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tv   Counting the Cost 2018 Ep 37  Al Jazeera  September 16, 2018 6:32am-7:01am +03

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years in exile in rwanda the government has released two thousand prisoners among them opposition leader. who were sentenced to fifteen years behind bars and twenty thirteen for terrorism offenses she'd been in detention since twenty ten when she ran against poor gummi in the presidential election and refugees stranded in bosnia say they've been beaten strip searched and robbed by the creation police seventeen people interviewed by al-jazeera said the abuse took place during attempts to cross into croatia bosnia has emerged as a new route to western europe since the e.u. tightened its borders croatia's officials deny allegations of police brutality well those are the headlines the news continues here on al-jazeera after counting the cost statement that's watching. getting to the heart of the matter the three big challenges facing human kind in the twenty first century and they are nuclear war climate change and technological destruction amity whatever is there to fear is not
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. in the people of uganda hear their story on talk to al-jazeera. hello i'm adrian figure this is counting the cost on al-jazeera a weekly look at the world of business and economics this week ten years later why young people are picking up the bill for the global financial crisis. also this week the weakest links fears over a seismic economic event that could be brewing in emerging markets. plus behind gated walls the growing wealth divide the housing market. this week we're marking an important anniversary ten years ago on september fifteenth wall street bank lehman brothers collapsed but this event wasn't about a one hundred fifty year old bank lehman was a key part of
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a chain reaction one which ultimately threatened one rival the global financial system banks across the u.s. have been offering housing loans to people with bad credit for years so-called subprime mortgages and this is where things got complicated those loans were packaged into risky products and sold on to global institutions regulators were asleep at the wheel a huge risks were taken lehman triggered widespread panic over fears that the system was riddled with bad debts credit dried up and banks stopped lending to each other governments had to bail out banks and then act emergency measures taxpayers' money was pumped into the global financial system to keep it alive the loss of confidence in the system led to a global recession. had a huge collapse in consumer wealth the aftereffects of still being felt today so what's actually changed since you may ask well global growth has recovered since the great financial crisis and the recession that followed the world is on track
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for three point nine percent growth in twenty eighteen according to the i.m.f. but that recovery is very uneven we've seen a decade of record low interest rates and new rules and regulations to shore up the banking system but the emergency measures used to stimulate the economy and bring it back to life have been in use for much longer than intended quantitative easing or government buying of assets helped to preserve wealth for those that had it but young people today can't afford to acquire assets that wealth gap is on the increase globally total debt is now worse than before the collapse of lehman brothers those record low interest rates in the developed world meant that it was cheaper for developing nations or emerging markets to borrow in dollars or euros and we're now entering an era in which central banks like the u.s. federal reserve aren't keeping rates low anymore and that's lending support to the dollar so as the dollar rises it's now costing those emerging markets
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a lot more to repay their debts and what about wall street well stock markets of tripled in value since the crisis but it's tech stocks which have replaced financials as the new masters of the universe so if another crisis is brewing where will it come from zero scott high the reports from hang joe where part of china's massive shadow banking system as recently faced a crisis of its own and some aspects a similar to what happened in two thousand and eight at thirty two joe focuses all her attention on building her wealth this motivation she says comes from growing up with very little. money is very very important to me and because money come bring me the sense of security i don't want to live poor again. living in hong joe joe embodies the entrepreneurial spirit in the city known for its financial technology industry and home to e-commerce giant ali baba but she and millions of other people in china
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have lost billions of dollars after investing in what are known as peer to peer lending platforms or p. to p. amid stricter government oversight than the panic withdrawal of funds by investors more than two hundred firms have failed in the last three months p.d.p. firms gather money from investors and then lend money to small businesses and individuals with many promising high returns on those investments and that concerns economists as the p.d.p. industry in china is the world's largest with more than one hundred ninety billion dollars at play this on the tenth anniversary of the global financial crisis. for the dutch problem i think it's a had a mom in china for a long time but now it looks especially dangerous because of lot of a lot of those dads are tied to the property market and like the recent p.t.p. crisis much of the borrowing or used to finance their housing market is speculation
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and she says some aspects of p.d.p. lending are similar to the subprime loans in the u.s. that led to the two thousand and eight global financial crisis the outcry over the failing p.t.p. companies was so big in july that the government here joe had to use athletic stadiums to how is the complaint centers for the thousands of investors looking to get their money back or simply find out where it went where i am some of those who lost money took their anger to the offices of one p.d.p. firm protesting out front chanting we want our money back. joining us now from london is russell jones russell's an economist and partner at the wellington consulting and independent economic advisory for russell great to have you with us again on counting the cost now you were at lehman brothers ten years ago is this financial crisis over because a lot of young people feel that they're still paying for it i think there are still some issues that need to be handled. my sense is that although the financial system
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the international financial system is a lot safer than it was in two thousand and seven or at least should we say it's better equipped to deal with the sort of crisis which began in two thousand and seven and two thousand and eight there are still some some outstanding problems not least in the area of of economic policy i think that we are overly dependent upon monetary policy if you like the mix of fiscal and monetary policy is still too skewed in favor of what central banks have to do i think it was been a. a loss of shortcomings with structural supply side policy is concerned and that's left us with a lower potential rate of growth in the advanced economies and i also am concerned that there is an element of backtracking on some of the financial sector reforms in the united states and this is something that we see quite often the desire to
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reform the financial sector off to a crisis tends to way in the longer we are into the recovery the sort of us approach cyclicality if you like and again you can see that in some of the things that the trumpet ministration is done recently gordon brown was britain's prime minister ten years ago on thursday he said that with sleep walking into the next crisis that the world is not ready to deal with another crisis is he right i think what mr brown said has as more than a grain of truth in it we still have an awful lot of private sector debts in the world economy which was one of the balances which which was playing out. in the last financial crisis is still a lot of debt i think another point that mr brown made which i would certainly agree with is that the cooperation between the major economies is really under
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a great deal the pressure of the moment. mr trump has launched quite an attack on the international financial institutions and it was through the guise of those international financial institutions the i'm at the will bank and so all the o.e.c.d. that a lot of the policy measures that would taken at the death of the crisis. were conducted through what with the help of we're now in an environment where there's a lot more bilateralism there's a lot less multilateralism as i say the americans the most powerful economy in the world still the government. is if anything undermining these international institutions and that is that extremely troubling is it warren buffett who said you don't know who swimming naked until the tide goes out and to quote buffett again where are the new weapons of mass destruction emerging markets could a whole country fail i'm thinking about argentina and its problems or there's no
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doubt that the emerging markets now are increasingly important to account for more than than half of global g.d.p. and it's also the case that the chinese economy which has a huge amount of outstanding debt is increasingly important it's actually been a good thing over the last nine years it's grown very fast and it's helped to to bring the world economy out of out of what was affectively a depression but it is vulnerable it has this debt problem there are underlying tensions between the sort of capitalist economic system and the communist political system in china which haven't gone away and as you said there are other emerging market economies which are in deep trouble argentina brazil turkey i'd even go as far as south africa and maybe even some of the smaller countries like egypt pakistan and so on so we have to be concerned about those and in some of those
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economies the politics which are playing out already not conducive to the right sort of policy response and there in particular i'm thinking about the imminent elections in brazil in argentina and the political situation in turkey where you have a president who doesn't seem to want to take on board any of the conventional economic wisdom and that's a worry rossley talk about the troubling levels of high levels of personal debt that we've seen how do you go about fixing the inequality that the last ten years the finance. the crisis has led to i'm thinking about in particular young people who can't get on the housing market for instance with huge student loans that they've got to pay off of the course of their working lives i think that have to be some really innovative responses to this i mean income inequality wealth inequality huge issues and as you hinted there is increasingly an intergenerational element to
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this with the young feeling that they're getting very much the fin end of the wedge is it. i think politicians are going to have to be agile innovative. my sense is the way to look at this is that we need to become more words eventually just but doesn't mean that we have to abandon the sort of capitalist model which has not withstanding the crises we experience has been so successful for so many centuries but in order to make that capitalist model work and work well we're going to have to redistribute more i'm going to have to think of some some new ways of doing that my sense is that higher taxation on the wealthy is unavoidable my sense is that more transfers from pensioners back into the younger generations is unavoidable we are going to have to do this otherwise the political environment
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we face which is already let's face it pretty force is going to become even more unpleasant and even more difficult to deal with i would say that addressing an income inequality is something which will help to save the current system rather than undermine it we're now in the era of the trillion dollar company what are the dangers when you've got companies like amazon and apple who are worth more than the a lot of a lot of the world's economies already you're seeing this ability of them to escape the taxation that indifferent jury. stiction is generate political problems political criticisms these are entities which are now shoojit the powerful and this is a brave new world and i think this is again another example where the all thora t's whether it's the tax or forty's or the regulator authorities are consistently having to play catch up as these new entities develop and innovate and so on
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russell really good to talk to your account of the cost many thanks indeed for being with us thank you. all right still to come on counting the cost i'm lawrence leigh ten years on from the financial crash the german economy continues to go from strength to strength but what cost to other european countries. now while the great financial crisis was playing out on wall street and in government ministries its roots lay in small towns and cities across the u.s. families pursuing the dream of homeownership fell victim to unscrupulous banks and predatory lending schemes rolle brunell's reports from paris in california. just before the crash life was good for betty nikka nor her parents and her kids they'd recently bought a brand new house our house was just huge it was a really big house that had five bedrooms four bathrooms all of that.
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so perfect but the dream house proved to be a cruel illusion a salesman had convinced her father may nardo to sign an adjustable rate mortgage on a property worth seven hundred fifty thousand dollars but the family's income was only sixty thousand dollars a year in two thousand and eight and two thousand and nine the area's housing prices plummeted like they did nationwide and their home payments rose higher and higher unable to make the monthly payments they reached out to their bank and we tried to refinance they wouldn't help us three weeks later menard zero lost his job and the dream house was sold what with the home worth by the three thirty you bought it at seven hundred seventy thousand dollars yes and it was worth less than yes yes the family wound up nearly broke with their credit ruined. for three years. i don't think this area of california riverside county was
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one of the hardest hit during the housing collapse and the recession it had the third highest rate of home foreclosures in the entire u.s. fabian casarez his organization helps low income people with home ownership it was chaos here we were ground zero the market was just you know upside down here it was it was it was chaos it was total chaos and you know it took years to get out of it and i was there and i was still going to say that was the limit the nikken orse struggled to get back on their feet my mom was the one who took it the hardest she went into depression you know my dad was displayed broken into he was like you know i can't believe this happened to was gloria nikken or suffered a series of strokes and heart attacks and earlier this year may nardone can or was diagnosed with colon cancer he's had surgery and has to wear a portable chemotherapy pump but he continues to work every day the nikken always
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have saved some money and are now in the process of buying a modest house nearby a step toward security after a decade of pain. joining us now from canberra australia is tim ribbon tim is the principal economist with the housing industry association there tim good to have you with us on counting the cost so ten years this week since the collapse of lehman brothers triggered of course by the us subprime mortgage crisis in the ten years since we've managed to save wall street what's been done to save the housing market though is there still such a thing as subprime is it any easier now or harder to get a mortgage if you are a low income could it'll happen again. i think it's very unlocked that it could happen again but certainly the the global financial crisis the way that the fannie mae and freddie mac. the subprime lenders in the united states the certainly given us the greatest
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economic shock we've seen at least since the oil crosses and aunts and seventies and quite possibly longer it's going to leave an indelible mark on the economic history books and global history books its impact on society and the economy has been an enormous challenge is global in terms of lending practices the united states has to be really chinese the way in which the derivative markets operate we've seen global multinational agreements come into place which ensure that countries are reporting much better from a regulatory perspective to ensure that there aren't the dhruva to try to practices that were occurring back ten fifteen years ago that lends to the global financial crisis so i think the risks so the economy going forward are very different i don think that subprime market issue is not going to arise again we've learnt a lesson from that really free lending practices but the medicine to him that we used to fix the crisis was poison for
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a whole generation of people who now can no longer afford to buy assets to get on to the housing crisis this housing ladder story this is where inequality i suppose is most visible how do you fix that inequality is there has been a structural. does that broad to thousand and seven in global markets of certainly had an advantage but that that will correct the time it is correcting out of the time from a government regulatory perspective. the storm really since the second world war. global money supply start and tartan from what has been an incredibly lax position . for a regulatory perspective from a government perspective the certainly a ball i have to why they don't chill the first time by young people low income owners have a place in the housing market you can see that through practices. in different countries the builds right market in abroad of different countries as a transitioning into the models that allow others to lease land and purchase
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that house through other mechanisms that's not the simons the subprime market that we saw two thousand and seven and it's a variety of different different mechanisms that governments have. to really get to talk to you know kind of the cost thanks for being with us but i think you put on a new report says that more than forty million americans are struggling to pay for enough food month to month and while that is a small improvement on recent years it still means that many people forced to rely on handouts kristen salumi has been to visit a food bank in new york. martina santos volunteers at this food pantry in manhattan where once a week she makes lunch for all the staff. this is like every morning when i made it last night in my house. this time in addition to bread pudding it's beef chicken or pork and beans and like many other volunteers here martina also relies on the
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pantry herself to help feed her family of four she's what's known as food insecurity which means she struggles to pay for all the food her family's needs. is important for me because they have a need to put forward a table and know when i'm running now i come in over here i got me i got a rise i got beings and i got some for it they stood before him based upon the pantry is run by the westside campaign against hunger which allows low income families to come once a month to get three days' worth of groceries although it's based in the affluent upper west side of manhattan it sees customers from all five boroughs of new york city a lot of the people who rely on food pantries like this one don't qualify for federal assistance what's known as snap or food stamps so even as the number of food insecure people in the united states has gone down their reliance on places like this has remained high two thirds of our customers are exclusively fantasy speaking . and many of them are recent ever grand and are not able to access some of the
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federal benefits that help to keep families afloat and so they're increasingly leaning on places like here and to meet their families basic needs. according to the group hunger free america it's a common misperception that people who rely on food assistance don't work in the last few decades the number of private charities in america has absolutely skyrocketed yet the number of people hungry has skyrocketed why because we replaced living wage jobs with poverty jobs and we flash to government safety net. making the work these charities do essential if not a solution to the problem. finally this week ten years after the financial crash of two thousand and eight germany still stands accused of helping to wreck the greek economy by demanding punitive hysterically measures but inside the german government there's no remorse as lawrence leamer reports from berlin. in the
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corridors of power in berlin there are reasons to be cheerful ten years ago the german economy was so well insulated that the big crash was never going to cause a crisis so much has changed in other european countries but not here in the first six months of this year alone the german economy around a budget surplus of over fifty billion dollars that's almost three percent of germany's gross domestic product or any wealth it's the kind of figure that makes other countries either extremely jealous or absolutely furious it was the german government that demanded after the banks started to fall that the european commission impose new rules on countries like greece forcing them to adopt a hugely destructive tax raising powers in return for bailouts and loans a decade on stagnant economy is in huge unemployment levels of what's left the proceeds went to the banks not the people many economists hold germany directly responsible for bankrupting greece it is very anti democratic approach that is
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something that gives assurance to general politicians that there are rules and that they can be here too and that things will work out that and i think that kind of comfort is illusion it is defense germany would argue that if other countries have behaved in the right way in the first place then there wouldn't have been a problem most of the political class here bears few regrets about driving policies which proved so controversial no absolutely not i think that was the only way the fact that we are successful in all these countries shows that this was the right way and it's like in the it's like in the private sphere. if you don't half debt you are a free man and if you have have debt you have to listen to the persons who gave you the money or has the one area which germany has suffered
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from in. in years has been the rise of far right populism born partly from economics in poor areas but also from anger towards chancellor merkel's generous asylum policies for refugees this week though the german government announced it was devoting billions of euros to tackle long term unemployment a certain way of diffusing anger germany is able to make these choices in ways others can only dream about and that is our show for this week if you want to get in touch with us and comment on anything we've seen you can tweet me i'm at a finnigan on twitter please use the hash tag a g c t c when you do or you can drop us a live counting the cost of al-jazeera dot that is our e-mail address as always there's plenty more for you online at al-jazeera dot com slash c.t.c. that'll take you straight to our page there you'll find individual reports links even entire episodes for you to catch up on. but that's it for this edition of counting the cost i'm adrian finnegan for the whole team here in doha thanks for
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being with us the news on al-jazeera is next. al-jazeera recounts the shocking story of the assassination of count folk abene dot . the first u.n. envoy trying to bring peace to the middle east how is negotiations with him helped save thousands of jews from nazi concentration camps and how these mediation skills put him at the vanguard in the quest for peace in the middle east. killing the count on al-jazeera. and monday put it well on. u.s. and british companies have announced the biggest discovery of natural gas in west africa but what to do with these untapped natural resources is already a source of heated debate nothing much has changed they still spend most of the days looking forward to for the dry river beds like this one five years on the syrians still feel battered or even those who managed to escape their country have
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been truly unable to escape the war. and instantly shifting news cycle they receive in change in america treat the listening post takes of questions the wilds of the devil will be of the details the kind that cannot be conveyed in two hundred eighty characters or fewer exposing how the press operates it is their language it's their culture it's their context and why certain stories take precedence while others are ignored we can have a better understanding of how news is created we're going to have a better understanding of what the news is the listening post on al-jazeera overthrow and exiled their point saying it will halt this race let me tell you an intimate film about the struggle of the elected leader of madagascar to return to his country and reinstate his presidency you know is that the true spying and a monkey do you think it is that you know what nature change the return of
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a president on al-jazeera. typhoon slams into hong kong with heavy rains and powerful winds often leaving a trail of destruction in the philippines. hello i'm don jordan this is al jazeera live from doha also coming up yemen's who the rebels say the un has agreed to help move the critically injured abroad to treatment. celebrations in ethiopia as the government's peace moves allow the leaders of the opposition party to return home to us. ten years after the financial crash the german economy continues to go from strength to strength cost to other europe.


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