23/10/2013 World Business Report


23/10/2013

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River Jordan. Those are the latest headlines. Now

:00:00.:00:00.

for the latest financial news. The French Finance Minister tells

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the BBC that the countries on mend and at economic performance is

:00:23.:00:25.

improving despite huge tax rises and high unemployment. `` the country is

:00:26.:00:30.

on the mend. The economic performance in front is getting

:00:31.:00:39.

better. That growth is positive. With a weak figure in twenty

:00:40.:00:42.

thirteen, it will get better in twenty fourteen.

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It is D`Day for Detroit as the city head to court to prove that it does

:00:47.:00:55.

not have the money to pay its debts. Welcome to World Business Report. In

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a moment, we will look at Australia where higher than expected inflation

:01:02.:01:06.

has dashed hopes of a rate cut. First, it is the Eurozone's

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second`biggest economy. For many, France is just not working. Trent

:01:12.:01:15.

families and firms are reluctant to spend and invest. That is because

:01:16.:01:19.

companies and households have been hit by sixty billion euros in

:01:20.:01:25.

additional taxes in twenty eleven. Bosses are reluctant to hire. More

:01:26.:01:30.

than one in ten French, nearly eleven percent of the workforce, are

:01:31.:01:34.

unemployed. Public debt is expected to drop ninety seven five percent of

:01:35.:01:41.

GDP next year. If France of the (MUSIC PLAYS) and of Europe?

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Our economics correspondant put that question to the country's Finance

:01:46.:01:52.

Minister, Pierre Moscovici. `` is a front of the sick man of Europe? At

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the same time, we should be conscience that France is still an

:01:59.:02:03.

important economy. Defeat in the world. It a large and competitive

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economic. I never get dedicate myself to French bashing. The

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economic performance of France is getting better. That growth is

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positive. With a weak figure in twenty thirteen, it will get better

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in twenty fourteen. Why so? Because we are addressing the real

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problems. We are fighting for competitiveness. With tax credits

:02:41.:02:42.

for competitiveness and employment, where is the tax credit for

:02:43.:02:52.

financing. More financing. Better orientation from savings to

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investment. This country is reforming. The country is changing.

:02:57.:03:01.

We changed the labour market function with an important reform.

:03:02.:03:07.

We are reducing our deficits. We are doing that through cuts in public

:03:08.:03:10.

expenditures. We're reforming the pension system. We're reforming

:03:11.:03:15.

policies for families. There is a move in France and think that the

:03:16.:03:21.

idea is to have a more competitive and more creative and more

:03:22.:03:26.

innovative country. Isn't a problem or is part of the fact that France

:03:27.:03:30.

has an enormous public sector? The largest in the Eurozone. High tax

:03:31.:03:35.

rate in particular are a dramatic, that seventy five percent tax on

:03:36.:03:39.

high earners for example. Did you need to fundamentally rethink the

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shape and size of the French public sector? Of eighteen billion euros,

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fifteen billion will come from cuts. We want to rethink the nature

:03:51.:03:57.

of this the State `` the state of public authorities. We are very

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proud of our public services. We are very proud of our collection. Very

:04:03.:04:07.

proud of the welfare system. We're not to sacrifice the social model of

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France but adapt and modernise and this will mean, of course, a

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reduction in the correct level of the public expenditures. We are now

:04:21.:04:27.

at fifty seven percent. We hope to be at something like fifty three

:04:28.:04:30.

percent in two thousand seventeen. We are reducing. That is not so

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simple. A period when Griffiths a slow. `` at a period when growth is

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so slow. It is the largest bankruptcy case in

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the US. The city Detroit head to court to prove that it is not have

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the money to pay its debts. Bankruptcy protection would mean

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that creditors would have to accept pennies on the dollar and retired

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city workers would see drastic changes to their pensions. That is

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not sitting well with many who are owed money.

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It was the fourth largest city in the country, the cradle of American

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automobile industry. The streets today tell a different story.

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Decades of decline had led to Detroit becoming broke. This was a

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Lieutenant Colonel... Gordon McDonald is proud of his thirty nine

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years at the Detroit police department. He saw the city 's

:05:29.:05:35.

demise firsthand. He and his wife live off the pension and benefits he

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gets from the city. Detroit says that it can no longer afford to pay

:05:42.:05:45.

pensions for it some twenty three thousand retired workers. We don't

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sleep very well. It is constantly on your mind. In a few months, the

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health benefits will end. They will take it away from us and don't know

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what she will do. Out of that make you feel? Kind of sad for her.

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Detroit needs to do something. Thousands of abandoned cars litter

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the streets. As the city tries to declare bankruptcy, municipal worker

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was like this one and move some of the evidence of just how bad things

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have become. This is our city and we are doing everything we can to bring

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it back. You sound hopeful? AM. Detroit has been here for years and

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will come back. Towing cars can't get the city of debt. It owes

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roughly eighteen billion dollars and is now looking to van Gogh and Monet

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to solve the problems. Like many things in the city, Detroit's

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impressive art collection was actually built during it economic

:06:51.:06:58.

boom. This city owned some of the most famous pieces including this.

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As Detroit filed for bankruptcy, it means that these works of art are

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actually assets and, if sold, the city could gain tens of millions of

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dollars. It is an abominable idea. It is one of America's greatest art

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collections, something that is talking about the history of

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Detroit. Many are watching what happens to Detroit very carefully.

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What takes place here will likely pave the way for other American

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cities facing the same financial constraints.

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We move on to Australia where inflation came in at a higher than

:07:36.:07:40.

expected rate, effectively killing off all hopes for a rate cut. We get

:07:41.:07:48.

the latest now. Australia? I spoke to a few analysts earlier and they

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say that could still go way. First, the sharp spike has pushed the

:07:55.:08:00.

inflation to one point two percent with expectations of zero point

:08:01.:08:05.

eight percent. This height expected them to the Australia dollar to four

:08:06.:08:09.

point five high. The markets speculate that there is this the

:08:10.:08:13.

chance of another interest rate cut in twenty thirteen. The last time

:08:14.:08:17.

the RBA reduced the cost of borrowing was in August to two point

:08:18.:08:21.

five percent, the lowest level since nineteen sixty and a hefty two point

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seven five percent. Secondly, some analysts are making the case for a

:08:26.:08:29.

potential rate cut, saying that despite the quarterly rise, the

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annual rate of inflation remains in the bottom half of the Reserve Bank

:08:34.:08:40.

two percent to two percent rate suggesting that there is still room

:08:41.:08:43.

for a reduction of push comes to club. `` push comes to shell. They

:08:44.:08:48.

suggest that the September quarter is strong so it is feasible that

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this quarter, there are still surprise on the downside. `` push to

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shove. A look at the markets now. In terms

:08:58.:09:02.

of Asian markets, twenty to think about. Yesterday, the jobs figures

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came out of the use case and they were disappointing. The US and the

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added one hundred and forty eight thousand jobs. `` out of the US.

:09:10.:09:13.

Less than expected. Asian markets reacted.

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In terms of currencies, the dollar is still sitting at a two year low

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against the euro. We are looking into the Federal Reserve, will it

:09:26.:09:31.

paper the stimulus package? The mood music now is that it will not. That

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is it for me and the team. Thank you for watching. Goodbye.

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