22/11/2011 World Business Report

senior surviving leaders. Now it is time for the latest

business also -- business. Hello and welcome to World Business

Report. The headlines: Fear and frustration returned to the global

financial markets as US politicians failed to agree a $1.2 trillion

worth of spending cuts. Asian markets gave a muted reaction

to the failure of the US debt talks. Spain prepares far higher borrowing

costs of. Good to have you with this. Another

day, another debt crisis. Attention is focused across the Atlantic. The

super committee charged with finding a compromise to deal on how

to act $1.2 trillion in US government spending admitted

failure late on Monday. But the matter of reducing America's 15

trillion dollars government debt mountain has not gone away. A

series of automatic emergency cuts There were last ditch attempts.

size of feeling the pain. But in the end the sides could not agree

on which social programmes to Co itself. This means automatic cuts

of around $1.2 trillion could come into effect in 2013. President

Obama says he is determined to implement those cuts. I will veto

any effort to get rid of those automatic spending cuts to domestic

spending. But the inaction in Washington has already begun to

spooked US markets and could push share prices lower. Investors are

going to lookout every move and ask themselves how is that company

going to be herds if there is a crisis and we have Greek like

cutbacks in spending -- to be heard. While the credit rating agencies

seems to have reacted calmly, business leaders are concerned

about bickering. It is very unfortunate. I still believe US

businesses will pose enough pressure on the government, even in

an election here. But Europe stands as a frightening example of too

much spending and too little political will. It is easy to see

how America got into debt, huge spending on defence and the

spiralling cost of its social programmes. The politicians are not

finding it easy to pick out of bed. A dangerous deadlock for the

American government. The news that the Seebohm Committee

came at the end of a tricky day for markets -- super committee. In the

US that added to a tricky session. The Dow Jones is damp by 2.2%. --

down by. Now let's see what is happening in Asia.

Fairly muted reaction here to the failure of the debt talk. We saw

markets opening with bigger declines than it now. They have now

recouped some of those steeper losses we saw earlier. They have

continued worrying. At one stage we saw the Nikkei hitting an eight-

month low. We are seeing markets fairly flat. The Nikkei is down

ever so slightly, 0.1%. Australia is down 1%. Those worries about the

debt problems and inability of policy makers to come to a

consensus is worrying a lot of in - - Asian investors. Investors are

seeking out safe havens. The US dollar actually maintained its

level in Asia. The Indian rupee fell to a record level on fears of

US debt concerns and the concerns in the US. Investors are seeking

out safe havens. Thank you. The strong US dollar

means many exporters as top Asia are having a better session today.

-- out. Spain is to hold its first auction of government debts since

the conservative Popular Party came into power. There are expected to

be tough austerity measures introduced to bring down the

national debt but there has not reduced the interest rates on

National government bonds. The party one of the biggest

election victory for 30 years but there has been no feel-good factor

on the markets. Government bond yields have continued to rise. On

Tuesday, the government will go to markers to auction between 2-3

billion it euros worth of Treasury bills. The yields have been rising

on this short-term debt. They will get sufficient demand for these

issues. But with elevated yields, which will leave a large question

mark over how long Spain will be able to finance itself. Last year,

the government debts stood at over 9% of national income. The Prime

Minister has vowed to bring it down to 4.4% by the end of next year.

With his -- discontent five, he will not be in a hurry to start the

cuts. TRANSLATION: The government has a large majority but there is a

lot to do. I doubt the Government will want to create negative

sentiments straight away. Spaniards are hoping the European Central

Bank will step in and buy their bonds. Without greater intervention

from the ECB it is hard to see what Spain's governments can do on its

own to solve its debt crisis. The unemployment based is over 20% and

the economy is on the verge of recession. Spending cuts my

pleasure over the brink. That may make Spain's debts even harder to

pay off. The world's biggest computer maker

has reported a 91% fall in profits. That is Hewlett Packard, 209 who

made $239 million. Its new devices racked up huge charges. The former

boss of the insurance giants i Ng is suing a government for $29

million. He claims the state's takeover in the group was

unconstitutional and done without shareholder approval. The

government had an 80% stake in the company.

In the UK, the rich are getting richer and that is the finding of a

year-long inquiry. The reports suggest executive pay has soared in

the last 30 years, undermining productivity and damaging trust in

British business. Many workers are facing a squeeze

with cuts in wages. According to the high paid commission, when it

comes to pay there is a growing division between those at the top

and everyone else. Last year, the average salary was just under

�26,000 while the average total earnings of the 3,100 chief

executive was �3.74 million. -- 3,100. The Commission says this pay

gap is no longer acceptable. Within five years we will be back at

Victorian levels of inequality. If that is what we want as a society

then fair enough. I suggest that most people do not want to end up

there. At the CBI's annual conference they had an explanation

as to why pay packets need to be generous. You have to be

competitive with the best of the world. While we are constraining

pay in some areas if you want people to come to work in the UK

you have to be prepared to pay the amount of money those executors can

get elsewhere in the world. report says radical reform in

Britain's top boardrooms is needed, including simplifying how executors

are paid and making the process more transparent as well as putting

employees on a remuneration committees. The business secretary