26/10/2011

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:00:08. > :00:14.The make or break meeting on the future of the euro has neither made

:00:14. > :00:18.it nor broken it, it looks as if the series of decisions due to be

:00:18. > :00:22.taken today, won't now be taken until tomorrow. That is at the

:00:22. > :00:25.earliest, it is already gone 11.30 in Brussels. A lot of talk but no

:00:25. > :00:30.detail, can Europe's leaders agree how to save the project, they claim

:00:30. > :00:36.is key to the continent's future. There is no substantive deal

:00:36. > :00:40.tonight, but we may just have seen the birth of a non-euro group.

:00:40. > :00:45.Banking has rules that need to be learned and followed. What is a

:00:45. > :00:48.billion or so to bank, how can it go missing and no-one notice. John

:00:48. > :00:52.Lanchester believes the whole system is so opaque, no-one at the

:00:52. > :00:56.top can have any confidence they have a clue what is going on. Nick

:00:56. > :01:04.Leeson, the man who brought down Barings Bank, knows exactly how

:01:04. > :01:08.true that is. As the seven billionth inhabitant of the planet

:01:08. > :01:14.arrives, we look at population in this country. That is the end for

:01:14. > :01:18.me, no more sex! Much of it is to do with foreign

:01:18. > :01:22.women giving birth in Britain. What does it promise for the future. At

:01:22. > :01:24.the global level, the head of the United Nations Population Fund is

:01:24. > :01:34.here with Liones Shriver, who needs to talk about the number of babies

:01:34. > :01:41.

:01:41. > :01:44.A Greek, an Italian and an Irishman go into a bar, a German settles the

:01:44. > :01:49.bill. Much of what was agreed to by the German Parliament today was

:01:49. > :01:54.that. But tonight's so-called final and decisive meeting, which was

:01:54. > :01:58.supposed to save the euro, is still going on and looks set to go on.

:01:58. > :02:02.The Italian Prime Minister did turn up at the EU summit in Brussels

:02:02. > :02:06.today, like a schoolboy handing in late homework, with a letter said

:02:06. > :02:11.to be promising his Government will try to get a grip. Whether the big

:02:11. > :02:15.scheme on the brink of being agreed, we don't know. Paul Mason may have

:02:15. > :02:18.an idea. What is up? It will be several hours before

:02:18. > :02:21.anybody gets to the bar here in Brussels. They are still behind me

:02:21. > :02:26.at it, trying to do the deal. The three things they are trying to do

:02:26. > :02:28.is to save Greece, save the banks and then save the eurozone from a

:02:29. > :02:33.meltdown following on from not doing the first two. They have

:02:33. > :02:36.actually managed to come up with a deal we this already done on Sunday,

:02:36. > :02:40.which is to recapitalise Europe's banks. There will be conditions put

:02:40. > :02:44.on those banks, shareholders will take some deillusion, anybody who

:02:44. > :02:47.can't take the hit of Greece effectively going part bust, will

:02:47. > :02:50.be recapitalised. That is a done deal. The other two are not. Across

:02:50. > :02:54.the road from me the banks are in negotiation with the EU about how

:02:54. > :02:58.much of a hit they are prepared to take. They don't want to take much.

:02:58. > :03:04.Meanwhile, there is this huge issue of what does Italy do in return for

:03:04. > :03:10.the best part of a trillion euros, for the megabailout that is so

:03:10. > :03:16.eluding them. Van Rompuy's spokesman said there

:03:16. > :03:21.would be a deal, is there going to be a deal or not? There will be a

:03:21. > :03:26.deal. The deal will be a sort of agreement in principle. To come

:03:26. > :03:30.back, not even at the Cannes summit, I'm led to understand, but in mid-

:03:30. > :03:36.November, and that all the options that are on the table now, about

:03:36. > :03:40.the shape of the bailout fund, the ESFS, will still be on the stable

:03:40. > :03:43.even after Cannes. If the draft they are discussing tonight, I have

:03:43. > :03:46.had sight of the draft, comes out as it went in. The deal is very

:03:46. > :03:56.general. The British officials are saying don't expect anything more

:03:56. > :04:01.

:04:01. > :04:04.than principles. They live in an armour-plated world,

:04:04. > :04:08.he canueding power. But Europe's leaders came here today, because

:04:08. > :04:12.for 18 months they have been powerless in the face of market

:04:12. > :04:18.logic. And nobody has been more powerless than George Papandreou,

:04:18. > :04:22.the Greek Prime Minister. Of all the crises facing the summit, only

:04:22. > :04:27.one is imminent. This man's country is rapidly going bust, and soon the

:04:27. > :04:37.banks that lent the money will have to decide by how much. And only

:04:37. > :04:39.

:04:39. > :04:43.then does this get real. On Friday, Europe's leaders were warned that

:04:43. > :04:46.Greek debt is, like its streets, running out of control. The task in

:04:46. > :04:52.Brussels to decide how much of the 200 billion worth of debt, held by

:04:52. > :04:58.banks, will be written off. The IMF wants 75%, the European Commission

:04:58. > :05:02.wanted 60%. The Germans 50%, the banks as little as possible, and to

:05:02. > :05:05.do it voluntarily. The voluntary principle is key, because it

:05:05. > :05:10.imposes losses on those who have speculated against Greek debt.

:05:10. > :05:16.Buyers of derivative, known as credit default swaps. Some think it

:05:16. > :05:19.would be better just to let Greece go, formally, bust. The banks are

:05:19. > :05:22.resisting haircut, they don't want the losses on the balance sheet.

:05:22. > :05:26.They don't want to be recapitalised. There is also a more cynical move

:05:26. > :05:33.by the European Commission, and political leaders in Europe, to

:05:33. > :05:36.close down the Credit Default Swap market, we which they believe has

:05:36. > :05:42.exacerbated the debt markets. Effectively, if they can ban

:05:42. > :05:46.trading in the CDS market, and avoid a default, these instruments

:05:46. > :05:50.become worthless as a hedge, which is what they were primarily set up

:05:50. > :05:55.to achieve. It is a backhand way to close down market they don't like.

:05:55. > :05:58.So far the Greek debt issue remains unsolved, but on one issue there is

:05:58. > :06:01.progress. Tonight, the European Union

:06:01. > :06:06.announced a deal on bank recapitalisation. European banks

:06:06. > :06:10.will be forced to raise their core capital to 9% by June 2012.

:06:10. > :06:13.Regulators, including in Britain, would force the banks to raise the

:06:13. > :06:18.money rather than shrinking back their loans, and those that can't

:06:18. > :06:24.raise it privately would be part nationalised. TRANSLATION:

:06:24. > :06:29.Everything the euro group does has to be in keeping with the idea of

:06:29. > :06:34.the unity of the European Union. We will, in that spirit, present

:06:34. > :06:41.certain practical solutions, so we can reconcile these two important

:06:41. > :06:45.European interests. The euro area integration on the one hand, and

:06:45. > :06:51.the maintaining of the integration of 27 member states. But there is

:06:51. > :06:57.one final bit of the jigsaw which is huge, and still missing. It

:06:57. > :07:00.concerns the European Financial Stability Facility, the ESFS, a

:07:00. > :07:05.megabailout fund. Today has been the tale of two Parliaments, the

:07:05. > :07:08.German one, in an orderly way, rubber stamping a deal to expand

:07:08. > :07:12.the ESFS. And the Italian Parliament, where the far right,

:07:12. > :07:18.and the hard right, had a punch-up over somebody's comment about

:07:18. > :07:22.somebody else's wife. To those studying the merging deal

:07:22. > :07:27.in Brussels, the contrast sun fortunate, since Italy is the main

:07:27. > :07:31.reason why they need to expand the bailout fund. The country is slowly

:07:31. > :07:35.being frozen out of the sovereign debt markets, and the Government is

:07:35. > :07:44.faltering. The problem with Italy is the paralysis. This Government

:07:44. > :07:50.is in a paralysis situation, without the capability to approve

:07:51. > :07:56.and to decide what is necessary for the country, and for the country

:07:56. > :08:01.the priorities are debt reduction and policies for growth. So for Mr

:08:01. > :08:05.Berlusconi, the question is obvious. REPORTER: How can the rest of the

:08:05. > :08:08.world take you seriously when you can't deliver austerity?

:08:08. > :08:12.David Cameron left the meeting early tonight, Britain not part of

:08:12. > :08:15.the core eurozone 17, but not before making this statement.

:08:15. > :08:19.made good progress on the bank recapitalisation, that wasn't

:08:19. > :08:22.watered down, it has now been agreed. It will only go ahead when

:08:22. > :08:27.the other parts of a full package go ahead, and further progress on

:08:28. > :08:33.that needs to happen tonight. Well, Paul is in Brussels now. What

:08:33. > :08:38.is David Cameron trying to do, Paul? What I think he's trying to

:08:38. > :08:43.do, Jeremy, is stealthy create a kind of non-euro group, of the ten

:08:43. > :08:49.nations that are not in the single currency. He met the Danes, the

:08:49. > :08:54.Swedes, the Poles and the Czechs tonight, that is who he chose to

:08:54. > :08:57.meet. The Telegraph is reporting tomorrow it has had sight of the

:08:57. > :09:00.diplomatic notes. Britain's negotiating position is this, it

:09:00. > :09:04.wants concrete and effective mechanisms to prevent the emerging

:09:04. > :09:09.eurozone, it is a were, solidarity, that we are seeing hopefully behind

:09:09. > :09:14.us, from damaging Britain's national interest. Mr Cameron made

:09:14. > :09:17.it clear last weekend, that will be a condition of Britain, as it were,

:09:17. > :09:21.butting out of the whole treaty renegotiation, that will need to

:09:22. > :09:25.take place to make the eurozone new mechanisms work. The problem

:09:25. > :09:29.Britain has, is that we want, the British Government wants the

:09:29. > :09:35.eurozone to work, and to get more like a fiscal union. But as it does,

:09:35. > :09:41.and John Major the former Prime Minister is righting in the papers

:09:41. > :09:44.tomorrow, in the FT, saying this, we have to decide what powers we

:09:44. > :09:48.want to take back. Cameron was laser like in that meeting and

:09:48. > :09:55.outside it. That is as significant for us as the Brits, as what is

:09:55. > :10:00.going on now still behind me in the negotiating chamber. When are you

:10:00. > :10:03.expecting any kind of announcement here? Midnight, maybe afterwards.

:10:03. > :10:10.Look, the announcement will be very vague. We don't know how big a hit

:10:10. > :10:13.the banks are going to take, if at all. There is still no way they can

:10:13. > :10:18.finalise the commitment to bailout Italy, best part of a trillion,

:10:18. > :10:24.that is what the ESFS is for. Until Berlusconi comes along with a plan

:10:24. > :10:28.for Italian growth based on more that prof Ligacy. He won't do it

:10:28. > :10:35.until November 17th, nobody knows the symbolism or significance of it,

:10:35. > :10:40.he picked the date. With us is Terry Smith, and Katynka Barysch,

:10:41. > :10:46.from Centre For European Reform, and Megan Greene economist. What do

:10:46. > :10:55.we make of the fact that there hasn't been the promised decisive

:10:55. > :10:59.agreement today, tonight? They said it would be a comprehensive

:10:59. > :11:02.solution, but they have been backing down from that since, and

:11:02. > :11:06.saying it probably wouldn't end the crisis. There is no surprise there

:11:06. > :11:08.isn't a comprehensive solution. think it is impossible for them to

:11:08. > :11:14.come up with a comprehensive solution. It was a pipe dream to

:11:14. > :11:18.think they could. And you? I agree with that. The problem goes so much

:11:18. > :11:20.deeper. The problem is we have overindebted nations in Europe that

:11:20. > :11:25.don't grow. We have lack of solidarity, we don't know how to

:11:25. > :11:29.get the ECB in. These aren't problems you will sort out in one

:11:29. > :11:33.night. Like previous summits. say you will? They are trying to

:11:33. > :11:38.calm down financial markets and buy time. Do you think they will?

:11:38. > :11:44.think they will. The markets are placid enough, easily led enough,

:11:44. > :11:48.to calm down now, are they, and back off? I think the markets

:11:48. > :11:53.understand that what they are trying to do now, this three-part

:11:53. > :11:56.package, is fiendishly complicated. I would be surprised if they came

:11:56. > :12:00.up with a quick solution, with all the numbers and here is the package,

:12:00. > :12:04.and this is what it looks like. Because there is so many different

:12:04. > :12:09.things that need to come together. It is complex, I'm not too

:12:09. > :12:12.surprised by that. The sharks like you in the market, are you going to

:12:12. > :12:16.be pacified by this? No, they have not done anything to address, even

:12:16. > :12:19.in the things they are discussing, the underlying causes of this. The

:12:19. > :12:23.peripheral countries are still all falling short of their deficit

:12:23. > :12:26.reduction. It is quite clear that Greece has defaulted, and will go

:12:26. > :12:30.further into default, and some other countries will have to leave

:12:30. > :12:35.the currency to recover. baffled by some of the talk. All

:12:35. > :12:41.this talk about a deal on recapitalising banks, a deal

:12:41. > :12:46.involves two contracting parties. The banks have to agree to this,

:12:46. > :12:49.they haven't agreed to it? It is not just agreeing, the capital has

:12:49. > :12:53.to come, it comes from the Governments putting this forward,

:12:53. > :12:56.already too heavily indebted and putting more money into the banks.

:12:56. > :13:00.It is not a solution. This is a closed system, there isn't any more

:13:00. > :13:03.money other than in one place, which is Germany, even then there

:13:03. > :13:08.is not enough so save this without bankrupting Germany, frankly.

:13:08. > :13:12.do you make of it? I think the markets might be pacified for a

:13:12. > :13:17.week or two, they will see it is not the best solution, but second

:13:17. > :13:20.or third best. It doesn't matter f they leverage the ESFS and able to

:13:20. > :13:23.support Italy and Spain for 12 months, it is OK if the markets are

:13:23. > :13:27.putting pressure on those countries. Do you get the impression that

:13:27. > :13:31.these political leaders gathering in Brussels actually have much

:13:31. > :13:35.understanding of how markets work? None, it seems to me. Talk of

:13:35. > :13:39.leveraging the ESFS, isn't that what got us into the problem in the

:13:39. > :13:42.first place. The bailout fund? you stopped someone on the street

:13:43. > :13:46.and said you would solve the problem of being overindebted by

:13:46. > :13:50.borrowing more money, they would look at you strangely.

:13:51. > :13:53.The German Chancellor said this morning, she had this rather

:13:53. > :13:58.apocalyptic talk when she talked to the German Parliament, saying

:13:58. > :14:02.nobody should take for granted another 50 years of peace and

:14:02. > :14:06.prosperity in Europe, they are not for granted, that is why I say if

:14:06. > :14:10.the euro fails, Europe fails. This is pretty dark talk? She has been

:14:10. > :14:14.saying the same sentence many times over many months. It is expected.

:14:15. > :14:19.Will they start war again? Not war, of course. She talked about 50

:14:19. > :14:23.years of peace and pros port not taken for granted? The political

:14:23. > :14:26.instability you are seeing in the streets of Greece, if this fails

:14:27. > :14:31.and we go into a deep, deep recession, you might see it more

:14:31. > :14:34.widely in Europe. This is what she's warning about. She's also the

:14:34. > :14:39.Chancellor of Germany, expected make statements about the future of

:14:39. > :14:42.Europe, strongly. In the beginning when she sounded modest and making

:14:42. > :14:46.it sound that it wasn't a problem, she was criticised. Now she has

:14:46. > :14:50.brought it up a bit, that is exactly what she should be doing,

:14:50. > :14:53.she got a big majority for her mandate to negotiate in Brussels on

:14:53. > :14:57.the back of it. What about this idea that Paul Mason was talking

:14:57. > :15:02.about just there, of the attempt to form a non-euro group. Many people

:15:02. > :15:07.have pointed out that the British ambition, that the euro problem be

:15:07. > :15:11.solved by greater fiscal integration, if necessary, in

:15:11. > :15:16.Europe, marginalises Europe. But this non-euro group within the

:15:16. > :15:20.European Union, actually would be a counter balance thing? Why are we

:15:20. > :15:24.worried about being marginalised, the Swiss don't have problems with

:15:24. > :15:28.being in the centre of Europe and out, even though they have the

:15:28. > :15:32.independent currency and in the centre of Europe. What is the worry.

:15:32. > :15:37.It sounds like people saying what they were saying when we were urged

:15:37. > :15:41.to join in the first place, we were told it would be a catastrophy, and

:15:41. > :15:45.the opposite is true. I think England is trying to stage its

:15:45. > :15:47.recovery on balancing the economy on exports mostly going to the

:15:47. > :15:53.eurozone. Britain has a choice to make about the role in Europe.

:15:53. > :15:57.is the reason it matters, because it matters to us it directly

:15:57. > :16:01.effects the well being of everyone in this country. Not just within

:16:01. > :16:04.the eurozone. But this idea of there being some sort of balancing

:16:04. > :16:09.entity within the European Union is a really interesting one, is it

:16:09. > :16:14.viable? I don't think it is viable, I also don't think the eurozone is

:16:14. > :16:17.viable in the medium to long-term. Longer term, supposing they do,

:16:17. > :16:21.supposing the markets hold off and say we will accept your assurances

:16:21. > :16:28.tonight, and they will hold off until November or when ever it is

:16:28. > :16:32.we get a few more details, long- term, is the euro viable? I don't

:16:32. > :16:36.think it is, I think in 12 months time when this leveraged ESFS runs

:16:36. > :16:40.out of money and Italy Spain go to the markets, they won't look any

:16:40. > :16:44.better than they do now. At that point the future of the euro really

:16:44. > :16:48.is called into question. inherent contradictions in the euro

:16:48. > :16:52.will still be there, whatever is agreed, won't they? I'm still a

:16:52. > :16:57.believer the euro can hold together. Italy and Spain might have

:16:57. > :17:02.liquidity problems, but they are countries that should be able to

:17:02. > :17:06.service their debt in the medium to long-term, if we get through the

:17:06. > :17:10.rough patch. And if we put enough support into place that the markets

:17:10. > :17:14.stop worrying about Italy and Spain, then, of course, the interest rates

:17:14. > :17:17.go down and they are able to service their debt. Greece can't,

:17:17. > :17:21.Greece is insolvent, this is why they are talking about a bigger

:17:21. > :17:25.reduction in debt. I still believe there is a lot of political will in

:17:25. > :17:34.Europe to save this. For me, the most important statement today, did

:17:34. > :17:38.not come from the German Parliament or David Cameron, it came from

:17:38. > :17:42.Mario Dragiewho said they would continue to buy in the markets.

:17:42. > :17:48.He's a politically appointed figure? The head of the European

:17:48. > :17:54.Central Bank. That is still a reasonably independent institution.

:17:54. > :17:57.Hasn't this whole crisis shown us the crisis of political political

:17:57. > :18:02.expectations when it comes to the real world? The issue is the

:18:02. > :18:06.eurozone is made up of 17 sovereign countries, and you cannot expect 17

:18:06. > :18:10.sovereign countries getting together to make policy with the

:18:10. > :18:14.same speed as, let's say, the Federal Reserve in America. Where

:18:14. > :18:17.will we be in a year's time? In a year's time I think Greece will

:18:17. > :18:23.have defaulted, it has defaulted already. Everyone agrees that.

:18:23. > :18:28.will be out of the euro, and one of the greatest things is he who

:18:28. > :18:31.defends everything defends nothing, the defence of Greece may make it

:18:31. > :18:34.impossible to defend Spain, Portugal and Italy. They may have

:18:34. > :18:39.to go for capital controls, like in the UK, when we had exchange

:18:39. > :18:42.control, to stay in there, otherwise they will have a flight

:18:42. > :18:49.of euro deposits from banks that will bring down the banking system.

:18:49. > :18:53.I don't understand what you mean? On the day the euro deposits are no

:18:53. > :18:57.longer eurobut drachma, all the deposits from Italy, Spain and

:18:57. > :19:01.Portugal will get up and leave, and that will cause a domino effect

:19:01. > :19:05.that will be very bad. They have to follow out of the euro or put up

:19:05. > :19:08.capital controls such as we used to have. Thank you very much.

:19:08. > :19:13.Earlier this evening a former director at the environment bank,

:19:13. > :19:16.Goldman Sachs, handed himself into the europolice, Rajat Gupta has

:19:16. > :19:20.been charged with insider trading. UBS, the big Swiss bank, proudly

:19:20. > :19:25.said today, they won't need to cut any bonuses this year, despite the

:19:25. > :19:28.fact last month they discovered what is called a $2.3 billion

:19:28. > :19:37.unauthorised trading loss. The scandals keep coming. What has gone

:19:37. > :19:42.wrong with banking? In my job, every account, every

:19:42. > :19:51.letter, is not just a soulless piece of paper, but a reflection of

:19:51. > :19:56.some man's life, hope and ambition. Within living memory banks were

:19:56. > :19:59.seen as bastions of respectability, your local branch manager was a

:19:59. > :20:05.formidable pillar of society, guarding your money and

:20:05. > :20:10.occasionally admonishing you to live within your means.

:20:10. > :20:15.But during the 1980s, as the walls between riskier trading and high

:20:15. > :20:21.street banks fell, we grew accustomed to seeing a privileged

:20:21. > :20:28.few in the world's major cities, quaffing champagne and driving

:20:28. > :20:32.Ferraris, greed had become good. And as the rogue trader, Nick

:20:33. > :20:37.Leeson's practices were exposed, the public saw the risks behind the

:20:37. > :20:41.profits. Time and again we were told the ruems were tightening up,

:20:41. > :20:45.time and again rogue traders hit the headlines, and images of

:20:45. > :20:48.conspicuous consumption in the City never went away. Now the title of

:20:48. > :20:51.banker seems to conjure up nothing but contempt in the public mind,

:20:51. > :20:59.despite the fact that the financial sector employs more than a million

:20:59. > :21:04.people in the UK, and last year formed 10% of our GDP. The occupy

:21:04. > :21:08.movement is loudly lamenting the respectablisation of greed. The

:21:08. > :21:12.image of banking is of an opaque world where very few understand the

:21:12. > :21:17.rules, and those who do, are ruthlessly selfish, and beyond

:21:17. > :21:22.control. It is our bank and they need to

:21:23. > :21:27.follow our rules. How did banking fall so far from grace? Can it ever

:21:27. > :21:31.return to its position as a pillar of society?

:21:31. > :21:34.With us now, Nick Leeson, who found infamey as the rogue trader who

:21:35. > :21:39.brought about the collapse of Barings Bank, and the journalist,

:21:39. > :21:45.John Lanchester, who wrote a book about the financial crisis, Whoops

:21:46. > :21:50.Why Everybody Owes Everybody ska nobody Can Pay. Nick Leeson, are

:21:51. > :21:54.you surprised these scandals keep on happening? I am, the most recent

:21:54. > :21:59.scandal shocked me extremely. I know how incompetent and negligible

:21:59. > :22:02.I was in Singapore and the bank. Each scandal is described as the

:22:03. > :22:07.wake-up call that nobody should forget. But they occur far too

:22:07. > :22:15.frequently. Why is it that people do forget? I think there is

:22:15. > :22:18.something about you know, it is often to do with arbitrage, people

:22:18. > :22:22.making huge bets supposed to cancel each other out and making a profit

:22:22. > :22:28.from the sliver in the middle. What you have is people leaving out half

:22:28. > :22:31.of the bet, they are so confident about something they make gigantic

:22:31. > :22:36.unhedged punts, because they are certain they will work out. How is

:22:36. > :22:42.it the bosses don't spot it? think it is to do with the size,

:22:42. > :22:45.the speed, the interconnectiveness, the complexity. Banking is so

:22:45. > :22:50.colossal now, it moves at the click of a mouse, hot money moves around

:22:50. > :22:53.the world. I think the idea that you can have adult supervision of

:22:53. > :22:58.it, and someone wisely casting judgment and assessing the risks is

:22:58. > :23:02.just not true any more. Do you think the men on the boards, they

:23:02. > :23:06.are mainly men, the men on the boards of these banks, actually

:23:06. > :23:10.understand what is happening on their trading floors? I think not.

:23:10. > :23:13.I think sometimes in a very broad level they do. Some of these things

:23:13. > :23:16.called black box financial instruments, which featured a lot

:23:16. > :23:20.in the credit crunch, the whole point is the person buying them and

:23:20. > :23:26.the person selling them don't know what is in them. They are put

:23:26. > :23:32.together by financial engineers, with maths PHds, it is a black box.

:23:32. > :23:35.This is nuts? It is a market place based on financial innovation.

:23:35. > :23:41.Speed and complexity is extreme. It is a very competitive environment.

:23:41. > :23:45.The speed and complexity dwarfs other industries. There should be

:23:45. > :23:50.more control. You look at any financial scandal it is down to a

:23:50. > :23:54.very simple control not being in place. Why are the regulators so

:23:54. > :23:58.useless? They always have been. The regulators are always behind the

:23:58. > :24:02.curve. The innovation, the creativity, happens with such speed

:24:02. > :24:06.and complexity that they are always trying to catch up. And you look

:24:06. > :24:12.back 50 years, they were behind the curve then, you look back 16 years

:24:12. > :24:15.ago, which was the time of Barings, they were further behind the curve.

:24:15. > :24:20.If you try to look into the future they will still be behind. What

:24:20. > :24:24.would you do about that? For me it is not the quantity of regulation,

:24:24. > :24:29.whether there should be more or less, the quality has to improve.

:24:29. > :24:32.There is an awful lot of people who were employed by the FSA, being

:24:33. > :24:36.paid large salaries, but not really controlling the market place. So

:24:36. > :24:42.the output needs to be improved. I think you need better people,

:24:42. > :24:45.getting paid more, probably less people, but achieving more output.

:24:45. > :24:49.Public servants being paid a lot more, being paid salaries

:24:49. > :24:54.competitive with bankers? You have to, because the industry is

:24:54. > :24:57.cannibalistic, if you have a good regulator, a good auditor, or

:24:57. > :25:01.somebody on the market place, controlling what is going on, the

:25:01. > :25:08.banks employ them, because they pay them more money. Do you reckon that

:25:08. > :25:14.would work? It is a start. I think, tomorrow by the way, is the 25th

:25:14. > :25:18.anniversary of the big bank, in 1986, they have within on a 25-year,

:25:18. > :25:21.quarter century journey away from deregulation, we have to look at

:25:21. > :25:25.how that worked out for us, and head back in the general way.

:25:25. > :25:32.the question of how we see bankers, you know, it is an embarrassing

:25:32. > :25:40.thing to be for many people nowadays, isn't it? Are we being

:25:40. > :25:50.naive in expecting them to behave some how altruisticically? It seems

:25:50. > :25:51.

:25:51. > :25:55.so, not so long kaing Captain Mannering was the image of banking,

:25:55. > :26:04.scruplous and unsympathetic, now we have this regulatory journey where

:26:04. > :26:07.they are seen as unscrupulous, greedy spivs. Is it fair? Not for

:26:07. > :26:11.everyone, there is a lot of principled people in banking. But

:26:11. > :26:15.it is said once a Government loses its reputation for competence, you

:26:15. > :26:18.never get it back. In the world of business, money and ethics, if you

:26:18. > :26:24.lose your reputation for basic decency, it is gone. You look at

:26:24. > :26:32.the last Labour Government, Tony Blair and Gordon Brown were clearly

:26:32. > :26:37.in awe of these nay bobs of finance, they were awestruck, why is that?

:26:37. > :26:41.think it is the case since the time of the big bang, the markets have

:26:41. > :26:45.moved on at such pace, that central banks and Governments have all been

:26:45. > :26:49.unable to keep up with it. There is not the degree of understanding

:26:49. > :26:51.there should be. I was never challenged during my time in

:26:51. > :26:59.Singapore, people didn't understand the business I was trying to

:26:59. > :27:04.transact. That is not acceptable, to anybody. When it gets to the

:27:04. > :27:08.extreme of tax-payers bailing out the banks, that makes it more

:27:08. > :27:12.unpalatable. What do you think, how they came to be so inspiring to

:27:12. > :27:16.many in the political class? think they are partly scared. They

:27:16. > :27:20.are the richest lobby in the world, and therefore the most powerful. It

:27:20. > :27:24.is a bit like one of those things when you have a very complicated

:27:24. > :27:28.chore to do, it is like having stand over you watch you get it

:27:28. > :27:32.wrong, and eventually say would you like me to sort it out for you, and

:27:32. > :27:37.that is what they did. They wrote their own rules and regulations.

:27:37. > :27:42.The idea was the market couldn't create any problems the market

:27:42. > :27:46.couldn't solve. It is that maxim that we now know, conclusively, is

:27:46. > :27:50.not true. Do you think the public need to wise up a bit about how

:27:50. > :27:53.banking operates? Absolutely, I think, you know, growing up, there

:27:53. > :27:57.were probably two industries that would have always had a bit of

:27:57. > :28:00.mystique for me, medicine and banking, the world of finance. I

:28:00. > :28:05.don't think people know enough about them. I had my own experience

:28:05. > :28:10.with cancer, I had to go and see an oncologist, and for a while I was

:28:10. > :28:13.passive recipient of what he told me. I changed that equation around

:28:13. > :28:17.by reading, empowering myself and being part of the process. That was

:28:17. > :28:21.really good for me, and helped me through the whole battle with

:28:21. > :28:25.cancer. I think right now, at this stage, the general public need to

:28:25. > :28:28.empower themselves, and rather than being passive recipients of what

:28:28. > :28:32.the bankers tell them, they need to be part of the equation and ask

:28:32. > :28:36.some searching questions. The degree of leverage people have put

:28:36. > :28:39.themselves under over the last number of years shocking. And for a

:28:39. > :28:42.banker to encourage that, and encourage at their own benefit, as

:28:42. > :28:48.well, they have sold as much of this product, these banking

:28:48. > :28:53.products as they can, around the globe, is not the way it should be.

:28:53. > :29:01.I completely agree. Britain's Government, plus private, plus

:29:01. > :29:07.corporate debt, is 466% of our GDP, that is a scarely big number. That

:29:07. > :29:10.came from people lending us money we didn't necessarily need to buy

:29:10. > :29:15.stuff we didn't necessarily need. There is a whole cycle of

:29:15. > :29:17.excessively cheap credit, which has brought us to a properly, serious

:29:17. > :29:27.predicament. We can extract ourselves, but it will take years

:29:27. > :29:32.and the road is uphill. The seven seventh billionth person will be

:29:32. > :29:36.born next week, the rate of population is increasing by 80

:29:36. > :29:40.million a year. We have been reporting the implications in

:29:40. > :29:43.Africa this week. But it is not just the developing world with

:29:43. > :29:53.problems. Figures today show our population is rising faster than

:29:53. > :29:57.any time in the past century. The total will reach 70 million in next

:29:57. > :30:01.10 years. 47% of the predicted rise will be down to immigration, the

:30:01. > :30:05.other increase, 53%, will be natural increase, the difference

:30:05. > :30:10.between births and deaths. Much of that is due to a leap in the number

:30:10. > :30:20.of children born to migrant mothers. Catrin Nye has spent three days on

:30:20. > :30:25.

:30:25. > :30:35.a maternity ward in Leicester for There we go. More babies were born

:30:35. > :30:35.

:30:35. > :30:40.in the UK last year than at any time since 1972. Hello sweetheart.

:30:40. > :30:46.Liz and kneel Franklin welcome the latest addition to the babyboom at

:30:46. > :30:56.Leicester Royal Infimary. In 2003, 8,800 babies were born here. This

:30:56. > :31:10.

:31:10. > :31:17.Did you know about this little babyboom you are having, did you

:31:18. > :31:22.know it was coming? No we didn't. The national statistics weren't

:31:22. > :31:26.indicating quite the increase that we have seen over the last couple

:31:26. > :31:30.of years. In an ethically diverse city like Leicester, the influence

:31:30. > :31:34.of women born overseas is particularly apparent. 45% of women

:31:34. > :31:41.having babies here were born outside the UK. Across England and

:31:41. > :31:45.Wales, that is 25%. Midwives say they are having to adapt, as well

:31:45. > :31:54.as increase capacity. We knew it was twins, we didn't know the sex

:31:54. > :31:59.at that time. Sandra has just had someones, elij ja and Alicia, they

:31:59. > :32:05.met as teenagers in the Congo, and chanced upon each other many years

:32:05. > :32:10.later in a Leicester church. We have one boy already. What did you

:32:10. > :32:14.feel when you found out you were having twins? She phoned and said

:32:14. > :32:22.you know what it is twins, I screamed, God I'm going to die this

:32:22. > :32:26.time. That is the end of me, and no more sex!

:32:26. > :32:29.Are you planning to stay in Leicester? Yeah, I have been in

:32:29. > :32:32.Leicester for 11 years, I'm not planning to move anywhere else.

:32:32. > :32:39.Unless there is a good place to live.

:32:39. > :32:49.Sure? Honestly, you don't know that. I know. Do you like it here?

:32:49. > :32:55.you? I'm not welcome because I can't work, that is why I was even

:32:55. > :33:00.planning to have more babies, because it is like I was doing

:33:00. > :33:04.nothing. Midwives tell us free movement

:33:04. > :33:09.within the EU has seen a rise in women from Eastern Europe having

:33:09. > :33:13.their children here. Ava and Thomas are from Slovakia and also

:33:13. > :33:16.expecting twins. Thomas was a chef there, and cooks in a KFC here,

:33:17. > :33:21.they are not sure if they will remain in the UK, but are happy to

:33:21. > :33:25.travel back and forward until they decide. It is nothing different the

:33:25. > :33:35.UK or Slovakia, it is a European country, it doesn't matter if it is

:33:35. > :33:39.here or there. Here or there, it doesn't matter.

:33:39. > :33:44.You have an Indian lady, any translators there. The only thing

:33:44. > :33:50.with this lady is her baby has been separated from her, from all ladies,

:33:50. > :33:57.no matter what ethnicity, it is about extra concern to get her to

:33:57. > :34:01.see the baby on the neo-natal unit. Is English her first language?

:34:01. > :34:07.but she can communicate. Sometimes they come and English is not their

:34:07. > :34:10.first language but they can speak good English. If it isn't their

:34:10. > :34:15.first language we need translation services for. We do use the family

:34:15. > :34:17.sometimes, we try not to, to make sure what we are conveying is

:34:17. > :34:21.translated to the woman in the same way.

:34:21. > :34:25.It is the diversity of women having children here that is so apparent,

:34:25. > :34:30.and the pressures that go with that. They have to have specialists to

:34:30. > :34:35.deal with refugee mums, teenage mums, mothers with cardiac problems.

:34:35. > :34:38.Even a dedicated clinic for expectant mothers who have suffered

:34:38. > :34:43.genital mutilation. Reflective of the facilities here, the UK is has

:34:43. > :34:48.seen a significant jump in the number of over-40s having children,

:34:48. > :34:51.caused by both choice and medical advancement, meaning it is now a

:34:51. > :34:57.more realistic option. Emma Giltinam has just had her third

:34:57. > :35:03.baby at 43, it has not been without its difficulties. She has had five

:35:03. > :35:08.miscarriages because of an immune system abnormalty. During her last

:35:08. > :35:11.pregnancy her placenta didn't detatch after birth, something that

:35:11. > :35:15.would mean previously a hysterectomy. He's a double miracle.

:35:15. > :35:19.I had the thing to stop me miscarrying, at a lot of hospitals

:35:19. > :35:24.I wouldn't have a uterus to get pregnant with him. Are you

:35:24. > :35:28.considering a fourth? I walls warranted four, but, I - wanted

:35:28. > :35:32.four, I think I have used my nine lives up now, I'm not sure I would

:35:32. > :35:35.risk it again. With all the problems that we have had. I think

:35:35. > :35:40.I should probably count my blessings and stick at three now.

:35:40. > :35:44.We have got older mums like Emma, mums not born here, mums with

:35:44. > :35:48.medical conditions that used it mean they couldn't have children.

:35:48. > :35:52.For policy makers, any response is complicated by the sheer number of

:35:52. > :36:00.factors influencing the increase. Ten years ago the average woman in

:36:00. > :36:03.England and Wales had 1.63 children. Last year that had risen to 2. The

:36:03. > :36:07.average foreign-born woman used to have far more children than women

:36:07. > :36:13.born here, but recently that gap has narrowed. We have got to a

:36:13. > :36:18.point where the actual physical capacity of our units, can no

:36:18. > :36:23.longer cope with that increase, so what we are having to do this year,

:36:23. > :36:28.is put some capital investment in to created a decisional delivery

:36:28. > :36:31.rooms, additional maternity beds, and we are talking 50 additional

:36:31. > :36:35.midwives. This is when other places are having to see cutbacks, you are

:36:35. > :36:38.having to increase spending here? We are, yes. The challenge here is

:36:38. > :36:44.about numbers, how we adapt to having more children to deliver,

:36:44. > :36:49.mouths to feed, families to house. Wherever they hail from.

:36:49. > :36:52.We are simply having more babies, baby Franklin, just one of many.

:36:52. > :36:58.think there really is babyboom at the moment. There is a lot of

:36:58. > :37:03.people we know that have had babies. To some they are a work force,

:37:03. > :37:08.others a burden on our ever- decreasing resources. For Liz and

:37:08. > :37:12.Neil, simply everything they hoped for.

:37:12. > :37:17.That was Nye reporting. Here to discuss the - Catrin Nye reporting,

:37:17. > :37:27.here to discuss the rise in not just the Britain's population but

:37:27. > :37:31.the world's, is Babatunde Osotimehin, and Lionel Shriver,

:37:31. > :37:35.author and patron of Population Matters. What is your estimate of

:37:35. > :37:40.the total number sustainable on this planet? I don't think anybody

:37:40. > :37:48.knows that. Do you have an estimate? I would rather not put an

:37:48. > :37:50.estimate to it. Can we sustain this level of growth? Let me

:37:50. > :37:55.contextualise that growth, it is important to put that right out

:37:55. > :38:00.there. We have seven billion people today, and the growth rate of the

:38:00. > :38:06.world's population peaked in the 1960s, at about 2%. It has come

:38:06. > :38:11.down, gradually since then, it is about 1% now. If you take all these

:38:11. > :38:15.seven billion people in the world today, and you line them up, to

:38:15. > :38:22.have a group photograph. It would only fill the size of Los Angeles

:38:22. > :38:25.city. It is not about space. It is about distribution, it is about

:38:25. > :38:29.equity, and it is about social justice. If you really believe that

:38:29. > :38:34.people can live that closely cramped together? I'm not saying

:38:34. > :38:38.they are living. It is a pointless comparison that? It is a comparison

:38:38. > :38:43.you have to make, because when you...Why Don't you put a figure on,

:38:43. > :38:50.if you are prepared to make that sort of judgment, why won't you put

:38:50. > :38:56.a figure? Because in the middle 1960s, everybody said there was a

:38:56. > :39:00.population explosion, and that the world would not be able to sustain

:39:00. > :39:06.3.5 billion people. Today we have seven. They talked about lack of

:39:06. > :39:10.food, we produced more than 300% rise in food production. We can

:39:10. > :39:15.carry on indefinitely? I'm not saying that. Why not? I will throw

:39:15. > :39:21.out a figure for you. At about 9.5 billion people we are

:39:21. > :39:24.going to run out of fresh water, and that is, even if that fresh

:39:24. > :39:28.water were evenly distributed throughout the earth, which as we

:39:28. > :39:34.know it is not. The real limit is before that. We're getting pretty

:39:35. > :39:38.close that. You would accept that figure would you? I don't work with

:39:39. > :39:43.that kind of figures. That is political correctness? I tell you,

:39:43. > :39:48.no. We have to look at this diversity of the population

:39:48. > :39:53.dynamics. It is not just about growth. There are many other issues

:39:53. > :39:57.in populations. Shortage of water is a bit of a problem? It is, to

:39:57. > :40:03.everybody. But the context I want us to look at is that there is

:40:03. > :40:10.growth in some places, there is shrinking in some places, and there

:40:10. > :40:16.are issues around ash bannisation on some issues. On - Urbanisation

:40:16. > :40:20.on some issues. I would agree on some of that. All week on the news

:40:20. > :40:23.there is the question, how many people can the earth support.

:40:23. > :40:29.Ultimately that is not the right question, it is not about absolute

:40:29. > :40:37.capacity. It is a question of what number is optimal, what is a good

:40:37. > :40:42.future for the human race? If we allow our numbers to multiply up to

:40:42. > :40:45.the UN top projection, which is 16 billion, what is life like for

:40:46. > :40:51.those people, that is the proper question to ask. If that life is

:40:51. > :40:55.not the kind of life we want to live, if it is on the edge of the

:40:55. > :41:02.ability to feed people, then maybe we should take somes and now.

:41:02. > :41:08.would you propose? I feel that population organisations and

:41:08. > :41:14.Government funding has got distracted in the last 20 years. It

:41:14. > :41:20.has gone very PC, the emphasis has been on improving women's rights,

:41:20. > :41:25.which is good in itself, right. But that's supposed to have a knock-on

:41:25. > :41:30.effect. Women tend to have fewer children if you educate them in

:41:30. > :41:37.human rights? Yes. That is the evidence we have. Once we empower

:41:37. > :41:42.women, you educate them, they make choices which are different, and

:41:42. > :41:48.which tend to ensure that you have less babies, better quality of life,

:41:48. > :41:53.and we have examples. We are on the same page. Brazil is a good example.

:41:53. > :41:59.I completely agree with you. One of the things that helps women is just

:41:59. > :42:02.having birth control. That's what I mean that population organisations

:42:02. > :42:06.and Government policy has to folk cuss a little more on the nitty

:42:06. > :42:10.gritty of Jews making sure that people who don't have access to -

:42:10. > :42:15.just making sure that people who don't have access to family

:42:15. > :42:21.planning do. You are in favour of that in the Population Fund? I am,

:42:21. > :42:24.but I want to state it differently. Because the issue of being able to

:42:24. > :42:30.access also has issues around women's status and the issue of

:42:30. > :42:33.freedom. You know, we can talk about that in London, when you do

:42:33. > :42:37.have family planning clinics everywhere, and people have the

:42:37. > :42:41.right to walk into places and get it. You would be in favour of

:42:41. > :42:46.having them anywhere in the world? Right, but then it has to be in the

:42:46. > :42:50.context of the culture and the place you are working. For crying

:42:50. > :42:53.out loud there are places in the world you cannot set up these

:42:53. > :43:01.things without breaking some barriers and working with them.

:43:01. > :43:06.What I'm saying is that Huang Fang Wen a young girl of 13 or 14 is

:43:06. > :43:10.married off, she has no voice. Trying to provide family planning

:43:10. > :43:13.in a distant clinic won't make a difference to her life. You are

:43:13. > :43:18.saying the same things about empowering women, do you think

:43:18. > :43:23.there sanctions that ought to be taken beyond that, one-child

:43:23. > :43:26.policies? I don't believe coercion is necessary. Unless you have a

:43:26. > :43:31.really repressive Government it won't be effective. You can take a

:43:31. > :43:41.look at a country like Iran. It is hard to find something to admire in

:43:41. > :43:45.Iran, but they produced a miracle demo graphically. In the 1980s they

:43:45. > :43:49.reversed what was a pro-natalist policy and decided they really

:43:49. > :43:54.wanted to bring it down, at that time the total fertility rate for a

:43:54. > :44:02.woman was seven, and within a single generation by 2000, they

:44:02. > :44:06.brought it down to 2.1. How did they do it? A combination of

:44:06. > :44:10.changing the rhetoric and the religious policy, it was a cultural

:44:10. > :44:13.element, but it was also very practical. They put clinics

:44:13. > :44:20.everywhere. Including in the rural countryside and not just in the

:44:20. > :44:28.cities. And between those two policies, they made history demo

:44:28. > :44:36.graphically. We are saying the same thing. We are saying the same thing,

:44:36. > :44:39.if you didn't get mast the Mullahs that would never happen. That was a

:44:39. > :44:43.cultural intervention in Iran. You have to do that in other places,

:44:43. > :44:51.that is empowering them to access what they need to access. You said

:44:51. > :44:55.it, and it is absolutely cerbt, the only sustainable human - correct,

:44:55. > :45:01.the only sustainable thing that works magic is educate girls, give

:45:01. > :45:05.them what they need, make it available. And give them

:45:05. > :45:11.contraception. I know. That goes with it. So it is not just about

:45:11. > :45:16.educating, it is educating, but making it accessible to them.

:45:16. > :45:23.also, this is awkward in the American context, but part of

:45:23. > :45:30.providing contraception is the ultimate contraception is giving

:45:30. > :45:36.people access to abortion. Safe abortion, that will be

:45:36. > :45:39.culturally sensitive in some countries I grant you. That became

:45:39. > :45:44.a problem. Would you accept the availability of abortion? In place

:45:44. > :45:49.where is it is legal, there are countries where it is legal, it

:45:49. > :45:52.should be available safely. Look what happened with the Bush

:45:52. > :45:55.administration, they cut way back on funding for population, because

:45:55. > :46:00.the stipulation was the organisation which you gave funding

:46:00. > :46:05.could not even advise on abortion, much less provide it, unfortunately

:46:05. > :46:09.we got a saneer man in the White House. One point has to be made,

:46:09. > :46:13.that is that preproductive health has to be provided to build women's

:46:13. > :46:16.rights, because it is not just about contraception, it is also

:46:16. > :46:23.about prevention of HIV transmission and several things, so

:46:23. > :46:27.it is not just contraception, it is a whole package. On tomorrow's

:46:27. > :46:31.night programme, Justin Rowlett has been investigating unlikely

:46:31. > :46:36.solutions to the growing demand on the planet's resources. With the

:46:36. > :46:43.world population about to hit seven billion, is it time we all started

:46:43. > :46:49.eating these? That's all from Newsnight tonight,

:46:49. > :46:55.join us tomorrow for another bucket Lloyd of doom and gloom. In China,