14/11/2011 World Business Report

latest headlines from BBC World News. Let's bring you the latest

numbers and used on the new man in charge of Italy with Sally and

A warm welcome, you're with World Business Report. These are the

headlines: He's an elected and highly respected. Will Mario Monti

be able to bring Italy back from the precipice of financial ruin?

The head of Germany's powerful Bundesbank rejects calls to use the

European Central Bank as the lender of last resort. Japan bounces back

from its post earthquakes slump but Mario Monti has been handed the

task of forging a new government in Italy. They will hope he can

restore the country's credibility and pushed through a tough

austerity measures. Between 1994 and 2004 he was a European

commissioner in Brussels where he developed a reputation as being a

tough negotiator and he has always been a staunch defender of the euro.

All eyes will be on how European markets will respond to his

appointment in a few hours. I am joined by a professor of economics

at the University of Sussex and also at the Open University. Are

you pleased Monti got the job? It seems to be the one the markets

were looking for. He was of very respectable economists. He has

connections with very smart economists that he can bring into

his cabinet. That will calm financial markets because he is

very credible in terms of how he understands international economy

and Italy's place within Europe and hopefully he can make it to the

Crow. As long as the growth rate remains below the interest rates

that they pay on their debt, the debt-GDP ratio will keep growing.

Does he have a growth plan? So far we have had two big austerity

packages pushed through Parliament in a very speedy fashion last week

was the latest on. Mario Monti has got to implement that. You say he

has got to bring growth. Everyone agrees that in the long-term Italy

needs to have a growth plan but what about those austerity measures,

will they lead to growth in Italy? It's interesting because they are

actually quite similar to the kind of package that the UK government

has just put through. Which is mainly about taxation. So the VAT

will go up to 21% in Italy. There will be pension reform, they want

Italian women to actually wait an extra five years before they get a

pension. There's increases in the expenses that people make within

hospitals. Little things like that. They are bringing in more money

that way? There will also be a freeze on public sector wages. But

if you think about what these measures will do, partly the

problem is they will decrease demand, they cost the VAT rising...

and this has happened in this country -- because the VAT rising.

Nothing we have seen will increase productivity. For the last ten

years it has had stagnant productivity. This is very

different to other European countries. It is not true it is a

European problem, it is an Italian problem because of under-investment

in certain areas where Germany has been a lot smarter. There's nothing

in this plan to do anything useful. Unless we increased Italian

productivity the gross rate will not rise. These measures we see are

all about decreasing the immediate debt but it is not about long-term

growth. We have got to leave it there, thanks very much. I am sure

we will talk again on this programme about the outlook for

Italy and we will discuss it further in the look at the

international press. But we have to move on because Italy may be

stepping back from the brink but its government bond fields, its

return and investor receives are still in the danger zone and the

European Central Bank is being urged to stem the crisis by

underwriting the Italian bond market. Germany are highly

sceptical of this. On Thursday the President of the German Bundesbank

said the ECB should not be used as a lender of last resort to European

governments. The European Central Bank may have

a new boss, who happens to be an Italian. But whoever's in charge

the ECB can't be a lender of last resort to using its unlimited

firepower to directly by the debt of governments like Italy. All you

can do is go to the open market and buy bonds from distress countries,

which it has done. Wholesale buying could stabilise Italy and Greece.

Four protesters in Rome, it is a simple issue. TRANSLATION: The

European Central Bank is the only central bank in the history of

humanity that lends money to private banks at a rate of 1.5% and

does not lend money to the state. We demand that the European Central

Bank by his state bonds directly because this was stop the

speculation. What is stopping the opening of the EU floodgates is the

zone's largest paymaster, Germany. It aims it will risk unleashing

chronic inflation of the kind experienced in the 1920s. But the

senior figure advising this Bank thinks it will soon end to world

opinion. Germany of course is in pole position here to swing the

decisions and it really has a choice, if it sticks by its

orthodox disciplined approach I fear there's going to be a serious

escalation in the financial markets that will be beyond repair. Or it

has to compromise and say, there may be certain concessions we will

have to make in terms of what the European Central Bank is allowed to

do so that we may leave them by some time to sort the problems out.

That is what will happen I think. With the ECB on the sidelines it is

still just Italy verses the markets. Japan is out of recession after its

economy rebounded in the third quarter growing for the first time

since the devastating earthquake in March. A rise in exports and

consumer spending helped boost the economy after nine months of

negative growth. Roland Berger is in Tokyo, some welcome news, tell

us more about how they did this. is about companies recovering much

more quickly than the common knowledge had expected. That helped

to restore the supply chains. In the last quarter, July to September,

the story was about companies catching up on lost production.

Japan's economy expanded by 1.5% quarter on quarter, 6% as an annual

rate. The fastest of any major economy. Consumers also did their

bit because of concerns about electricity shortages in the wake

of the Fukushima nuclear crisis, there was a bit of a Brunt on

people buying energy-efficient appliances, trying to do their bit

to save electricity -- a run. But can that momentum be my maintained?

Presumably not. I presume the strong yen is playing a part and

also the events in Europe. Those things are inextricably linked. The

turmoil in Europe means investors look for a safe haven, somewhere

where there is no risk of inflation so they turn to Japan. That

prompted the government to intervene. The other big issue is

the flooding in Thailand. Just as those supply chains were recovering

from the earthquake they got hit by the flooding in Thailand. Many

Japanese companies looking to escape the high yen have opened up

factories there in recent years and they were in the way when the

flooding happened. Thank you for joining us. Some Other stories and

President Obama has announced the broad outline for plans to create a

trans-Pacific free-trade zone at an annual regional summit in Hawaii.

Nine APEC nations are involved but China has not expressed interest in

joining the talks. APEC countries account for about 44% of global

trade. Dubai baste Emirates Airlines has ordered $18 billion

worth of airlines. It is the single largest aircraft order for Boeing