that. it really looks like you know we have this globalization phenomena that we know in the night but at the same time when you see mistakes being made in a certain part of the world but in the west right now i mean why should the rest of the world follow but maybe you can't get out of it it's a trap i mean they talk a lot about the. basically it's

a interconnected world in the economies are interconnected what i was looking more on the infrastructure point that was raising the amount of investment that the president was talking about and to me i mean we're looking at you have supposedly a lot of money a lot of cash sitting out there somewhere for investment but it's not being invested because it's cautious and i look at russia where they're talking about we need to innovate except for the infrastructure that they were talking about it was mostly about railways pipelines etc all simply focus on energy and commodities again so i don't see that as innovation per se but at the same time it makes russia indispensable to the global economy and there is a diversification maybe a different way the best way to diversify the wash in the economy and that's where the greatest demand for the development is so i think you know a lot of these infrastructure projects of course the big concern is how. they will be conducted and hopefully war of the funds will be coming from the budget sawley from the budget but also from the private sector that is the biggest challenge i

think rights it's a great that's the biggest opportunity for foreign investment right now in russia absolutely i think. has been probably one of the key themes in the discussions in the forum and clearly russia is trying to make every effort to attract not just private capital but sworn capital into. the. transportation the specialist so you know the. russia certainly needs more roads it's always been it's from charles you know president putin said long ago that russia would not the social welfare state that's founded in western europe what do you think he means by that. the maze is not going to push welfare spending pension spending and so on unemployment benefits to create a situation where the government spending fifty percent of g.d.p. on francis case i think fifty seven percent of g.d.p. spent by the federal govt by the main government in france in russia it's more like

twenty to thirty percent the only problem with that is that he has already pushed up engine spending and he's done that quite dramatically in the last five to six years and with the demographics russia's got this is not a sustainable. situation that the good news is that you've got some very good performers who just you know we speak of the four who are talking about the need to sort out the pensions issue it's trying to make it sustainable in the long run it's important he's thinking about it and so it's basically. a variation on a theme i mean it's going to be a russian social welfare state it's not going to be a certain model or russia needs a special model of course they always need to special model but i think at some point. if there's an increased investment coming into russia i mean if there's a slowdown in the amount of capital that's leaving russia because you see it's pretty high already for the first quarter was like twenty five billion already and it was estimated it was going to be ten billion for the years and i already had twenty five and they're not saying it's capital flight actually being invested in

other countries which is. a complicated situation but if you don't see this new money coming in it's going to be challenging because they'll have to start dipping into this reserve funds where they've been putting the excess. revenues from you know previous sales and it's very interesting because remember we talked earlier and another program about how private russian individua. rules are investing their money all over the world ok so this is again something the russian government has to do with this kind of globalization of independent private investment yeah i think there are a lot of aspects to this theme one of the aspects is that yes the russian consumer is becoming a global consumer and so part of that is leading to capital outflows i don't think you can call it capital flight because this is more an indication of how mature the russian consumer is but another aspect is of course that a significant part of the outflows is russian strategic russian corporates to

acquire assets abroad and this is again not something that you can short of capital flight but this is simply russian companies this time it's almost impossible to control it i mean it's the open market yes exactly and i would say there are problems on this front because a lot of this outward investment by russian corporates the still somewhat in the fashion. to improve on this and certainly some of these assets of they're properly used by russian companies will be a contribution could be a greater contribution to russia's g.d.p. growth it just raises the question if the russians themselves or investing outside of russia how does that support the theory or the argument that we need more foreign investment in russia when your own. everyone is. everyone's dollar say there is the best return to show you that you get as much as. of the last five years three percent of g.d.p. goes to china department so the same money comes in but russian companies diversify

fomor outside. those other countries. is about one percent of g.d.p. russian f.b.i. alex wellen everybody wants chinese investment quite a few countries in the world that actually block their ability to buy assets in the world but there is russia still experience as i said i think there was an element where post cold war that was normal russian companies should want to diversify one hundred percent local rich. much like south africans off to post thoughts i wanted to invest abroad but it's the twenty it's now you should want your business environment to improve such that the russian companies are saying. investing in her . relatively how is russia doing to its peers and with the g seventy economies well i think it's always understated ok you know of course even you know in terms of restrictions say with regard to investment losses distractions with regard to its strategic sectors and strategic companies they have analogs the

western economies whether it's the u.s. or europe but if we're talking about russia's economy certainly the quality of the . reserve the reserve that has been built up in terms of the. it's far better states. what you have been western countries in terms of and that of this obviously russia is ten percent of g.d.p. public debt in the west we know that the ten approach one hundred percent of g.d.p. and then in terms of growth. very frustrating but for a lot of the western economies it would be great to see those growth rates of even the one to two percent that russia has now first a question of what is the growth based on i mean really where's it coming from. another point i had was just about again on the investment in bringing money in there's always been discussion about you need the state to kind of back out to privatized more so that you can have more competition here and really help to

innovate the economy and the figures i had maybe your figures are different but i was i was told that in two thousand and six about thirty four forty three percent of government involvement in the it's about forty three percent was government involvement in the economy and now this year it's like fifty two percent that the actual government involvement is much higher than it was so i guess it depends on what you. by involvement i mean is that head count is head count is going down. going down according to this all right chance i'm going to have to go to a short break here and after that show break we'll continue our discussion on the russian economy and the global.

led mission and free credit a should be free. for charges free arrangement free. three stooges free. cold free blog video. free media. see a story. and realize everything is. welcome to the big picture.

please. welcome back across up for all things considered i'm about to remind you we're discussing the global economy.

before we went to the break we're talking about russia but i want to talk about this new normal here because it seems to me the new normal if that last a decade or a generation is lower expectations of economic growth in the traditionally rich western countries how the government gets through that we see europe going in one direction the americans going to another but let's look at the other parts of the world i mean ever since the the end of the second world war the end of the cold war there's heightened expectations it's always going to get better always going to get better and in two thousand and eight two thousand and nine that proposition hit a brick wall but we have most of the growth in the world now outside of those traditionally rich western industrialized countries so i mean do you give up on the expectations model or you have to redefine it or do it. because growing on the basis of. i think.

the most telling case is that of china i think they're starting to think about not just the quantity of growth but the quality of growth. going forward. only have that kind of expensive growth just for so long even exactly exactly so i think this is really the issue with a mix of different factors that constitutes growth and the quality of the. a broader economic development because after all g.d.p. is not the only probably only an indicator of the quality of economic conditions would think about that i mean you know we see these emerging market world kind of stuff because they looked at the west what they did emulated quite a few things we've already discussed the dangers of debt and i know that russians are getting a little comfortable with that but most people are kind of skittish about it and maybe because of what happened in the west i mean is it

a hybrid here where you continue to take some of these things but he served with other issues. i think was totally right about the chinese moving towards quality i think that thing is misunderstood. in germany the chinese. growth in germany. but that's only because they were lower income level mathematically impossible for them to continue to grow. ten percent a year they are now an eight trillion dollar economy another trillion dollars as they were a decade ago a decade ago they added america each year to the global economy hundred billion hundred twenty five billion dollars now they add mexico over a trillion dollars a year and next year china is going to last well i think maybe one point four trillion the u.s. will add six hundred billion dollars to the world economy that's two trillion from these two alone still pretty helpful growth for the rest of the world it's not quite so bad as some people fear i think also as you have to look at if we're talking about where is the money coming from if it's trade i mean. the economies

have to do well enough that there's a demand for the for the imports whether it's from europe or from asia or what have you and if the european economies slow down the per capita spending is going to slow down i mean you know i mean it's already it's already bad but the problem is who's going to be the purchasing power coming from they don't have it so i can say that you're going to see a shift in the trade patterns that's go. going from one country to another but. i just. it's going to be water what is the products or services that are going to be in demand in these are going to be just going to have the impacts that's accepting if you haven't pointed all let's go to a quantitative easing ok we heard that it's it may come to an end in the middle of next year and that is clearly. what i'm asking the question ok well yeah is there life after quantitative easing well i think there will need to be some further

injections probably further down the road and i think the wording from the fed will be more about piecing the markets and probably some more drawn out pattern of the withdrawal of monetary easing clearly given withdrawal like that term using it in multiple definition where we have gotten used to it yes particularly a lot of people on wall street like this very think another issue with the stimulative that we've seen whether it's fiscal or whether it's monetary in a lot of the developed economies there are diminishing returns from these injections of liquidity that i think is as another problem with which the policymakers will have to. think about that you think that you know i mean bernanke he did in his head if that's possible because in looking at the actions of the fed they said they would relax taper off if they thought the economy was recovering in a real sustainable recovery i mean is he trying to is he projecting hope or is he

reflecting reality that the economy is on the mend where he can step aside and this what eight hundred fifty billion dollars a month can be you know withdrawing the eighty five billion dollars a month you can start cutting that down and perhaps some reason next year he's assuming growth will be three and a quarter three and a half the markets are saying two and three quarter three and everybody is agreeing the u.s. be doing better next year so that's fair so i think they. can't do anything about it europe could get still so much worse. where we are today that's a real dilemma for europe yesterday that was a big part of the discussion here at the forum because you have some kind of me to perform well in germany for example and they have spain greece others that are portugal that are in really. deep mass and how europe as a as a unified group can address it but i think that's a concern it's confusing sometimes because you're hearing some days you're hearing really good figures coming out something's changing for the good and the next day it's bad so i have a problem with understanding really words going long term in europe and i don't i

think still the center of concern is still europe i would agree because i agree also that probably the u.s. is going to excel the way. we also for the european union will accelerate inference of growth and probably will no longer be in the recession territory next year but look at the exit into the euro zone europe in general but if you look at the pattern the clearly there are so many risks associated with europe especially in this. southern part of europe where the weakest links could go wrong again and we're not seeing much progress and films of them really normalizing their economies especially the physical cd but i was going raise that is a terrible problem on friday the day the person was giving a speech at the greek government losing one of his cool coalition phone it's dropping down you're reading my mind as i say where does politics come in and out

because it's here with the condom it's always had these broad strokes you know and when you look at these figures it's three point one or three point four but what about people in greece in portugal and spain and ireland places like this i mean this is not sustainable we see doesn't receive the rise of the political right now it's economists i'm not going to ask you to talk to specifically about that but there is a political dimension here where you can say sustained growth over certain amount of time but things actually happen on the ground people actually make decisions and politicians have. what you say man is actually a rise of the left and the right ok. and indeed the populist i hate you all the parties in the u.k. and greece and italy and spain are all coming up the thing with grace is that no country can ever find in the history of the survives the unemployment rates to you now get in greece and spain on a fixed exchange rate regime in the one nine hundred thirty s. everyone on the gold standard of fixed. yeah but if you can if you just continue the austerity you'll get that extra injection from matter merkel ok that's not

creating a healthier economy it's not raining if you leave the euro. we were did this last year i think that's it's just people prematurely they missed they didn't recognise the political will to stay in the euro but if we look back at the great depression you see can take five six or seven years after a recession when unemployment to go up to thirty thirty three percent in the netherlands before you leave but that's when you can just value you can't devalue well i mean clearly some of these countries were facing this choice relatively recently and i think that's the issue how far can the suffering go because to normalize the fiscal situation the economic situation more broadly you have to pursue such a fairly that it's going to be. one of you on holiday i want to go back to this term that the new normal here is that the new normal and i know that doesn't apply because russia is kind of in the middle of things because it's still an emerging market but it certainly feels the effects of the eurozone as we've pointed out

before that's where they were turning so much of their trade and now they see the euro zone is not as favorable as it used to be so this is a good dundrum for russia but let's look at this new normal here i mean what is the new normal is just austerity for the next twenty him kotoko into the new normal they were talking about the u.s. they were talking about lower growth for a sustained period europe's in a different situation it's got the choice of either paying its pound for the last twenty years twenty years of just managed to to climb. most people being ok so it's off but that's because it's in the eurozone rather than one single country like japan that will entrenched incredible division of wealth in germany and deep deep pockets in greece which will last for years and years and i struggle to believe that people in greece will continue to put up with. it sorry but i mean even the there's a stronger economies in europe i don't see them really coming forward in a big way to try to. help greece in the long term and they just didn't have the

economic back bone before this crisis it was a matter of timing they didn't even have a chance to get their institutions and their fiscal they could really afford anyway merkel made a point on friday at the forum that demographics mean germany can't afford to just pay out it has a fiscal terrible fiscal problem has a pensions similar to russia in fact but a sudden more acute because german debts already eighty percent of g.d.p. in russia russia can afford to make mistakes on pensions germany can't germany can't afford to pay out spain and greece and italy a portugal they can't afford to do so. the normal means slower growth way in the developed world and i think we will see. by very definition we might not be using the term developed world anymore. the world of lowered expectations a lot of maybe a lot of knowledge you will need to be explored but let's put it this way ok money amount talks about no growth and growth economies and says' new toy economies of

hope and noble he doesn't even talk about bricks anymore it's growth versus no growth and why russia's concern people in the last twelve months is because this approach to no growth environment or a gentleman were brought out of time i want to thank you for joining me here is the same people who are going to national economic forum and i want to thank our viewers for watching us stay with r.t. . more news today boylan says once again flared up. these are the images the world has been seeing from the streets of canada. showing corporations are all day.

they were ready to do anything for their country to me is to love the country more than yourself if you joined the military for any other reason that you're probably not to have a good day they were tools in the hands of the state now they live remembering the past which is impossible to get rid of. the war. but it however good people do get hurt. and i have heard good people. silent. a lot. but would prefer not to be sometimes i feel like. i should have died over there. because. i saw

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me very lightly. on the run n.s.a. whistleblower edward snowden is off the radar with no sign of him board the flight bound for cuba he was reportedly booked on off to spending a night at a moscow airport. this is footage from our correspondent of the seat snowden is meant to be sitting and soon the flight will end to u.s. airspace where america might have a chance to intercept. someone says snowden is safe but keeps his exact whereabouts secret we can extend however confirm ecuador has given him refugee travel papers. washington criticizes every country snowden passes through while demanding his immediate deportation a white house spokesman insists the whistleblower is still in russia.