:00:06. > :00:16.follows UNESCO's decision to award Palestine full membership.
:00:16. > :00:19.
:00:19. > :00:24.Time for World Business Report. Welcome to the programme. The
:00:24. > :00:32.headlines: Place your bets. Emergency talks under way in Cannes
:00:33. > :00:42.in a be in to save the euro deal. At Europe sneezes, fears that the
:00:43. > :00:51.
:00:51. > :00:55.US could catch a cold. -- as.
:00:56. > :01:00.One newspaper calls it Greek roulette. In his gamble to save his
:01:01. > :01:06.own political credibility, the Greek Prime Minister's decision has
:01:06. > :01:13.plunged and the entire eurozone back into crisis. George Papandreou
:01:13. > :01:19.will meet his French and German counterpart later today. Other
:01:19. > :01:23.signatories to last week's deal are also scrambling to hold it together.
:01:23. > :01:28.International banks represented by the Institute of International
:01:28. > :01:33.Finance had agreed to forgo 50% of the money owed to them by Greece.
:01:33. > :01:42.They had hoped that the right of would avoid a default on the entire
:01:42. > :01:47.debt owed it to private lenders. Ealing with this problem is like --
:01:47. > :01:52.dealing with this problem is like getting on to a roller-coaster.
:01:52. > :01:55.There are sharp, unexpected terms and then you start to settle down
:01:56. > :02:01.again. We remain focused on this deal and we are engaged in
:02:01. > :02:05.technical discussions with our partners in Greek and the EU about
:02:05. > :02:09.how the deal may be fleshed out. We look forward to doing that because
:02:09. > :02:19.this is an historic opportunity for Greece to put aside a substantial
:02:19. > :02:22.
:02:22. > :02:32.burden of debt. We are joined by the former Greek
:02:32. > :02:37.finance minister and an assistant professor in business.
:02:38. > :02:44.First of all, can you give us your reaction when you first heard that
:02:44. > :02:48.George Papandreou was calling for a referendum? I thought and still
:02:48. > :02:54.believed that this was an irresponsible and reckless decision
:02:54. > :03:02.that introduces massive uncertainty in an already uncertain environment.
:03:02. > :03:07.I do not support his decision. will happen between now and if a
:03:07. > :03:10.referendum were to take place? Some are saying that the government will
:03:10. > :03:16.be voted out anyway and there will therefore not be a referendum in
:03:17. > :03:23.the end. This is possible but what will probably happen will be a
:03:23. > :03:28.severe slowdown in the way that Greece approaches its problems.
:03:28. > :03:32.They have already been slow and they will become slower now. If you
:03:32. > :03:38.asked me what I believe will happen, there will be an increase in the
:03:38. > :03:43.deficit within the next few months until we reach a referendum. This
:03:43. > :03:49.is all counter-productive and I think it is simply wrong. It should
:03:49. > :03:55.not be happening. What impact has this had on the
:03:55. > :04:00.perception of Greece from now on in? Obviously, deals have been done
:04:00. > :04:06.and China has been seen as a possible helping hand. What impact
:04:06. > :04:11.has this decision had? This is truly a disastrous decision and no
:04:11. > :04:14.matter what the outcome of the referendum will be, all the
:04:14. > :04:21.disciplines in the market for stakeholders like China are going
:04:21. > :04:27.to be wondering in the future about the credibility of the Greek side
:04:27. > :04:32.of any kind of a deal. We are looking at a sovereign debt problem.
:04:32. > :04:37.Everything is negotiable at any point in time. This is not a
:04:37. > :04:42.company that can close down and sell off their assets. Greece must
:04:42. > :04:52.participate. The deal that was struck said that in 2020, the Greek
:04:52. > :05:01.GDP level would be 120 % -- the great debt compared to GDP level
:05:01. > :05:06.would be 120 %. Basically, we do not know what is going to happen
:05:06. > :05:11.for example with the Greek government in 2013 and 2015. Will
:05:11. > :05:14.they be sticking with this or not? Basically, people will be
:05:14. > :05:20.questioning from now on the credibility of any kind of
:05:21. > :05:26.arrangement on Greek debt with Greece participating.
:05:26. > :05:29.From the point of view of the situation within Greece, do you
:05:29. > :05:34.believe that George Papandreou is hoping that the referendum will
:05:34. > :05:39.bring the citizens of Greece on board? Obviously it depends on the
:05:39. > :05:47.questions in the referendum itself, but do you think this is his
:05:47. > :05:52.intention? We still do not know what a
:05:52. > :05:57.question of the referendum will be and if there will be any
:05:57. > :06:02.implications of that question. But my supposed would be that the Greek
:06:02. > :06:08.people are very much against George Papandreou and that puts the
:06:08. > :06:12.referendum in danger and increases uncertainty. I cannot predict with
:06:13. > :06:18.certainty how he Greek people will handle this. If you ask people if
:06:18. > :06:22.they want to stay even the euro or leave the euro, most would say that
:06:22. > :06:32.they want to stay in the euro but that has nothing to do with the
:06:32. > :06:33.
:06:33. > :06:39.specific question of debt. This is a dangerous situation because the
:06:39. > :06:45.hatred against the government could influence the decision of the
:06:45. > :06:50.referendum. The next few days are critical. The G20 Summit in Cannes
:06:50. > :06:58.and an George Papandreou's meeting with Angela Merkel and Nicolas
:06:58. > :07:03.Sarkozy tonight. At this stage, from the European side, Angela
:07:03. > :07:11.Merkel and Nicolas Sarkozy need a deal very quickly. They want to
:07:11. > :07:13.stop the further deterioration of Western banks. I doubt that there
:07:13. > :07:18.will be any more concessions to Greece because the process of
:07:18. > :07:24.granting the current deal was very painful. Slovakia did not have
:07:25. > :07:29.voted it in on the first occasion, for example. He would require all
:07:29. > :07:39.the eurozone countries to participate in such a deal. Second,
:07:39. > :07:41.
:07:41. > :07:46.the magical number of one and then 20% -- 120 %... Even assuming that
:07:46. > :07:56.this were to take place on a one- time bassist... We have tea leave
:07:56. > :07:59.
:07:59. > :08:08.it there for now. Thank you for joining us.
:08:08. > :08:11.And how are the markets digest in all of this today in Asia? -- di
:08:12. > :08:19.jesting. This is quite his situation we are in, right now,
:08:19. > :08:25.isn't it? Naturally, Asian investors have continued to react
:08:25. > :08:33.to the referendum. Essentially, we have seen a third day of decline.
:08:33. > :08:40.The Japanese yen has strengthened against the euro, which is bad news
:08:40. > :08:44.for export rely it countries. And it was not just Asian investors
:08:44. > :08:49.reacting, but we also had some comments from the Japanese finance
:08:49. > :08:54.minister, who said that people do not understand Greece's decision to
:08:55. > :08:59.hold a referendum. Nonetheless, it was not all entirely about Europe.
:08:59. > :09:08.There are other concerns about the US and American manufacturing,
:09:08. > :09:18.which grew more slowly in October. Many companies are making steep
:09:18. > :09:21.
:09:21. > :09:31.losses. Banking shares have also been hit. HSBC has fallen in the
:09:31. > :09:33.
:09:33. > :09:38.region. Thank you.
:09:38. > :09:42.Is could plunge the entire eurozone reason -- region into recession and
:09:42. > :09:49.there is a fear of contagion. On Wednesday, the US Federal Reserve
:09:49. > :09:53.will announce its thinking. Violent demonstrations on the
:09:53. > :09:58.streets of Greece. But the EU's dire financial problems are not
:09:58. > :10:04.just a concern for Europeans. The turbulence is being closely watched
:10:04. > :10:11.by America's central bank. Ben Bernanke has said that eurozone
:10:11. > :10:16.crisis does impact the US economy. Marc Chandler explains why. What
:10:16. > :10:26.happens in Europe affects the US, just as how what happens in the US
:10:26. > :10:31.affects the EU. The economy in the EU is so fragile that the debt
:10:31. > :10:37.crisis has the potential to paralyse the economy. And it is not
:10:37. > :10:41.just Greece. There are problems in the UK as well. From high
:10:41. > :10:44.unemployment to a stagnant housing market, which is stifling the US
:10:44. > :10:49.economy. Even with a record low mortgage rates, many households
:10:49. > :10:53.have been unable to borrow or remortgage. The Obama
:10:53. > :10:57.administration has a new plan to help homeowners through finance but
:10:57. > :11:04.the Federal Bank is under pressure to keep intervening, especially
:11:04. > :11:07.given the political deadlock in Washington DC. This increases the
:11:07. > :11:11.urgency for the gradual reserve to do more rather than less. Even
:11:11. > :11:16.though there are dissenters, the majority in the Federal Reserve
:11:16. > :11:20.feels that they would rather try to fail and a tie at all. The Federal