:00:04. > :00:14.to be a serious condition. Those are the latest headlines. It is
:00:14. > :00:16.
:00:16. > :00:22.time for the latest financial news. Welcome to World Business Report.
:00:22. > :00:28.The headlines: The euro falls further and Greek bond yields soar
:00:28. > :00:33.ever higher as investors see no clarity on a rescue plan for Athens.
:00:33. > :00:37.In Singapore, Asian stock markets are lacklustre as investors remain
:00:37. > :00:40.worried about Greece's debt problems.
:00:40. > :00:50.Prada scales back its Hong Kong flotation as risk goes out of
:00:50. > :00:52.
:00:52. > :00:56.fashion. It is a crucial day in what is
:00:56. > :01:00.threatening to become a new financial crisis for Europe. In
:01:00. > :01:03.just over an hour's time, the Greek Prime Minister reshuffles his
:01:03. > :01:10.cabinet in a bid to push through new austerity measures that are a
:01:10. > :01:14.condition of the EU and IMF bail- out. Without it, next month, Greece
:01:14. > :01:19.will become the first eurozone them back to default on its debts. In
:01:19. > :01:25.Berlin, Germany's Chancellor will meet the French Prime Minister to
:01:25. > :01:30.discuss a longer term plan for managing Greece mac's 750 billion
:01:30. > :01:34.euros debt. This is the dilemma for Europe. German taxpayers are
:01:34. > :01:39.unwilling to write more checks to Greece. Germany wants investors to
:01:39. > :01:44.share the pain. Either by excepted they will not be repaid in full, in
:01:44. > :01:49.other words, taking a cut, or as quickly, by extending the
:01:49. > :01:52.maturities on bonds. But the European Central Bank, backed by
:01:52. > :01:56.France, is against the restructuring of existing debt, it
:01:56. > :02:02.is worried about the precedent that will set for Ireland, Portugal, and
:02:02. > :02:05.even Spain. The central bank is also worried about its own finances,
:02:05. > :02:15.because it has been buying Greek bonds and accepting them as
:02:15. > :02:16.
:02:16. > :02:22.collateral. It has $180 billion of exposure. France's banking sector
:02:22. > :02:26.is the second-biggest lender. Worries about exposure to Greece
:02:26. > :02:36.hit bank shares very hard on Thursday so the big question, what
:02:36. > :02:48.
:02:48. > :02:53.his next? In the studio, we had David from BCP partners.
:02:53. > :02:56.The former Federal Reserve chief, Alan Greenspan, said that default
:02:56. > :03:03.is inevitable because Greece does not have the ability to deliver on
:03:03. > :03:08.its austerity measures. Do you go along with that? Icesave Greece was
:03:08. > :03:12.any other country, if it was outside the eurozone, even in Asia,
:03:12. > :03:16.Greece would have to faltered long ago. The only trouble we have is
:03:16. > :03:23.that Greece is inside the eurozone, if Greece defaults, it sets a
:03:23. > :03:29.precedent for other countries. After a Greek default, it will not
:03:30. > :03:38.happen again, before island off for Spain. You do not want to have
:03:38. > :03:42.Greece default because it was set a precedent. That is an important
:03:42. > :03:46.point. There is an argument that Greece does not want to default,
:03:46. > :03:50.but the EU and the IMF are pushing it was that position, because they
:03:50. > :04:00.are not working hard enough to do with the problem. It might happen
:04:00. > :04:00.
:04:00. > :04:05.because there is too much pressure. This is an EU problem. Greece may
:04:05. > :04:10.have managed itself very badly, but the ramifications are for the
:04:10. > :04:13.European Union not taking a strong hand in this, they are dire. There
:04:13. > :04:20.is a danger of throwing money down a black Kohl. No matter how much
:04:20. > :04:24.money you put in, it is not hitting the root of the problem. We cannot
:04:24. > :04:30.afford to shrug our shoulders and say that is how it is. We cannot
:04:30. > :04:40.afford to do that. The European Central Bank has 180 billion euros
:04:40. > :04:40.
:04:40. > :04:44.of bonds. It is a huge amount of money. I think the central bank is
:04:44. > :04:48.capitalised at 180 billion euros, it is already under an enormous
:04:48. > :04:52.amount of pressure, the European Union's political leaders have to
:04:52. > :04:57.get a grip, for the central reason, markets cannot cope with
:04:57. > :05:03.uncertainty. The fact they have refused to make decisions is just
:05:03. > :05:07.exacerbating the problem. It seems as if it is largely Europe's fault,
:05:07. > :05:14.because they are not being proactive enough, they are sitting
:05:14. > :05:18.too far on the sidelines, they are making the situation worse. That is
:05:18. > :05:23.a fair point. Europe has dragged its feet all along. Something was
:05:23. > :05:31.decided a couple of weeks ago, Europe or was very reluctant to
:05:31. > :05:37.come across with money or measures. The point you have reached, both
:05:37. > :05:43.parties in the IMF and Europe, and Greece, they are playing a big men
:05:43. > :05:52.should game and this is a very dangerous situation. -- a bridge
:05:52. > :05:56.midship game. Are we in that situation? It Europe allows this to
:05:56. > :06:02.get out of hand, it will have its own Lehman Brothers, with even
:06:02. > :06:06.worse ramifications. The contagion effects, the banks on the bank --
:06:06. > :06:16.the effects on the banking sector, it Europe as a whole, the survival
:06:16. > :06:22.
:06:22. > :06:32.of the euro, it will be at stake. We will press on to see how this is
:06:32. > :06:39.playing out in the Asian markets. What has been the response?
:06:39. > :06:43.last is not very deep in late Asian trade. Currently, they are
:06:43. > :06:49.lacklustre, they are in positive territory. But they are very
:06:49. > :06:53.uncertain about the future due to this deepening crisis. It is a
:06:53. > :06:58.potential contagion effect on other eurozone economies. One analyst
:06:58. > :07:02.that I spoke to earlier, said that if if serious financial
:07:02. > :07:07.problems, this will have a major effect on Asian markets. You have
:07:07. > :07:11.technology, auto makers, property and construction issues, they are
:07:11. > :07:16.falling before the weekend. There are also concerns about higher
:07:16. > :07:26.rates in China. The weak US growth is also keeping investors on the
:07:26. > :07:29.sidelines. The euro continues to slip. In oil markets, prices are
:07:29. > :07:39.falling at four-month lows as investors continued to worry about
:07:39. > :07:39.
:07:39. > :07:43.the pre-crisis. -- the Greek crisis. Prada is having to scale back its
:07:43. > :07:48.ambitions ahead of its flotation on the Hong Kong Stock Exchange. It is
:07:48. > :07:52.lined up for next week. It is being forced to pitch its shares at the
:07:52. > :07:57.bottom end of the price range that it announced, because of poor
:07:57. > :08:02.market conditions. Samsonite made a lacklustre market debut in Hong
:08:02. > :08:09.Kong after scaling back its own IPO. Shares fell sharply on the first
:08:09. > :08:14.day of trade. With typical Italian flair, Prada
:08:14. > :08:18.has been showing off not just its latest collection, but a new
:08:18. > :08:23.financial trend as well. Instead of using the stock market in Milan, it
:08:23. > :08:29.has opted to float 20% of its shares in Hong Kong, the first big
:08:29. > :08:35.Italian company to do so. Prada is loved by Asian companies, Asian
:08:35. > :08:39.investors may be equally as King. Just as the price tag on its
:08:39. > :08:49.accessories can be a strong that -- can be too high, shares are just
:08:49. > :08:50.
:08:50. > :08:54.too expensive. Rivals such as Louis Vuitton looked like better value.
:08:54. > :09:00.quibble how Prada is just that much more special than other fashion
:09:00. > :09:05.houses. It is a significant premium. That is what I really question.
:09:05. > :09:09.others see more of an opportunity, with Prada planning 70 new stores
:09:09. > :09:19.in Asia, readers of a fashion magazine are being asked to buy its
:09:19. > :09:22.
:09:22. > :09:28.shares as well as its outfits. is at the peak of its fashion
:09:28. > :09:32.credibility. I think it looks set to continue. But markets are not in
:09:32. > :09:37.a positive mood. Yesterday, Hong Kong was the venue for the
:09:37. > :09:42.flotation of Samsonite, the world's biggest luggage maker, its shares
:09:42. > :09:48.closed down 8%. A big show for Prada and a big test for Hong Kong,