21/05/2012 World Business Report


21/05/2012

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of the bombing of an airliner over Scotland, has died.

:00:05.:00:15.

Now it is time for the latest financial news.

:00:15.:00:21.

You are with World Business Report. The headlines: a turbulent week

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ahead on the markets as leaders battle to contain the eurozone

:00:24.:00:31.

crisis. Finally a done deal. Yahoo agrees

:00:31.:00:36.

to sell half of its stake in the Chinese website Ali Baba for more

:00:36.:00:45.

than $7 billion. His Ryanair and the -- is the

:00:45.:00:51.

budget airline model running out of space after another big year for

:00:51.:00:56.

Ryanair? A New Trading Week begins and

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investors remain on a knife-edge after leaders of the G8 nations

:00:59.:01:05.

came up with no concrete proposals to tackle the eurozone crisis. The

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German and French finance ministers meet today in Berlin. The

:01:11.:01:17.

unravelling of Greece's financial system is gathering pace. Many

:01:17.:01:27.
:01:27.:01:30.

Greek people are taking savings out of the banks.

:01:30.:01:40.
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Cash machines are emptying daily, mattresses of -- are bolting. --

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bulding. Estimates suggest around 4 billion euros a week is being

:01:48.:01:55.

withdrawn. In the shadow of the famed a couple us, economists say

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recent Turkish history provides an example of the loss of savings that

:01:59.:02:09.

many Greeks fear. In Turkey we had that 15 years ago. The powers-that-

:02:09.:02:18.

be dealt in French francs and in Deutschemarks and they had a

:02:18.:02:21.

flourishing situation and the rest of the population had low-spending

:02:22.:02:31.

power. In London, this risk specialist says companies are

:02:31.:02:34.

emptying their Greek bank accounts snidely. Some of them are taking

:02:34.:02:41.

cash homes. Some of them are buying German bonds, some are opening bank

:02:41.:02:46.

accounts on the internet but that is getting harder and harder. Some

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of them are opening bank accounts in Cyprus in the probably mistaken

:02:51.:02:56.

belief that a Greek bank in Cyprus is protecting them more than a

:02:56.:03:06.
:03:06.:03:09.

great bank in Athens. -- Greek bank. These people are house-hunting in

:03:10.:03:16.

London. His agent says Greeks are flocking here. They are looking to

:03:16.:03:21.

park their money, looking for things they can rent out. This is

:03:21.:03:30.

removing money from wherever it is and putting it in a safe haven.

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Most on Mary Greeks are not in a position to do this. -- most

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ordinary. The more of the money moves outside of the country, the

:03:46.:03:56.
:03:56.:03:58.

more the country is reliant on the central bank.

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Obviously a critical week, today the German and French finance

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ministers talk in Berlin ahead of an EU summit on Wednesday. How will

:04:09.:04:16.

they find middle ground prior to that? It will not be easy. Germany

:04:17.:04:22.

is exposed to using debt to spend the country's way out of a

:04:22.:04:32.

recession. France will press on with an abolition of the strict

:04:32.:04:37.

austerity policies which they think Germany is imposing on Europe.

:04:37.:04:42.

Between demand and supply there is quite a difference. They will have

:04:42.:04:50.

to come up with a compromise. seems to be some room emerging in

:04:50.:04:54.

Germany. The German finance minister speaking on the weekend,

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saying they are open to look at all sorts of ideas as long as it

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doesn't increase debt. Do you think eurozone bombs, which many have

:05:04.:05:14.

been pushing, a good way of resolving the situation? For many,

:05:14.:05:18.

the eurozone seems a way out but the bonds basically mean you borrow

:05:18.:05:28.
:05:28.:05:28.

your neighbour's credit card to find your own spending. -- to fund.

:05:28.:05:33.

They are only make sense if you have a common fiscal policy. Give

:05:33.:05:39.

up your sovereignty, otherwise countries can go on spending as

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much as they like and make other countries responsible for paying

:05:43.:05:52.

their debt. It is difficult to see the eurobonds working. While all

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this is it going on we heard that the Greek people are pulling out

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their money, and it is going on in Spain as well. The prime minister

:06:01.:06:07.

there saying he will enact an audit of the banks to see how stable they

:06:08.:06:14.

are. That is very much welcome. The markets are suspicious that the

:06:14.:06:20.

reported numbers are understating the scale of the problem. It could

:06:20.:06:27.

be a help if a trusted third party could clarify the mess and come up

:06:27.:06:32.

with something for the market to believe. There is a divide between

:06:32.:06:36.

what the market thinks and what the government is telling us is needed.

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A lot to keep an eye on, thank you for your perspective on what will

:06:41.:06:47.

be another critical week. In a bid to raise cash, Yahoo is

:06:47.:06:55.

near to selling half its stake in Chinese website Alibaba. What these

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:07:06.:07:08.

Yahoo up to? -- what is? Alibaba will be buying back half of

:07:08.:07:13.

the Afu's stake for a minimum 7.1 billion US dollars in cash and

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stock. It brings to an end a long- running and bitter negotiation

:07:18.:07:25.

process between the two science. Yahoo acquired the stake in Ali

:07:25.:07:31.

Baba years ago for 1 billion US dollars, they are making 700 % of

:07:31.:07:36.

their investment. Alibaba is buying back its own stock. There is an

:07:36.:07:41.

agreement for Yahoo to sell its remainder of the stock in stages

:07:41.:07:50.

later on. Another story to keep an eye on. Ryanair. The biggest

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airline for European routes. It is expected to make almost 500 million

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euros, around the same as last year but until now it has posted big

:08:02.:08:09.

chums in earnings. How do they grow from here?

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Ryanair's main markets, Spain, the Italy and the UK face tough

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economic times. Fuel costs have been soaring but they keep the

:08:20.:08:29.

money coming in by stripping off costs and charging for extras. The

:08:29.:08:35.

chief executive aims to double passenger numbers over the next

:08:35.:08:42.

five years but how can he do that? He does not have many options. He

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is trying to expand in eastern Europe and there the economies are

:08:48.:08:54.

flat. He has a problem at the moment. A wry N N needs a new fleet

:08:54.:09:04.
:09:04.:09:08.

of more fuel-efficient planes. -- IMF -- Ryanair needs. They are

:09:08.:09:16.

looking at developing a new type of debt. They are being offered a

:09:16.:09:25.

bargain price. If they can achieve this they can break into the

:09:25.:09:30.

Airbus-Boeing duopoly. For our their airlines it will be good news

:09:30.:09:35.

because they raise more competition. On the other hand they will find

:09:35.:09:45.

that Ryanair got there first. want to replace their fleet in 2014

:09:45.:09:55.
:09:55.:09:56.

but the new plane might not be in production by then.

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