07/10/2016 Newsnight


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

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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


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