Episode 63 Show Me the Money

This is Show Me The Money - your weekly guide to who's making the

cash, and how it works. With me Digby Jones, banging the drum for

British business. Former Trade Minister, now an advise tore the

most gold-plated of British names. The American travel entrepreneur,

Barbara Cassani, lives over there, but works over here. She will tell

us why this is the place to do business. Ruth Lea has spepbtd her

working life talking about and helping to run the economy. She

advises the Arbuthnot Banking Group. The cash machine is standing by.

The wheelbarrows are at the ready. Europe's Finance Ministers will say

tomorrow they will give Greece a second bail out. That is �100,000

of new loans, so Greece can pay back some of its existing lenders.

Ruth Lea - why give Greece any money at all? It should be the end

game now. The Greek my is in such a bad state and its deficits and debt

is so enormous that by doing this you are not solving any problems at

all. On the economy, it is almost tanking at the moment. GDP fell 7%.

Unemployment is 22-23%. This is unsustainable. More to the point,

it has very little competitiveness. It probably needs a devaluation of

30-40% to get some go into this economy so it can grow. What is the

point of giving it money, saying, stay where you are, keep up the

austerity. It will not solve any of Greece's problems. This is just

continuing the madness? It is sticking plaster time. And the

indebtedness of Greece is so huge, it cannot pay these debts off. It

is time for a reality check. Let it devalue, let it get some

competitiveness back into the economy. I actually think, giving

them the money at the moment is going to solve nothing. It's not

going to be good for the Greek people, because they'll have to

take enormous austerity. Secondly, Ruth is right, it will not grow the

economy. We'll be here again. The northern European countries, where

you, where there are democratically elected people managing a default

in Greece, because if banks take a haircut, which they are, but a

default, secondly Greece is being told what to do by another country.

The two things they say they will not have, which is a transfer of

sovereignty or managed default, they are having both. At the end of

the day the Greek people will have an awful time for the next ten

years and not solve the issue. do we have the Greek Prime Minister

flying into Brussels saying thank you very much? They are all

democratically elected people. The Greek one is not at the moment. The

problem is they have got to be seen to do something. The thing to be

done would actually be to get Greece into a position where, at

some point in the future, they can earn enough money as a nation to

pay down some debt. I don't see it happening because they give them

money now. These comments coming in from the American Treasury

secretary. This is a very strong and very difficult package of

reforms, deserving of support of the international community and the

IMF, the United States will encourage the IMF to support this

agreement. Barbara, of course this has been felt on the ground

economically. Among the companies you work with you are on the board

of Air Berlin. It has noticed the impact of this? Yes, both from the

US perspective as well as looking at it from a country like Germany,

it's all about how consumers feel and how much confidence people have

in making decisions in going forward. Looking at it from say the

US, if Europe falls apart, it's a particularly frightening prospect.

When you are sitting in Germany you may still have a job, you may have

everything fine. It feels uncertain. Neither things are good.

outsiders, to nations in China, the countries Europe is going to asking

for help to them this looks like a disorganised row? It takes them

wonder what happens next, what happens to Spain, to Portugal, et

cetera. It would be best for Europe, as a whole, if it could be settled,

but that may or may not be possible. Ruth says this may not be the

settlement - it suggests there might be more to do? Greece is not

Argentina. It worked well for them to take the devaluation, et cetera.

It is part of a bigger entity. There are similarities and

dissimilarities. That brings me on to another point. We have talked

about Greece, you touched on other eurozone countries weak as well.

It's not just Greece uncompetitive, you could argue that Portugal and

spaib is, possibly Ireland. They have actually got some export

industries as well. The real problem of the eurozone is you have

a competitive northern countries, Germany, the Netherlands, Finland

and you have this sudden string of countries which need a 40%

devaluation in order to be competitive with Germany when you

are in a single currency. That is the fundamental flaw. It's the

fundamental problem of the eurozone. If you were Ayoub Salangi telling

the Scottish people, if you have -- If you wereal election Salmond

telling the Scottish people either have the pound or the euro, think

of this, you have the position Ruth described having to take it on

interest rates, exchange rates, the whole thing to suit the competitive

big country. Germany runs the show. They will say, we'll have the pound,

England will run the show. If it is no, we'll have the euro, Germany

will rub the show. If you don't have inherent competitiveness and

an export country, then there is a word for it - Greece. Argentina -

what was that comparison? Apparently with the Peso, it was

tide with the dollar until the early 2000s. They did that because

they had hyper inflation in the 1990s. Argentina was

uncompetitive.... They try to harness themselves. A Stronger

currency. They broke the linked with the dollar. They had a 40%

devaluation with the currency. For a time it had a boost for the

Argentinean economy. At least they got growth back. It was based in

minerals, exports in agriculture, which is not Greece's.... It is

something Greece cannot do. They have tourism. Should they go that

route? I think they should leave the euro and go for it. It is make

your mind up time. Thank you. Now time for Boom or Bust. Our flick

through some of the news stories, starting with an itsy-bitsy teeny-

weeny newspaper. This is an edition of the Portuguese weekly paper, no

sign of it being yellow or polkadot. It is one inch high and the

Guinness Book of Records said it is the world's smallest newspaper. A

tall tale - this is Paul Sturgess, the tall block, his nickname is

Tiny. He's the first British player to sign for the Harlem

globetrotters. He is the tallest player at seven foot eight inches.

The photocall to unveil him was on the top of the Empire State

Building. You might want to put your feet up in retirement - I know

I do - it is not the thing for Dorrie Noyek. She is only 10 -- 105

years old. She works in a Florida hospital

every day. She says the thing is never to complain. The business we

draw from that is even if you have a product that works you can never

close the door to innovation. I worked in a traditional airline

industry and then started up a low- cost, there is something to

reinvent in the industry. I am not sure about a small newspaper. The

apps on your iPad take a traditional business model and

change it and hopefully make more money out of it. There are many

ways newspapers are trying ta make it work for them. They are

realising that you can charge for something that the public, the

reading public until now has assumed was free, if you add

something else on to it. Absolutely. You were working within BA at the

time, as an executive. They came to you with the idea, orp you went to

them with the idea? Let's launch another airline within an airline?

They said, we need someone to write a business plan to see if it is a

good or crazy idea. I went at it with a sceptical approach. I had

been selling first class seats on Concorde for years and years. I got

into it, started to look at the numbers, looked at what competitors

had done. It continues to be a much better business model. I got in

there quickly and strapped on a back pack myself. Did you feel it

was difficult to sell the idea of what would have been a ku ku in the

nest? Yes. It was. That was the reason British Airways ended up

selling Go is because there was a change of chief executive. The new

chief executive said, strategically I don't want a subsidiary which

competes with their own business. The new guy says, oh, that was a

big mistake, so every time there is a change at the top you get a

strategic shift. It is the problem with big companies is how you

innovate within a big organisation. It is tough. You have to take risks

and accept that change is required. I will ask you about the tall

basketball player. He has a skill. It is his height and sporting

ability. The business lesson is his skill is not actually that he's

seven foot something. That's not the skill. He's there. The skill is

how you exploit that, what you already have and turn it to

advantage. In a business, you've got a mind to the business and find

where the talent is and then maximise that talent, get that

talent to do things it never thought it could, that might be

leading people. It might be exploiting the market where you are

established but didn't know certain things were happening. The lesson

we can take from the basketball player is not he's seven foot

something, it is how do you build around him to turn it to advantage.

When you were looking at the old lady doing her stuff, my mum

retired at Christmas, she's 89 this year. She finally packed it in at

Christmas. Now she is getting under everyone's feet. She is 89 and she

packed it in. Dorrie Noyek going at 105. My father is 91 and still

playing the organ in church. It is a growing issue, this one. There

are two things, one businesses say they have a shortage of skills.

Often it is older workers who have the skills. We are finding

retirement is becoming more and more expensive and more people have

to take part-time jobs to be able to afford it. Frpbld and their

pensions will not be as good -- their pensions will not be as good

as ten or 15 years ago. A business wants the skills of people who are

adaptable and can change. I loved the way she said the mystery, the

key thing about this is you don't complain. If somebody asks you to

do something, you don't want to do it - it wasn't done that this in my

day, was it? You grasp it, say this is what I have been asked to do,

just do it. You keep that aliveness, which is important as you go

forward. On the other hand - so that is the relationship between

the employer and employee. It is that people will have less good

pensions than they had ten or 15 years ago. That means people will

want or need to work longer than they otherwise did. This point

about not complaining - that's never going to work in this country.

We like a good wage. We do. It is very interesting. I worked for a

Japanese company, an American company and then for a British

again. The Japanese and the Americans did not complain. The

Brits complained. I thought the British company was better than the

American or the Japanese company, but there you go. Having a whinge,

but that is different than a complaint. You might have a whinge,

then you just, you know get on and do it. I think humour is the key.

It can dispel most whinges. Do you think we whinge today? Great humour.

I think a whinge can be a constructive thing if it is

channelled properly and used properly with a glint and a smile.

One great thing about using older people and I think supermarkets

find this, is they are more reliable, they are more dependable,

their customer-facing is good. If we can do this, it will give us a

fabulous lead, is why don't we put an older person as the mentor to a

younger person in the business and bring them on, in terms of all the

soft skills you need - confidence, look me in the eye, be more dil

gent and careful. They are the talents that the older people have

developed over the years. It is more about the soft skills. They

are so essential. Especially in consumer-facing businesses.

Your worry is there are a large If you think that half of the kids

do not get above a seat in English or maths, they are functional

illiterate and innumerate, and many have so much unemployed people, I

would say to you that about half of them are unemployable because all

the businesses of Britain will telly the biggest challenge is

education. They cannot be employed? We have just heard about how we

have mood this country to a branded end of the game to goods and

services. One thing you need is you need skilled people, not rocket

scientists, just can read and write, turn up to work on time, at all,

and if you crack that, that is fine. People are delivered into the world

of work that are not fit for purpose. So this is not a feeling

of employers that they are not providing the training that is

required because the apprenticeship schemes, that have come back. But

it did with a. You were saying the problem is done at a much longer

level. Definitely. You have got people, 11 and 12, who cannot read

and write. When you try to teach them geography, it goes over their

heads. You get truancy and drugs. We have got to address illiteracy

and innumeracy. If we do not, we have got a very good time to come.

Lord Jones, thank you. The Labour has called on the

government cut taxes. Ed Balls wants a temporary cut in

either VAT or income tax. He says it will give the economy a

necessary boost. We need growth. We need to get the

economy moving. This is the only way to get the deficit down. A

temporary VAT cut is the fairest way. There are other ways, but the

Chancellor needs to act. Doing nothing will make the growth crisis

was and make it harder to get the crisis down. Is he right? How much

will he stimulate economy by doing this? Would get me is that Moody's,

the credit agent -- credit rating agency, downgraded the outlook for

our debt, the sovereign debt, from stable to negative, meaning that is

a one-in-three chance we might have our credit -- credit rating from

the AAA now. If that happened, you get high interest rates, because

the bond market will react badly, so you might well have some initial

kick on the economy by cutting taxes, but they knew would have

interest rates going up, and it would be difficult to see over all

what the impact would be fools stop these are the rating agencies that

got it so terrific the wrong. should we pay any attention to it?

It is whether the markets listen to them. Having said that, when

standards and pause to downgrade the United States, what happened to

Treasury yields in the States, they went down. So people were still

buying them. But we are in not such a happy situation. Will the markets

not be more worried that we are stuck, that there is growth, but

very little of it? Unemployment is rising and the deficit is getting

bigger. I take that point, but I would like to put the question back

to Ed Balls and say, how much extra growth will he get out of these tax

cuts? He needs to answer that before we actually entertained this.

Barbara, would you cut taxes? Of their taxes worth cutting? Taxes

are high, but I think fixing the budget deficit is more important.

When businesses look at whether or not they will invest, they are

going to create new jobs, etc, they need to be able to predict the

business environment. So it is a tough situation. Everyone wants

lower taxes, but we have come through 10 years of doing whatever

we want and there are consequences. Now we are dealing with the

consequences. I am in tough it out mode. The argument is, if you cut

VAT, it drives up demand and get people spend ing. There is not much

evidence of it. Does that work? There was not so much evidence when

the rate was cut a couple of years ago, and, by the way, I am not

pessimistic about the economy as much as Ed Balls does. By the

second half of this year, it might pick up again. The squeeze on real

incomes we saw last year when the price of inflation was running so

high ahead of earnings, that will end. By the end of the year, there

will be grateful to drop would you cut taxes? I would get the

employers tax, I would abolish it. That money, please do the dock one

of my jobs is to chair a business. And we pay �60,000 a year in

National Insurance. We are not making a profit it. We would employ

three more people, but because we do not, is because we are paying

National Insurance. The depression world have just put

on a show for London fashion Week. They put on a show. The catwalk was

inspired by Stella McCartney and a magical trick. It is all about

making magic out of a few more sales in a shoe.

-- in Asia. London's big names unveil their

latest collections and a up-and- coming talents good a chance to

showcase their skills. This season, the event has an international

flavour. As well as a big push to attract more buyers from Asia and

the Middle East, 19 embassies and cultural institutions are promoting

the work of 18 young designers. inspiration is about nature power

and the garment and the human bodies. And all of the subject is a

reflection of the radiations and tsunami in Japan. For London

fashion Week, it creates an opportunity for me. Many of those

displaying clothes on the main catwalks also have their sights set

further afield. Maria has been showing in London for many years.

This season, heart art-deco inspired signature prints and

sculptured Sutton creations are just as likely to be snapped up at

her boutiques in Singapore and Taiwan as in her flagship London

store. Companies go in cycles. The Asian economy is where the Western

economy was 10-15 years ago. Singapore is a completely different

place now than it was 10 years ago. It is, you know, booming, and you

have got a very sophisticated and developed customer there, that

really is... They are young, call, and they are embracing a whole

designer fashion. How has it been, working as an international

designer in this economic climate? When the recession kicked off in

2007 or thereabouts, there was a real shift in the consumer and

people started to think much more carefully about how they shopped,

what they bought. And, I think as a designer, that pushes you much more

to really think about design. Design in its core essence. If you

think of Great design, it should be timeless. From a creative

perspective, it is a really healthy thing. From a business perspective,

it was the natural cycle of What -- of a baby we were going. In terms

of the challengers, my main challenge has been suppliers going

out of business. I have had a number of things like that over a

number of years. I created something and then I wasn't able to

produce it because I couldn't get the fabric or I had to source it

from somewhere else. Quite challenging? Yes, and it is sad.

When people who have been in business for 40 years and cannot

make it work any more. I find that quite sad.

Despite such setbacks, her expansion plans continue. She

follows a path blazed by the bigger fashion houses like Burberry. It

sales rose by 30% in China during the last three months of last year.

Asia is also the biggest market for the brunt a Chris Hughton. There is

a shift. It is to do with made in England. People think, I have got

to wear something British. Key to Maria's success has not also be --

has not only been her creativity but her keen business sense. It has

been my dream to be a designer and I was cutting and making from age

12. But it was actually someone at London fashion Week who gave me a

lovely piece of advice and said, you need to run a business. I did a

little bit of business courses and ended up in the city. That was for

a short while. That gave me a good financial background as well, which

has been very helpful, I have to save. Especially during this time.

As the autumn-Winter Collection 2012 wraps up at London fashion

Week, she will be straight back at the drawing board, designing what

her customers will be wearing next spring and summer.