13/11/2012 World Business Report


13/11/2012

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the home of Paula Broadwell. Those are the latest headlines. Now

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it is time for World Business Report.

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The headlines: Greece is being made to wait by its creditors. Vital

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bail out funds will be delayed by another week. As Italy's biggest

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bank, UniCredit, recovered from last year's shocking losses?

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Japanese consumers are tightening their purse-strings among gloomy

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economic conditions. The weight for vital new funds

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continues for the great government. It had hoped that part -- passing a

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new budget would persuade its international lenders to hand over

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30 billion euros. Late on Monday, eurozone finance ministers say they

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will meet again on November 20th and take a final decision then.

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Greece urgently needs the money to pay its bills. User Rome ministers

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want Greece to implement promised reforms. -- eurozone. On the plus

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side, they will be given an extra two years to meet the budget goals.

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Give us more detail on what was established yesterday. I think the

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two-year extension was something that was widely expected and it is

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good news. It means the pain will be eased over the short-term. It

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means it would take a bit more effort to get to where you are at

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the end of the day, because there will be more money needed ahead at

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some point in order to achieve the targets at a later date. And we

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need to keep Greece financed for slightly longer. That means

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slightly more expensive overall. It will have to raise some money. More

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importantly, it will have to look at the whole debt restructuring,

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which is an issue. But there have been some positive developments.

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There is a very immediate issue, in what the government is going to be

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doing with some of the debt repayments that will be due this

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week. They will now be able to breed -- rollover some of the

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Treasury bills. So they established how to meet the payment. The next

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summit is the 20th. What will be established then? Will they get to

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the point where they can say we can release the next tranche of money?

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There should be some agreement on that. It will not be released

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immediately. If they do not have to look at the bail out package and

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add extra money, if Greece is allowed to raise the money in a

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different way, it may not have to go through all the things that

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would delay the process. Nevertheless, it looks like the

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payment itself is not going to come immediately. That is crucial for

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Greece. There was a 31 billion euros, which should have been paid

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in February. The banks cannot land and the contractor is in Greece

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have not been paid, the government owes them a lot of money. -- the

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contract does. The head of the IMF was speaking and she has raised

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concerns about how they fit a rout of the restructuring of debt for

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Greece in the long-term. -- how they figured out. The real question,

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if it is not growing, it is going to see a fall in GDP. The debt

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repayments are going to be very significant. The deficit is still a

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big problem. What the IMF is saying, the debts which are going to be

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rising, is unsustainable. There is nothing there to underpin an

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improvement. It has been delayed in terms of a decision and that will

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be a problem. Let's take you to Italy, because

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the biggest bank there, UniCredit, is releasing its latest set of

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results. The markets will be very interested. Has this bank managed

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to recover from its crisis this time last year, when it reported a

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staggering $10.5 billion loss. It provoked a panic over whether it

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and other Italian banks will ask for a bail out, as Spanish banks

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have already done so. When the bid is baked in Italy, the

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reserve's third largest economy, reported a billion dollar last, it

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cent fear down the spines of the financial markets. One neuron,

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UniCredit has pegged its costs and its losses. It managed to raise

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$9.5 billion of new capital. It may have escaped a one storm, only to

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be sailing into a fresh one, caused by the lack of Braughing. --

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borrowing. Revenues are coming down. They need to convince people that

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it has changed. It would eat up all of their profits and throw them

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back into a loss. A key problem for the entire banking sector is the

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sharp raised in bad loans. They rose 6%. -- the sharp rise. The

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worry is that rising losses caused by back but it may overwhelm

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Italy's smaller banks, causing them to seek a bail out. -- caused by

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bad loans. They are left looking at the Italian state, saying, help us.

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The European Central Bank may be alarmed at the prospect of a cash

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crisis, but it is having to fight so many other financial fires in

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Greece, Portugal, Ireland and Spain, that the smouldering problems of

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Italy's banking have been let into the home government.

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suffering from weakness. It is not surprising to hear that Japanese

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people are feeling quite worried about their finances. That is right.

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Consumers are tightening their purse-strings. Households are

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holding the most cash since 2005, amid the grim economic conditions

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in the world's third-biggest economy. Data shows sliding

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consumption which makes up nearly two-thirds of the economy,

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contributing to the contraction in the past quarter. Private

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consumption is down by 1.4%. It has now dropped for two consecutive

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quarters, the first back-to-back decline since the global financial

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crisis. People have no incentive to spend. They are not sure about

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future job security. Many big firms are cutting jobs and training

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salaries. Renaissance electronics is planning to cut thousands of

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jobs. A maker of electronic components is shedding 1,000

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domestic positions. Sharp and Sony posted record losses and they are

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cutting jobs and production lines. Large businesses have also cut

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worker bonuses. One economist who I spoke to, the end of subsidies and

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the looming sales tax increase, it is also making people more

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pessimistic. They are putting their money in savings accounts with low

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rates. One of Microsoft's most powerful

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executives, Steven Sinofsky, is leaving the company with immediate

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effect. He was head of the Windows software unit, and worse head of

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Windows 8. Microsoft did not say why he left. -- was the head.

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Staying with Microsoft, its Halo 4 Videogram launched up sales of $220

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million. -- video game. It took Microsoft Game Studios more than

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three years to develop the game. A markets are not happy about the

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