21/05/2012 Newsnight


21/05/2012

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So, how do we get ourselves out of the doldrums. Today's answer came

:00:12.:00:17.

from a Tory donor, arguingp employers need to be able to hire

:00:17.:00:20.

and fire more easily. Rubbish said the other half of the coalition

:00:20.:00:24.

Government. We don't need to scare the wits out of workers with

:00:24.:00:27.

threats to dismiss them, it is completely the wrong approach.

:00:27.:00:33.

is the ghost of "I'm all right Jack", still at large. Could the

:00:33.:00:40.

economy be energised if we were all less secure. Is he in. I will see

:00:40.:00:44.

your union bogeyman, and raise awe free market economist.

:00:44.:00:49.

Meanwhile, could a bank run in Greece spread to your local branch.

:00:49.:00:53.

How at risk are the major banks of Europe. Later on. TRANSLATION:

:00:54.:00:58.

doctors in Iraq told me, if this operation in Iraq does not work out,

:00:58.:01:02.

I will have to have an amputation. Damaged in Iraq, mended in Jordan,

:01:02.:01:08.

the hospital where they try to put back together the shattered bodies

:01:08.:01:14.

of those who survived the violence. I sleep for one week before the

:01:14.:01:18.

amputation, and one week after amputation. Amputation for any

:01:18.:01:25.

surgeon is failure. We talk to one of the world's greatest sopranos,

:01:25.:01:35.
:01:35.:01:35.

or rather we listen. # Falling in love with love

:01:35.:01:44.

# Is falling for make-believe. Britain has a deficit crisis, true,

:01:44.:01:47.

the only escape is economic growth, also true enough, but after that,

:01:47.:01:51.

the ideas laid out in a report for the Government, from a big Tory

:01:51.:01:54.

donor get a whole lot more controversial. So controversial,

:01:54.:01:59.

involving getting rid of all sorts of labour rights, that the Business

:01:59.:02:07.

Secretary, Vince "diplomacy Cable, delivered the verdict that they are

:02:07.:02:11.

complete nonsense. Will any of these plans that make hiring and

:02:11.:02:17.

firing easier see the light of day, and or important, should they?

:02:18.:02:21.

Here is Allegra Stratton. You can see why the Prime Minister

:02:21.:02:27.

might spend his down time on this, with one dab of the index finger

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you can slice through a juicy fruit, three in one go, you get more

:02:31.:02:37.

points. For his party it is not fruit, it is flexible leave,

:02:37.:02:44.

redundancy pay, and the juicyist of all, the ability to hire and fire.

:02:44.:02:49.

Their set text is this. A review by Tory donor and private equity

:02:49.:02:55.

businessman, Adrian Beecroft, it was published this afternoon. It

:02:55.:03:00.

made 17 proposal that is would allow firms to opt out of

:03:00.:03:10.
:03:10.:03:15.

It was welcomed by those with experience running businesses.

:03:15.:03:18.

labour market has to be flexible. You see that particularly with

:03:18.:03:22.

employment law as well. What we want is a right to hire policy, we

:03:22.:03:26.

want companies to be taking people on, and unafraid of the

:03:26.:03:29.

consequences of taking people on. Small companies need flexibility.

:03:29.:03:32.

But employees needs their rights too. It is a question of getting

:03:32.:03:35.

the balance right. I think the Beecroft Report, published this

:03:35.:03:38.

week, is a very important step on the road to considering all the

:03:38.:03:43.

options. I think we should look at makes it as easy as possible for

:03:44.:03:47.

smaller companies to take on staff. These ideas, however, do not mix

:03:47.:03:52.

well in the coalition furnace, today sparks flew.

:03:52.:03:54.

The Business Secretary, conveniently visiting the

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sweltering steel works of Redcar, and so atired in flamable kit, went

:04:00.:04:05.

into battle with his intellectual foes. Most of it is pretty

:04:05.:04:10.

uncontroversial. There is one bit that has stirred up a lot of

:04:10.:04:15.

controversy, this no-fault dismissal, some describe it as a

:04:15.:04:19.

hire and fire system. I don't see a role for that. Britain has a

:04:19.:04:22.

flexible, co-operative labour force. That is what you see here in this

:04:23.:04:26.

steel plant, the work force have made a lot of this happen. Last

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week I was at Ellesmere Port, where we have got back General Motors

:04:30.:04:36.

investing in Vauxhall. One of the thing that attracted them is

:04:36.:04:40.

British workers being flexible. We don't need to scare the wits out of

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workers with threats to dismiss them, it is completely the wrong

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approach. This is about the differences between the coalition

:04:46.:04:49.

partners, it is as serious as it gets, for one it is an ap, the

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other it is a pear. They don't agree. You have Conservative people,

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including cabinet ministers, who think the reason the UK economy is

:04:57.:05:02.

sluggish, is because the labour market is shrer rottic. And the

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Liberal Democrats say there isn't a single shred of evidence that says

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it is the UK's economy. They have a wider point, they say capitalism is

:05:10.:05:13.

allowed to work because of regulation, it allows trust.

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No matter, Tory MPs said in the Commons today, as the Government

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fields questions in the chamber, Beecroft's lessons are legion.

:05:23.:05:29.

2005, Germany exempted businesses with fewer than ten workers from

:05:29.:05:38.

unfair dismissal regulations. They introduced a new catagory of mini

:05:38.:05:42.

and midi jobs, their unemployment figures have halved, what can we

:05:42.:05:48.

learn from Germany. The last survey in this area showed

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that we were lightly regulated, the third lightest after America and

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Canada. Germany is more regulated. Turkey, the most regulated, drew

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its economy. Circumstantial evidence, and studies carried out

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by a number of think-tanks, national and international, seem to

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put some of the best economic performances, such as Germany, and

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to some extent, France, on the more regulated end of the spectrum.

:06:17.:06:21.

of how Germany has deregulated? have to see these particular

:06:21.:06:28.

measures in the German context, which is the context of a highly-

:06:28.:06:33.

regulated, neo-corporate, industrialised economy. And labour

:06:33.:06:37.

lawyers, and comparative labour lawyers, are always warning against

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the simplicity of the argument, of suggesting legal transplants from

:06:40.:06:50.
:06:50.:06:50.

one legal system to another. International Labour comparison is

:06:50.:06:55.

interesting, Denmark is highest in the world for ease of hiring and

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firing and redundancy costs. They have a system that is very good at

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getting people back into work when they are unemployed, they support

:07:02.:07:07.

them very well, and they have a highly-skilled work force. The

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lesson is, if we are going down this path, we have to look at it in

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the round, rather than focusing specifically on one element of

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deregulation, as a solution to getting people into work.

:07:17.:07:20.

Some within Government expect that there will be action on the

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Beecroft Report, as part of a great reckoning between the two parties

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that they have to do everything they can to get growth. The

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question will be, will it be in substantial areas, where previously

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there had been much disagreement, or whether it will be in those

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areas where actually they have already said they sort of agree, so

:07:37.:07:41.

the low-hanging fruit. There are some consultations out there, there

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are some things the Department of Business has already said it will

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implement. I understand that the Lib Dems

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could move towards the Tories on Beecroft's ideas, it would be

:07:51.:07:54.

limited to those affecting small businesses. Those employing fewer

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than five employees may be exempted from regulations. Lib Dems suggest

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they may exempt employee-owned, John Lewis-styled companies from

:08:05.:08:08.

regulation, in an attempt to increase that model in the economy.

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The Beecroft Report emerged having had hefty help from Downing Street

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and civil servants. One source joked, final version was version 27.

:08:17.:08:19.

Varnished or unvarnished, many think the Prime Minister does have

:08:19.:08:24.

to act in some way, and Lib Dems know it. Tory MPs think the

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Beecroft Report offers many fruits to be sliced, some in one swipe.

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We have Lord Oakeshott, and the Conservative MP Tominic Raab, the

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one-time economic adviser to George Bush, and head of an Asset

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Management company, Pippa Malmgren, and Labour Party economist, Davit

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Blanchflower. Where is the evidence that making

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it easier to hire and fire people actually promotes growth? There is

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actually a total of abundance of domestic and international evidence.

:09:02.:09:09.

The CBI did a report last year, a survey which found 77% of

:09:09.:09:13.

employiers said regulation was the major -- employers said regulation

:09:13.:09:18.

was a major threat to businesses. The World Economic Forum says we

:09:18.:09:22.

come 83rd on the league table for overregulating our businesses.

:09:22.:09:27.

These are statements of opinion, I'm asking for evidence? In the

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CBI's case it was a survey of employers. And they said something,

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they did not produce any evidence, isn't that correct? In that case,

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yes. But all of the business groups, all of the employee groups, are in

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unison saying we have a major problem in this country. It is not

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a silver bullet, there is finance and business taxes. But if you are

:09:47.:09:50.

a small business, with all the uncertainty around you, you are

:09:50.:09:53.

worried about taking that risk to hire someone, and someone in this

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debate has to stand up for the 22% youth unemployed. That is what we

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are doing, it is not standing up for the employers, but the

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unemployed. Have you seen evidence to support this contention, Davit

:10:06.:10:11.

Blanchflower? No. I listened to the commentator a moment ago, I looked

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at what Vince Cable said. He's quite right to say there is

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absolutely no evidence for this. There has been a huge literature in

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economic about the effects of regulation, and how it impacts

:10:22.:10:30.

unemployment. We see no co-relation whatsoever. A good thing to think

:10:30.:10:34.

about in the UK, we have seen incredibly flexible wages and hours,

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there is no credible evidence whatsoever to say that regulation

:10:37.:10:42.

in the UK is a major problem. In fact, if you go to the business

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department survey of 201, they said 7% of firms thought regulation was

:10:48.:10:53.

a problem, so I'm afraid there is no basic evidence to support the

:10:53.:10:59.

contention, at all. Lord Oakeshott, there is an apparent plausibilty to

:10:59.:11:02.

this argument. It seems to make a certain amount of sense, doesn't it,

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if you are Mr Beecroft, of course it makes sense. Yes. It is my turn

:11:07.:11:12.

now. You hang on a second blees, Davit Blanchflower, I want to bring

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in Lord Oakeshott. Can I say in my day job, not talking politics with,

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I'm a small businessman, and I run a small business with five people.

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I know a bit about it, and more than Adrian Beecroft, who has been

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an asset stripping executive. may employ five people? He doesn't

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employ them directly. If you ask small businesses and the Federation

:11:40.:11:43.

of Small Businesss what the biggest problem is, it is not whether they

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can sack workers, it is whether they can get the finance from the

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banks, particularly the Royal Bank of Scotland, to take the workers on

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in the first place. That is the biggest single problem. This

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Beecroft Report, it does have some good things in it. Taking the fruit

:11:57.:12:00.

analogy, there is decent apples in there, but two or three very bad

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ones. The things like putting off the compulsory fund pension

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contributions are being done, a lot is being done. What is not being

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done is to have a sack on the spot culture just at the time when there

:12:14.:12:19.

is no economic confidence. There is no chance, in your view, of the

:12:19.:12:25.

Government to bring in those regulations? Not the one that says

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sak-on-the-spot. In this country, we in this country do not believe

:12:30.:12:34.

that is a price worth paying, even if they might in America.

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Frightfully rude, I should have brought you in. I want to bring

:12:38.:12:41.

Dominic on the point that whether this Government will introduce this

:12:41.:12:44.

particular, do you think the Prime Minister is on your side, the

:12:44.:12:49.

particular point about making it easier to hire and fire? I'm not a

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psychologists, I'm a politician. You are asking me to guess what the

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Government will do, don't -- are asking me to guess what the

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Government will do. Don't you know what your leader

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will do? Does he agree with you? hope he does. You don't know?

:13:05.:13:09.

are having a consultation and we will find out. On the issue of

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firing on the spot. There are whole swathes of ways of doing this. We

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extended the period from one to two years, and I didn't hear Lord

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Oakeshott complaining then. I'm in favour of that. What we are arguing

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about is this one thing here which you Conservative right-wingers seem

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to be fixating on, which is the sack-on-the spot culture. You don't

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need to throw jibes. The one to two years has been done by the

:13:39.:13:43.

Department of Business. You support that. So for two years you are

:13:43.:13:47.

happy with sack-on-the spot. When you take someone on it is

:13:47.:13:51.

reasonable to have two years. The sensible parts of Beecroft are

:13:51.:13:56.

being done already, so why is there suddenly this great attack on Cable

:13:56.:14:03.

because they won't do the sack-on- the-spot thing. As you have

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accepted, most of it is completely uncontentious. This particular

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point is held by people like Tominic Raab and his friends to be

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abs you luetly key. Absolutely keen. It is a totem pole. What about the

:14:20.:14:23.

United States? Two-thirds of economies are generated by firms

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that employ fewer than 50 people. So if we want to create new jobs,

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it is only going to come from one place, that is from entrepeneurs

:14:34.:14:38.

who are taking risk. So far so uncontentious? If we talk about

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sacking on the spot, I want to be clear. The thing to cause people to

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be sacked on the spot is not regulation, but the debt problem

:14:46.:14:50.

that is bearing down on this country and the austerity. You

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can't project people from losing their jobs by having all this

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legislation in place. That is what we learned in the United States.

:14:55.:15:00.

The one thing you have to do is create new jobs. And that GDP

:15:00.:15:05.

construction can only occur if you have a risk-taker, the risk-taker

:15:05.:15:10.

needs to know if he or she puts his capital down, that they can

:15:10.:15:14.

manoeuvre who are my employees, what is the nature of the business,

:15:14.:15:21.

can I innovate fast. What we have to do in Britain is to innovate

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fast. We have that already. Look at this clart, you will be able to see

:15:25.:15:29.

it, -- This chart. You will be able to see, it was referred to in the

:15:29.:15:34.

piece. It is the OECD's assessment of employment protection in this

:15:34.:15:41.

country. You can't see it Davit Blanchflower, but you know the

:15:41.:15:47.

facts. I have it here. The UK is down there, why does that have

:15:47.:15:50.

anything whatsoever to do with economic performance? The point is,

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the debt problem in this country has created such a burden on growth,

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the point is how are you going to get growth going, you are not going

:15:58.:16:03.

to go through the state. Davit Blanchflower you are in the states.

:16:03.:16:13.
:16:13.:16:15.

Putting your hand up, you can speak. Job protection, there is no

:16:15.:16:19.

question it is a problem. If you look at the World Bank's business

:16:19.:16:23.

ratings, the UK ranks 7th behind the US and Canada, same countries.

:16:23.:16:27.

There is no evidence whatsoever to say it is regulation, and actually,

:16:27.:16:32.

I agree that the big problem in the UK are two things, lack of demand

:16:32.:16:36.

and lack of access to finance to small firms. None of which are

:16:36.:16:40.

being dealt with. All of this stuff is just a way to scare workers,

:16:40.:16:44.

make them have an increased fear of unemployment, stop consuming,

:16:44.:16:49.

increase spending, lowering growth. I think this looks like a right-

:16:49.:16:53.

wing disaster. Can I say something nice about the

:16:53.:16:57.

stories, please. Hang you, you want to hear something nice, we don't

:16:57.:17:01.

want to hear that! Seriously, the point he's making, and the point

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about I'm already Jack, we have a totally different Labour market

:17:05.:17:09.

than 20 years ago. I pay tribute for Mrs Thatcher for cracking the

:17:09.:17:13.

strength of the unions, we have a free and flexible market. Look at

:17:13.:17:17.

Vauxhall, it is not a problem any more. I want to talk to Tominic

:17:17.:17:23.

Raab now, about this point that David Blanchflower -- Dominic Raab

:17:23.:17:26.

now, about this point that David Blanchflower made. If people fear

:17:26.:17:30.

for their jobs, they are not going to consume, and without consumption

:17:30.:17:34.

you don't get demand and therefore no growth? That may be true, but if

:17:35.:17:38.

they are languishing unemployed. is rather serious? There are a

:17:38.:17:45.

whole range of competing risks here, the big risk for us is we have 22%

:17:45.:17:48.

youth unemployed, 8% unemployed, I agree with the points about finance,

:17:48.:17:52.

we have told the banks we have introduced major reforms, we

:17:52.:17:55.

probably agree on most of those. We are telling the banks two different

:17:55.:18:00.

things at the moment. Our control over certain things, like finance,

:18:00.:18:04.

is wanting to stop bail outs happening again. One of the things

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we have total control about is the regulatory climate. The problem

:18:07.:18:11.

with the chart, it is four years old, if you look at what the IOD

:18:11.:18:14.

estimates for last year, they said the equivalent of the output of

:18:14.:18:18.

Singapore is what businesses lost in the regulatory burden. That is

:18:18.:18:25.

why if you look at other surveys. Anecdote. We are still well down

:18:25.:18:30.

towards the deregulated labour markets around the world.

:18:30.:18:34.

Please? Smaller companies need to face less regulation. You can

:18:34.:18:38.

choose what is the level of employees at which you want to have

:18:38.:18:41.

protection of employment begin, but that's not even the critical issue

:18:41.:18:44.

here. I think this is what the Beecroft Report isn't addressing.

:18:44.:18:48.

Is what is the bigger question of how to incentivise more risk-taking

:18:48.:18:54.

in the economy. That involves a question about tax policy,

:18:54.:18:57.

regulatory policy, frankly, monetary policy and what purpose it

:18:57.:18:59.

service in the current environment. The point is, this country needs to

:18:59.:19:02.

have a massive debate, about the relative balance between these

:19:02.:19:07.

different things. All with a view to incentivising more risk-taking.

:19:07.:19:11.

I agree with, that we need more investment and more confidence and

:19:11.:19:14.

more growth, at the moment it is not working.

:19:14.:19:19.

Thank you. The dealers who make-or- break currencies, were willing to

:19:19.:19:23.

pay a little more to buy euros, it was a reflection of the weekend

:19:23.:19:26.

comments by leaders that Greece will stay in the euro. Easier said

:19:27.:19:30.

than done, perhaps what may determine the fate of the euro, and

:19:30.:19:34.

of many European economies, is much less words of politicians, than the

:19:34.:19:37.

actions of their citizens. Specifically whether they are

:19:38.:19:42.

willing to leave their money in the banks, and whether those banks are

:19:42.:19:46.

themselves judged safe. Paul Mason, our Economics Editor,

:19:46.:19:51.

is here, before you talk about that. It didn't seem to me to achieve

:19:51.:19:55.

very much that gathering in America. That is clear, the news is, nothing

:19:55.:19:59.

happened in the weekend. The G8 leaders don't get together often.

:19:59.:20:03.

It was an opportunity. What we can say is the battle lines inside the

:20:03.:20:06.

powerful nations were drawn more clearly in the sense that Germany

:20:06.:20:10.

is a bit more isolated in its insistence that there has to be a

:20:10.:20:19.

lot of austerity in Europe. The growth wing strengthened its hand.

:20:19.:20:23.

The good news today is no bank run in Greece and Spain. Towards the

:20:23.:20:27.

end of the week people in the markets were pretty wordied that

:20:27.:20:32.

people would pull their money out of the banks. What passes for good

:20:32.:20:36.

news today is there is not a run on the bank? That is not just because

:20:36.:20:43.

we don't like to see queues outside banks or 1930s-style scenes. It is

:20:43.:20:45.

very difficult to understand at the moment what is holding Europe

:20:45.:20:49.

together. Europe has a sovereign debt problem. The European banks

:20:49.:20:53.

are currently buying the debt of countries, because the European

:20:53.:20:56.

banks have been given money by the European Central Bank. If there is

:20:56.:21:01.

a bank run, that is not just a bad thing for Greece, where the most

:21:01.:21:04.

likely candidate it is for it to happen. A bank run, for reasons I

:21:04.:21:08.

will explain in a minute, can take apart the very mechanism that

:21:08.:21:14.

allows the money to flow through banks to state. The whole situation

:21:15.:21:18.

being created could come tumbling down if we got one queue outside a

:21:18.:21:24.

big bank in Athens. It is technical, but here is why.

:21:24.:21:29.

Eurozone banks send money to each other through a system known as

:21:29.:21:34.

Target 2, it is a payment system, not a lending system. All

:21:34.:21:37.

transactions take place within the European Central Bank, not direct

:21:37.:21:43.

between a Greek bank and a Germany bank, say. Here is the problem,

:21:43.:21:47.

with the Greek banks in droubl, they can only operate in this

:21:48.:21:52.

system because the ECB is letting them draw money they don't have. It

:21:52.:21:57.

is auld emergency liquidity assistance, ELA, it is a lifeline

:21:57.:22:02.

the European Central Bank has to vote for, twice a week. Last week

:22:02.:22:08.

it was raised ten billion, to 100 billion euros. If a real bank run

:22:08.:22:11.

begins in Greece, independent of who wins the election, that

:22:11.:22:19.

lifeline could be shut down. It did seem quite clear, pleasingly

:22:19.:22:22.

clear. There is a European meeting later this week? It is a dinner of

:22:22.:22:31.

the heads of state, convened by your favoured man in Europe, Mr Van

:22:31.:22:36.

Rompey. There is fun already happened there is two-and-a-half

:22:36.:22:42.

pages of detail before the immortal statement, "before the end of

:22:42.:22:46.

dinner, I propose we talk about recent developments in the

:22:46.:22:49.

eurozone". It is a kind of acceptance that at the big

:22:49.:22:52.

diplomatic evidence there is not much more action until the Greek

:22:52.:22:57.

election on the 17th of June. And while Greece is a ticking detonator,

:22:57.:23:02.

ready to go, what people are then worried about is what it sets off.

:23:02.:23:05.

Because while Greece is, we have discussed again and again the Greek

:23:06.:23:10.

problem, the banks are effectively bust, they are on life support from

:23:10.:23:14.

the European system. It is what happens if the Spanish banking

:23:14.:23:19.

system is in some way ignited by that detonator. What you don't want

:23:19.:23:24.

is to have an unstable political situation in Greece, where a

:23:24.:23:28.

trigger is either through the bank run system, or simply by the idea

:23:28.:23:33.

that the Greek also not carry out the austerity moves, that the

:23:33.:23:38.

crisis comes in Greece at a point when the Spanish banking system is

:23:38.:23:42.

not stablised. They are trying to stablise the Spanish banking system

:23:42.:23:46.

and want to give the Spanish banks 100 billion. Now we have the

:23:46.:23:50.

problem we always run into, the Spanish bank doesn't want to be

:23:50.:23:53.

bailed out at the moment. That is where we are, by Wednesday night we

:23:53.:23:57.

might be is somewhere else, or by the time coffee and the canapes

:23:57.:24:01.

come out, I'm not sure. Two people who know a thing or two about banks

:24:01.:24:08.

in trouble, are Gillian Tetting, managingedor of the Financial Times

:24:08.:24:15.

in -- managing director of the Financial Times in America.

:24:15.:24:21.

-- Gillian Tett. Are we there yet? The ECB has

:24:21.:24:29.

propped up the banking system to an extraordinary degree, which is good

:24:29.:24:33.

news, but the key challenges are very serious. The question is, what

:24:33.:24:37.

are they doing behind the scenes to prepare for the worst case. People

:24:37.:24:42.

behind the scenes should watch are they supporting the bond system,

:24:42.:24:46.

will they create an insurance scheme for the entire eurozone, and

:24:46.:24:50.

just how much more can the ECB do. We hope to explore some of those,

:24:50.:24:54.

what is your view of whether there will be a run on the banks?

:24:54.:24:58.

tricky parts is in terms of how Greece will be managed, is manage

:24:58.:25:02.

the cross-border exposures, the extent to which banks are indebted

:25:02.:25:06.

to banks across the border has to be covered. That is the big

:25:06.:25:10.

question. How is it covered, by what Gillian was talking about?

:25:10.:25:15.

There has been experience of this, in the 1980s in Latin America, you

:25:15.:25:18.

had a big crisis of the banks potentially collapsing and the

:25:18.:25:22.

currencies collapsing. It was covered, in effect, in a system

:25:22.:25:31.

known as Brady Bonds, US dollars security, an analogy could be the

:25:31.:25:34.

eurobonds. What is happening now? If they have any sense, they will

:25:34.:25:39.

be working out how that eurobond- type cover can work to stablies

:25:39.:25:43.

those currencies, if there is any risk in that cross-border exposure,

:25:43.:25:46.

between the banks transferring. That's the defence mechanism that

:25:46.:25:49.

needs to be put in place at this point in time in Europe. You have

:25:49.:25:52.

spoken to a lot of these people at the European Central Bank, haven't

:25:52.:25:57.

you? I have recently, yes. Is that what they are doing? They are

:25:57.:26:02.

certainly looking at just how many extraordinary weapons they can pull

:26:02.:26:06.

out of the Arsenal and fire. Over the last year or so they have

:26:06.:26:10.

already surprised people by -- arsenal and fire. Over the last

:26:10.:26:17.

year they have already surprised people by old actions with the LTRO.

:26:17.:26:24.

What is that? Long-term retail operations, the ECB could be

:26:24.:26:28.

fatastically bold if it wanted. We have an article from the Polish

:26:28.:26:32.

Finance Minister today, alling for unlimited purchases of the eurozone

:26:32.:26:37.

bonds by the ECB. That is a very big step for the Germans to stand

:26:37.:26:42.

up to. The Germans are against all that? They have been very cautious

:26:42.:26:47.

up to now. Germany has to recognise, to some extent and to a large

:26:47.:26:52.

extent, it hasn't been explained to the German voter, but the German

:26:52.:26:56.

economy is being largely subsidised by keeping its exports competitive

:26:56.:27:00.

by the other countries in the eurozone. If these countries are at

:27:00.:27:07.

risk, the danger is that the German currency s or the eurobit of that,

:27:07.:27:10.

deflates rapidly making Germany uncompetitive. Germany has had a

:27:10.:27:16.

boom, because of the high level of stability in German employment, in

:27:16.:27:20.

marked contrast to what we were hearing, it has meant the German

:27:20.:27:24.

consumer is not worried about losing their jobs and is spending

:27:24.:27:27.

more. If there is the sort of banking

:27:27.:27:34.

crisis that we are thinking about, what happens to banks in this

:27:34.:27:39.

country? I think this is very much almost a third order, if you like,

:27:39.:27:44.

the second order was the contagion alluded to in terms of Spain and

:27:44.:27:49.

Italy, the third order is the UK, which has less exposure to

:27:49.:27:56.

continental European banks. What about Santander, which took over

:27:56.:28:01.

Abbey National? Santander UK is isolated, it can't pay a dividend

:28:01.:28:05.

to the Spanish parent unless the FSA approves that. If you had money

:28:05.:28:09.

in santand der you would loaf it there? It is pretty safe. The only

:28:09.:28:14.

downside to it, is you can'tness -- the bank can't get capital out of

:28:14.:28:17.

the parent in Spain to support itself, in a way another bank may

:28:17.:28:22.

be able to. The rest of that is very safe. I support Ian's point

:28:22.:28:26.

and pick up on something he said earlier. The good news about the UK

:28:26.:28:31.

system is people have got deposits in UK banks do know there is an

:28:31.:28:34.

insurance scheme in place, they know who stands behind it. One of

:28:34.:28:39.

the big problems in the eurozone is there isn't a common insurance

:28:39.:28:43.

scheme for the entire area. If you are a Greek depositor, you don't

:28:43.:28:46.

know who is backing it, at the end of the day. When it is said the

:28:46.:28:49.

issue right now is the cross-border balances being covered, what is

:28:49.:28:53.

happening in the financial system now is you are seeing fracturing in

:28:53.:28:57.

terms of how banks actually order their businesses, that is

:28:57.:29:02.

incredibly important. If you were a Greek with funds on deposit in a

:29:02.:29:05.

Greek bank, surely you could move it to a German bank? That is why we

:29:05.:29:08.

have money moving out of Greece right now. The legality of this

:29:08.:29:11.

protection scheme, and the question of who is responsible for whom, it

:29:11.:29:15.

is simply not defined right now. What you have already is many banks,

:29:15.:29:19.

as Ian knows, essentially saying, if I'm lending money to Italian

:29:19.:29:25.

companies, I want to make sure I'm electing -- collecting money from

:29:25.:29:28.

Italian depositors to match them up. If you go back to two or three

:29:28.:29:34.

years, everyone thought it was a common euromush, they were treating

:29:34.:29:38.

it like a single currency area, the banks are don't that any more.

:29:38.:29:43.

is to cover the cross-border exposure, if a bank is borrowing

:29:43.:29:48.

across country borders, there is an insulation in the banks for the

:29:48.:29:52.

cross-border exposure. That is, in effect, what the ECB has to put in

:29:52.:29:56.

place to keep it going, that is the called firewall protection they are

:29:56.:29:59.

working on. Time for something positive, it is

:29:59.:30:03.

a pretty rare commodity in coverage of the Middle East, where frontline

:30:03.:30:06.

journalism focuses on bombs, shootings, torture and suffering.

:30:06.:30:11.

For every person who dies in a bomb explosion, many others are wounded,

:30:11.:30:15.

often serious lo. There is a remarkable hospital in the

:30:15.:30:20.

Jordanian capital, Amman, which offers to repair those victims. It

:30:20.:30:23.

has began caring for patients from Iraq, and now patients come from

:30:23.:30:33.

all over. All the patients have something in

:30:33.:30:43.
:30:43.:30:43.

common. They have been terrorised, by explosions, by bullets, by

:30:43.:30:53.
:30:53.:31:07.

catastrophy. I admire my patients. They are great, they are strong.

:31:07.:31:11.

have come to Jordan to meet the faces behind the statistics. Tucked

:31:11.:31:16.

away in a suburb of Amman, the forgotten victims of violence in

:31:16.:31:20.

the Middle East. Is survivors of unimaginable horrors.

:31:20.:31:28.

Here, doctors are reconstructing their broken bodies. And helping

:31:28.:31:38.
:31:38.:31:41.

them rebuild their lives. When we get a result, it makes you feel

:31:41.:31:46.

good, really good. Dr Majd el-Rass, is a Syrian surgeon, preparing to

:31:46.:31:52.

operate on a young Iraqi girl, injured in a bomb. When I see these

:31:52.:31:59.

patients, I feel I'm not having enough, I should give more. They

:31:59.:32:07.

need more. They are suffering, they didn't do anything bad to suffer,

:32:07.:32:12.

they are here asking us to help them.

:32:13.:32:18.

Waiting anxiously is this girl. An explosion outside her home in

:32:18.:32:21.

Baghdad last September killed her brother, and shattered her leg. She

:32:21.:32:27.

hasn't been able to walk or go to school since then. TRANSLATION:

:32:27.:32:31.

doctors in Iraq told me, if they operation doesn't work out, I will

:32:31.:32:35.

have to have an amputation. That's why I'm scared. Since the moment I

:32:35.:32:45.
:32:45.:32:45.

arrived in Jordan, I have been nervous. This is the first stage of

:32:45.:32:50.

surgery. She will need a lot, at least three or four. We hope, after

:32:50.:32:57.

that, she will walk. But there is always a risk. There is a risk of

:32:57.:33:02.

amputation, always. By the time they get here, the

:33:02.:33:06.

patients are all extremely complicated medical cases. And over

:33:06.:33:10.

many months and years they face multiple gruelling surguries. But

:33:10.:33:20.
:33:20.:33:20.

the care they get here is so u Neil Kinnock there is -- surgeries, but

:33:20.:33:28.

the care they get here is so unique, there is a huge waiting list. Set

:33:28.:33:35.

up in to deal with the patients of conflict in Iraq, it was a

:33:35.:33:40.

temporary unit. But with increasing conflicts, the hospital had to

:33:40.:33:47.

expand, with an increase in 46%. It has taken in patients from Libya,

:33:47.:33:51.

Yemen, Iraq and Syria, and Egyptians. Amongst the Syrians,

:33:51.:33:55.

desperate to keep in touch with news from home, there is a special

:33:55.:33:58.

camaraderie. Almost all are afraid to be identified, because of

:33:58.:34:08.
:34:08.:34:09.

concerns for relatives left behind. Not Abu Hassan, he managed to get

:34:09.:34:13.

both himself and his family out. A woodcutter from Deraa, he says he

:34:13.:34:17.

was politicised when he saw the Al- Assad's response to peaceful

:34:17.:34:24.

demonstrations on the streets. He began to mobilise young

:34:24.:34:28.

protestors, and witnessed and filmed, as demonstrators were

:34:28.:34:38.
:34:38.:34:38.

gunned down. Soon he was rounded up, interrogated and tortured.

:34:38.:34:42.

TRANSLATION: I was handcuffed and blindfolded, and the interrogator

:34:42.:34:47.

told me he would bring Syrian television in, and I must tell them

:34:47.:34:51.

I smuggled weapons from abroad, and I regreted it. I said I cannot do

:34:51.:34:55.

that. He said he knew how to make me confess, then he put burning

:34:55.:35:00.

coals on my feet, and poured a kettle of boiling water over my

:35:00.:35:05.

legs. But he knows he's lucky, only Syria's walking wounded are making

:35:05.:35:15.
:35:15.:35:21.

it here. Saed had to be operated on three times, but in the end the 27-

:35:21.:35:26.

year-old's leg had to be amputated. He says he was shot while helping

:35:26.:35:31.

wounded protestors, shot by snipers. He hid, sleepless with pain on a

:35:31.:35:37.

farm for seven months, before being smuggled here for treatment. Today

:35:37.:35:41.

the doctor is preparing Saed's stump for a prothesis. I can't

:35:41.:35:45.

sleep for one week before an amputation, and one week after the

:35:45.:35:51.

amputation. Amputation for me, or for any surgeon is like failure.

:35:51.:35:56.

It is like a failure. But times it is the saving measure, the saving

:35:56.:36:06.
:36:06.:36:06.

of life sometimes. For months on end, this hotel is a

:36:06.:36:15.

home from home for the patients. Some will have to return year after

:36:15.:36:24.

year. Amid the pain, hope and expectation. But most of all, this

:36:24.:36:31.

is a place of waiting, and for many, progress is slow.

:36:31.:36:36.

This boy was six years old when a bomb went off at a family funeral

:36:36.:36:41.

in Baghdad. He lost several relatives, as well as his left leg,

:36:41.:36:46.

left eye, and half of his face. Already he's had 25 operations. To

:36:47.:36:52.

help rebuild his mouth, muscle was transferred from his back.

:36:52.:36:56.

Complicated surgery rarely perform anywhere else in the world.

:36:56.:37:00.

One in ten of the project's patients at the moment are children.

:37:00.:37:03.

And in room 502, they have just opened a makeshift school. The

:37:03.:37:08.

teacher told us the children are so keen, that they pile into class the

:37:08.:37:13.

moment she arrives at the hotel. Most of them now are Iraqis, but

:37:13.:37:16.

MSF is readying itself for an influx from Miria in the months

:37:16.:37:20.

ahead. What strikes you most about these

:37:21.:37:26.

children is the complete absence of self-pity. This 12-year-old is from

:37:26.:37:30.

Fallujah. TRANSLATION: I have been here for a

:37:30.:37:37.

year. This bit of my face used to be like the other side. I have had

:37:37.:37:42.

two operations so far. How is it being here, is it difficult to be

:37:42.:37:52.
:37:52.:37:57.

away from home? It's good? In what way? You like the weather. You like

:37:57.:38:04.

the calm and the fact that there are no explosions. Hussein is

:38:04.:38:09.

waiting for a third skin graft. He showed me how he was burned in a

:38:09.:38:19.
:38:19.:38:34.

bomb. He says it hurts, but only at night. The patients living behind

:38:34.:38:38.

these doors all have very visible injuries, but hidden away is the

:38:38.:38:43.

mental pain, of men who have been rejected for work because of their

:38:43.:38:47.

disfigurement. Of women so badly maimed they have been divorced by

:38:47.:38:51.

their husbands, and children, ostracised at school because of

:38:51.:38:54.

their disfigurement. And the psychological wounds are extremely

:38:54.:39:00.

hard to treat. This man's deepest wounds cannot be

:39:00.:39:04.

seen. On day out with his family, the young Yemeny's car was hit by a

:39:04.:39:09.

rocket, killing his wife and two- year-old son, in front of him.

:39:09.:39:12.

Tomorrow he will have complex surgery to transplant a bone from

:39:12.:39:22.

his leg to his arm, and staff are anxious about him. He has attempted

:39:22.:39:28.

suicide three times. TRANSLATION: Since it happened I have known no

:39:28.:39:34.

peace, none at all, I'm in constant pain. I had four operations in

:39:34.:39:38.

Yemen, each one made things worse. Here I love the doctors, they are

:39:38.:39:44.

like a family to me, anything we need, they give us.

:39:44.:39:49.

It is Wednesday afternoon, and they have opened up the hotel ballroom.

:39:49.:39:53.

Every few months staff put on a special party for the patients, to

:39:53.:40:01.

try to lift their spirits. Time to keep a close eye, this woman is

:40:01.:40:05.

responsible for the patients psychological welfare. Do you worry

:40:05.:40:12.

about their physical or mental injuries more? The mental injury,

:40:12.:40:20.

the physical will be treated. It is the last day of the week, and

:40:20.:40:28.

the doctor has patients to check up on. Three days after surgery,

:40:28.:40:33.

wassan is recovering slowly. Her mother is concerned that she

:40:33.:40:38.

has lost weight. That is her on the left, taken before the explosion. A

:40:38.:40:43.

young women now reduced by her injury to childlike dependency. But

:40:43.:40:51.

all are relieved that the first operation has gone to plan. Saed is

:40:51.:40:55.

busy rebuilding his strength. As soon as he gets his new leg and can

:40:55.:41:01.

walk on it, he has told me he's going straight back to Syria. The

:41:01.:41:05.

doctor is gathering his strength for a new influx of patients.

:41:05.:41:13.

hardest part is to see the patient on arrival. When he arrives to me,

:41:13.:41:17.

especially children. I have my habit, when I see a child with a

:41:17.:41:21.

fracture of the limbs o a problem with the limbs, when they arrive to

:41:21.:41:26.

me, I say you will walk for me on both limbs, with a football, I will

:41:26.:41:36.
:41:36.:41:40.

bring the football. If you didn't exist or this

:41:40.:41:45.

hospital didn't exist, what would happen to them? It would be

:41:45.:41:55.
:41:55.:41:56.

catastrophic for them. Catastrophic. Now, one of the greatest voices in

:41:56.:42:03.

the world was heard in London earlier this evening, Jessie Norman,

:42:03.:42:06.

the great American soprano, gave her first concert in a decade on

:42:06.:42:13.

the South Bank. A programme from Gershwin and Bernstein, to Rodgers

:42:13.:42:18.

and Hammerstein. She rarely gives interviews, but she has given one

:42:18.:42:28.
:42:28.:42:33.

to Steve Smith. Jessye Norman is a diva, in a good

:42:33.:42:38.

way, and husband been one for 40 years, if you think she has a great

:42:38.:42:41.

voice, you are quite wrong, unusually she has three great

:42:41.:42:47.

voices. I have the great privilege of

:42:47.:42:54.

having a lot of low notes, a very strong middle voice, and high notes

:42:54.:42:57.

as well. Do you ever ring people up in different voices on the phone

:42:57.:43:00.

and catch them out, does that work? I have never tried it. Most people

:43:01.:43:04.

recognise me on the phone, I don't think I would get away with it at

:43:04.:43:14.
:43:14.:43:19.

all, I hadn't thought of it. Miss Norman was born and raised in

:43:19.:43:23.

what is then the segregated south of the United States. Long before

:43:23.:43:27.

she performed the classical repertoire, other styles claimed

:43:27.:43:33.

her. Growing up I listened to a great deal of gospel music. I love

:43:34.:43:39.

jazz, I love singing the American song book, these things that I will

:43:39.:43:47.

be singing. Cole Porter a Gershwin? Rodgers and hammer stein, Gershwin.

:43:47.:43:51.

This is all beautiful music s I love it T I want other people who

:43:52.:43:57.

are stuck, as it were, in what we call the traditional classical

:43:57.:44:02.

canon, I would encourage them to allow those walls to fall down, and

:44:02.:44:06.

to allow themselves to listen to a song of George Gershwin and be

:44:06.:44:16.
:44:16.:44:22.

happy about it. # It is very clear

:44:22.:44:28.

# Our love is here to stay. Is there still snobbery in the

:44:28.:44:33.

classical world? Oh yes, we are very snobbish, we think if it

:44:33.:44:37.

hadn't been written, particularly and preferably in the 19th century,

:44:37.:44:42.

somewhere in Europe, it can't possibly be as good. That is simply

:44:42.:44:48.

a mistake. Jessye Norman backs Barack Obama

:44:48.:44:53.

for a second term, and not just because he gave her a medal. She

:44:53.:44:57.

supports him over gay marriage. have never understood why it

:44:57.:45:02.

bothers other people so. If you're in a committed hetrosexual

:45:02.:45:07.

relationship, why does it bother you that the people across the road

:45:07.:45:13.

are the same-sex and happy together. Wouldn't you just want to celebrate

:45:13.:45:23.
:45:23.:45:24.

love in any form that it can occur in this challenging world of our's?

:45:24.:45:29.

Religion plays a great big part, particularly conservative religion.

:45:29.:45:36.

I don't know how conserve ive and religion goes together, since any

:45:36.:45:43.

religion is meant to be about love, and understanding, and acceptance.

:45:43.:45:53.
:45:53.:45:53.

So conservative and religion is an objectiony moron for me.

:45:53.:46:01.

Oxymoron for me. You're from the same town as James

:46:01.:46:07.

Brown? I saw him in the lobby, and I thought should I go and say hello,

:46:07.:46:13.

or walk by and keep smiling. He turned around and he said, Jess,

:46:13.:46:19.

how marvellous to see you. And so I said, I was going to say hello, but

:46:19.:46:24.

I certainly could imagine that you had any idea. He said he knows all

:46:24.:46:30.

of his homegirls. I wouldn't do my job properly, and usually that is

:46:30.:46:35.

how it is, if I didn't say, could you please sing a little for us.

:46:35.:46:40.

# Falling in love with love # Is falling for make-believe

:46:40.:46:46.

Falling in love with love # Is playing the fool

:46:46.:46:52.

Good, would you say that you are a diva? One thinks of a diva as being

:46:52.:46:58.

a person who is rather difficult to be around, and difficult to be with,

:46:58.:47:05.

forgive the dangle participles, and capricious and generally rather bad

:47:05.:47:14.

company, and I'm not like that. If a diva is a person that takes

:47:14.:47:20.

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