09/08/2017 BBC Business Live


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09/08/2017

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This is Business Live from BBC News with Ben Thompson and Sally Bundock.

:00:07.:00:17.

It was ten years ago - exactly a decade after

:00:18.:00:19.

the credit crunch began - have we really learnt the lessons

:00:20.:00:22.

Live from London, that's our top story on Wednesday, 9th August.

:00:23.:00:35.

Stock Markets are at record highs and personal debt is soaring

:00:36.:00:38.

We will assess what's changed and what hasn't.

:00:39.:00:47.

Also in the programme, Disney's Frozen relationship with Netflix.

:00:48.:00:50.

The media giant says it's going pull all its movies off the streaming

:00:51.:00:54.

And as President Trump threatens North Korea with "fire and fury

:00:55.:01:01.

like the world has never seen", markets and others remain on edge.

:01:02.:01:06.

And we'll be getting the inside track on the controversial business

:01:07.:01:11.

The founder of Nosh Detox will be in the studio with us.

:01:12.:01:19.

And ten years on from the beginning of the credit crunch,

:01:20.:01:22.

we want to hear your memories of the crisis and how

:01:23.:01:29.

Let us know. Use the hashtag BBCBizLive.

:01:30.:01:40.

Get in touch with your memories. I know for us, it was the start of ten

:01:41.:01:55.

long years of covering the stories and the repercussions of it.

:01:56.:01:58.

This week the main stock markets in the US have had another record

:01:59.:02:01.

run and London's FTSE 100 flirted with breaking into record territory.

:02:02.:02:05.

It's a far cry from ten years ago when the global credit crunch began.

:02:06.:02:10.

Ten years ago today - 9th, August 2007 -

:02:11.:02:16.

banks suddenly found that they had billions of dollars in toxic

:02:17.:02:19.

debts that customers couldn't afford to repay.

:02:20.:02:21.

So overnight, they stopped offering loans.

:02:22.:02:24.

The financial crisis that followed cost the British economy over

:02:25.:02:28.

?7 trillion in lost output - that's close to $10 trillion.

:02:29.:02:31.

For the US economy, the cost hit a staggering $22 trillion.

:02:32.:02:35.

So with traders now celebrating a record breaking run

:02:36.:02:42.

on the Dow and other markets, have we really learnt

:02:43.:02:44.

lessons from the mistakes of the financial crisis?

:02:45.:02:48.

On Monday, new figures showed that consumer credit card debt in the US

:02:49.:02:57.

had risen above its previous record, set in 2008, to just

:02:58.:03:00.

In the same month unsecured consumer debt here in the UK

:03:01.:03:03.

topped ?200 billion - that's $260 billion.

:03:04.:03:08.

Again, the previous record was set in 2008.

:03:09.:03:11.

So do the stock markets have it wrong or is this level of debt

:03:12.:03:15.

Ann Pettifor is a Director at Prime Economics and was one

:03:16.:03:24.

of the key voices at the time that said the crisis was coming.

:03:25.:03:35.

Nobody was listening then, were they? No, they thought I was a bit

:03:36.:03:42.

crazy actually. I had some rude comments. I kept being called

:03:43.:03:52.

"Chicken licin" On social media. You saw it coming and you were analysing

:03:53.:03:55.

the levels of debt that countries were exposed to. You weren't looking

:03:56.:03:59.

at sub-prime in particular, were you? No. Just explain what you

:04:00.:04:03.

thought would happen? I was working on the debt of the poorest countries

:04:04.:04:06.

which is really small and I looked up and I looked at the debt of the

:04:07.:04:11.

Anglo-American economies and realised that the overhang of debt

:04:12.:04:15.

massively exceeded the income of those countries and people don't

:04:16.:04:18.

repay their debts by selling their properties. They repay their debt

:04:19.:04:23.

out of income and there wasn't enough income to deal with that.

:04:24.:04:30.

Today, those levels of debt are even higher, global income, GDP is about

:04:31.:04:36.

$77 trillion. Global financial assets are $225 trillion which makes

:04:37.:04:43.

$1 trillion that Ben was talking about in consumer credit tiny in

:04:44.:04:48.

proportion. Our real problem is we have had this mass jiff overhang of

:04:49.:04:53.

debt, but income, which we repay our debt in terms of wages and so on is

:04:54.:04:57.

shrinking. Today, for many of us, debt is very cheap. Interest rates

:04:58.:05:02.

are so low and so actually, it pays to borrow in some senses. Right. Are

:05:03.:05:07.

we in for another nasty shock? I think we are. Central banks have not

:05:08.:05:12.

put up rates almost since the crisis, but they're going to at some

:05:13.:05:17.

point. We don't pay Central Bank rates on our debt. We pay market

:05:18.:05:21.

rates. And if you're running a business and you want an overdraft,

:05:22.:05:26.

you gopbt get 0.25% on your overdraft. You would probably get...

:05:27.:05:35.

Have banks learnt a lot of lessons and make sure that they are not

:05:36.:05:41.

subject to bad debt again? The central authorities have ensured

:05:42.:05:45.

they have more capital to shore up their banks, but mainstream banks

:05:46.:05:49.

are peripheral in terms of the global economy. There is a lot going

:05:50.:05:52.

on in the shadow banking system which we don't know and understand.

:05:53.:05:57.

There is a lot going on in that area within China? Absolutely. There is

:05:58.:06:01.

real concern about the level of debt there, the kind of debt within the

:06:02.:06:05.

banking system in China and what that could mean if they have a

:06:06.:06:09.

financial crisis? China is not a free-market economy. It is run by

:06:10.:06:13.

the Communist Party and it is a top down economy and they do a lot to

:06:14.:06:17.

manage their system. They will bail out their banks and we know that

:06:18.:06:21.

they use capital controls to manage flows and so on and so forth. It is

:06:22.:06:25.

hard to judge whether or not they will be able to manage it, but they

:06:26.:06:31.

are being more proactive in managing in than central banks were before

:06:32.:06:36.

2007-2008. Ann thank you for coming in and sharing your warnings acht

:06:37.:06:40.

the time. So you went from the crazy economist to the one that got it

:06:41.:06:48.

right? Yes. Who had ever heard the word, "Sub-prime" Before 2007? It

:06:49.:06:53.

suddenly entered the dictionary. And quantitative easing. That one as

:06:54.:06:54.

well. Plenty of them. Let's take a look at some of

:06:55.:06:58.

the other stories making the news. The media giant Disney says

:06:59.:07:02.

it will launch its own It will show movies,

:07:03.:07:04.

TV shows and sports and will mean the end of Disney's current

:07:05.:07:08.

distribution deal with Netflix. Some sports will also be removed

:07:09.:07:11.

from its US TV channels. It comes as Disney announced a 9%

:07:12.:07:14.

fall in profits for the three We'll be getting more

:07:15.:07:17.

on this later in the show. The Australian bank accused of more

:07:18.:07:22.

than 50,000 breaches of anti-money laundering laws has

:07:23.:07:24.

admitted its reputation is at risk. It comes as Commonwealth Bank

:07:25.:07:28.

of Australia reported record profits of more than US $7.8 billion

:07:29.:07:30.

for the year to the end of June. The big safety scare in the European

:07:31.:07:48.

egg industry mean Belgium's Parliament will interrupt its summer

:07:49.:07:51.

break for a summer hearing. Ministers will have to answer

:07:52.:07:54.

questions about why the country didn't act faster when it was found

:07:55.:07:58.

that traces of a banned pesticide had been found in eggs which ended

:07:59.:08:01.

up in several other European countries.

:08:02.:08:04.

The United States says it is imposing tariffs on imports

:08:05.:08:07.

It's the first case of its kind since Donald Trump became president

:08:08.:08:18.

and raises fears of a trade war between the world's

:08:19.:08:21.

So Monica Miller is in our Asia Business Hub in Singapore.

:08:22.:08:27.

Monica, really, we're going to have a trade war about foil? Is that the

:08:28.:08:41.

case? Well, yes. The US foil makers lodged a pedestrian tuition. They

:08:42.:08:47.

say the foil makers are subsidised by their own country and they get to

:08:48.:08:51.

sell their product in the US at low prices. The US Commerce Department

:08:52.:08:54.

made a preliminary decision to tax Chinese imports that could range

:08:55.:08:59.

between 16.5% and.81% based on the subsidies that the Chinese

:09:00.:09:03.

Government gives. Now, US data shows that imports of foil from China last

:09:04.:09:09.

year were worth almost $390 million. That's just, this is the first case

:09:10.:09:14.

since President Trump took office and he did make repeated promises on

:09:15.:09:26.

the campaign trail that the US would tighten trade against China to bring

:09:27.:09:30.

back jobs. We will talk more about those.

:09:31.:09:34.

Well, ten years on from the financial crisis,

:09:35.:09:38.

This time those escalating tensions between the

:09:39.:09:43.

That's shaken investors in Asia with markets mostly

:09:44.:09:47.

The falls on US markets continued after President Trump warned

:09:48.:09:50.

North Korea that they would face "fire and fury like the world has

:09:51.:09:53.

never seen", if they continued with their attempts to build

:09:54.:09:57.

a nuclear warhead that's able to hit the western US.

:09:58.:10:04.

That's translated to an open like this across Europe,

:10:05.:10:06.

mirroring that weaker close on Wall Street last night.

:10:07.:10:09.

A raft of earnings of some middle-of-the-road players.

:10:10.:10:11.

We'll talk more about those in a moment.

:10:12.:10:14.

Well, as we've talked about, shares in Disney and Netflix likely

:10:15.:10:20.

Earnings continue with media company 21st Century Fox

:10:21.:10:28.

The Rupert Murdoch-led company will likely report

:10:29.:10:34.

a rise in revenue, helped, of course, by a strong performance

:10:35.:10:37.

Now, the company is also seeing strong growth in its domestic

:10:38.:10:41.

But Fox is likely to be weighed down by its weak box office results.

:10:42.:10:46.

What investors will be looking for is any updates

:10:47.:10:48.

Now you may not recognise the name Mylan, but the drug company came

:10:49.:10:58.

under intense regulatory scrutiny recently over the price of its

:10:59.:11:01.

Now, the company will be reporting earnings, but what investors will be

:11:02.:11:07.

looking for is comments on the falling price

:11:08.:11:09.

Richard Dunbar is Investment Director

:11:10.:11:20.

We want to update you on a story that's developing in France. The

:11:21.:11:26.

mayor is talking about what happened earlier today where a BMW drove into

:11:27.:11:33.

soldiers and the mayor said this is no doubt it was a deliberate act.

:11:34.:11:37.

More detail coming through to us. Reports that this car hit soldiers

:11:38.:11:42.

who were on patrol outside Paris. It says it injured six people. Two of

:11:43.:11:47.

them were seriously injured. The vehicle just drove off after that

:11:48.:11:50.

incident. That took place at 8am this morning. That's 6 o'clock GMT

:11:51.:11:56.

in the northern western suburb of Paris. We'll get much more on that

:11:57.:11:59.

for you and bring it to you here on BBC News. When we hear more, we'll

:12:00.:12:05.

update you. The markets across Europe. They are

:12:06.:12:10.

edging lower. Richard Dunbar is

:12:11.:12:11.

Investment Director I know you were listening to our

:12:12.:12:19.

conversation about the ten year anniversary. Your thoughts on that

:12:20.:12:23.

and the decade we've experienced? Well, I'm hoping it is a quieter day

:12:24.:12:28.

than it was this day ten years. I suppose at that time we didn't fully

:12:29.:12:32.

realise the interconnectness of the financial world. We didn't realise

:12:33.:12:38.

the implications to the borrowing that it had been attached to that

:12:39.:12:43.

interconnectedness and we didn't understand fully some of the

:12:44.:12:47.

sub-prime lending you've touched on and the other lending that had been

:12:48.:12:52.

pursued. The domino-effect was quite phenomenal really. The eurozone debt

:12:53.:12:56.

crisis started. It was just incredible, wasn't it, we couldn't

:12:57.:13:00.

have predicted any of that? It was a freezing of the markets that we

:13:01.:13:03.

thought were broad and deep. The wholesale market were many of the UK

:13:04.:13:08.

and global banks were borrowing, moving away from borrowing from

:13:09.:13:12.

customers to borrowing from the wholesale markets. Investors thought

:13:13.:13:14.

the markets were broad and deep and would always be there, and quickly

:13:15.:13:21.

the markets were turned. It has been about regulation and trying to put

:13:22.:13:26.

right what went wrong there. We talked about the Disney Netflix deal

:13:27.:13:31.

or no deal. Disney going it alone. We will see their shares being

:13:32.:13:34.

volatile as investors try and work out what it means. It is great to

:13:35.:13:38.

have a stand alone service, but then you end up having to subscribe to

:13:39.:13:41.

every one of them? It is interesting. Netflix has been one of

:13:42.:13:49.

the darlings of the US stock market. It has been leading the Nasdaq and

:13:50.:13:52.

tech heavy index up and investors thought it was a one-way bet that it

:13:53.:13:58.

could only get better and better for Netflix, but it is a bump in the

:13:59.:14:02.

road for Netflix. It will be interesting to see how investors

:14:03.:14:07.

react and that model isn't as bullet-proof as some investors

:14:08.:14:09.

initially thought. All right, Richard, thank you very much. He

:14:10.:14:13.

will return a lull bit later in the programme as we unpack some more

:14:14.:14:16.

stories in the news at the moment in business.

:14:17.:14:17.

We will get the inside track on the juicing business.

:14:18.:14:28.

You're with Business Live from BBC News.

:14:29.:14:36.

Global security firm G4S has announced increased revenue

:14:37.:14:38.

and profits in its half yearly report The strong results come

:14:39.:14:45.

despite an ongoing fraud investigation by the Serious Fraud

:14:46.:14:47.

Theo Leggett has been looking through the figures for us.

:14:48.:14:57.

Tell more about the results. They look pretty strong, 7.6% rise in

:14:58.:15:06.

first-half profit compared to last year earned ?128 million from

:15:07.:15:12.

continuing businesses. Important to say continuing, because it is in a

:15:13.:15:15.

restructuring programme and is trying to get rid of some of its

:15:16.:15:24.

subsidiaries. It is a global company and the biggest increase in profits

:15:25.:15:31.

came from the US where it recently negotiated a contract for handling

:15:32.:15:36.

cash with Walmart. That was up almost 19%, so solid results, except

:15:37.:15:40.

in India and the Middle East where the monitor I is a nation and a fall

:15:41.:15:43.

in the all price have taken their toll. The share price, down more

:15:44.:15:53.

than 6%. Investors who have favoured this company, its share price has

:15:54.:15:56.

risen a lot since the start of the year, they are not overwhelmed by

:15:57.:16:03.

the results today. A brief word on the Serious Fraud Office

:16:04.:16:06.

investigation. What does that mean for the business? It has been going

:16:07.:16:12.

on since 2013, about an electronic tagging contract. Allegations G4S

:16:13.:16:16.

was overcharging the government by charging for the tagging people who

:16:17.:16:22.

had left the country, were in jail, or actually dead. That investigation

:16:23.:16:27.

is ongoing. The company acquired a new contract for 25 million, links

:16:28.:16:38.

to tagging earlier this year, the. This is a story you might agree

:16:39.:16:43.

with. It is an anonymous story released to the Daily Telegraph from

:16:44.:16:46.

a cabinet minister who wants to be anonymous. He says that he or she

:16:47.:16:52.

believes stamp duty must be reformed because it is exacerbating the

:16:53.:16:57.

housing crisis. Apparently it does save the rate of house moves is

:16:58.:17:02.

reduced by one third because of the cost of stamp duty, just putting

:17:03.:17:07.

people off from buying or moving up the ladder. It is creating a

:17:08.:17:12.

mismatch in the market. More details on the live page.

:17:13.:17:17.

You're watching Business Live - our top story.

:17:18.:17:22.

Today's the tenth anniversary of the beginning of the credit crisis.

:17:23.:17:30.

Banks are now in better shape of quarrelling is once again hitting

:17:31.:17:34.

record levels, personal debt levels, record highs, and stock markets

:17:35.:17:38.

soaring through new records and we are talking about whether it could

:17:39.:17:42.

be the start another crisis. Thanks for your memories we will

:17:43.:17:48.

talk about those in a few minutes. Let's now talk about the idea of

:17:49.:17:49.

health. The idea of making yourself feel

:17:50.:17:51.

healthier is something most people It can mean anything

:17:52.:17:53.

from eating better to exercise It's such big business

:17:54.:17:57.

that the global wellness economy is now worth $3.7 trillion,

:17:58.:18:00.

according to the US based One business tapping into the trend

:18:01.:18:02.

is London based Nosh Detox which produces freshly made,

:18:03.:18:11.

non-pasteurised juice diets as well as detox

:18:12.:18:15.

and nutritional plans. Geeta Sidhu-Robb is

:18:16.:18:18.

the founder of Nosh Detox. It is nice to see you. Welcome.

:18:19.:18:29.

Before we get into the business itself, how did you start this? I

:18:30.:18:36.

understand you used to be a lawyer. Corporate. Telecoms, tax, really

:18:37.:18:41.

corporate. My first child, I think for many mothers, you get derailed

:18:42.:18:47.

when you have children. My first child was allergic to vaccinations

:18:48.:18:51.

and the second and third he ended up with patches of eczema and then

:18:52.:18:56.

covered in it and when he went into remission with the eczema, he had

:18:57.:19:00.

asthma, said he was either scratching himself and leading every

:19:01.:19:05.

night, or not able to breathe. He spent many days in hospital in his

:19:06.:19:12.

first year which was awful. At the end he got cardiorespiratory arrest

:19:13.:19:15.

and stopped breathing and died in my arms. We ended up in a coma, in

:19:16.:19:22.

intensive care in St Mary's, who were lovely. I sat there looking at

:19:23.:19:28.

this, and I was so young, and he was about this big with tubes everywhere

:19:29.:19:32.

and I thought, never again. There was no medicine, nothing to treat

:19:33.:19:37.

him with. What you treat eczema and asthma? It is supposed to be

:19:38.:19:46.

incurable. I thought nothing would help him. When he finally woke up, I

:19:47.:19:49.

took him out and said, we are never going back. I went searching for

:19:50.:19:53.

alternative ways and I am a lawyer so I know how to read boring

:19:54.:20:00.

information and pull a fact. Have you fixed your son? That is

:20:01.:20:06.

debatable because he is a teenager. He is completely eczema free and

:20:07.:20:12.

100% asthma free. He has not had asthma since I do not know when.

:20:13.:20:18.

That is through what he is eating? 100% what he eats, when and how Pete

:20:19.:20:24.

and the way he approaches nutrition. He is the only child at university

:20:25.:20:28.

who cooks all his meals in the salad! We talked about detox in the

:20:29.:20:35.

introduction. It is a misused word. Detoxes is going cold turkey or

:20:36.:20:39.

needing treatment for alcohol addiction. It has been used by the

:20:40.:20:46.

nutrition industry, everything is detox. Ultimately you are offering

:20:47.:20:52.

healthier eating. I am yelled at a lot but the reason the company came

:20:53.:20:59.

around I wanted to call it Nosh, which is natural and healthy and

:21:00.:21:07.

then had to call it Nosh Detox. We should be looking at what we eat

:21:08.:21:15.

which impacts how we are, we look, wrinkles, skin quality, everything

:21:16.:21:20.

is about what goes in your mouth. Detox has a bad name because of the

:21:21.:21:24.

emotional connotations of alcoholism and things like that. Doctors,

:21:25.:21:30.

scientists, say... How would they know? They do about three hours

:21:31.:21:35.

nutrition in their medical career. There has been research and analysis

:21:36.:21:39.

into this process of detox and many argue it is not, there is no

:21:40.:21:46.

scientific basis to say it is the truth as such in the sense it will

:21:47.:21:52.

cure eczema or asthma. But you are what you eat, it will help you and

:21:53.:21:56.

make you healthier, perhaps, do you see what I mean? Many people look at

:21:57.:22:02.

you and think you are making a massive industry and profit out of

:22:03.:22:06.

something that is not necessarily realistic. It is such a shame

:22:07.:22:12.

because what happens is I do not have the big budget to fight a

:22:13.:22:16.

pharmaceutical company who will say it is scientifically proven to work

:22:17.:22:21.

like this. If you drink a bottle of vodka... It is academics... If we

:22:22.:22:27.

spent more time eating better and living better, we would spend less

:22:28.:22:32.

time using up NHS resources. We should look at a diet and the way we

:22:33.:22:36.

eat and live long before we go anywhere near a doctor. I look at

:22:37.:22:42.

people who look really tired, they are grey and obese and nobody is

:22:43.:22:47.

saying what you eat doesn't matter. I think most people would agree you

:22:48.:22:53.

are what you eat and what you eat is important. What would be the

:22:54.:22:56.

argument against it? I think they are saying you do not replace one

:22:57.:23:01.

with the other. I think we do much. We should eat less. But we are

:23:02.:23:07.

talking about medicine and eating. I say wellness and illness are

:23:08.:23:11.

different things. There is a huge category of wellness way before you

:23:12.:23:17.

get sick. ! And asthma, supposedly incurable but if you support the

:23:18.:23:22.

body's natural process, what will happen is you would get so much

:23:23.:23:28.

better and understand what to do about illness. We look at businesses

:23:29.:23:32.

and I know celebrity endorsement is important because that will get you

:23:33.:23:37.

headlines and get people to notice. Are we gullible? We see a celebrity

:23:38.:23:45.

uses this, but if you look at the peer review and evidence, we get

:23:46.:23:51.

blindsided by the celebrity. We are careful because around 24% of my

:23:52.:23:56.

business is global household names that I make everybody pay, because

:23:57.:24:00.

it is how we earn a living so we cannot talk about who is on the

:24:01.:24:05.

database. Celebrities are obligated to look amazing and functioning.

:24:06.:24:11.

Filming is hard work, starting at 4am and going to ten o'clock and you

:24:12.:24:17.

cannot afford to get sick. Celebrities look for the newest and

:24:18.:24:21.

most effective ways to look good and feel good and that is why we should

:24:22.:24:25.

follow them, not just because they are a celebrity. When did a

:24:26.:24:29.

celebrity last look tired and horrible? We know this because on

:24:30.:24:37.

social media and anywhere, they will look beautiful, photographs, great

:24:38.:24:41.

make-up. You meet them in person and they look amazing. They look amazing

:24:42.:24:47.

all the time. I don't know, we get a lot of celebrities. It depends how

:24:48.:24:51.

and when you meet them. My programme at 5am, they go to make up. How

:24:52.:24:57.

accessible is what you are finding and providing in the marketplace to

:24:58.:25:02.

those who really need it, the mum who has the child that has bad

:25:03.:25:07.

eczema, and cannot afford what you are supplying. I am aware of that

:25:08.:25:11.

because I have been a single mother and my business was set up to feed

:25:12.:25:17.

my children, because there is a ten year gap between learning and

:25:18.:25:22.

applying. We give away so much free information, free books, recipes and

:25:23.:25:29.

ideas, everything. It is committed to helping people, Nosh Detox, not

:25:30.:25:33.

just because you pay us. Really nice to see you. So much to talk about

:25:34.:25:38.

that time is tight. A very good discussion. We can throw

:25:39.:25:42.

out some of the memories. People getting in touch about the

:25:43.:25:49.

global crisis. Matthew said he graduated after the crash and big

:25:50.:25:54.

problems for employment. Pamela said she was made redundant and went back

:25:55.:25:57.

to study and is happy in a new career so a good ending for Pamela.

:25:58.:25:59.

Goodbye. Good morning, it is a wet start

:26:00.:26:13.

across many parts of

:26:14.:26:14.