03/01/2013 World Business Report


03/01/2013

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- and the winners Financial News with World Business Report.

:00:16.:00:20.

Hello and welcome to World Business Report.

:00:20.:00:23.

One fiscal cliff avoided - watch out for the next one as Washington

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prepares to do battle over America's $16 trillion debt.

:00:30.:00:35.

More evidence of a rebound in a china's economy, with the numbers

:00:35.:00:40.

confirming a strong December for the services sector.

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Do not crispy -- do not repeat our mistakes of the 1930s, a US

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billionaire tells European leaders white austerity is not the way

:00:48.:00:58.
:00:58.:01:02.

US stock markets started 2013 with their best day in more than a year,

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US politicians late on Tuesday. The deal heads off $600 billion worth

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of tax rises and spending cuts, the so-called fiscal cliff, that

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economists warned could push the US market euphoria could prove short-

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lived. The deal, already criticised by the IMF, merely delays $100

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billion of government spending cuts until March 1st. And around the

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same time the US will reach its trillion dollars. The debt ceiling

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can only be raised after agreement in Congress which means the US

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could be on the brink of another cliff in a matter of weeks.

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Here at the New York Stock Exchange, the first day of trading got off to

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a very cheery start as American here.

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here. In just eight weeks, American lawmakers must once again attempt

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to tackle two fiscal related issues. One is the debt ceiling. The other

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new year dealt with that tax cuts but did not deal with the spending

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side of things. Lawmakers must face each other around the table again

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come March. The other issue is the debt ceiling. The US Treasury

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more money to pay debts. President Obama says he refuses, he does not

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want the debt ceiling to become a point of negotiation. The

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Republicans have already indicated that there that there oval

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for an increase to the debt ceiling if they get more spending cuts and

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entitlement reform. These all sets the stage for a test of the new

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Congress and a Test for the new confidence of the financial markets.

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analyst Louise Cooper. We are relieved that they got a deal in

:03:02.:03:08.

the end but we are looking ahead. That is not that far away? That

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rally we saw it is a relief rally rather than sustained euphoria.

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Remember that the stock markets did not really fall on fear of no deal

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therefore one wonders if they will rally on a mini deal. Sustainably

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rally. More rally. Morey rally. I wi rally. I wit that that is

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not the case. Asia is pretty flat. We had not seen a significant fall

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but it is significantly flat. is interesting that the fear index,

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the volatility in the American market has fallen quite

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dramatically over the fast -- past few training sessions. That is

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significant. I volatility means a investors may be more confident.

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That is summit watch as we get into the new year and trading volumes

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increase and people return to their desks. They will have to discuss

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the debt ceiling, the credit card is max out in the US. They have to

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come to a political agreement on that. That will mean spending cuts,

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would it? It seems that the Republicans feel that they had to

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compromise and they will be looking for paybacks in the next deal. That

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is the political dimension. It seems that investors, I think, I've

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starting to get bored with the whole crisis. As with the eurozone

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crisis, they got bored. They may be getting bored of the fiscal crisis

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in the US and may be willing to just ignore it. The assumption is

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that some kind of deal will be down, that the politicians will not

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commit economic suicide. Because a low interest rates, investors are

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forced and equities - maybe they were just ignore it. We will speak

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more about this in about ten minutes. She will return as we look

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This This fiscal This fiscalama is all of

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the papers, so we will talk more them.

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more evidence that the economy there is rebounding significantly.

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Figures confirm a strong month for the service sector. Happy new year

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:05:41.:05:42.

Good news for the manufacturing now. It is a picture that is

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seemingly across the economy. Is that what people are saying?

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In things like we are seeing an improvement on both sides of the

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economy. We're seeing the services sector rising to a four-

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month high. 56.1 % in the month of reading above 50 indicates that

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growth is accelerating while a number below 50 is an indication of

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a slowdown. The fastest-growing services industry has so far

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weathered the global slowdown much better than the factory sector in

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will be a major stimulus for the mainland's economic stimulus going

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forward. Th forward. Tht potential will be coming from the services

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industry. One of the key drivers for this jumper is the construction

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industry which supports about 40 other industries. The size on

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strength de strength deernment restrictions... as you say,

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combined with manufacturing data, the shows and the revival in the

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world's second largest economy. To Europe now, where the crisis in

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the Eurozone has been calmed in recent mont recent montks to the

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European Central Bank pledging to governments. That has bought those

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governments some time to get on with their reform efforts. But are

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they going about it the right way? Definitely not, says influential US

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publisher Steve Forbes. He told the BBC that European politicians are

:07:16.:07:26.
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repeating some of the mistakes the US made in the 1930s. European

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countries they should realise that what they're doing now in these

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countries is not much in terms of restructuring. They tried it in

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Italy and did not get very far. The Germans had not put much pressure

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on it. When talking about structure are you talking about propping up

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up up a legal business. If you're an

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outsider in Italy, it is difficult. We have tried it in Italy. War

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would be easy, in combination with government assets is reducing the

:08:10.:08:16.

tax burden instead of piling up. Spain has raised the top tax rate

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22%. The It 22%. The Ite raising it as well. Greece is raising everything

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and collecting nothing as businesses flee to neighbouring

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Bulgaria. They must realise that this is not the way ago and going

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the opposite direction. And then those economies will start to

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revive and that's it anyway bell built to service their debts.

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implication is that surely even more savage cuts in public spending

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programmes which are already giving and politic and politicms. The only

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way to preserve their programmes is of balancing a Budget, what they're

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trying to do now is the way they tried to balance budgets in the

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early 1930s which was piling on taxes which meant you had a

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contracting economy which make your revenues were always disappointing.

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Greece is perpetually about run out of cash. Spain is not meeting

:09:13.:09:18.

revenue per -- projections. They must learn that this is not working.

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The only way to do it is to get a grip -- by but economy. Revenues

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the US still sluggish, is China the saviour? China will do better this

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being an engine for the global economy, not enough to pull us out

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of the morass that we're in. We must and internally, not count on

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others to pull us out?. Al Jazeera says it's buying Current

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TV, the struggling US cable channel co-founded by Al Gore. The Qatar-

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based news network says the deal will give it access to more than 40

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million American households, compared to less than 5 million at

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the moment, putting it in closer competition with US news channels

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like CNN and Fox. Marcus today. China and Japan are

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