07/10/2016 Newsnight

The leaked email scandals that rocked Clinton's

Now the US government blames Russia for cyber hacking.

Was Moscow trying to influence the outcome

Sterling slumps to its lowest in 30 years.

Is our national currency any more than a symbol of pride?

Or is this telling us something about Brexit we need to know?

All becomes clear in the Ukip saga as Mike Hookem explains the two men

were just "wrestling like a pair of tarts".

If you get offered out in Hull and you don't go,

you're a bit of a wimp, so I'm going out with him.

I'm 63, I should have made a different decision.

I shouldn't have made decision that decision.

It was silly, but he offered me out so I was going.

Meet the liberal American writer who says the Democrats have

Is this why Hillary Clinton is finding the race so hard?

Late this evening the Obama administration came forward

to formally blame Russia for a series of cyber attacks

that it believes were intended to influence

The US Homeland Security Department has said it is confident the Russian

government directed the recent compromise of emails from US

institutions and persons - including the

Democratic National Committee - which was hacked

just before Hillary Clinton's Convention back in July.

And how do they know for sure it is Russia?

Our technology correspondent David Grossman is with me now

David, what do you make of this coming now?

Until now, Americans had blamed the Russians but they had done so off

the record but tonight they have gone on the record with that

accusation. Let me just read you a little. The US intelligence

community is confident that Russia directed these e-mails. It goes on

these are intended to interfere with the election process. It goes on, we

believe, based on the scope and sensitivity of these efforts, only

Russia's senior most officials could have authorised these activities.

What do they mean by influence the election? In what way? This

disclosure, 20,000 e-mails and 8000 attachments from the Democratic

National Convention's computers were intended to destabilise the DNC

convention where they'd nominated Hillary Clinton. It shows that DNC

organisation was biased against Bernie Sanders and had colluded with

Hillary Clinton. It was timed exquisitely to embarrass Hillary

Clinton and her team and it nearly threw it all off the rails. Thank

you. Joining me now is Thomas Rid,

Professor in War Studies and one of the first to find

the Russian Fingerprints And Kurt Volker, former US permanent

Representatvie to Nato. Many thanks, gentlemen, for joining

us. Kurt, why do you think this has come out now? I think that is

exactly the right question. No one had any real doubt that this was the

Russian government behind it, and I think as we get closer to the

election itself, I think the administration wants to come out to

show that Russia is playing a direct role. In some ways that is going to

call into question Donald Trump's embrace of Russia during the course

of the election campaign, and I also think whereas in the past the

Administration may have held back from public charges against Russia,

after Russia's assault on Aleppo, I think any motivation to hold back on

criticising Russia has gone away. Cilic trump supporters suspected

this was timed to help Hillary Clinton right now, they would not be

wrong? It is one theory and I think the first thing you have to say is

what difference does it make, because it is true, and the

administration is putting out what is a true story and they have

evidence behind it. But it gets to the issue of timing and I think

there may be something with the politics of timing. You were one of

the first, Thomas to compare the fingerprints and put the blame on

Russia. Talk us through that? Russian intelligence agency have not

just breached the DNC but several organisations and individuals. They

claim that through a leaked account and what they have done is they

hacked democratic organisations which happens all the time,

basically, but they have done something fresh this time, something

new. They also gave this information to the public in order to influence

the election. This was a first. They have done this very aggressively

again and again, almost on a weekly basis. We have seen 30 separate

leaks since. And when we hear it is from the top echelons of the Russian

government, our people deliberately not saying Putin that implying Putin

or is there a different strand there? When the leak started on the

15th of June, initially it looked like a bottom-up operation, some

rogue person perhaps in Russia's military agency taking the

initiative. But very quickly looting was confronted and Lavrov was

confronted by American counterparts and it became clear that it must

have been authorised so it has been authorised by Putin. And Kurt, if I

take you back to that convention in July, there was that odd

intervention from Donald Trump where he appeared to be calling on Russia

to hack Clinton's e-mails, he said afterwards it was a joke and it had

been taken out of context, but how does that now playing to this

narrative? None of this came from Trump? No, of course not. I think

truly Donald Trump was making light of it and making the assumption that

Russia had already stolen these e-mails and they could release them

but he was making light of it. I think it plays in a more serious way

in that Trump has shown a more positive disposition toward Putin

and Russia, has dismissed -- diminished Russia invading Ukraine,

so pointing out Russia is doing these things directly to try and

influence the US election is in a way demonstrating that perspective

that Trump has embraced on Russia. It is really not in sync with the

Russia we are dealing with. Thomas, I know you want to come in on this.

It is really important to understand that they are sending a message to

the American public as much as two Russia, to journalists in the United

States and Europe as well. They are saying to them, you cannot just use

these leaks and treat them as facts, because we have seen these

intelligence agencies, Russian, falsifying and modifying information

in these leaks. Previously, until today, the door was wide open for

the Russian operatives to influence the election and today it has become

a lot more difficult because journalists cannot just report these

as if they were factual. But as Kurt was saying, this also hints at a

real breaking down of relations over Syria. The sense that any entente

between the US and Russia are working together to try and solve

Syria has now gone, is that right? Absolutely. You had John Kerry

musing about Russia being investigated for war crimes now. It

is the kind of language we have not heard before from the Obama

administration. I think they have become completely despairing and

frustrated and upset over the deliberate role that Russia is

playing in levelling Aleppo and killing thousands upon thousands of

people. I don't see that this will recover in the course of this

Administration. It will be up to the next president to try and build

something sustainable with Russia. We have not had a direct comment

from Russia on this but what is your sense of how they will read this or

respond to that? They have been denying this operation in the past.

It is a consistent pattern that they say one thing and do another thing.

The same applies to operations in Aleppo and Crimea in Ukraine. They

will not say they have been caught. You looked at two burglarised

buildings which had the same fingerprints. If that irrefutable

now? The evidence is strong so let's make this very concrete. We know the

same entity that breached the DNC has also breached the German

parliament, in order to find dirt on German politicians, interesting

information to leak and that happened last year. We have the

malware samples, the fingerprint, the tool they left behind and we can

link those. They are very strong indicators to each other. This is

literally as good as a fingerprint in a burglary. Thank you.

6% in two minutes, the crash of the pound last night

Those who long favoured Brexit will tell you a weak pound

Those who feared Brexit will tell you this has been long time coming -

One thing is clear - the flash crash suggests politics

and political words play a crucial part in the fluctuations

Or, as HSBCs head of Foreign Exchange quipped today,

"the pound is now the de facto opposition".

So tonight we ask how we feel about what may be

Is strong currency anything more than a symbol

Adam Parsons takes us through the day's vertiginous drop.

Brokers and jobbers crowded together to try and sort out what the drop

1967 and there's panic on the streets of London.

The pound had been devalued, a change so cataclysmic

that the stock market had to be closed, to let the dust

Half a century later and the value of sterling is,

It's been falling steadily ever since the Brexit referendum,

Because while monetary policy, with superlow interest rates...

Global markets took this as the Prime Minister criticising

And that dragged the value of the pound down to levels it

Sterling broke through some important levels we hadn't seen

since 1985 and it still underlines the fact that international

investors seemingly over the course of the last four or five days have

Primarily moving in one direction which has been to sell sterling.

In the early hours of this morning came something new,

a sudden dramatic collapse in the value of the pound,

a so-called flash crash, apparently caused by a computer

algorithm that read an article on the internet of the computer

reading it, not a person, and instantly decided to sell a vast

On the trading floor, this is what a flash crash looks

This graph shows us the value of the pound against the dollar.

You can see, at midnight, last night, it was worth $1.26 and a bit.

And then, suddenly, this vertical line shows us the dramatic fall

Four minutes later, worth just $1.18.

It's lost 6.5% of its value in just a few moments.

Well, there is a rebound, but not a full recovery.

What this shows us is a picture of sterling under attack.

Here's what's happened since the referendum.

The value of the pound has dropped sharply but at the same time,

Well, because most of the money earned by the FTSE's big companies

So, profits are worth a lot more as the value

So, could we be heading towards a time where the pound

Well, I den think we've seen the trough in sterling, yet,

so we still have some more pain to come, which of course means UK

I wouldn't suspect that we would get those parity thresholds

being reached but further depreciation against the US dollar,

I wouldn't be surprised if we trade down to 118 or even as low as 115.

And I think in the shorter term, if we are going to see some

of the selling pressure dissipate then we probably need to see some

of the politicians rolling back on some of this hard Brexit talk

which is really destabilising markets.

Over in the States, the Chancellor was in his familiar sanguine mood.

But markets will go up and down, markets respond to noises off

and as I said earlier this week, we are going to go through a period

of volatility now, there will be lots of commentary

going on and we can expect to see markets being more turbulent.

But hold on, is a weak pound really so bad?

Well, one leading economist has told Newsnight

The effect of a fall in the pound will make

imports more expensive, so, people in the UK are more likely

People overseas are likely to find our goods cheaper

and more attractive, so they are more likely

Tonight's jackpot is an estimated ?139 million.

And one final benefit of a weak pound, the Euro millions lottery

is paid out in euros, win the jackpot and it will be worth

?7 million more than this time last week.

Bonne chance, as they say in the Eurozone.

That's more than enough of a silver lining.

Joining us now Alistair Heath, from the Telegraph, Vicky Pryce,

Economist, and Rupert Harrison former Treasurer advisor

and chief of staff to the Chancellor, from Washington.

Is it all so bad when you see the pound coming down this quickly or do

you look at the upside? For an open economy like the UK, the currency

acts like a shock absorber, so when you get hit by a shock, the currency

goes down and there is a silver lining. The export products might

benefit by selling more. There is still the original shock. People

around the world are waking up to the risks that Brexit poses to the

economy. Fewer people will invest in the UK, it is expected. That is not

a good thing. The fall in the pound can have a silver lining but the

shock that caused it is something we should be concerned about. In a

slightly old-fashioned way, do we get too hung up on the pound as if

it is somehow reflecting our national pride or a sense of

virility in a funny way? I agree, we shouldn't look at it that way at

all. People do but they shouldn't. There is a certain pride about

having a strong currency and in many ways it can be good because it means

you are richer, you can buy many more things from abroad than

otherwise would be the case. Having a weaker currency makes you pour

almost immediately. The concern I have is that the pound was going

down because there are issues about whether we know where we are going

from here on in -- makes you poorer almost immediately. After a long

period of thinking maybe we would never leave the EU, it is going to

take some time before we trigger article 50. In order to start the

process of leaving. We now have a timetable. The words we had in the

Conservative Party conference were quite... Direct. Direct in terms of

hard Brexit minded, if you like. It is funny, during the summer a lot of

people said, you see, it's fine, Brexit will be fine, we taking it in

our stride, we are bigger than that and almost this delayed reaction

that nothing happened for three months until she triggered the

starting gun. Now we are seeing what is going to be a year of

uncertainty. Clearly, there will be a lot of uncertainty but the

interesting thing is this, before Brexit, before anyone thought the UK

would leave the EU, the IMF was saying the pound was 12% - 18%

overvalued. They thought the pound needed to fall because the UK, for

many years, has suffered from quite a major weakness, which is that we

consume too much compared to how much we produce. In other words, we

have been living beyond our means for years. Our deficit last year was

the highest of any G-7 country. You are delighted? I am not delighted

but it is a sensible readjustment. I do not like the fact that the

markets are so febrile. I am worried about things like the flash crash

and cost. But we are already poorer than we thought we were, for many

years. This is effectively the reality sinking in. I don't think it

is to do with Brexit, it is the catalyst but not the cause. Is that

right, Rupert, all that is worrying the people is the speed of the

dissent? That if it was a slow descent but roughly to the same

place we would not be worrying at all, we would see it as an upside? I

do not think it is that simple for two reasons. There is a very real

consequence for a fall in the pan for people watching. The things that

you buy that manufactures overseas will cost more. The new iPhone has

exactly the same dollar price as the old iPhone but it will cost ?50 more

in the UK because of a weaker pound. That will be reflected across all

sorts of items including food and fuel for their car. Secondly, the

thing that we should perhaps be more worried about than the fall in the

pound itself is what it means for international perceptions of the UK.

I'm in Washington for the IMF meetings and I am finding myself

this week doing a lot of explaining. Lots of people are saying what on

earth is going on in the UK? They are hearing messages about

immigration. There was quite a lot of perhaps naivete around the world

that the UK was heading for a soft Brexit, that we would stay in the

single market. People are increasingly understand that is

probably not going to be the case. This wonderful line from the HSBC

analyst who said the pound is now the de facto opposition, it will be

the pound that tells this government when it is going too far. Not

really, because the pound should have been lowered in the first

place. If it gets to parity? If it gets to parity, the pound would be

undervalued, yes. You would be horrified at that point? I would be

very surprised. The pound is more or less fairly valued now but if it

falls further it would be undervalued. There is a perception

problem and the government needs to be more explicit as to what it once,

nobody understands what the Theresa May government's position is on

Brexit, stay in the single market, the customs union? Bizarre rhetoric

on immigration, quite worrying also. I am pro-Brexit. It will work out in

the end. In the old days, they used to be flights of capital and we used

to go to the pound when times were uncertain, why isn't that the case?

What is clear is that we haven't got a clue where we will be going. That

is a problem. You are right, is something that we all agree on. Life

after Brexit is simply too uncertain right now but it also suggests,

there are quite a lot of disagreement as to what it means

within the government, that there is no confidence in our leaders, if you

like, that they know where they are taking us in terms of economic

policy. In those times of uncertainty, you sell the pound, you

will not invest in this place. That is exactly what is going on.

Unfortunately, what it also does, it increases cost to businesses.

Perhaps he is right, that the pound was overvalued, but we tend to

import an awful lot of things into our manufacturing process. Import

costs are rising substantially. Current account right now, it is

widening. The data from August suggests it is getting worse instead

of getting better. Actually, we are not solving anything through this

devaluation. Interesting, Rupert, the cost of the iPhone, you

mentioned, and we heard in the film, consumers will be buying more

domestically, do you think that is going to happen, could that happen?

That we stop buying from overseas? It will happen. We saw this a bit

after 2008, 2009 when we had a big devaluation of the pound in response

to lower growth expectations. Concern about the UK banking sector.

Over the years that followed that, we saw benefit, but is disappointed.

Expectations were disappointed because the manufacturing response

wasn't as big as people hope. That speaks to the fact that global

economy is quite different from what it used to be. In the UK, we don't

sell things that, you know, when it only depends on price. We sell

products where it depends on quality, long-term relationships

with your customers. Just devaluing your currency by itself is not

enough, necessarily. Let me... We might just after the financial

crisis. The bigger question, what to put this briefly to you all, when

the world is looking at us with a weak pound, it is impossible not to

see yourself for all the benefits and you can talk about it whatever

you want, it feels as if we are in a position of weakness, isolation or

weakness. We are not in a position of isolation, that is wrong.

Weakness? We're not in a position of weakness. Our economy has problems

and it needs to be resolved but Brexit does not create that

weakness. The Europeans have made very clear that they will go for

hard Brexit themselves in a sense not really giving anything to us.

Which means we have actually in a strange way isolated ourselves and

made more difficult to have dealings with Europe. The world's trade

environment is slowing down. Nobody knows where this will actually end.

There is a negotiation going on. We have nowhere else to sell to the

goods trade has declined in the first half of the year. We are in a

weak position right now in terms of a negotiating stance. Thank you for

coming. In case you were confused

by what happened in the European parliament yesterday,

today it all got much weirder. Ukip's Mike Hookem emerged to deny

punching Steven Woolfe, the Ukip frontrunner

who ended up in hospital, and clarified that instead they had

wrestled like "a pair of tarts". After an office conflab on what that

actually looks like, So we sent Secunder Kermani

to find Mr Hookem and see Ukip has had its fair share

of embarrassment over the years. Mike Hookem MEP, is at the centre

of one of its largest. Previous favourite for party leader,

Steven Woolfe, is still in hospital in Strasbourg,

following an altercation with Mike Hookem yesterday

in the European Parliament. Hookem's back in Britain, now,

despite rumours on social media. ..Because there was all kinds

of stuff going around yesterday, You were jumping in the back

of lorries, according to Twitter. Yeah, I was on a rubber dinghy

in the middle of the I was being pursued

across France by the gendarmes. He says it all began

during a discussion between Woolfe and other MEPs over Woolfe's

admission he recently considered He took umbrage and stood up

and said, "Well, if that's going to be the tone

of this meeting, maybe And his words were mano

el mano. So, he;s now heading out the room,

taking his jacket off. So, I went into the ante-room

with him. And what's going through your mind

when he said mano a mano? Well, I'm from Hull,

if you get offered out in Hull and you don't go,

you're bit of a wimp. I shouldn't have made

that decision. But he offered me

out, so I was going. He come at me and it was

just a bit of a tussle. The door opened, I stepped back

and he fell back into the room onto a colleague that was stood

in the room. He didn't hit his head, I'm sorry,

he never hit his head on anything. He is being quoted as saying

you threw a punch. If I had a tussle with him,

would that cause a seizure? So when he said mano a mano,

was that uncharacteristic for him? And probably won't be

saying it to me again. When Woolfe's released

from hospital, he and Hookem have The damage done to Ukip

and its reputation at a crucial time for the party could take

much longer to repair. For American commentators

on the left right now, one question seems to override all

others. Why isn't Hillary Clinton

hammering her Republican Why do his blunders and hypocrisies

seem to leave no mark on the man, Why do his blunders and hypocrisies

seem to leave no mark on the man. Tonight, another video of Trump's

past has emerged that would sink One writer argues it may have less

to do with HIM and more to do with HER -indeed,

to do with the failings of the Democrats and Obama as a whole

over the last eight years. Thomas Frank is a political analyst

and commentator who's new book argues that the Democrats have badly

let down the people. Nice for you to come in. I won't

talk about Americans. Most Europeans still can't

understand why Hiallry Clinton isn't Against somebody who seems to trip

himself up the whole time. Like a demagogue out of a movie from the

1930s. He has done so many things that was destroy an ordinary

politician. This Titanic won't sink. We are taking him seriously as you

are as a potential winner of the presidency. It's possible it could

happen. It seems unlikely. I think Hillary Clinton will win, for the

record. The Donald Trump phenomenon is striking, this is amazing this is

happening. What it represents, to a large degree, is the desperation of

a large chunk of middle America de-industrialised form

industrialised parts of the United States and it is the largest shift

of working-class voters in the United States away from their

traditional home in the Democratic party to the Republican party. This

has happened over a long time. Why have the Democrats lost them? That

is half of the question and a big part of it is the Democrats refuse

to ask that question of themselves, by the way. Democrats have lost

them, because they basically look at what is happening to these people

and say, you know, there's nothing that can be done to save your way of

life. In the middle class in America is crumbling. That is just

globalisation. That's just technology doing its thing. But at

the same time, Democrats have embraced this kind of liberalism

that is... Clearly, a liberalism of the rich. OK? They aren't concerned

with working-class voters any more but they are very concerned with the

attitudes and tastes of, say, the professional class in America. OK,

but if the answer was to move away from globalisation, that was the one

that Bernie Sanders was screaming for a year and it didn't work in

terms of winning the nomination. LAUGHTER

You about the entire Democratic party came together to stop him, you

know, you realise, that is what happened. This takes us back to the

first order, the e-mail scandal. As we now know, I should say. -- first

story. So, you basically think Bernie Sanders would have won that

nomination? I don't think so but the challenge was worth making. This is

the Democrats that need to look inside and ask themselves why this

is happening. They also have to re-evaluate their long history. One

of the issues that Trump talks about are the lousy trade deals as he

likes to put it that our country has signed. There is no figure in

American history more closely identified with those trade deals

than Bill Clinton. Hillary Clinton's husband, a Democrat. When he signed

off on the first of those lousy trade deals, he did it over the

opposition of his own supporters and organised labour. He stuck the knife

in their back and people remember that. You think that Trump is a

product of Obama as well? To some degree. He is a reaction to Obama.

We have the financial crisis in America, it originated in my country

and came here, you're welcome! Thank you! President Obama was elected in

this great wave of hope and enthusiasm in 2008. I thought he was

going to be my generation's Franklin Roosevelt, to come in and put things

right. Instead, here we are, almost eight years later. For a large part

of the American public, the recession has never ended. The

American stock market is doing phenomenally well, wealthy people

have seen everything bounce right back. But for a lot of ordinary

Americans, there has been no recovery. Great to have you here,

thank you very much. That's all we have

time for, goodnight. Have a great weekend, we are back on

Monday. Good evening. The weather is looking

relatively settled and