01/03/2013 World Business Report


01/03/2013

Similar Content

Browse content similar to 01/03/2013. Check below for episodes and series from the same categories and more!

Transcript


LineFromTo

of prayer. Those of the letters headlines. Time now for the money

:00:10.:00:19.
:00:20.:00:24.

Accidental austerity as US lawmakers are paralysed

:00:24.:00:33.

bipartisanship. A $5 billion is cut from the government's pocket.

:00:33.:00:41.

A refuge for the wealthy no more as Switzerland is to rein in a fat cat

:00:41.:00:47.

pay in a vote this weekend. Good morning. Welcome to World

:00:47.:00:51.

Business Report. In just a moment, will have more on the Swiss Eddie

:00:51.:00:58.

fat cat movement. First, there is sweeping austerity cuts in the US.

:00:59.:01:06.

$85 billion worth of cars are said to go into effect today. As the

:01:06.:01:10.

partners and ship paralyses Washington, the sequester will cut

:01:10.:01:14.

deeply into defence spending. In a town in Virginia, almost half of

:01:14.:01:18.

the local economy is dependent on federal funds which are now at risk.

:01:18.:01:22.

We report on how government wrangling is hurting this small

:01:22.:01:25.

town. America's politicians are not

:01:25.:01:29.

popular among the lunchtime crowd here in the junior. Washington may

:01:29.:01:33.

only be a three-hour drive away but they do not think much here of how

:01:33.:01:40.

the nation's capital is handling the latest Budget showdown. How can

:01:40.:01:44.

Congress let that happen? You cannot let all of these people get

:01:44.:01:50.

laid off. The economy is recovering. Other countries are looking to last

:01:50.:01:55.

to see what we do. They are making judgements about how we have a

:01:55.:01:59.

allowed our failures. As home to the main shipyard for the US Navy

:01:59.:02:03.

and the East Coast fleet, the region is exposed to Budget cuts

:02:03.:02:09.

that could shave 0.5% of American growth. Behind me is a retired

:02:09.:02:13.

battleship. It is another kind of the forced retirement that is

:02:13.:02:17.

worrying people in the region. Unless a deal is done to avoid

:02:17.:02:22.

these Budget cuts, then defence workers are forced to take unpaid

:02:22.:02:27.

leave. As many as 90,000 people could be affected in Virginia alone.

:02:27.:02:31.

Private shipbuilders in this region would also be forced to lay off

:02:31.:02:35.

workers. It is not just the military that is worried about

:02:35.:02:39.

these cuts. School life were all for be affected. Fewer teachers

:02:39.:02:43.

will mean a larger class sizes and programmes designed to help the

:02:43.:02:47.

neediest children will also be hit. That means a tough decisions ahead

:02:47.:02:52.

for those on the local school board. It could have impacts across the

:02:52.:02:57.

board. We will have to determine how we are going to provide the

:02:57.:03:01.

same level and quality of support and education structure for those

:03:01.:03:09.

children, given that another $3 million are lost. Even the mayor

:03:09.:03:14.

cannot see any light at the end of the tunnel. I'm already getting

:03:14.:03:23.

letters from defence contractors. I have won the received yesterday.

:03:23.:03:26.

The leader of General Dynamics may lie off hundreds of workers.

:03:26.:03:32.

Another has sent me a letter talk about 1,600 job reductions. They

:03:32.:03:38.

are getting these daily. This will be felt immediately. Back at the

:03:38.:03:42.

diner, they know that this is the beginning of America's politicians

:03:42.:03:52.
:03:52.:03:55.

continue to get to grips with their Budget battles.

:03:55.:03:59.

I am now joined by a senior market analysis. How one markets reacting

:03:59.:04:04.

to this? The markets are quite sanguine about it and have been for

:04:04.:04:10.

some time. The Dow was at a five- year high. I think that they are

:04:10.:04:13.

sanguine are simply because the Fed is pumping a $5 billion per month

:04:13.:04:20.

into the US economy. The effective ad $5 billion of sequester cuts for

:04:20.:04:26.

the year it is probably a pinprick. This is political risk. This is

:04:26.:04:36.
:04:36.:04:38.

part as a chip at the very most basic level. -- partisanship. As

:04:38.:04:42.

much goes on, the pressure will increase was some sort of

:04:42.:04:47.

resolution. We have seen the effect from the fiscal cliff. There will

:04:47.:04:54.

be an effect. It will impact US growth.

:04:54.:04:58.

Swiss voters are going to the polls this weekend to decide on measures

:04:58.:05:03.

which would strictly limit the salaries for top managers and ban

:05:03.:05:06.

and golden handshakes. The proposals known as the Fat Cat

:05:06.:05:10.

initiative come in the wake of catastrophic losses for big Swiss

:05:10.:05:14.

businesses such as UBS. Continued with continued high salaries and

:05:14.:05:21.

bonuses. Once a byword for reliability and

:05:21.:05:25.

caution, some of Switzerland's top companies have had a bumpy ride in

:05:25.:05:30.

recent years. Multi-billion-dollar losses, especially at the banking

:05:30.:05:35.

giant UBS, had gone hand-in-hand with multi-million-dollar salaries

:05:35.:05:40.

for top managers. Now voters will decide on proposals to limit pay

:05:40.:05:45.

for those that the Swiss had begun to call fat cats. TRANSLATION: It

:05:45.:05:50.

is a rip-off and it is damaging splits economy. It is not about

:05:50.:05:53.

high salaries in general but excessive compensation -- the Swiss

:05:53.:05:59.

economy. Especially for banks that I mismanaged. The fat-cat proposals

:06:00.:06:05.

would give shareholders a veto over manager salaries and ban golden

:06:05.:06:08.

handshakes all together. The Swiss government is uncomfortable with

:06:08.:06:17.

the idea. They -- so our business leaders who has spent $800 million

:06:17.:06:22.

on the ad campaign fought know. would be a bad signal for

:06:22.:06:28.

Switzerland as a business location and we are concerned about that

:06:28.:06:36.

because it is an international issue. We think that it will be

:06:36.:06:41.

very strict. Opinion polls show that almost 66% of voters will say

:06:41.:06:47.

yes to reining in the fat cats. The recent proposed pay-off of seven $8

:06:47.:06:53.

million for outgoing chief -- for an outgoing chief has an did many

:06:53.:06:59.

even though he finally agreed not to take the money. The Swiss are

:06:59.:07:02.

traditionally very protective of their businesses and banks but it

:07:02.:07:07.

seems as though many voters I do want more control over the salaries

:07:07.:07:11.

of the bosses. If the opinion polls are correct, those fat cats could

:07:11.:07:21.
:07:21.:07:26.

be facing a diet. Some are then used: -- Some other

:07:26.:07:29.

news: Once the darling of the start-up world, Groupon founder

:07:29.:07:32.

Andrew Mason was fired today after yet another round of disappointing

:07:32.:07:35.

earnings this week. Groupon has lost 75% of its value since its

:07:35.:07:38.

public debut just over a year ago. In a letter to employees, Mason

:07:38.:07:41.

said the change would give the company room to break bad habits.

:07:41.:07:44.

Japan's unemployment rate edged down to 4.2% in January while the

:07:44.:07:46.

struggling economy remained mired in deflation. The jobless rate

:07:46.:07:52.

slipped to 4.2% from a revised 4.3% in December. The figure was in line

:07:52.:08:02.
:08:02.:08:03.

with economists' expectations. For the third straight month,

:08:03.:08:06.

prices in Japan have declined, a worrying sign for the country's new

:08:06.:08:16.
:08:16.:08:17.

government. Deflation is a problem for Japan?

:08:17.:08:21.

It is a problem that Japan knows very well. It has been caught in

:08:21.:08:25.

the spiral for the best part of a decade. The numbers today really

:08:25.:08:30.

highlight the problem facing Japan's Prime Minister and the new

:08:30.:08:32.

governor of the central bank his appointment was announced just

:08:32.:08:37.

yesterday. Consumer prices including food -- excluding food

:08:37.:08:42.

fell 0.2% in January. The third straight month of decline. Those

:08:43.:08:47.

falling prices have been a big hurdle to Japan's bid to boost

:08:47.:08:50.

domestic consumption. It is difficult to get people to buy

:08:50.:08:53.

things when prices are falling because they believe that if they

:08:53.:08:58.

put it off, then they can get a better deal chip -- later on. If

:08:58.:09:02.

prices rise, buyers are not inclined to delay a purchase. That

:09:02.:09:06.

is why Japan's new government has said that creating inflation is key

:09:06.:09:12.

to reviving the sluggish economy. Especially with exports being one

:09:12.:09:15.

of the biggest growth drivers and they are much slower because they

:09:15.:09:19.

have been hit by the global slowdown in demand. The question is

:09:19.:09:24.

on how you drive that domestic consumption. The news on these

:09:24.:09:27.

falling prices is just how big a challenge it will be to find the

:09:27.:09:33.

answer. That is the key question. Many

:09:33.:09:39.

thanks. Let us look at how markets are

:09:39.:09:43.

doing at this time of day. In Europe, that is how they finished

:09:43.:09:50.

the session on Thursday. Across the board. Let us look at how they did

:09:50.:09:55.

in the US. A different picture. I cannot bring the stocks in Asia but

:09:55.:10:00.

I can tell you that there were currently mixed. Confused numbers

:10:00.:10:03.

Download Subtitles

SRT

ASS