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tv   Counting the Cost 2018 Ep 34  Al Jazeera  August 28, 2018 8:33am-9:01am +03

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for over thirty years his disappearance remained tragic in mystery. but after colonel gadhafi his downfall in two thousand and eleven new evidence came to light . al-jazeera world investigates the case of the vanished in. and out to syria. hello i'm housing seeker this is counting the cost on the jazeera your weekly look at the world of business and economics this week crippled by its currency crisis venezuela's economy is in freefall out did it get to this. also we talked tesla and asked when the fledgling carmaker might start delivering on expectations . as greece emerges from years of bailout smear look at how austerity has affected
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the nation. we're used to be one of the richest countries in the world but now all rich venezuela is suffering from runaway inflation and its national currency has become almost useless president nicolas maduro is blaming all of this on what he says is an economic war against his country term or seeing millions flee even as well as economic hardships for neighboring countries. the international monetary fund predicts inflation will continue to rise by up to one million percent this year to put that into perspective venezuelans are now paying about two million dollars for a cup of coffee in order to tackle the problem the government has introduced a new currency the sovereign bolivia which will remove five zero from banknotes it's linked to a crypto currency called the petro that's pegged to the price of oil and the government is also raising the minimum wage by three thousand percent and faced with a squeeze on the country's cash reserves president maduro wants venezuelans to pay
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more for what is currently the world's cheapest gas latin america editor lucien human right now has more on this from caracas. venezuela government supporters tried to rev up enthusiasm for the newly introduced economic measures described by president nicolas maduro as an economic revolution to defeat hyperinflation here conspicuously absent from a rally in front of the presidential palace was mad little himself who hasn't made a public appearance since an apparent assassination attempt on august the force. if the right wing crosses our path will run over them like a train nothing will stop our reforms. just blocks away many shops and markets remain closed some in here into an opposition call for a national strike others unsure how much to charge now the five zero zero seven slashed off the currency head of
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a compulsory thirty four hundred percent increase in the minimum wage they go into effect september first the price hikes aren't too easy and two hours ago these eggs cost fifteen hundred and when i came back with the cash they were two thousand. the bus company that takes the border remains shut until further notice and that's the web page. for the moment it is not operational one of the few things that has not changed prices are these bananas they're now five of the five hundred thousand of the old ones which is roughly the same if you take away five zero s. but according to the people selling them by next week they'll probably go up three hundred percent. the government blames a crisis that's brought on precedented hunger and illness on what it calls a domestic and international economic war but many economists who learned the new measures will only make things worse. they're implementing fiscal measures to
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increase. refusing any type of international financing so they'll keep printing out money and we'll see that hyperinflation stop. and amid the uncertainty neither it seems will the exodus of the desperate to find relief anywhere they can see in human for counting the cost us. well let's bring now to carlos card that as he is the head of latin america country risk with i.h.s. market in london thanks very much for being with us so i think it's worth first of all just taking a step back here for a moment and asking. how did venezuela get to this point such an oil rich country had alley get so poor when i mean it has been a combination of factors as you mentioned going to lessen the economy and the clane or prices had an effect but in reality it has also been accompanied by indiscriminate public spending in via the printing of currency the implementations
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of giacomini and price and exchange controls that were never relaxed a policy of expropriations many of the expert peter companies and that have been mismanaged and bankrupt. and all of this compounded by economic mismanagement and widespread corruption and how of us sanctions affected venezuela's economy is there any way of of measuring that is there is there a number at all that we can put on that. the key issue about the u.s. sanctions is that they have operated in two ways one they have targeted top individuals of the government they lived in an effort to promote regime change the venice along with all of this. obviously the united or the not gangs that the other one and the most critical in terms of the economy is that the sanctions prevent than a sort of from restructuring its debt in a sort of currently it's in opposition of
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a technical default because of the depleted depletion of the foreign eccentric selves it doesn't have the ability to own or any payments to bondholders are going a company that operates in minnesota but it also is not able to restructure that debt. in the u.s. financial system regardless of the sanctions that the key issue here and then the connection to the economic policies over recently implemented is that the authorities are still also unable to present a credible economic package a program that would take out the economy out of the current crisis not so that in combination with the u.s. sanctions make the economic and political situation more and more difficult by credible. you're talking as well about this new currency that they're in. as well is that going to do anything to address the current economic problems. no our view is that actually the situation is going to get more difficult in terms of
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the economic and political environment and we're going to continue into the intensification of the hyper inflation that we have at the moment the currency the spect to a crypto currency that hasn't been really properly implemented. but also any type of investor is prohibited or participating in that because of the u.s. sanctions but at the same time in order there to prevent any type of social unrest the government will have to continue printing the currency it has multiplied the minimum wage for more than sixty times it has promised bonuses for people to contain them and even though they have announced that fuel subsidies will be relaxed the reality is that they have also said that those that hold the fatherland ideal which is up special id card that it's given to the poorest of the population would still receive that subsidy and also overall it will have a very little impact on the critical point here is that oil production continues to
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decline international reserves are not enough to cover any type of imports and the government is unable to restructure its debt and of the more financing. then asked to speak we think it has been a busy week for donald trump who has been pushing ahead with his america first agenda negotiations with china over trade tariffs failed to reach an agreement u.s. president impose new sanctions against russia and his route with turkey over tariffs sees no signs of abating she habitants he looks deeper now at how the trumpet ministration is using its financial muscle to go after those it thinks are adversaries. the trump administration has been setting new records with its imposition of sanctions on foreign entities though it is continuing a trend we saw under barack obama what is different is the imposition of economic tariffs this administration overtly views the dollar as
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a weapon and the globalized economy as a battleground. the numbers have been climbing proud of donald trump's presidency but according to the u.s. treasury sanctions were imposed on close to one thousand entities and individuals in twenty seventeen a new record. and busier analysts predict the administration will suppose that number potentially adding more than fourteen hundred entities to the list of those sanctioned he's president he came into office without much to government experience any with very limited in the western relationships with people in the hell of the product executive branch and what sanctions lesson do is execute foreign policy effectively not stop it is unclear sometimes whether the us has a grand strategy when it imposes sanctions is washington trying to change the behavior of those it deems as working against u.s. national interests or simply punishing them without any opportunity for redemption . and this anyone really believe that russia will forsake crimea for example as
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a result of sanctions what exactly is the u.s. trying to achieve in the rush to project u.s. power such questions sometimes remain unanswered. at least with the trumpet ministrations imposition of economic tariffs they would seem to be a goal president trump says other countries are exploiting the u.s. economically and that needs to end and that is why we are going to stick together and win for our farmers and our factory workers are still workers here we are all across this nation. the imposition of tariffs began in january with restrictions imposed on solar panels and washing machines the trumpet ministration said it hopes to boost domestic manufacturing since then china has borne the brunt tariffs have been imposed on thirty four billion dollars worth of chinese imports they went into effect july the sixth and tariffs on an additional sixteen billion dollars of goods they went into effect or just twenty third in addition twenty five percent tariffs on steel and ten percent on alum in human ports have shocked allies such as canada
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mexico japan and the e.u. . turkey's tariffs of meanwhile been doubled to fifty percent on steel twenty percent on aluminum yet here too there is confusion in imposing the steel and aluminum tariffs donald trump invokes national security his administration is using those tariffs as bargaining chips in trade negotiations how does that square with keeping america safe the long been international grumbling to the central and see if the new dollar and financial system to the global economy and it is likely that the frequent deployment of both as weapons often with little recourse for those affected will heighten those complaints in the future. washington all right still to come on counting the cost we look at white eight years of bailouts for greece led to a brain drain. electric car make
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a tesla has a value of between sixty and seventy billion dollars it's been trading as a public company for eight years but it has never made an annual profit elon musk's vision of integrating clean energy with transport and home power some might say is the perfect marriage but is tesla on the cusp of profitability or is this a bubble where joining us now from london is our national studio and i she is the corporate finance and deals editor at the financial times in london thanks very much for being with us so first off what is the latest that you're hearing on the company possibly going private obviously mr musk has been tweeting about this and then it's caused quite a ripple in the financial community but what exactly is going on well so i think we should probably start at the beginning which was a story that i broke with the financial times that that saudi sovereign wealth fund had secretly kind of quietly built. about a four point five four point six percent stake in tesla we broke that story roughly
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two weeks ago and it sparked a chain of events which is led us to where we. we are now thirty minutes after our story broke on musk took to twitter and said he was considering taking tesla private at a twenty percent premium or so to where the stock was trading saying he had the quote unquote funding secured and that basically unleashed this chain of events which is roughly as far as i can tell unprecedented in terms of corporate finance and takeover battles in history where a c.e.o. takes the social media and amplifies another organization story and basically uses it to. really change the narrative around this company so where we are at the end of these two weeks is really not much further than what we started because musk may have taken some actions which violated sea. policy securities and exchange commission policies which have sparked a series of investigations into his actions and as a result also left him scrambling to put together this plan and make it look like
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there was actually more meat than there was on the boat and so at the moment banks are all running around trying to figure out whether they want to even work with him on this because it's such a wild wild idea and proposal and seems seemingly unrealistic and at the same time not wanting to miss out on potentially the largest leveraged buyout in history and only all important question of profitability which in which you mentioned at the top there when do you think it might turn a profit. i mean there's no indication that tesla will turn a profit anytime soon and it's burning cash at a phenomenal rate it can barely produce a couple thousand cars a year it can't keep up with demand from consumers and so there's no sign of profitability in the foreseeable future and then you hear read constant stories about problems with the cars problems with deliveries it's sort of endless stream of negative news but what keeps this company going and what keeps the belief of investors there is the sort of cultish icon of ilan musk where he can captivate the market into seeing his vision and he just dreams big we're in a world where you know as one person wrote silicon valley entrepreneurs are
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creating these really micro startups that really have no real no real direction but will create sort of very profitable companies for their enterprise and some sort of back office software what you all must doesn't do that you'll musk sets up sets visionary ideas out and says i'm going to change the way transportation works i'm going to change the way energy works and then he lays out these really attractive narratives which obviously in a world where there's a bunch of small ideas we all want big ideas and so that can captivate the market in investors who are willing to back an entrepreneur but the facts and the details when you dig into them present a much murkier picture and that's why so many people have bet against tesla stock it's the most that it one of the most bet against talks in the u.s. market and there's a lot of people who expect this company to come crashing down and have bet a lot of money against it you know that gets my next question then is this really sustainable i mean if you talk there a lot about the about the negative side of this the money they're spending this problems with supply lines you know is this a bubble that's going to burst well i mean it's sort of the tesla story is part of
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our story of where we are in the world right now there are so many different bubbles that were and were in a real estate bubble or in a technology bubble and tesla sort of in caps encapsulates one of these bubbles now the way that they can get through this is if they actually just focus on building cars and delivering and meeting their demand and that is clearly the best way to run this company if he can meet the thousands of supply orders that he's already registered and give deliver those cars to consumers then you can see if a foreseeable run rate for tesla to survive but this is a company that produces a fraction of what ford g.m. and cetera et cetera produced on an annual basis and it has a higher market value and at some point reality will catch up if musk can't deliver . and why would a lawn musk we want to bring the company enter into private hands what would be his motivation so that. well again that feeds into one of the themes of our time which is that the markets are extremely short term oriented right investors want returns they want profits if you think about all the activist investors who are squeezing pennies out of companies and torturing c.e.o.'s for for more capital return to more
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aggressive action we're sort of in this ramp an environment where hedge funds and portfolio managers are demanding maximum amount of stuff from big companies and often times very hard to deliver and you couple that with someone with the ego of a lawn musk which must be among the top five top five biggest in the business world based on his behavior on twitter that's the only rational calculation one can make you can see that would be deeply offensive to someone and you can see through his actions that it's almost a personal vendetta that he wants them burn the short sellers and prove them wrong and so this this is created an incredible distraction around his company and himself where he's not focusing on the exit question so i think part of his argument is if i can get this company private then i don't have to deal with these massive distractions and i can focus on doing that problem is that it's really cute to want that but also you relied on the public markets to get to where you are you didn't magically become a sixty billion dollar company without having sold things to investors and sold things to the public and so to then say actually the public be damned is
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a bit of hypocrisy in its own sense so there's a lot of lot of questions here that are still remain unanswered one of their major topic that is is relevant here is the corporate governance around tesla the board includes his brother its quote unquote lead independent director is someone who's been named in court filings as his close friend says basically a mockery to corporate governance the tesla board and therefore that's another big issue that's under examination now how can a u.s. company have such a captured board that is close to the c.e.o. and the board is very much on trial right now so the last two weeks i've really been a story about the board in the special committee of the board desperately fighting to maintain some semblance of independence so they don't get sued to death but what would the implications be for tesla shareholders if there's a private buyout both institutional and. individual shareholders to talk us through what's involved for them there well so in a traditional sense if you don't want to take a public company private the easiest way to do that is a quote unquote leveraged buyout where you take a slice of equity and a bunch of borrowings you saddle the company up you offer
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a premium to the share price and then everyone gets the premium and sells their shares and then you take the company private with your new ownership team unfortunately that only works when you have a cash flow positive company because creditors don't want to lend you money if you're burning through money and you have no capacity to pay back the money so to basically launch the world's biggest leveraged buyout in history is impossible here and therefore none of the world's major banks will participate in such a plan because tesla doesn't have the capacity to repay its debts it's burning through cash as we've established so then you have to find another way and so the idea that they're discussing this quote unquote growing dark philosophy where a small group of shareholders will buy out other shareholders and take the company private with minimal equity checks which is why everyone got excited about the way musk spun the saudi line that we broke but unfortunately my reporting suggests that the saudis have no intention of sort of funding. an extra you know five ten fifteen billion dollars to take the company private and if they had discussions it was very very informal and not of the nature and development that must might have suggested
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through his tweets and his subsequent communications to the market just to pick up on the on the saudi connection why why would the saudis want to find out it's tesla's exit from from the stock market there but what's in it for them will no discussion about saudi arabia can take place these days without discussion of the crown prince mohammed bin solomon the sort of various thirty two year old who's leading the country trying to transform its economy and the vehicle through which he's doing that and to take the company's reliance off of oil is the saudi sovereign wealth fund which is called the public investment fund that's about two hundred fifty billion dollars in assets he wants to grow to four hundred billion over by two thousand and twenty he wants twenty five percent of those assets to be in overseas holdings and that's why and he's clearly a guy who's attracted by people who have big ideas who are trying to really chain. engineers trees that's why they went and invested three point five billion dollars in that's why they gave forty five billion dollars to japan's softbank and mussel yoshi sun to have this incredibly large tech investment fund which everyone has to been talking about for the last two years it's wise put
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a billion dollars of virgin galactic with richard branson twice put up to twenty billion dollars with steve schwartzman in blackstone and this is very much in line with those bets of big entrepreneur trying to change an industry potentially even a hedge to saudi arabia's oil based economy. by investing in electric cars i'm with you on musk and the way i reported the story was to say that when mom had been someone went to the u.s. in march and april of this year she in tesla soon after a c in the saudi sovereign wealth fund soon after approached tesla and said we'd be interested in buying new shoes newly issued shares to both help support your company but also we'd like to be an investor and must for whatever reason did not accept that offer and so the saudis with the help of j.p. morgan chase built the stake in the tesla stock in the subsequent weeks and months and it was private until i broke the story hours from a sooty good to speak with you thanks a greece is celebrating the end of eight years of bailouts it's avoided bankruptcy
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since twenty ten through three hundred billion dollars of loans from the international monetary fund and the european union but alongside the punishing austerity policies greece has had to abide by there was also a human cost john psaropoulos takes a look at how changes in society affected the country's youth. prime minister alexis t. pers may have been trying to custom self in the role of a hero when he chose to send a message to the greeks that their economic odyssey is over this is the island home his hero odysseus finally returned home to after twenty years of war and adventure and live the same this seems better today a new day has dawned for our country historic day the bailouts of austerity recession and a social desert are finally over our country we gave the right to shape its own future and fortunes like any normal european country without external device blackmail or sacrifices by our people for this group of young people the news comes
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too late the economic crisis struck at the beginning of their teens and changed their lives you know to go see one who is studying political science but what he really wants to do is three d. animation there's no market for that here so he'll go broad in my parents had invested everything in government bonds we lost everything it had a huge effect on our psychology and it immediately changed how we lived it was as though you had flipped a switch stefanos going to studying molecular biology the great genetics market is shrinking as people have fewer children so he plans to end up in the united states or canada and look at me as has a job waiting for him upon graduation at a u.k. company you know has many my parents are divorced the moment i realized there was a crisis was when i watch my mother counting out money to pay to miti bills and i thought i have to finish school and find a job quickly so i can have my family i have two smaller siblings and they need a chance to grow up to. all three would prefer to stay in greece they just don't
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think this economy will produce the jobs they want nor do they believe greece's political elite can create that economy at least half a million young educated greeks have emigrated over the past decade in search of better jobs and that brain drain is likely to continue greece is forecast to grow. by only about two percent a year for the next five years but over the same period it's obliged to spend at least three and a half percent of its economy per year repaying debt so it's gains will be swallowed by its commitments the markets greece will now depend upon for its borrowing a looking for signs of stability that includes keeping up debt payments but not everyone believes it can go to stefano's and look in the us all study deal to see in school they're well aware that to deceive this was the sole survivor of his homecoming expedition all his men perished whether his has done enough to ensure greece's survival as well as his own political survival remains in the lap of the gods. and that is our show for this week remember you can get in touch with us by
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tweeting me at has him seek and use the hash tag a day see to see when you do or drop some e-mail counting the cost at al-jazeera dot net is our address and as always there's more for you online at c.n.n. dot com slash c.t.c. take you straight to our pages as individual reports links any tar episodes for you to catch up on. so that's it for this edition of counting the cost and hasn't secret from the whole team here thanks for joining us the news on the edges it is next.
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good known as a hotbed of radicalism. you have to fight. to defy stereotypes. of the meaning. of the story. told by the.
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amount. i'm rob madison in doha the top stories on al-jazeera a u.n. report says some of me in mars' top military generals should be prosecuted for genocide it says at least ten thousand people were killed in a crackdown in range of muslims last august me and was un representative says his government does not recognize the u.n. fact finding mission which produced the report arsalan iftikhar is a human rights lawyer for burma task force it works to protect minorities in me and mine he told my colleagues how raman that the u.n. report is an important step. in mind is.

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