07/01/2016 Newsnight


With Evan Davis. How worrying is the state of the world economy? The siege of Madaya, transcripts between Blair and Clinton reveal closeness, and Andrew Davies on adaptation.

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First week of the year, and it's not looking good


This year opens with a dangerous cocktail of new threats


For Britain, the only antidote to that is confronting complacency.


We'll ask if the next leg of the protracted sequence of global


Shocking footage from Syria draws attention to the latest horror


to afflict certain towns in the country -


After January, I'm available for


I wouldn't say that, or you'll be doing it.


Newly-published transcripts reveal a new contender for the greatest


Veteran script writer, Andrew Davies, talks us


Sex is terribly interesting to everybody.


Stock markets falling - especially in Shanghai.


Oil prices falling to shockingly low levels.


of a devaluation war in Asia which has all sorts


No wonder that Chancellor George Osborne thought it might be prudent


Anyone who thinks it is mission accomplished with the British


Or it will be the year we look back at


Yes, listen, and you'll hear the distinct sound


Remember, after the crash, its economy, and those


of other emerging nations, were the great hope.


And there are worries about the debt that accumulated in the years


In some ways, you can see the latest concerns as part of a pattern that


Go back to Japan in the 1980s, it was the world's beacon of growth


It was underpinned by credit growth and a property and stock market


They don't think the market is transparent enough. They don't


understand what is going on. The Japanese stock market


peaked at 39,000 in 1989. Today, two and half decades later,


it's at less than half that level. But while Japan had a hangover,


the world carried on turning, But they soon imploded


into a regional crisis Some of us are old enough to have


reported on it. The problems with Asia and the banks go far wider and


deeper than Japan. Just as El Nino is creating chaos in the weather


system, a global storm is staring in the world economy, coming from the


Pacific region. The number of countries that got into trouble in


Asia, borrowed money from the rest of the world. There were some common


themes and the most important was that they had all been on a private


growing binge. Over to the west, another bubble -


the dot com boom. A surge in optimism, growth


and subsequent disappointment. The west weathered the dot com crash


comfortably thanks to low interest rates and growing debt


that fuelled growth. Which kind of almost


brings us up to date. China was the post-crash


poster child. They were going to be


a market for the west, languishing in stagnation


and having to sort out debts. And yes, China did keep


going but now even it is running The fear is always that


you have not just a boom-bust cycle which is as old as the hills -


it's the boom underpinned by borrowing, with debts making


the subsequent bust all the more And the issue is, is there a bit


of that in China now? Look back at the last decade, debt


in China has been growing, fuelling growth. It is not clear the debt


will be paid back. You can't go on fuelling the economy by letting debt


rise like that for ever. China is resonating the kind of financial


crisis we have seen in the past in other parts of the world, which is


that it is starting to look quite shaky on the basis of an unstoppable


build-up in credit creation and debt. The government should step in


to break it and stop it. The story is that while China's


factories keep producing - overproducing perhaps,


the world has been struggling to buy all the stuff that it's


capable of churning out. We know how to spend,


but not how to then pay There is a cocktail of pernicious


things going on in the global economy, which has to do with the


legacy of past access. So, in the Western world, we are still dealing


with the consequences of our own financial crisis which was caused


why excessive credit. In the emerging countries today in general,


particularly in China, they are having to deal with the consequences


of excessive credit creation. So many economic crises -


is another one due? In a moment we'll be discussing how


worried we should be with two big beasts of the economic jungle,


but first, let's focus for a moment on the situation


in China with the BBC's Asia Business Correspondent


Karishma Vaswani. The stock market is what they are


feeling at the moment and it has been pretty remarkable, having to


shut down as soon as they opened? It has been a remarkable start to the


New Year. On Monday when trading first started, the circuit breaker


mechanism the Chinese authorities put into place, that kicked in


shutting trading down for the day on Monday. Things looked better on


Tuesday, but on Thursday, we saw this happen again. 29 minutes of


trade, the shortest trading day in China's history of the stock market.


Pessimism and anxiety investors. Give us a little bit on the exchange


rate. It is complicated in China, two exchange rates. There is a fear


of an exchange rate war going on in that region? Basically what has


happened is the feeling is the central Bank of China allowed the


currency to depreciate to rate we haven't seen since 2011. Other


countries in the region become less competitive. Many of these countries


in Asia have benefited from the economic boom we have seen in China


over the last decade. Think of Australia, Indonesia, Malaysia,


selling the commodities to the hungry giant China is. As a result


of this effect give devaluation there are concerns we could see a


currency war across the region forcing other countries to try and


lower their currencies at a time when the US is raising interest


rates 's. Looking at it briefly, to what extent have the authorities in


China run out of tools to get growth. You cannot just keep using


monetary creation? They made the decision today to suspend the


circuit breaker mechanism on the stock market. It shows they are


running out of ideas. There is a lot of speculation in China that they


don't know what to do next. In the weeks to come, we will start to see


more moves from the regulators there. Thank you very much.


I'm joined now by Adair Turner, a former chair of the Financial


Services Authority, who has written a book about our pact with debt.


And Rupert Harrison, who until 2015, was the chief of staff


This thesis there is a link between this crises and China, do you buy


it? Yes, I assert in my book it is there. You look at the fundamental


cause of the financial crisis in 2008, it is driven by the fact that


private debt in the advanced economies had gone from 50% of GDP


in 1950 to 170% of GDP in 2007 and grew pretty much every year for


those 57 years. What has happened since 2008 is the debt hasn't gone


away, it is just shifted around. In the advanced economies we have


achieved a very small amount of reduction of debt to GDP in the


private sector, offset by a big increase in public debt. Then we


have had a big shift of debt to the emerging markets and in particular


to China. Essentially that growth of the Chinese debt was deliberately


planned by the Chinese authorities in 2009 as the mechanism to offset


the dangerous impact for the economy of the crisis in the West. But it


has got to a stage now, where it is out of control and that


extraordinary investment boom, in particular a construction boom has


come to an end and we are facing the deflationary consequences of that.


This pattern isn't over yet and the total level of debt has just gone up


and up. Rupert, do you buy the Chinese problem, because most of us


are focusing on the stock market and interest rate, do you think deep


down there is a problem like there is in other places? Absolutely, in a


sense it was caused or at least exacerbated by the Chinese response


to our financial crisis. But I think China would have had to go through


something like this anyway. It is making a transition like many other


countries to growth not based on consumption. They exacerbated the


scale of the problem they had to face. They would have had to face it


anyway. The question is in all market economies, do we have debt


crises and financial crises, the answer is yes. As the world the only


way to make growth? Going back to Japan, you have had a beacon of


global growth getting into crisis and then another one runs with it


and builds up credit. Who will pick up the growth if China stops growing


and becoming the kind of spender of last resorts to the world? In a


sense, China's slowdown is nothing new. It probably started two years


ago. The story of 2015 is a economies like the UK, the US and


increasingly be eurozone, eked out decent growth, unemployment coming


down at a time when China was slowing dramatically. I don't think


we should be too pessimistic of our ability to grow without China. I


think the UK economy is doing OK, but only OK. The latest figures show


we grew by 2.1% last year. You have to allow for the fact we have a


population growing up .6% per annum. If you turn into the growth of


income per capita, it is only 1.5%. That has just got back to income


standards very slightly above the 2007 peak. This is getting on for an


entire decade, in which capitalism has failed to do what we thought it


would do before, which is to deliver at least over a decade period of


time, growth in income standards. Even in the US, which has been the


most successful recovery from 2008, this has been a mediocre recovery


compared with what the US economy used to do. At the core of that is


what is called the debt overhang. Is there anything new about that?


People have put together data that goes back a long way. The financial


crises have been part of capitalist economies for centuries. We know


recoveries from deep financial crises like the one we had, take a


long time. Over centuries, the human progress and wealth creation has


been unprecedented. It means the machine is running out of steam?


This has occurred at a higher level of debt than any since 1929. Very


briefly, do you have an idea for how you can have growth without


encouraging consumers to spend more? I have a radical proposal, there are


some circumstances in which your deflationary problems are so deep


you should run increased public deficit and funds them with central


bank money. You print the money and explain it you want to print money


rather than borrow it and get the growth without the borrowing? Yes


that's right. Whether you think that is a good idea or not, I will give


you a prediction one country of the world will do that, that country is


Japan, because it has a level of debt which it can not possibly pay


back. You said you didn't believe that bit. That that is the only way.


The UK and United States economies demonstrate what needs to be done.


The recovery has been slow, but it has been par for the course. The


only way way to grow is what has been happening, inVoe vat and in--


innovate and invest. Should we be worried in conditions in the world


are poor to get growth we are going to resort to consumer spending,


shopping, borrowing. There is a myth that the recovery has been debt


fuelled. We can do it. And you know of course there are risks, China is


a risk, or other risks. The other lesson is you can have long


upswings. The big question is as we remove the fiscal stimulus and one


reason that has kept the UK economy going over the last five years is a


very big fiscal stimulus, even within the austerity which George


Osborne and Rupert were responsible for, that was a reduction in the


level of deficit, but it was still a big deaf #1i9. Ficit. Then we will


only be only grow by returning to private credit growth and that what


is the Office of Budget Responsibility forecast for the next


five years will be the case. Degrees of pessimism and optimism. Thank you


both very much. We've become used to seeing some


dreadful images coming out of Syria, but today distressing footage has


emerged that still has The situation in Madaya,


a town of 40,000 people that is just 15 miles


north-west of Damascus, is known to be dire -


it has been besieged for months, and people left there


have nothing to eat. Residents say they've received no


food aid since October and some have Well, images released by opposition


activists give some indication as to the suffering


that is resulting. This footage released by


the Syrian American Medical Society shows a young boy called


Mohamed Eysa, who tells us he hasn't I'm afraid we don't know any


more about this child, Finally, here you see


a banner in English - the adults desperate at least


to save the lives of the young ones and draw attention


to their situation. Activists say up to 40


civilians have now died, either from starvation and lack


of medicines or from trying The better news today,


is that the United Nations says the Syrian government has agreed


to allow humanitarian aid We need to be clear though,


that while we have these pictures from Madaya,


this is not the only town Dr Ammar Ghanem is


originally from Madaya. He now works for a charity called


the Syrian American Medical Society and is in regular touch


with relatives from the town. Thank you for joining us. You're in


contact with the town. Your town. What can you tell us about what is


happening there? Well the situation is really above description. The


siege started in and has continued for 200 days. In the last two months


it's Ca lated. Now nothing is allowed come in or go out. The


regime has tried to put the check points in every entrance to that


area and the rest of border is planted with land mines. Who anybody


who will think about escaping will face his death and anybody who wants


to choose to stay will die from starvation. We are seeing pictures


today, but let's be clear we are only talking about it because we are


seeing the pictures, but this situation is not one that has just


occurred, and it is not the only place, Madaya? Yes there is multiple


areas like Madaya, but the only situation is more difficult than


other places. Gota is a larger place and they can plant and eat. Madaya


is a small area and people are forced to be in that prison without


any resources. So what about if you take a large number of the


population and put nit jail and say you're not going to have any food or


water and you let them die. That is what is happening in Madaya. We have


heard food will go in, but they're talking about that taking a few


days. Doctors as I understand it say every day now means fatalities.


Definitely. We started fatalities, we have a report from December, with


a documented 30 cases of death from hunger and starvation by names and


ages and each day we have more documented cases that die from


hunger. If we delay, we will talk about more people dying. Who will be


responsible for this. It is remarkable that in 2016 that


starvation is being used as a weapon of war. It is not just if Syrian


Government using that weapon, the UN says others been using starvation


and south-east and siege as weapons. Yes and it has nothing to do with


the conflict. No matter what the conflict is about. Why don't we


leave the civilians alone? They're humans and they want to live and to


take care of their children. So we need to leave them alone. The


situation here is another holocaust, like what happened to the Jews


before it can happen to Madaya people. This is happening in the


21st Century in front of our eyes. We ch see this through the social


media and the internet and we allow it to happen. Thank you and we know


that situation is getting more attention now. Thank you.


Well, that potentially makes more poignant the issue of Europe's


response to the humanitarian crisis in Syria, and the migrant crisis


At the time, Hungary was much criticised for its allegedly


not-very communitarian response to the crisis,


implacably opposed to the open border stance of the Germans,


keener than anyone on deploying copious quantities of fencing.


But in Germany right now, there are tensions


following the disorder in Cologne and other cities on New Years Eve


and other countries in the EU are now themselves rediscovering


their national borders, Sweden, Denmark for example.


Is the criticism of Hungary being revisited?


Mark Urban has been weighing up the arguments.


Europe's migration crisis keeps prompting nations


to do their own thing, while paying lip service


to the decisions reached collectively.


For Germany, that is a danger to the Schengen system of borderless


travel and European unity more widely.


TRANSLATION: I don't issue any concrete warnings here or say


what happens if, but I do say a Schengen


system can only work if there is joint responsibility


for taking in refugees and joint responsibility


Recriminations continue about the violent disorder


in Cologne, Stuttgart and Hamburg on New Year's Eve.


Was it mass sexual assault, were most of


the perpetrators asylum seekers or not?


As questions multiply, so too the political cost


for a Chancellor who accepted more than one million migrants.


There are divisions within the Christian Democrat Party.


I am not quite sure the Socialists are quite as united as they appear.


The one group which clearly is united are the German left,


but I think there are divisions in Germany, we have elections soon,


we will see how they work out.


At the moment I would still put money on


Merkel, but maybe less money than I would have done


Earlier this month Sweden put controls


The Danes have in turn now said they will be putting them


France meanwhile retains its border checks put in place after the Paris


attacks and other two Schengen signatories,


Austria and Slovenia, have now erected a border fence


As well as those internal checks, countries on


Europe's periphery have been putting fences too,


trying to keep migrants out and increasingly that approach


called Fortress Europe by some is seen as key.


Yes, I think that the Germans care about that.


Our citizens enjoy the abscence of internal border control


between Schengen states in Europe, but they


and only if external border control works and then internal border


Today, other European leaders are more


David Cameron voicing support for a comprehensive policy


to limit the flow of Syrians into Europe.


I quite agree with Victor that Europe needs strong external


borders and those that help provide those strong external borders


I believe are doing very much the right thing.


Much now depends on EU plans for a new border force and a deal


with Turkey to cut the flow of people to the Greek islands.


But neither promises to be a perfect solution.


Thousands of refugees are still making the journey weekly


and Europe's nations are still struggling to agree how


I'm joined from Spain by Peter Sutherland,


the United Nations Special Representative


of the Secretary-General for International Migration.


Can you give us a comment on what happened in Cologne and other German


cities, that seems to have thrown a new perspective on the the issue for


some people in Germany. The simple answer is I can't comment on it. The


German police have not commented fully on it. It is being


investigated. The numbers involved in the appalling hooliganism that


took place, where they came from and so on is an issue which can only be


resolved through proper judicial and police mechanisms of decision-making


and to make a comment on it and to apply a responsibility to any one


particular group will I think be quite wrong for somebody who doesn't


know the answer to it. I find hour and I must say this if I may at this


stage, I find this debate about borders, border controls, Razor wire


borders in the context of what you have shown in terms of what is


happening in Madaya and the fact that we are getting a hundred


thousand Syrian refugees, let's stop talking about migrants, the vast


bulk of these people are escaping persecution, our only concern should


be the humanitarian concern of doing about it, rather than having wires,


fences and borders to stop people moving across borders. Of course you


have to have at the borders of the European Union a proper assessment


of whether people are genuine refugees, but if they are, we are


all morally and legally obliged to let them in. And there can be no


comparison between the generosity of Germany, which has been obvious, and


the very opposite position which has been taken by Hungary in terms of


razor wire fences. Is there a dilemma, you can have a country like


Germany that lets in a million refugees and you have a incident


like Cologne and the beneficiaries to that are parties that benefit are


parties to the right that will stir up racial and ethnic tension and


they may be telling you there is a capacity for a country to absorb


refugees without tension, but if you bring a in too many you will create


dischord where there was Harman -- harmony. That is the challenge to


advance the more balanced view that can be advanced about the problems


that we are trying to resolve, the suffering of refugees, does this


generation of Europeans wish to be marked as earlier generations were,


with their refusal to take in genuine refugees. I'm not talking


about people who are not genuine refugees. But they have to take on


the debate. With the far right parties. Which are emerging all over


Europe and are growing and will no doubt be stimulated by events such


as those that took place in Cologne if they can be blamed on migrants.


But they have to be taken on. And not simply kowtowing to the argument


that we should put up borders all over Europe when our great source of


pride was that we had removed them. Does this not strengthen the David


Cameron argument that it is not about helping 200 thousand migrants


who got on boats and came to Europe, but it is about helping the millions


who are there in the region, in Lebanon or in parts of Syria. Is


that not the approach that doesn't allow the far right to benefit from


this and also helps more people? Of course we should be helping those


particularly in Turkey and in Lebanon who are taking, in the case


of Turkey, 2 million refugees and over 1 million in the Lebanon on.


But let me ask this question, 100,000 arrived in Greece in the


last short period. What is to happen then, are they to lie on beaches?


Are they to war, as 77% of them have done, up through the Balkans to be


blocked by razor wire fences. Are they to be lodged in camps and


locked into them? Or, are we to welcome them? Those are the only


alternatives, apart from sending them back to what you have just


shown on your television. That is not answerable other than by the


answer that we have defined away. Germany has given far more, as had


Sweden and many others in Europe in terms of giving places to refugees.


It is causing political difficulty in Germany to continue this when


others aren't doing this. Peter Sutherland, thanks.


He knows how to tell a story and he knows to make sure there's


sex appeal up there on the screen when he does.


Andrew Davies is Britain's best paid screenwriter.


He's the man who made Colin Firth's career by putting him


in a clinging wet chemise in 'Pride and Prejudice'.


And he's receiving acclaim this week, for his adaptation of 'War


and Peace', the BBC's big drama offering of the winter,


although some have suggested he's sexed up Tolstoy's masterpiece,


less subtly physical than the original.


Andrew Davies has been answering his critics,


and giving a master class on filleting the classics,


to our own very poorly adapted Stephen Smith.


Ask Andrew Davies to cut down a classic and he doesn't mess about.


Eventually I just took a pair of kitchen scissors and opened up


the spine and cut it through the middle.


I could carry it round in a jacket pocket then, that kind of thing.


Did you utter a silent apology to Tolstoy as one


I did feel a bit guilty about it, so I felt a kind


Poor old Tolstoy really had a hammering


We crossed the steps of Warwickshire to his


# If they asked me, I could write a book #.


So, this is my journey to work in the morning.


From the bedroom, into the cupboard in the corner.


Through the corresponding one in the next-door house and this


I think it's a very good thing to do, to chop out the boring bits.


Henry James called War and Peace a great baggy monster.


By which he meant it had lots of things


in it that Henry James, and in fact most modern critics,


would say shouldn't be in novels at all.


Great long essays about history and philosophy


So long as some of his ideas emerge through


Oh, this incestuous romp between brother and sister


Anatole and Helene, didn't happen in the book.


Say critics like Simon Scharma, who bashfully admits he only


made his way to the end of the novel eight times.


He probably read it eight times and never noticed it.


After my first reading, I hadn't noticed it either.


Actually, he did put one little scene in it where Anatole is kissing


Pierre comes upon them and is a bit alarmed.


You know, you think, well, that's not your average


I would write 70,000 men engaged in a


Bodies flying through the air and I'd just


cheerfully stop work and go and have lunch.


It's not my job to make it look like all this is happening


I'd like to think Colin Firth still sends you a cheque every


year for making him a star, Does that happen?


Sex is terribly interesting to everybody.


And it does help to sell shows.


So even if the coverage of it in the papers is exaggerated,


it usually does help the audience figures.


Is it possible to adapt a book and be faithful to it?


An adaptation is always different according to when it's


Even the reading of a book, when anybody


reads a book, it's different from another person's reading.


I used to teach English and I would give


lectures saying my God, this is a wonderful book and trying


This adapting job is a bit like that, only with millions


If you enjoyed Brokeback Mountain, you'll probably enjoy reading


the transcripts of conversations between Bill Clinton and Tony Blair,


They date to the late '90s, and came out of a BBC freedom


of information request to the Clinton Presidential Library.


The transcripts show the then British PM and the US President


Two youthful looking lawyers turned leaders,


back in 2000 one of them was about to become a father.


After January, I'm available for babysitting.


Oh, I wouldn't say that or you will be


You said you wanted to continue my work with the third way


Helping Blair balance work and family.


I tell you, Cherie's in great form but keeps


put you down on the babysitting list now, mate.


Now that would be a special relationship.


But in the transcripts of conversations running


to more than 500 page, sometimes a little more explanation


My staff won't let me talk to you un-Lescer's


Now, Bill, I thought we should have a word about Kosovo.


Intervention in Kosovo and the Northern Ireland peace


process were the backdrop to this bromance


between a second term Clinton and a first term Blair.


Thank you for giving Great Britain to Tony Blair and Tony Blair to the


world. As they chat we get a sense


of how these men view There is a limit to how many


times you can do it. Yeah, we end up being being part


negotiator and part therapist Some day we should write a book


together about these Northern Ireland figures large,


but the conversations don't I'm watching the end


of an old Peter Sellars movie. I can't tell, I've only


seen about five minutes, but Herbert just disappeared


along with a castle. with Northern Ireland.


humour since you're dealing I just wanted to bring you up today.


Tony Blair's answers from here were redacted. I know what you mean. It


is all redacted. Tony, when this comes out, who do you think they


will get to do the voices? I don't know, some impression it. Not that


Rory Bremner? That is more likely than Jeremy Corbyn leading the


That's all we have time for. Good night.


In-depth investigation and analysis of the stories behind the day's headlines with Evan Davis.

How worrying is the state of the world economy? The siege of Madaya, transcripts between Blair and Clinton reveal closeness, and Andrew Davies on adaptation.

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