17/08/2016 BBC Business Live


17/08/2016

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This is business life. Driving with no hands, steering wheel, pedals, an

:00:07.:00:17.

ambitious plan to have self driving cars on the road in five years. That

:00:18.:00:20.

is scary. Oh yeah, the big boss of Ford tells

:00:21.:00:44.

us the BBC the future of automobiles is driverless. Also on the

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programme, Cathay Pacific, Hong Kong's national carrier bets against

:00:55.:00:56.

the drop in oil and gets wrong, loses big time. Its profits plunge

:00:57.:01:04.

82%. And we will take a look at the markets, its August, give us a

:01:05.:01:05.

break. And staying with aviation -

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Latin America's biggest carrier has had a bumpy ride in Brazil we ask

:01:19.:01:21.

the Chief Executive if the Rio Olympics will give

:01:22.:01:24.

the company a boost? And later on we'll look at how

:01:25.:01:26.

savers and banks are hoarding cash because interest rates are so low -

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are you tempted to put your money What are you doing with your cash

:01:30.:01:32.

now that rates are at all time Comments already coming in, and we

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appreciate them. US car maker Ford has promised it

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will have a mass-produced self-driving car on the road by 2021

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- one that won't even Google has been leading this

:01:58.:02:00.

particular technological revolution - and has been road testing cars

:02:01.:02:10.

in the United States for years. Tesla is of course

:02:11.:02:17.

another key player - but its self-driving project has had

:02:18.:02:22.

some road blocks. The project has come under scrutiny

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after a driver was killed in a driver-assisted

:02:25.:02:27.

vehicle earlier this year. But Ford is joining the race

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and has put it's money where its mouth is -

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investing $75 million in a sensor Tesla's Elon Musk doesn't believe

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it's the future of driverless cars. Our North America technology

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reporter Dave Lee spoke to Ford's president and asked him

:02:51.:02:55.

if LiDAR is a gamble. I cannot speak to what is going on

:02:56.:03:13.

in Elon Musk's head, but we believe cloud is very important. One of the

:03:14.:03:19.

goals is that eventually there will not be drivers. What about those

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millions of people that make their living from driving taxis, driving

:03:23.:03:28.

trucks. Clearly, as you think about the societal benefits around fully

:03:29.:03:34.

autonomous vehicles, benefits around safety, mobility for elderly or

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disabled folks, benefits for the environment because there is less

:03:40.:03:42.

congestion, clearly those are really huge benefits. At the same time a

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lot of economies including the US are very resilient. As we see

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situations like this, the economies situations like this, the economies

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will be resilient and there will be new sources of opportunity for

:03:57.:03:59.

people to work, whether in the automotive industry as drivers or

:04:00.:04:00.

not. head of autos analysis

:04:01.:04:10.

at BMI Research. What do you make of this? It is

:04:11.:04:22.

certainly a statement of intent, putting a timeline on it. From their

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side that they have control over, the technology is certainly

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possible. Many car-makers already have this underdevelopment, they

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have been working on it for a few years. I think it's other issues

:04:35.:04:40.

that might derail this. Things like connectivity, having the right level

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of connectivity in cities where you want these cars to work. Consumer

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perception, do people actually want them? Will they want to give up

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control of driving? Can I just ask, surely the regulation of this in

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five years is going to be one of the largest hurdles, jumps. And the

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insurance, right? You've got to have the regulation to have the insurer

:05:09.:05:11.

because one of them crashes into a car, who is it for? This is the big

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question. Absolutely, this is something we have highlighted as a

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biggest hurdle. And that's why we think it could be ten to 15 years

:05:22.:05:25.

before you see them in operation fully. All of the regulation and

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insurance regulation we have is all around the fact you have a driving

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charge of the car. You take that away, who's at fault? The car-maker,

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the software provider? There are still many questions to be answered.

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In the meantime Ford and many rivals are just ploughing plenty of money

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into this technology. Just tell us about the rivals. We know about

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Google, we know about Tesla, but many others are in the frame. Yes,

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and a lot at the premium end. BMW, Mercedes. They are concentrating on

:05:59.:06:06.

the premium eventual ride sharing. What about Apple? A lot of talk

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about them, they are heavily predicted to be making a car. I

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think it's highly likely they will be in there as well. I was wondering

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about, we said in the introduction they were putting their money where

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their mouth is, but $75 million in the grand scheme of things doesn't

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sound like a lot. Hang on, we have been corrected. $175 million, that

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sounds a bit better. Elon Musk's against it, isn't he, saying the

:06:45.:06:51.

technology was expensive? I think the aim of Ford is to get involved

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in the development and build up economies of scale so that it can be

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made more cost effective, particularly because they're looking

:07:00.:07:01.

and the mass-market end of this, that's obviously very important for

:07:02.:07:05.

them, to be more affordable for a big fleet. That's their thinking

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behind this. I know LiDAR is generally looked on to be better for

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3-D mapping which is vital for, make. Extremely vital. You'd be in

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the wrong place at the wrong time with the wrong person. Or no person.

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Thanks for coming in, we appreciate it. Much more to squeeze in, go for

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it. A former head of Goldman Sach's

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mortgage trading unit has been barred from the industry

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by US regulators. Edward Chin, former head

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of residential mortgage-backed securities, was accused by the US

:07:38.:07:40.

Securities and Exchange Commission of misleading customers, causing

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them to pay more. In addition to the ban,

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he has agreed to pay $400,000. China's state council has approved

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a new link between its tech heavy Shenzhen and Hong Kong stock

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exchanges in a move to open Under the initiative limits

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on how much foreigners can invest in Chinese

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stocks will be scrapped. But there will be a daily cap

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of $2 billion dollars on the amount Online news site Gawker Media has

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been sold to media firm Univision The firm outbid media rival

:08:11.:08:14.

Ziff Davis to seal the deal, which still hinges on approval

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from a bankruptcy judge. The sale comes after Gawker filed

:08:19.:08:24.

for bankruptcy protection in June to avoid paying damages after it

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lost a $140m invasion of privacy lawsuit bought by former

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wrestler Hulk Hogan. Now, Hong Kong's national carrier -

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Cathay Pacific- has taken an almighty hit to its profits.Net

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profit for the first half of the year fell 82.% compared

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to the same period last year, Karishma Vaswani is

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in Singapore for us. At a time when oil prices are low, I

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think this story has something to do with oil, it bet against oil prices

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and lost that bed, basically? You are absolutely right. They bet that

:09:18.:09:23.

oil prices, to protect itself from the volatility it is seeing in oil

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prices, it bet that it would be higher than it currently is. It's a

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bet that many airlines make on occasion. Cathe is said to be more

:09:32.:09:38.

conservative than most, and that is what you are seeing reflected in the

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earnings being released. It's a staggering figure. If you compared

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to how regional airlines are doing, Cathay really isn't doing very well.

:09:51.:09:54.

Now, the big of a problem of course for this airline at at one point was

:09:55.:10:03.

all one of Asia's finest is that the main market it has been serving,

:10:04.:10:06.

China, has been seeing a slowdown. That's not all, it's also because of

:10:07.:10:10.

competition. Chinese carriers are now becoming far more competitive

:10:11.:10:13.

and becoming very good passengers from the mainland to international

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destinations. People don't necessarily need to go through Hong

:10:19.:10:23.

Kong any more. And that's really starting to hurt Cathay's

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bottom-line. I guess you'd call it as a hub, an important hub, if

:10:27.:10:31.

passengers don't need to go through it, they are in trouble. Great stuff

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as always, see you soon. Just a quick flash of the markets -

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because it's very The Asian markets pulled back a bit

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from their one year high. The price of a barrel

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of oil dropped a bit. The pullback also

:10:49.:10:50.

happening in Europe. But the best market comment has

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to come from one of the men who vote on whether to raise

:11:03.:11:06.

or lower US interest rates. Yesterday he hinted that the cost

:11:07.:11:08.

of borrowing in the world's biggest Today we get the US FED minutes

:11:09.:11:11.

from their last meeting and should give us a clue as to what's

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going on in the heads And talking of the US -

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let's find out what'll be making the biz headlines on that

:11:25.:11:28.

side of the Atlantic. On Wednesday we'll get a closer look

:11:29.:11:34.

into the thinking of the Federal reserve policymakers when the

:11:35.:11:37.

minutes of their July meeting are published. Now, the US central bank

:11:38.:11:42.

said at its last meeting that the economy stands on a better footing.

:11:43.:11:47.

Economists will be scouring the notes, looking for true hints on how

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likely an interest rate will be. In other business News a few companies

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reporting earnings including network equipment maker Cisco. Now, Cisco

:11:59.:12:05.

has been beefing up its wireless, security and data centre businesses

:12:06.:12:08.

to really offset the impact of sluggish spending by telecom

:12:09.:12:12.

carriers and enterprises on its main business of making network switches.

:12:13.:12:19.

Also reporting, retail giant target and office supplies retailer

:12:20.:12:27.

Staples. Pretty busy day shaping up on Wall Street. The business editor

:12:28.:12:31.

from Telegraph media group is with us, good morning James. We are

:12:32.:12:36.

seeing who is not on holiday, they are on business life. Talking about

:12:37.:12:43.

the Fed, we get the minutes later, could be quite interesting, couple

:12:44.:12:46.

of those on the policy-making team, as it were, making hints, saying get

:12:47.:12:50.

ready for rates going up again in the states. Yes, basically said

:12:51.:12:57.

growth is it's a rating, the boss of the New York Fed coming out

:12:58.:13:02.

yesterday and saying called your horses, a rate cut will not happen.

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A lot of money has been on a rate hike. But some of the money now

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moving to thinking about the December rate. He is an important

:13:16.:13:20.

chat, he's a permanent voter, one of the people who sit around this big

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table and vote whether up or down. And we got more indication later

:13:27.:13:29.

with the minutes coming out tonight at about 70 GMT. The business life

:13:30.:13:39.

page is consumed with UK data. Unemployment data coming out today,

:13:40.:13:43.

consumer sentiment data tomorrow. Some survey today saying we are at a

:13:44.:13:49.

two-year low. Just talk us through what's happening and what we are

:13:50.:13:51.

learning this week. Basically everybody is grasping, trying to

:13:52.:13:56.

find out in the post-Brexit vote environment how the UK economy is

:13:57.:14:01.

doing. Inflation data yesterday showed inflation increasing up at

:14:02.:14:06.

1.9%. Quite a bit. Employment data out later is for June, we are

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expecting that at 9:30am. We are expecting unemployment down a 4.9%.

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But that is just the June, only takes in seven days after the Brexit

:14:18.:14:21.

vote. So still a bit early to tell. Going to be very hard to compare

:14:22.:14:33.

anyway. Exactly. Very seasonal. We'll see you again later. Still to

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come, it could be hard times for Brazil's airline has the countries

:14:41.:14:46.

economy installing, seats are left empty. We'll be talking to the boss

:14:47.:14:49.

about how she plans to turn around the company 's fortunes.

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Banks and accountancy firms that help their clients bend the rules

:15:00.:15:01.

to unlawfully avoid tax could face huge fines under new proposals

:15:02.:15:04.

Ministers have published plans which would give courts

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the power to impose fines of up to 100 percent of the tax avoided -

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Andrew Walker is in our Business Newsroom.

:15:12.:15:20.

How big a step is this? Up till now it is the individual who would get

:15:21.:15:28.

into trouble, but never the accountants. It is very striking, it

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has been welcomed by a lot of tax campaigners, that the position now

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is basically, if you take advantage of a tax avoidance scheme that is

:15:41.:15:45.

subsequently found to be unlawful, you get landed with the financial

:15:46.:15:50.

consequences. Hitherto there has been no real disincentive for

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accountants and lawyers to offer these schemes, it will be required

:15:56.:15:58.

to has to deal with the consequences. So it is potentially a

:15:59.:16:02.

major change in approach and other way in which government deals with

:16:03.:16:07.

the problem of tax avoidance, and we're talking about billions of

:16:08.:16:11.

pounds a year lost with these type of schemes. The hope is that the

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prospect of facing these penalties potentially covering a large number

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of clients, may help to choke off the supply of these schemes in the

:16:24.:16:29.

first place. Briefly, it has not been announced yet but when we

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expected to come from the Treasury, with a new government led by Theresa

:16:36.:16:40.

May? These are consultation proposals, but it is striking,

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Theresa May has said that paying your tax as a company is part of the

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price, the benefits you get from living in a free, nor for society.

:16:51.:16:55.

Thank you. We will see you again soon. Balfour Beatty, managing to

:16:56.:17:03.

narrow its losses, pre-tax losses coming in at ?21 million, a lot

:17:04.:17:12.

better than the previous year, ?150 million in losses. Its order book is

:17:13.:17:18.

looking strong as well. Nearly 12.5 million. What about the story with

:17:19.:17:25.

the job cuts? Unemployment data we're getting out later but also

:17:26.:17:28.

Cisco. Our top story, forward, the motor

:17:29.:17:42.

car announces ambitious plans to have a driverless car on the road in

:17:43.:17:48.

just five years. So no steering wheels, no pedal, no driver! Let's

:17:49.:17:51.

have a look at the markets. One of the comments from the US Fed,

:17:52.:18:06.

one of the voting members who decide whether rates go up or down in the

:18:07.:18:09.

world's biggest economy said, there could be a rate rise, be prepared.

:18:10.:18:14.

Our next guest has one of the toughest jobs

:18:15.:18:16.

in Latin America right now - keeping South America's

:18:17.:18:19.

LATAM is the fusion of two giant companies: Brazil's TAM airlines

:18:20.:18:22.

and Chile's LAN and it started operating flights under a joint

:18:23.:18:25.

It operates flights to 140 destinations in 29 countries -

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But it has not been an easy start for the joint venture.

:18:29.:18:36.

Brazil's recession has hit the airline sector hard,

:18:37.:18:40.

with a 6% contraction in the number of passengers this year.

:18:41.:18:44.

Chief Executive Claudia Sender took over the helm of the company

:18:45.:18:47.

A chemical engineer with an MBA from Harvard and is one of very few

:18:48.:18:54.

women leading a major company in Latin America.

:18:55.:18:58.

The BBC's Daniel Gallas spoke to her at the Latam's Sao Paulo

:18:59.:19:01.

headquarters and asked her if sponsoring Rio was a wise move.

:19:02.:19:10.

I am absolutely convinced it was the right decision, the go-ahead to toe

:19:11.:19:16.

into the Olympic Games in Brazil. First because Brazil is the largest

:19:17.:19:22.

market for LATAM airlines group, and it's a way in which we reinforce our

:19:23.:19:25.

commitment to Brazil and our presence here. It was also an

:19:26.:19:30.

important moment for the launch of our new brand. Until the beginning

:19:31.:19:37.

of the Olympic process we were still LAN and TAM and our first LATAM

:19:38.:19:41.

flight was the one which brought the Olympic flame from Geneva to Brazil,

:19:42.:19:46.

so it was a beautiful way of marking the introduction of our new brand.

:19:47.:19:51.

Since then we have been recognised as the second most remembered brand

:19:52.:19:54.

attached to the Olympic Games service has been very good in terms

:19:55.:20:00.

of brand recognition. The travel arm of your company offered big

:20:01.:20:04.

discounts to tourists in the run-up to the Games, has the number of

:20:05.:20:07.

tourists been disappointing in these Olympics? Before the Games started

:20:08.:20:12.

there was a lot of concern, whether the Brazilians would be able to pull

:20:13.:20:17.

this out or not and since the opening ceremony, I think people

:20:18.:20:22.

were very impressed by the capacity of Brazilians to do the

:20:23.:20:27.

extraordinary. So as a country, we always surprised when the time comes

:20:28.:20:30.

to deliver the extraordinary, the same thing happened during the World

:20:31.:20:36.

Cup, we are now seeing history being repeated during the Olympic Games.

:20:37.:20:42.

So we have seen more and more people getting excited about coming and we

:20:43.:20:46.

have seen Brazilians showing their best and not their worst. So all the

:20:47.:20:52.

concerns about the car, violins, the logistics and whether the Games

:20:53.:20:59.

would work or not, I think they have diminished significantly. --

:21:00.:21:02.

violence. I think this has increased the traffic. Latin America saw a

:21:03.:21:09.

boom in the number of passengers flying in the last decade but now

:21:10.:21:12.

it's going to a very severe recession, what happened to that

:21:13.:21:19.

room? The consumption class really grew in Brazil and people who before

:21:20.:21:22.

could only afford travelling by bus were all of a sudden able to afford

:21:23.:21:28.

travelling by plane, this is how the market tripled in only ten years. It

:21:29.:21:35.

made Brazil the third largest airline market in the world. What we

:21:36.:21:40.

have seen in the past two years is as the recession hit our economy and

:21:41.:21:43.

people became more cautious in how they spend their money, the leisure

:21:44.:21:48.

clients are thinking twice before taking another vacation or flying.

:21:49.:21:55.

But more than anything, the corporate clients, who makes the

:21:56.:22:00.

bulk of our demand and sales, got a lot more cautious, we have seen

:22:01.:22:05.

significant reductions in trouble. We do expect that to pick up after

:22:06.:22:12.

Brazil retakes its growth and start growing its economy again. This

:22:13.:22:16.

should happen in the next year or two, and with believe Brazil can

:22:17.:22:23.

start to retake growth, maybe not at the seven speed as before. I wonder

:22:24.:22:32.

if she has ever heard of the joke, how do you become a millionaire

:22:33.:22:41.

running an airline? Let's go, quickly! James is back. The

:22:42.:22:45.

Financial Times has a story which we asked you to comment on. Thanks look

:22:46.:22:51.

for cheap ways to store cash piles as rates go negative, where are they

:22:52.:22:56.

putting the cash? They are looking at putting it in storage. In belts.

:22:57.:23:02.

Rather than, the whole purpose of lowering rates, the irony really is

:23:03.:23:08.

to get them to lend money, distillate economy but instead a lot

:23:09.:23:12.

of banks are looking at storing it under the ground in secret faults.

:23:13.:23:18.

How much can you store under a double bed? $106 million,

:23:19.:23:28.

apparently. A suitcase can hold $2.5 million! It's also harder because

:23:29.:23:36.

from later in the year, your notes are going out of circulation -- 500

:23:37.:23:49.

euros notes. Hayley says she's keeping her money in the highest

:23:50.:23:53.

paying bank account from now but looking at shares, gold, biotech,

:23:54.:24:00.

solar companies. My favourite tweet is this person, no name, I have got

:24:01.:24:05.

a grand, in a shortbread tin, shortbread eaten! Another one says,

:24:06.:24:16.

regular savings account for highest monthly payments. Another says if I

:24:17.:24:19.

had any money I would look for options. Sorry to hear that. Let's

:24:20.:24:25.

talk about this story, which is interesting. The shins and stuck

:24:26.:24:31.

index licking up with Hong Kong exchange, and opening up more

:24:32.:24:38.

opportunities -- linking up. The latest move from the Chinese

:24:39.:24:43.

authorities to open up companies listed to global investors, clearly

:24:44.:24:48.

very limited, 2 billion every day in terms of money coming in, it is the

:24:49.:24:53.

next step for China awakening to the well. If you listen to the comments,

:24:54.:24:58.

people are talking about biotech and solar, people are desperately trying

:24:59.:25:03.

to find ways of making money, it's definitely risky because who knows

:25:04.:25:06.

how these companies are regulated, you just need to look at the scare

:25:07.:25:10.

stories coming out of China but people are looking for new ways of

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high interest. What is interesting as well is the type of companies you

:25:16.:25:20.

can invest in, until now it has only been banks and state-run

:25:21.:25:24.

enterprises. China is taking baby steps. I wanted to talk about the

:25:25.:25:33.

satellite, we only have 22nd! Quantum physics again! After the

:25:34.:25:40.

programme, I will take you through quantum physics! Look forward to it.

:25:41.:25:49.

You lie! That is it from us. See you tomorrow.

:25:50.:25:51.

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