07/08/2013 World Business Report


07/08/2013

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at the centre of a health scare this week.

:00:05.:00:14.
:00:15.:00:27.

All of the signs point to a strengthening UK economy, so is that

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tide finally turning. We take a look. Wilfully misled, that is what

:00:33.:00:43.
:00:43.:00:54.

the US government claims that Bank Welcome. We will hear about the

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latest fraud case that has been launched against the Bank of

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America. The tide is turning on the British

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economy, finally the momentum behind a sustained economic recovery is

:01:07.:01:12.

mounting. The latest stream of up the figures paint a very positive

:01:12.:01:17.

picture. Manufacturing output rose 19% month on month, that was double

:01:17.:01:21.

the speed analysts had been expecting. Retail sales enjoyed

:01:21.:01:26.

their fastest low growth in seven years, rising by 2.2 percent as

:01:26.:01:32.

people rush to the shops to why things like barbecues and sunscreen.

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Car sales also involved -- indicated a bumper after more sales are

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registered on this time a year ago. The survey of the UK service

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reported a growth rate of 60.2, the fastest rate of expansion in nearly

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six years. With all of these positive numbers, how are Britain's

:01:57.:01:59.

policymakers to react? Surprisingly, the expectation is

:01:59.:02:04.

very subdued response. Today's Bank of England inflation news conference

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is due at 10:30am, sets to give forward guidance and state that

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interest rates will raid -- remain at record lows will sometime yet.

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Let us take a look at the Bank of England 's strategy going forward.

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Joining is the chief economist of Deutsche Bahn.

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He is probably going to tell us that interest rates are going to stay

:02:33.:02:37.

very low for quite sometime. We're not quite sure how he is going to do

:02:37.:02:42.

this. What he will probably say is to ignore the fact that growth rates

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are improving and focus on the fact that the level of output in the UK

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economy is massively below its previous prerecession peak and

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therefore we need to stimulate the economy and get these growth rates

:02:56.:03:00.

to continue. If the markets start to price in higher interest rates, that

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could derail the very fragile recovery and that is what is to

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encourage. His seat is a fragile recovery. We were just giving out

:03:11.:03:17.

some of the positive data we have had recently, but it is important to

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remember that although it is good news, we are still way below where

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we were in 2005. The important point is that Mr Carney has come from a

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country which has had economic output rise substantially from 2007.

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It has gone up by around 5%. We are operating at about 3% below where we

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were back in 2007. Things still look fragile because the level of output

:03:45.:03:50.

is so low. This forward guidance. This is a tried and tested formula,

:03:50.:03:55.

isn't it? He did it back in Canada. It is also a policy that has been

:03:55.:03:59.

adopted at the United States. is right. There are two slightly

:03:59.:04:01.

different policies. In Canada they said they would keep interest rates

:04:01.:04:05.

on hold for a year and a half. In the US they are saying they will

:04:05.:04:10.

keep interest rates on hold until unemployment. Down to 6.5%. Slightly

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different policies, but aiming to do the same thing, which is aiming to

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do that keep interest rates low. They are trying to tell the markets

:04:23.:04:26.

that they are going to keep their official rates, the rates that they

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sit on a monthly basis, at very low levels. That should also keep longer

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term interest rates low as well. Thank you.

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There are more ramifications now from the US mortgage scandal. The US

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government has sued bank of America for allegedly lying to investors

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about the quality of its mortgage-backed securities that it

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sold back into thousand eight. -- 2008.

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The US government has described Bank of America as reckless and

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fraudulent. In its latest effort to halt Wall Street accountable for

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misconduct that led to the financial crisis, both the Justice Department

:05:09.:05:14.

and financial regulators have filed lawsuits against the bank. They are

:05:14.:05:18.

related to mortgage-backed securities worth $850 million. They

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were created by packaging together groups of residential mortgage

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loans. Bank of America allegedly knew that more than 40% of the

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mortgages did not comply with its own standards, and yet sold them to

:05:30.:05:35.

investors anyway. The bank denies the charges, saying that they were

:05:35.:05:40.

sold to sophisticated investors who have sufficient information. In

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recent years, the Bank of America has been forced to pay billions of

:05:43.:05:51.

dollars in order to settle lawsuits arising from the financial crisis.

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China has fined six baby formula companies for price-fixing. The

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mostly foreign companies have been fined a total of $108 million and

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include New Zealand's giant Fonterra. Which was at the centre of

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:06:14.:06:21.

a health scare this we. What is the latest on all this? The six

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companies include Fonterra. The two US -based companies were hit by

:06:30.:06:36.

particularly large fines. One is going to pay $38 million. The other

:06:37.:06:46.
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$26 million. Fonterra will pay $700,000. The move follows

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anti-trust and anticompetition probes by authorities in China.

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Consumers in China are willing to pay lots more. And brands, after

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public trust was hit when six children died from drinking tainted

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milk into thousand and eight. The fines were announced by China's top

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economic planner and it coincides with a separate pricing

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investigation into the pharmaceutical industry as well.

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None of the companies have given details of the conduct that has

:07:17.:07:23.

caused these fines to be imposed. Fonterra has been facing its own set

:07:23.:07:26.

of problems after it announced a worldwide recall of some of its

:07:26.:07:32.

problems in a health scare last weekend. The overseas manufacturers

:07:32.:07:36.

have set a minimum at which their products could be sold in China.

:07:36.:07:38.

That has been leading to these higher prices, according to the

:07:38.:07:48.
:07:48.:07:49.

media. Thank you. Let's stay with China, where a

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record 7 million students graduated from university this year. But for

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many, their high hopes are being crushed by the country 's economic

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slowdown. Companies are hiring 15% fewer graduates than they did one

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year ago. As our correspondent reports, the job hunters never been

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harder. A temple may not be the obvious

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place to start a job hunt, but in China, graduates need all the help

:08:17.:08:20.

they can get. Some are hoping for a spot of divine intervention. For

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this student, graduates and is still three units away -- graduation is

:08:27.:08:33.

still three years or way. But she still worried. The pressure is

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tougher and tougher. I should improve my study skills and I come

:08:38.:08:48.
:08:48.:08:48.

here to pray for my job in the future. The prayers of many of the

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graduates in this job they are going on Ansett. China may be trying to

:08:51.:08:56.

build an educated workforce to rival the west, but for now, most of the

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jobs here are low skilled and poorly paid. China is now producing three

:09:01.:09:06.

times as many graduates as it did a decade ago. Many hoped that hoping

:09:06.:09:11.

-- many hope that having a career would be a ticket to distract a

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degree of the ticket to having a better life but now is the toughest

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I do find a job. This student graduated last month and is applied

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for more than 100 positions. He hopes to work in finance.

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TRANSLATION: Finding a job is more difficult than I expected. But I can

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accept it. My dream is to become a stockbroker. That in the current

:09:35.:09:41.

employment situation, I don't think I will get that position. Business

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is here say that many graduates are not equipped for the world of work.

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He got lucky at the fair and is heading off to interview for a sales

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position. China has created an educated generation, with

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expectations to match. But the worry for the country 's leaders is that

:09:59.:10:09.
:10:09.:10:17.

there are not enough decent jobs to Let's have a look to see how markets

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are getting on in Asia this morning. We are all waiting for that

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announcement from Mark Carney at 10:30am local time. Asian markets

:10:31.:10:34.

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