14/11/2012 Newsnight


14/11/2012

In-depth investigation and analysis of the stories behind the day's headlines, with Gavin Esler.


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Tonight, Israel saw him as a top terrorist, today killed the Hamas

:00:13.:00:19.

military leader. After further strikes in Gaza tonight, civilian

:00:19.:00:22.

deaths and blood curdling promises of retaliation, could the

:00:22.:00:25.

assassination of Ahmed al-Jabari, lead to an even more bloody

:00:25.:00:29.

conflict in the Middle East. Also tonight, strikes across Europe,

:00:29.:00:32.

hundreds of thousands of workers take to the streets to protest at

:00:32.:00:36.

austerity and cuts. In Spain, rubber bullets and

:00:36.:00:40.

teargas, fired at protestors in central Madrid, temperatures

:00:40.:00:45.

inflamed by the evictions of those losing their homes. Here at home, a

:00:45.:00:50.

ray of sunshine, as unemployment is down again, sag flaigs might be

:00:50.:00:54.

coming back. Stagnant growth, -- stagflation, might be coming back,

:00:54.:01:00.

stag grant growth and higher inflation. We will discuss this

:01:00.:01:03.

with economist, protestors and politician. The soldier, the

:01:03.:01:08.

secrets and the sex scandal the, all America is talking about,

:01:08.:01:14.

General Petraeus pet talks to Newsnight. I'm under no illusion

:01:14.:01:19.

that he knew it was the right decision that he personally had to

:01:19.:01:23.

take. Tomorrow sees a by-election in a seat, which for 30 years has

:01:23.:01:28.

predicted the British political weather, Corby. How do you go about

:01:28.:01:32.

replacing Louise Mensch. You are not going to start writing chicklit

:01:32.:01:40.

books, Have I Got News To You? No connection to heavy rock bands?

:01:40.:01:46.

20 years older than Louise, and I wouldn't know what to do with a

:01:46.:01:50.

rock star if I found one. Good evening. There is no doubt

:01:50.:01:52.

that Ahmed al-Jabari was a big player in the struggle between the

:01:52.:01:58.

Palestinians and Israel. He was the military commander of Hamas in Gaza.

:01:58.:02:05.

A man described bit Israeli Defence Forces as someone with blood on his

:02:05.:02:12.

hands the IDF assassinated him, and strikes across the country have

:02:12.:02:17.

followed. Israel has said only the start of an operation to hit

:02:17.:02:19.

militant groups. NATO strikes have been launched tonight. In Egypt,

:02:19.:02:26.

the first country to sign a peace treaty with Israel, and now under

:02:26.:02:31.

the leadership of the Muslim Brotherhood. Mohamed Morsi

:02:31.:02:33.

immediately recalled Cairo's ambassador. What does the killing

:02:33.:02:38.

of Ahmed al-Jabari tell us about the new and explosive geography of

:02:38.:02:44.

the Israeli-Palestinian conflict. What happened here? I have to show

:02:44.:02:49.

you rather graphic images. This is the scene in Gaza City today,

:02:50.:02:56.

immediately after the destruction by Israel. This is the Carrying

:02:56.:03:00.

Ahmed al-Jabari, the Hamas military chief, and one other Hamas official,

:03:00.:03:04.

they were killed. As far as Israel is concerned this is a highly

:03:04.:03:07.

successful operation against a man responsible for many missile

:03:07.:03:12.

attacks against Israel. Also responsible for Hamas's links with

:03:12.:03:22.
:03:22.:03:24.

the main military backer, Hamas. The Israeli army res -- released

:03:24.:03:29.

this film which shows the car being tracked and hit. His body was taken

:03:29.:03:34.

to hospital, followed soon afterby some very young casualties of other

:03:34.:03:38.

naval and air strikes. At the end of the day, Gaza's health ministry

:03:38.:03:42.

said that a further nine people had been killed, at least in various

:03:42.:03:45.

strikes. But, of course, we expect that number to rise.

:03:45.:03:50.

What do you make of the timing of this? Well, Israel's killed many

:03:50.:03:54.

Hamas military commanders over the years, including one senior

:03:54.:03:59.

commander, who was suffocated in a hotel in Dubai two years ago. But,

:03:59.:04:04.

this is the most senior target since 2004. There is no doubt, I

:04:04.:04:09.

think, this is linked to a rather sudden upsurge in missile attacks

:04:10.:04:15.

from Gaza into Israel, particularly in the last couple of weeks. Indeed

:04:15.:04:19.

110 rocket attacks since Saturday. What the Prime Minister, Binyamin

:04:19.:04:24.

Nethanyahu, said, is we have to give a clear signal against Hamas.

:04:24.:04:31.

And also in other strikes, the main aim was to try to reduce or get rid

:04:31.:04:36.

of Hamas's stockpile of rockets. Those are the Iranian rockets that

:04:36.:04:40.

can go rather further and target main population centres in Israel.

:04:40.:04:45.

There has been a lot of rhetoric after this attack today. Does the

:04:45.:04:50.

conflict seem, now, likely to escalate? What Mr Nethanyahu said

:04:50.:04:54.

today was that if necessary the operation, Israelis operation

:04:54.:04:59.

against Hamas, would be broadened. I spoke to the former head of

:04:59.:05:05.

planning in the Israeli Defence Force, Giora Ireland, and asked

:05:05.:05:09.

what that might mean. He said, this is only possible, he said it would

:05:09.:05:14.

be logical to extend the attack, not only to strictly military Hamas

:05:14.:05:18.

tarts, but also to Hamas infrastructure, to police stations,

:05:18.:05:23.

to bridges, as a way of punishing Hamas. Hamas's reaction to this was

:05:23.:05:28.

very predictable. It talked about opening the gates of hell against

:05:28.:05:35.

Israel. And already today it has been reported that intercepted by

:05:35.:05:40.

Israel's shield there have already been 13 Hamas rockets successfully

:05:40.:05:43.

intercepted. I suppose what is also different is the whole political

:05:43.:05:49.

context now, the Middle East has changed. Mohamed Morsi in Cairo,

:05:49.:05:52.

Muslim Brotherhood, his political party, were saying Israel has to

:05:52.:05:56.

get its head round the fact that things have changed? Absolutely,

:05:56.:06:00.

this is a completely new landscape, this is the first conflict of this

:06:00.:06:04.

kind between Hamas and Israel, since the Arab Spring, and since

:06:04.:06:08.

the election of a Muslim Brotherhood Government in Egypt, by

:06:08.:06:13.

ideolgical is at one with Hamas. Egypt very, very strongly of course,

:06:13.:06:18.

has condemned this attack. I think it will remain principally at the

:06:18.:06:22.

level of rhetoric. Because even the new Government in Egypt has

:06:22.:06:25.

indicated very clearly it is committed to the peace treaty with

:06:25.:06:31.

Israel and so on. The main danger is, Israel has very important

:06:31.:06:36.

security co-operation with Egypt in the Sinai Peninsula, where we have

:06:36.:06:39.

seen a big upsurge in terrorism, since the Egyptian revolution. For

:06:40.:06:43.

both sides, they would really suffer if that co-operation was

:06:43.:06:48.

curtailed. The other part of this political context is that within

:06:48.:06:52.

Israel itself, where we are in a run up to an election, and as you

:06:52.:06:55.

well know in the run up to the election the Prime Minister tends

:06:55.:06:59.

to want to look tough on security? Certainly, because of the missile

:06:59.:07:03.

attacks on Israeli towns and village, there has been even more

:07:03.:07:07.

annual a big, big demand in Israel for action against Hamas, and

:07:07.:07:12.

certainly that is what Binyamin Nethanyahu was responding to. Right

:07:12.:07:17.

across the boar, in Israel, at -- board, in Israel, at least to begin

:07:18.:07:21.

with, this will be welcomed. Certainly it will do Mr Nethanyahu

:07:21.:07:27.

absolutely no harm at all in the elections in January.

:07:27.:07:33.

Daniel Ayalon, the Israeli deputy minister joins me now. What do you

:07:33.:07:38.

think that Israel has achieved by killing Ahmed al-Jabari? We have to

:07:38.:07:45.

remember that Ahmed al-Jabari was the Bin Laden of Hamas. He has many,

:07:45.:07:51.

many innocent lives on his head. The fact that he was overseeing the

:07:51.:07:57.

new attacks on Israel for the last two week, by actually taking him it

:07:57.:08:02.

is not only self-defence, it is a classic self-defence, and hopefully

:08:02.:08:11.

a message and prevention and preefplive -- pre-emptiveness for

:08:11.:08:17.

the future. There is no way to reason with the terrorists, but by

:08:17.:08:20.

defending yourself in a way where they won't be able to operate again.

:08:20.:08:27.

You have in the past killed Hamas founder Yassin and his successor,

:08:27.:08:34.

you have killed previous military commanders, and while you have

:08:34.:08:37.

successively removed one enemy of Israel today, you have probably

:08:37.:08:41.

created a whole lot of other one. There will be a successor to this

:08:41.:08:50.

man? Well, I would beg to differ. We did what we had to do in killing

:08:50.:09:00.
:09:00.:09:03.

the head of terror. We did achieve deterrence. We gave Gaza entirely

:09:03.:09:07.

to the Palestinians, we left Gaza all together in 2005, seven years

:09:07.:09:14.

ago. Since then, instead of having a responsible part, taking

:09:14.:09:19.

responsibility and managing the lives in Gaza and negotiating with

:09:19.:09:26.

us on peace and reconciliation, we saw, actually, that ham maz was

:09:26.:09:30.

emboldened, getting -- Hamas was emboldened getting an Arsenal of

:09:30.:09:34.

terror, long range missiles, and terrorising more than one million

:09:34.:09:38.

Israeli civilians in the population on the southern border and southern

:09:38.:09:44.

parts of Israel. What we see now. Picking up on the point of

:09:44.:09:47.

civilians, there were civilians killed on the other side today,

:09:47.:09:52.

would you like to apologise for those needless deaths? Anybody

:09:52.:09:58.

innocent civilian who gets killed is deplorable, and I would

:09:58.:10:04.

apologise for anything. We would not like to do that. But, I would

:10:04.:10:08.

say that the responsibility for the death and the killing is of the

:10:08.:10:13.

Hamas. Because what do they do? Not only do they target the civilian

:10:13.:10:16.

population in Israel, but they plant themselves, implant

:10:16.:10:20.

themselves in the midst of the civilian population in Gaza. In

:10:20.:10:23.

fact, they use the Gaza population as a human shield for their hidious

:10:23.:10:28.

attacks. We will leave it there.

:10:28.:10:31.

Workers and students in more than 20 countries across the European

:10:31.:10:36.

Union took part in strikes and protests today, to show their

:10:36.:10:39.

disgust at cuts and austerity measures. As you might expect, the

:10:39.:10:42.

largest protests were in those Mediterranean countries where the

:10:42.:10:47.

budget axe is making the deepest impact. In the new Sick Man of

:10:47.:10:51.

Europe, Spain has an even more emotional issue, some people are

:10:51.:10:56.

being forced out of their homes in a wave of prepossessions and

:10:56.:10:59.

evictions. We report on -- repossessions and evictions. We

:10:59.:11:09.
:11:09.:11:09.

report on the human cost of the economic mess.

:11:09.:11:14.

Again they came, from the factories, from the public sector, from their

:11:14.:11:18.

homes. Some who marched in tonight's demonstration, were from

:11:18.:11:22.

Spain's nearly six million unemployed. Some were pensioners.

:11:22.:11:26.

This is the second general strike in Spain this year. They wanted to

:11:26.:11:30.

protest against the Government's austerity, and to show their anger

:11:30.:11:38.

at its effect on ordinary Spanish people. Here, in a suburb of Madrid

:11:38.:11:42.

this morning, one family looked set to suffer the most extreme

:11:42.:11:46.

consequence, losing their home. Inside this block were three

:11:46.:11:50.

generations, six people on the brink of being evicted. The police

:11:50.:11:54.

came, the bailiffs were there, protestors learned of it and

:11:54.:11:59.

gathered. Earlier this week, Spanish banks had said the

:11:59.:12:06.

evictions of the most needy people would be suspended. They had come

:12:06.:12:11.

under pressure after two suicides linked to evictions and an outcry.

:12:11.:12:15.

Today, perhaps because of the general strike, they haven't

:12:15.:12:20.

arrived, so it is almost certain, although we will have to wait for a

:12:20.:12:27.

while, that this eviction has not, will not be carried out. Then,

:12:27.:12:33.

celebration. The official responsible for the eviction had

:12:33.:12:40.

not turned up. The family were immensely relieved. TRANSLATION:

:12:40.:12:47.

I'm really happy, she told me. And I'm nervous. But when I asked her

:12:47.:12:57.
:12:57.:13:00.

what happens next? She had no idea? The bank could go back to court and

:13:00.:13:05.

get a new eviction date. She's the only wage earner in her family now,

:13:05.:13:10.

a cleaner, she can't pay the mortgage of 1300 euro every month.

:13:11.:13:13.

They are celebrating a small victory in this Madrid

:13:13.:13:17.

neighbourhood, but nobody knows what will happen next, not even the

:13:17.:13:21.

lady herself, and nobody knows either whether this is to be the

:13:21.:13:24.

pattern going forward, fewer evictions, fewer repossessions. If

:13:24.:13:28.

so, what will be the consequences of that for Spanish banks, and for

:13:28.:13:33.

Spain itself. Spain has to make its mortgage law

:13:33.:13:37.

more lenient, to bring it into line with the rest of the EU. If there

:13:37.:13:41.

is a freeze on evictions, some say, that could have an impact on the

:13:41.:13:45.

banks. It will surely have an impact, because it will increase

:13:45.:13:49.

the debt of the banks. But I don't think that's the worst problem the

:13:49.:13:53.

banks have. So it will be just an added problem, and could be

:13:53.:13:59.

properly solved. We then have to think that going on with the

:13:59.:14:02.

evictions will also cause serious problems, not just in human terms,

:14:02.:14:06.

or in social terms, but also in economic termsment we are talking

:14:06.:14:10.

about now those evictions we are seeing now is people who lost their

:14:10.:14:15.

jobs in 2009, because the law is very slow. This is just a gathering

:14:15.:14:20.

storm, we will see it worse in the coming years.

:14:20.:14:25.

Beatrice is a nurse, supporting today's strike, taking part in

:14:25.:14:30.

tonight's march. In 10% of Spanish families now, both parents are out

:14:30.:14:37.

of work. Even those with one income worry. Beatrice has finished her

:14:37.:14:42.

temporary contract, her husband works in the often unpredictable

:14:42.:14:49.

building industry. They are worried about the future. TRANSLATION:

:14:49.:14:57.

any point you could lose your job, we could maybe stay afloat on

:14:57.:15:00.

unemployment benefit and savings for a year at most. There will be a

:15:00.:15:02.

moment where we have to choose between paying the mortgage and

:15:02.:15:08.

eating, obviously I have a daughter and I have to feed her.

:15:08.:15:11.

TRANSLATION: It is a difficult situation. The Government are

:15:11.:15:16.

making it tougher for us, with two salaries, you really struggle to

:15:16.:15:20.

pay your bills every month. If one of the salaries goes, it is even

:15:20.:15:26.

worse. Unions claim the turnout today and

:15:26.:15:29.

tonight has been strong, police estimates were far more modest, the

:15:29.:15:33.

night is not over though. These demonstrations have been

:15:33.:15:38.

taking place across the country, not just in Madrid, and police say

:15:38.:15:42.

there have been over 100 arrests during the day. It is quite late

:15:42.:15:46.

now in the capital, but some people still have an appetite for protest.

:15:46.:15:52.

The main rally is over, they are on their way to another demonstration.

:15:52.:15:56.

And their mood was defiant. They will do it again, this English

:15:56.:16:01.

teacher told me. We have to go to the streets, we have to be a group

:16:01.:16:07.

of people, not people individually, you know. We have to fight for our

:16:07.:16:13.

rights. The Government says it will not change its policies. And the

:16:13.:16:18.

country's current economic position leaves little room for manoeuvre.

:16:18.:16:22.

More strikes, more protests, seem certain.

:16:22.:16:28.

We have a PhD student and supporter of the demonstrations today,

:16:28.:16:32.

Mariana Mazzucato is professor of economics at Sussex university, and

:16:32.:16:36.

Jose Maria Beneyto is a spokesman for Spain's People's Party on

:16:36.:16:38.

Spanish affairs. Was this another day of

:16:38.:16:43.

demonstration in Spain, or have things changed? No, it wasn't just

:16:43.:16:49.

a demonstration. First, it was the largest cord flated strike and

:16:49.:16:52.

protest movement -- co-ordinated strike Europe has ever seen. It

:16:52.:16:57.

shows the nature of change in protests. At the Spanish level, it

:16:57.:17:02.

was the outcome of an increasing social unrest that has been

:17:02.:17:05.

developing over the last year as people get to live the consequences

:17:05.:17:12.

of the socialisation of the financial crisis. Evictions is that

:17:12.:17:18.

part of it, you are losing your home, 350,000 people since 2008?

:17:18.:17:25.

People are getting evicted from their own home by the very same

:17:25.:17:29.

banks the taxes helped to bail out. The Government have been

:17:29.:17:32.

controlling the interests of the financial sector and not the

:17:32.:17:35.

interests of those they are meant to represent. You have an economic

:17:35.:17:39.

crisis, you have a social crisis, now perhaps you have a public order

:17:39.:17:46.

crisis? Well, I wouldn't dramatise too much the situation. Because, of

:17:46.:17:53.

course, you know, the right to strike is granted by the

:17:53.:17:57.

constitution, there were protest and demonstrations today, they were

:17:57.:18:03.

very peaceful. There were also -- they were also limit the in their

:18:03.:18:08.

skom. There has been an -- limited in their scope, there has also been

:18:08.:18:11.

an expression of the people's feelings. But I wouldn't dramatise

:18:11.:18:16.

it and say it is a general unrest in the country. When you have a

:18:16.:18:20.

third of a million people over the past four years losing their homes.

:18:20.:18:23.

You have somebody who apparently committed suicide as a result of

:18:23.:18:29.

being evicted, things have changed in Spain? The person who committed

:18:29.:18:34.

suicide was linked to an eviction, they were not directly evicted from

:18:34.:18:41.

the house. Of course the situation is not easy. We have, as a

:18:41.:18:48.

Government, we are in a position negotiated with a moratorium for

:18:48.:18:52.

the extreme cases of need. We are fully aware of the situation of a

:18:52.:18:57.

number of the Spanish citizens. Of course, you know, the course of

:18:57.:19:03.

fiscal consolidation is not an easy path, but I don't think we have

:19:03.:19:07.

another one. We need growth and jobs, but we need, particularly,

:19:07.:19:13.

first, to tackle the problem of too much public expenditure of the past.

:19:13.:19:18.

The years before. Let me bring in Mariana Mazzucato here. It's tough,

:19:18.:19:22.

it's hard, is Spain on the right course, because, basically, in

:19:22.:19:26.

slightly different ways, all of Europe is doing broadly the same

:19:26.:19:30.

thing? I think it is absolutely on the wrong course. Because basically

:19:30.:19:33.

what we are seeing are these massive cut, which are not creating

:19:33.:19:37.

any gain. It is all pain with no gain. This is why we have these

:19:37.:19:40.

demonstrations. So, in fact, Spain was a country that before the

:19:40.:19:45.

crisis had quite a low deficit, 3- 4%, it is very hard to say that

:19:45.:19:48.

Spain's problems today are because it was spending too much. Perhaps

:19:48.:19:51.

it was spending in the wrong place, but for sure it was not the public

:19:51.:19:55.

debt that was the problem. It was the private. Instead what we are

:19:55.:19:59.

seeing is public sector wages are come down, public services are

:19:59.:20:02.

being put, and this, of course, is hurting demand, as well as general

:20:02.:20:06.

confidence in the economy. We don't have any investment. And we don't

:20:06.:20:09.

really see the end, it will get worse. It will be a 50%

:20:09.:20:14.

unemployment amongst the young. 25% for the whole economy, and this is

:20:14.:20:20.

only getting worse. You are going a way of grief, in other words, which

:20:20.:20:23.

is you are taking the pain, but the gains are not there? It has nothing

:20:23.:20:30.

to do with the situation in Greece. I do not agree with what has just

:20:30.:20:36.

been said. If you look into the figures, now Spain is having

:20:36.:20:42.

positive data. We have increased enormously our exports,

:20:42.:20:46.

productivity is increasing. It is not that we are in the path of

:20:46.:20:50.

Greece. It is a completely different situation. What do you

:20:50.:20:54.

think the Government should do, then, as suggested, broadly,

:20:54.:20:57.

European Governments are practising austerity, one end to another, they

:20:57.:21:05.

all seem to think it is working, in some ways, you have just heard the

:21:05.:21:11.

argument for it? The situation is not working, and the Government is

:21:11.:21:15.

hiding behind this narrative. There are plenty of other options to take,

:21:16.:21:20.

they have chosen not to. instance? There has been

:21:20.:21:25.

conversations on a whole range of measure, including taxes on

:21:25.:21:29.

financial transactions, abolition of tax havens o at least

:21:29.:21:34.

prohibiting to give Government contracts to those companies in the

:21:34.:21:37.

tax havens, and not putting the bad on the most vulnerable. Many things

:21:37.:21:41.

have been suggested, the Government is choosing to ignore them. What

:21:41.:21:45.

would you be the alternative, broadly is that what was just

:21:45.:21:49.

advocated? I would support those measure, with very interesting in

:21:49.:21:59.
:21:59.:22:01.

Spain, and it differentiatates it from Greece. -- grease. They were

:22:01.:22:04.

lead investors in wind and solar energy, that has all gone down here

:22:04.:22:09.

since the crycy is, those kinds of investments in new technologies,

:22:09.:22:12.

was positioning Spain to become what Germany is today. The real, I

:22:12.:22:20.

think, problem right now, is unlike what we saw today, which is a co-

:22:20.:22:26.

ordinated action by the European Trade Union's Confederation. We

:22:26.:22:30.

don't have the same level of co- ordination in the European

:22:30.:22:32.

Commission, in what all the countries should be doing to become

:22:33.:22:37.

competitive like Germany. Germany is investing a lot in all sorts of

:22:37.:22:40.

things, they have patient capital through a state investment bank, by

:22:40.:22:44.

is funnelling resources directly to the companies who need it, as

:22:44.:22:48.

opposed to always going indirectly via private banks, which is not

:22:48.:22:52.

working. What do you fear might happen now, if this is the route

:22:52.:22:57.

that Spain is going? Government's seriously doing its

:22:57.:23:02.

best to sink the country as much as it can. All the measures they have

:23:02.:23:05.

taken have produced this horrible human crisis. Now it is not a

:23:05.:23:10.

financial crisis, it was a financial crisis had a has turned

:23:10.:23:19.

into a social and human crisis. have produced a human crisis?

:23:19.:23:22.

is certainly not the case. The human crisis comes from the fact

:23:22.:23:28.

that we had a deficit of 9.4% last year. With a the previous

:23:28.:23:31.

Government. -- with the previous Government. Our Government was

:23:31.:23:35.

putting public expenditure to the top in Spanish history. This was

:23:35.:23:41.

the real problem. You cannot find, as a country, with a 9.4% deficit

:23:41.:23:45.

every year. This is the real issue that we have to tackle, first, and

:23:45.:23:50.

then, of course, you need growth, and you need jobs. You need

:23:50.:23:55.

measures in order to improve those two points as well. We're running

:23:55.:23:56.

out of time, thank you all very much.

:23:57.:24:04.

In the 1960s, the Conservative politician, Iain MacLeod coined the

:24:04.:24:07.

phrase "stagflation" to describe low growth and rising inflation.

:24:07.:24:09.

Today the Governor of the Bank of England talked of a long and

:24:09.:24:12.

winding road to recovery, in which low growth is likely, and inflation

:24:13.:24:17.

is a danger. But the latest figures continue to show one bright spot,

:24:17.:24:22.

unemployment continues to fall. Not quite the old stagflation of the

:24:22.:24:26.

60s. Economist, Howard Archer, has coined a new definition of what is

:24:26.:24:30.

ahead, perhaps a DIRE decade, Disappointing Inflation, Rotten

:24:31.:24:35.

Expansion. We have been trying to figure out where growth might come

:24:35.:24:45.
:24:45.:24:54.

from, Gerard Lyons reports. These people are in fashion, they

:24:54.:24:57.

call themselves the Bloomberg of the fashion sector. They are a

:24:57.:25:01.

dotcom that started up three years ago and is now hiring one new

:25:01.:25:04.

employee a month. There are two places in a month where you could

:25:04.:25:08.

do a business like our's, either you New York or London, we looked

:25:08.:25:12.

at New York or London, it seemed like the talent pools were fairly

:25:12.:25:17.

equivalent. It seemed like the friction for doing business of

:25:17.:25:20.

maybe a tiny bit lower in New York, but getting much better in London.

:25:21.:25:24.

Also, critically, in the fashion industry, fashion moves faster in

:25:24.:25:27.

London as well. It really seemed like London was the right place to

:25:27.:25:34.

set up. There are already 300 start-ups in

:25:34.:25:40.

tech city, nicknamed "sill conround about", and many wider in the East

:25:40.:25:45.

London area. They could be the answer to the question, why is the

:25:45.:25:52.

UK economy so weak, yet creating so many jobs. Unemployment has fallen

:25:52.:25:57.

to 2.51 million people, or 7.8%, signal as robust labour market. The

:25:57.:26:02.

number of people collecting jobseeker's allowance rose to 1.58

:26:02.:26:07.

million. The number of time work stands at a record of 8.1 million.

:26:07.:26:11.

Temporary workers are also near record highs of 1.6 million. This

:26:11.:26:15.

suggests the figure for those underemployed could be close to 10%

:26:15.:26:20.

of the work force. I don't think one would say that the data release

:26:20.:26:26.

this morning were weak. Some signs in the claimant count of a small

:26:26.:26:33.

increase, that may -- maybe it is beginning to move. There were still

:26:33.:26:38.

falls in unemployment, a rise in employment, a big increase in total

:26:38.:26:42.

hours work. It is still a strong labour market. There is very little

:26:42.:26:47.

unemployment in tech city, business is booming and it is creating a

:26:47.:26:51.

virtueous circle, meaning its success attracts the best software

:26:51.:26:55.

developers in Europe. They are not paid peanuts, most of the staff are

:26:55.:27:02.

earned over �40,000 u and the average age is over 28. There are

:27:02.:27:05.

hundreds of families barely surviving on the minimum wage.

:27:05.:27:11.

Unemployment in some neighbourhoods is 40%. Campaign groups like London

:27:11.:27:15.

Citizens, are hoping to place a thousand less well off people with

:27:15.:27:19.

technology firms nearby. It is really hard to have two Londons in

:27:19.:27:22.

such a small area, on the one side you have the rich, the other side

:27:22.:27:27.

you have the really poor. You can see where the money is. And how

:27:27.:27:30.

people just throw away money, literally. And then I'm coming to

:27:30.:27:34.

work and working with families that are really struggling. There is

:27:35.:27:39.

families that do not have the money, at all, to access to feed their

:27:39.:27:43.

children. I'm having to find food vouchers for them. So that at least

:27:43.:27:47.

Friday, for the rest of the weekend, they have got food to eat. That's

:27:47.:27:54.

really hard to see. It may not be very aesthetic, but silicone round

:27:54.:27:58.

about and its people may yet to prove to be a thing of great beauty.

:27:58.:28:01.

An ecosystem of hundreds of start- ups, employing thousands of well-

:28:01.:28:06.

paid people. It happens just as the banking sector, long an engine of

:28:06.:28:09.

growth, appears to be entering a period of irreversible decline.

:28:10.:28:13.

The financial sector accounts for 10% of the UK economy, but few

:28:13.:28:17.

people believe it will remain that high in the coming years. An

:28:17.:28:20.

estimated 250,000 people are directly employed by banks and

:28:20.:28:27.

insurers in the City at the moment. Down from its precrisis peak of

:28:27.:28:32.

2350,000. With all major banks cutting staff, especially in

:28:32.:28:36.

investment banking, staff numbers will be probably at a 20-year low

:28:36.:28:42.

by the end of next year. The hope is that places like the Google

:28:42.:28:48.

Campus, will create a shrew of self-employed people who hire

:28:48.:28:51.

themselves, and others in cafe-like environments like this. What the

:28:51.:28:56.

Government is doing right is championing Tech City and the tech

:28:56.:28:59.

cluster in the UK. Opportunities to improve are in the areas of

:29:00.:29:02.

immigration, enabling technical talent coming to the UK. In the

:29:02.:29:07.

area of education, strengthening the education system, especially

:29:07.:29:10.

the technical degrees and the skills that people come out with

:29:10.:29:13.

from university, and financing. the meantime, the rest of the old

:29:13.:29:19.

economy, on which Britain is still very dependant, will have to limp

:29:19.:29:23.

on with anaemic growth for a few years, before a new economy emerges

:29:23.:29:29.

from the Chris lisence. Mark Hoban was the co-founder of

:29:29.:29:34.

lastminute.com, and an invester in start-up, and Gerard Lyons is chief

:29:34.:29:40.

economist at the Standard. One economist said it was a DIRE decade,

:29:40.:29:42.

Disappointing Inflation, Rotten Expansion, is that how you see

:29:42.:29:45.

things? The world economy is doingle with, it is continuing to

:29:45.:29:50.

grow. What the UK, like western Europe needs to do, address

:29:50.:29:55.

underlying problems. If we start to do that we can become more positive

:29:55.:29:58.

the reality of the situation is whatever economy one looks at, the

:29:58.:30:01.

outcome depends on the interaction between the fundamentals and public

:30:01.:30:04.

confidence. In the UK the fundamentals are not great, but

:30:04.:30:08.

better than they were. Policy doesn't really have much room for

:30:08.:30:12.

manoeuvre, but could do more, unfortunately confidence is pretty

:30:12.:30:15.

rock bottom. The question is if policy could do more, what policy

:30:15.:30:20.

would be doing the more, what would you like to see? I would like to,

:30:20.:30:23.

obviously, entrepeneurs, we have record levels of people starting

:30:23.:30:27.

companies in this country. That's the good news. The thing is s they

:30:27.:30:31.

are just not getting big enough. They are not expanding faster. The

:30:31.:30:35.

emphasis that has been coming on international trade, I do think,

:30:35.:30:39.

actually, is very relevant. I think it is actually still much harder

:30:39.:30:42.

than one thinks. Using the Internet as a network to help people trade

:30:42.:30:45.

international, out of the UK, this great trading nation, I think there

:30:45.:30:49.

is lots of room for optimisim there. If we don't do it, the world's

:30:49.:30:55.

going to be belonging to Amazon, is that a possibility? That is

:30:55.:30:58.

something I would love to seat economists focus on, what happens

:30:58.:31:02.

in ten years time if e commerce and the Internet sales will be as big

:31:02.:31:06.

as we think it will be, and most of the companies are maerpblg. That is

:31:06.:31:10.

why the sec saving -- American. That is why the tech savings is

:31:11.:31:13.

more important, there is so much economic value that could be taken

:31:13.:31:17.

away from the UK by the big American tech giants. Do you

:31:17.:31:20.

broadly agree with that, that is one part of the future. The

:31:20.:31:23.

Government talks about rebalancing the economy, away from financial

:31:23.:31:26.

services, that may happen for all kinds of reasons, high-tech is one

:31:26.:31:30.

part of the future? I think what is interesting when we look at these

:31:30.:31:35.

big companies, like Google, Amazon, Apple, in the US, and talk about

:31:35.:31:39.

how can we in Europe and the UK create them? There is this myth

:31:39.:31:44.

that the reason we don't have those kind of companies is we don't have

:31:44.:31:50.

enough angel investors and venture capitalists. If you look at Silicon

:31:50.:31:54.

Valley, there was a huge state of investment, going goggle as all

:31:54.:31:58.

georhythm was funded by the science division. Everything behind the

:31:58.:32:04.

iPhone, that makes it a smartphone, touch screen display, the Internet,

:32:04.:32:07.

the voice-activated personal assistant, is state-funded. You

:32:07.:32:12.

need the venture capitalist, but in the US with nano tech and the

:32:12.:32:17.

internet, the VC model is good after the state has made the huge

:32:17.:32:20.

investments that venture capitalists can ride N this country

:32:20.:32:25.

we don't have the confidence of a Government that feels it does have

:32:25.:32:28.

the manoeuvring possibility to confidently invest in these new

:32:28.:32:32.

areas. I personally wouldn't like to see Government invest. Already

:32:33.:32:39.

the European investment, Europe invests 40% of venture capital.

:32:39.:32:42.

That is the limit you are wondering. What the Government can do,

:32:42.:32:47.

encourage through the tax system it, entre pent nurses to keep investing.

:32:47.:32:51.

That is what they are doing -- entrepeneurs, to keep investing.

:32:51.:32:54.

That is what they are doing. There is the question of unemployment

:32:54.:32:59.

going down, I have seen a lot of analysis, one is they are not good

:32:59.:33:02.

jobs and part-time. Another analysis is real wages in Britain

:33:02.:33:06.

have gone down, which helps a flexible labour market? A whole

:33:06.:33:10.

host of things are happening. Public sector jobs are being shed.

:33:10.:33:13.

Although those in public sector jobs now are getting paid more. In

:33:13.:33:17.

terms of the rest of the economy, part-time work, temporary jobs are

:33:17.:33:23.

rising. It is a mixed picture. We saw this in Japan, when the

:33:23.:33:26.

financial crisis happened 20 years ago. People held on to workers in

:33:26.:33:29.

the hope that the economy would turn round. Also because it is

:33:29.:33:33.

difficult to rehire worker. I think the key issue, coming back to the

:33:33.:33:37.

wages point. The big problems we have in Britain and continental

:33:37.:33:41.

Europe is a lack of demand. What should the Government be doing,

:33:41.:33:44.

trying to get more demand into the economy. We have talked about

:33:44.:33:49.

infrastructure, there needs to be tax cuts to get money into people's

:33:49.:33:52.

pockets, the excise duty on petrol, all these things help. At the same

:33:52.:33:55.

time you need to encourage big companies, who have the finances

:33:55.:34:00.

available, to start investing. does that square with the view that

:34:00.:34:06.

the cuts haven't started yet and it will get deeper next year? Stp do

:34:06.:34:11.

any of you foresee -- do any of you foresee the kinds of troubles we

:34:11.:34:15.

have seen in Spain happening here? The problem is demand, but both in

:34:15.:34:18.

terms of the consumers, because we have had this, basically what we

:34:18.:34:22.

need is a Government that doesn't act like a business. Business

:34:22.:34:27.

invested too little during the boom and too little during the bust. We

:34:27.:34:31.

need a counter cyclical Government that makes up for the fall in

:34:31.:34:36.

investment. What guides private sector investment? GDP in all

:34:36.:34:39.

countries is the most volatile part of GDP. This notion that some how

:34:39.:34:43.

it will be tax cuts that will make this country more entrepeneural,

:34:43.:34:51.

and lead investments, I think is really flawed. Two wrongs don't

:34:51.:34:54.

make a right. The previous Government spent too much in the

:34:54.:35:00.

good times and not in the rest. The issue would be to stop spending in

:35:00.:35:05.

the bad times. We need more money in people's pockets, but we need an

:35:05.:35:12.

innovative industrial sector. I was at the Guildhall on Monday, the

:35:12.:35:14.

Government was talking about an industrial policy.

:35:14.:35:19.

We need more money in the economy. The etoric and branding of Britain

:35:19.:35:25.

-- rhetoric and branding of Britain being open for business to attract

:35:25.:35:28.

more business. We will get the Skype message out. People were

:35:28.:35:32.

talking today in Brussels about why are so many start-ups are moving to

:35:32.:35:37.

London. That is great use. We will get some billion-dollar companies,

:35:37.:35:41.

it is about tax cuts, and Britain is open for business, that is a

:35:41.:35:46.

message coming across. I completely disagree, there is a big poster

:35:46.:35:50.

outside the British and skills administration, saying Britain is

:35:50.:35:54.

open for business, lowest tax and lowest registration. People are

:35:54.:36:01.

leaving the UK. Not because we haven't demand in the economy.

:36:01.:36:06.

go to companies with a strong strategic investment policy S

:36:06.:36:10.

Pfizer went to Boston. Other companies are coming to London.

:36:10.:36:14.

have invested in several coming from Spain moving to the UK.

:36:14.:36:16.

green companies are the new -- the new companies are internet, the

:36:17.:36:21.

green companies are leaving. Recent political history shows

:36:21.:36:25.

whichever party wins the seat of Corby ends up in Downing Street.

:36:25.:36:28.

There is little wonder the by- election campaign has been keenly

:36:28.:36:33.

fought. Tomorrow, following the transient political comment, Louise

:36:33.:36:38.

Mensch who quit to spend more time with her family, Corby voters will

:36:38.:36:42.

have a chance to tell us what they think of the Government and the

:36:42.:36:48.

opposition parties. We have been zoo see -- see which way the wind

:36:48.:36:54.

is blowing. First to bury a non-fact about

:36:54.:37:00.

Corby. I was a bit bored so I dismandled the Corby trouser press.

:37:01.:37:05.

It is not the home of the Corby trouser press, let's dismandle the

:37:05.:37:08.

Corby by-election, because this is the home of some very interesting

:37:08.:37:13.

politic. For a start, it feels like several constituencies, the

:37:13.:37:18.

agricultural, the industrial, the affluent and less well off. Because

:37:18.:37:22.

of this diversity, Corby acts as a national opinion poll. In fact, in

:37:22.:37:25.

every single general election, since the constituency of formed,

:37:25.:37:35.

the seat has been won by the party that goes on to form a Government.

:37:35.:37:39.

They loved Maggie, and pipped for John, just, and then fell for tone

:37:39.:37:44.

he yoo, then David came along. There is -- Tony, then David came

:37:44.:37:47.

along. They were general elections where voters asked who do you want

:37:47.:37:51.

to be a Government. This is a by- election, very different. Voters

:37:51.:37:55.

here are answering the question, what message do you want to send to

:37:55.:37:58.

the Government. The toughest fight belongs to the

:37:58.:38:05.

Conservatives, defending a 3.5% majority, in, well, let's not say,

:38:05.:38:12.

the best of circumstances. The outgoing MP was very outgoing. For

:38:12.:38:22.

some reason, Louise Mensch, the glamorous game-show inhabiting

:38:22.:38:26.

novelist, decided to give up politics to go to America with her

:38:26.:38:30.

rock star husband had. I'm 20 years older.

:38:30.:38:33.

The Conservative candidate replacing her, promises to be

:38:33.:38:37.

different. Is the electorate listening. The limiting polling in

:38:37.:38:43.

the seat has been suggesting Labour has a lead. What is dragging your

:38:43.:38:48.

ticket? Is it national politics, David Cameron, local factor, Louise

:38:48.:38:53.

Mensch and that baggage, or is it simply the economy in the electoral

:38:53.:38:58.

cycle. What is hold you back? not being held back, the economy is

:38:58.:39:03.

holding up, a million new jobs created since the coalition came

:39:03.:39:07.

into power. 5 new companies set up in Corby and east Northamptonshire

:39:07.:39:12.

in the last quarter. Apprenticeships are up 124%. There

:39:12.:39:16.

are lot of good signs on the economy. I think people recognise

:39:16.:39:22.

that. This being a by-election, plenty of other parties are

:39:22.:39:26.

fighting Corby. But, as they say, Corby is fighting back.

:39:26.:39:31.

They are banned from canvasing in the town centre, and well, were

:39:31.:39:35.

these signs put up specially. The Lib Dems are smiling for

:39:35.:39:41.

photographs, but it is unlikely they will be come Friday. The polls

:39:41.:39:44.

suggest the only hope they have is their candidate, Jill Hope. A by-

:39:45.:39:48.

election should be a classic Lib Dem opportunity. How difficult is

:39:48.:39:55.

it this time when Lib Dems are in Government? Obviously it is very

:39:55.:39:59.

difficult, I spent many years in opposition, it is so easy, you

:39:59.:40:02.

criticise others and say you could do better, you never have to

:40:02.:40:05.

promise anything concrete. All of a sudden we are delivering

:40:05.:40:09.

policiesering but it is wonderful. I have spent many years as a

:40:09.:40:11.

Liberal Democrat watching Government make really bad

:40:11.:40:18.

decisions. Now 75% of our manifesto has been delivered. Jostling the

:40:18.:40:21.

Liberal Democrats for third place is UKIP. At the general election it

:40:21.:40:27.

was the BNP that came forth. That time UKIP didn't stand. We are

:40:27.:40:31.

speaking common sense, we are really identifying with common

:40:31.:40:34.

sense policies and politic. People are really, they can't put a pin

:40:34.:40:39.

between the other parties. So they are looking for change. They are

:40:39.:40:42.

looking for an independent voice. If they vote for the other three

:40:42.:40:48.

they know there will be no change. Which brings us on to labour,

:40:48.:40:53.

trying not to look too confident, but, according to the polls, poised

:40:53.:40:57.

for their first by-election gain from the Conservatives for 15 years.

:40:57.:41:02.

How much of this do you think that you are detecting pro-Labour, and

:41:02.:41:07.

how much of this is anti- Government? People will make up

:41:07.:41:12.

their mind on Thursday, I hope people vote. They will make up

:41:12.:41:17.

their mind on a range of things. It is important people choose the best

:41:17.:41:22.

person to be the MP, I have shown I'm there for the families. I have

:41:23.:41:25.

ran a campaign to fight for the truth in the hospital. People can

:41:25.:41:35.

see I'm a fighter for this area. We leave the Corby campaign with

:41:35.:41:44.

the Conservatives in a familiar- sounding village. We are in

:41:44.:41:53.

Warmington, shall I say don't panic? That was Warmington-on-Sea.

:41:53.:41:58.

General David Petraeus was, amongst other things, the thinking man's

:41:58.:42:01.

soldier, genuine and curious, and very much admired in the United

:42:01.:42:04.

States and beyond. Now the sex scandal in which he's embroiled has

:42:04.:42:11.

led to him being forced out of the CIA and led to the US military

:42:11.:42:14.

apparatus being subject to a certificate yes, sir investigation.

:42:14.:42:18.

We assess the significance -- serious investigation. We assess

:42:18.:42:24.

the scandal with the help of the British soldier General Petraeus's

:42:24.:42:29.

second in command in Afghanistan. So the man lioniseed by the

:42:30.:42:33.

Americans, pressed for turning around the war in Iraq, called upon

:42:33.:42:37.

to try the same in Afghanistan, and then sent off to the CIA has fallen.

:42:37.:42:42.

There was a time when he could do no wrong, in front of congressional

:42:42.:42:47.

committees. But now, he has gone, like some hero of the ancient age,

:42:47.:42:53.

because of a woman. General Graham Lamb was his deputy

:42:53.:42:59.

in Iraq, and became a close friend. So the loss of him as an individual,

:42:59.:43:04.

in my view, in no way is insignificant. The loss to the

:43:04.:43:11.

organisations, though. Should also be taken into account. His actions

:43:11.:43:14.

were inappropriate. They were unworthy. They were just to people

:43:14.:43:19.

like myself, who will always look up to David, before, now and in the

:43:19.:43:24.

future. We are just disappoint ed. He knows that. But the implication

:43:24.:43:29.

and the consequences to the organisations, both the institution

:43:29.:43:34.

of the US military, and the likes agency, in effect, will be impacted

:43:34.:43:40.

by these event. What could be lost policy wise is

:43:40.:43:44.

Petraeus's advocacy for more action on Syria, or a reduction of drone

:43:44.:43:48.

strikes in Pakistan. I first interviewed General

:43:48.:43:52.

Petraeus in Baghdad four years ago, and have met him several times

:43:52.:43:57.

since. Once he introduced me to Paula Broadwell, the woman he

:43:57.:44:03.

subsequently admitted having an affair with. Whatever his drive and

:44:03.:44:07.

extraordinary intellect, David Petraeus's long years on

:44:07.:44:11.

operational tours and perhaps his brush with cancer, left him open to

:44:11.:44:16.

the attractions of a driven young woman.

:44:16.:44:20.

Miss Broadwell was investigated by the FBI, originally, as the

:44:20.:44:25.

possible source of threatening e- mails to Gill kely, another friend

:44:25.:44:31.

of General Petraeus. However explanation of Mrs Kelley's e-mails

:44:31.:44:35.

revealed thousands from General John Allen, current NATO commander

:44:35.:44:40.

in Afghanistan. The scandal has now engulfed the White House too.

:44:40.:44:44.

General Petraeus had an extraordinary career. He served

:44:44.:44:48.

this country with great distinction, in Iraq, in Afghanistan, and as

:44:48.:44:57.

head of the CIA. By his on assessment, he did not meet the

:44:57.:45:02.

standards that he felt were necessary as the director of the

:45:02.:45:05.

CIA, with respect to this personal matter that he is now dealing with,

:45:05.:45:12.

with his family, and with his wife. It is on that basis that he

:45:12.:45:19.

tendered his resignation, and it is on that basis that I accepted it.

:45:19.:45:25.

Does a man who has wielded powers of life and death, but brought down

:45:25.:45:33.

by an apair signal American purience or is it a symbol of bath

:45:33.:45:37.

Sheba ism, they are looking at modern King Davids in America, of

:45:37.:45:41.

high command. The question becomes why do successful and moral good

:45:41.:45:47.

people get caught up in doing wrongful things, it is a lack of

:45:47.:45:51.

supervision, accountability, too much praise, not enough, I think

:45:51.:45:58.

completeness in their life, if you would, social isolation, the

:45:58.:46:01.

biggest one could be that people don't believe the rules apply to

:46:01.:46:06.

them, or they believe, wrongly so, that they have the power to cover

:46:06.:46:12.

their wrongdoing. That is what we have come to call the bath Sheba

:46:12.:46:18.

syndrome. General McChrystal because of staff indiscretions,

:46:18.:46:23.

Petraeus to infidelity, and now John Allen is being investigated

:46:23.:46:28.

for his correspondence with Gill Kelly, that runs to more than

:46:28.:46:33.

20,000 e-mail, many suggestive. What advice does a veteran

:46:33.:46:38.

commander offer those settinging to wield high command? You are in the

:46:38.:46:43.

constant space of being blamed. You are in the constant space of risk

:46:43.:46:48.

to reputation and career. You're in the constant space of catastrophic

:46:48.:46:54.

failure. So, you know, this is a big deal. But our expectations

:46:54.:46:59.

should be and should continue to be, that we look to the very highest of

:46:59.:47:06.

standards of those individuals, and continue to expect that of them.

:47:06.:47:11.

But, when they stumble and fall, as many will surely do, and David,

:47:11.:47:14.

General David is an example of that, we want to be a little careful in

:47:14.:47:18.

just being too harsh in our judgments. What was once a private

:47:18.:47:23.

matter, between a man and his wife, has brought down a celebrated

:47:23.:47:28.

American hero. But, the model of the modern general, has to be

:47:28.:47:34.

morally impecable as well as skilled on the battlefield.

:47:34.:47:38.

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