09/03/2012 World Business Report


09/03/2012

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the city of Homs. -- the UN humanitarian chief. Time for World

:00:10.:00:19.

Business Report. Welcome to the programme. As Greece pores of the

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biggest sovereign debt will pave the way for a second

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rescue package. China's inflation rate falls sharply. More evidence

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of a major slowdown in the economy. Plans for an Asian premier airline

:00:37.:00:47.
:00:47.:00:49.

collapse for Qantas. Greece is on the verge of clinching

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a second bail out this Friday after agreeing to the biggest sovereign

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debt restructuring in history. In 30 minutes, it will be revealed how

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many of the country's private creditors have agreed to swap their

:01:03.:01:13.
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public bonds for new ones are worth 70% less. Reports overnight

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indicate the deal has been successful, with 95% of debt

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holders agreeing. Thank you for joining us.

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It appears that this deal will be going through but not without

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consequences. It is important to understand that

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these potential bonds are pricing around 20%. People are expecting

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that this is a step in the right direction but there will be more to

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come. The target of 120 % debt-GDP for Greece is for 2020. Are you

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predicting another bail out? Along the road, it is likely. What is

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important is to understand exactly how this will be done. What the

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ratings agencies will say if that is activated and what the impact on

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the market will be. The market for Greece is quite small but will

:02:31.:02:36.

people stop worrying about Italy and Spain are? This 95% threshold

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is really important. It was never really all about Greece, was it? It

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was about ring-fencing the problem so it did not affect Spain, Italy

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and Portugal. Has that been effective? We are not there yet but

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we have made a lot of progress, injecting a lot of liquidity in the

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banking system and alleviating the pressure on those banks. Investor

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confidence has returned to a large extent. The other thing we are

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forgetting is that a large part of Europe, like Germany, is doing very

:03:15.:03:20.

well. That will help with European health overall. However, European

:03:20.:03:25.

fragmentation is still apparent. That is, between the south and the

:03:25.:03:29.

north. China has seen a drop in the rate

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of inflation in February - evidence of a slowdown in the economy. It is

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lower than what many were expecting. It is the lowest rate of inflation

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for almost two years. Thank you for joining us.

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What are we to read into these inflation figures? Is this a signal

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that the Chinese economy is slowing down?

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We have got to be careful about the interpretation of Consumer Price

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Index inflation. In a financially repressed system like that of China,

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it is fairly standard that rapid monetary growth is associated not

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so much with Consumer Price Index inflation but asset inflation. To

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that end, it is good at this inflation has come down. It gives

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the central bank more room to manoeuvre and we were all expecting

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it to happen. The distinction between consumer

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price inflation, what people pay for products in shops, and asset

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price bubbles. Yes. That is the real concern.

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Monetary growth has been very rapid, credit growth is slowing but is

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still quite rapid. We are seeing huge amounts of investment in areas

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that are probably not economically viable. But with such low interest

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rates, it is difficult to prevent. What most people seem to be

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concerned about is the prospect of what people are calling a hard

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landing - a sudden drop of the growth rate. Is that a possibility?

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It is obviously a possibility depending on what happens in Europe

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but it is unlikely, I believe. I am more concerned about a long

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slowdown of growth over many years, which I think is more likely. If

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you can predict what will happen in Europe, you will have a better idea

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of how rapidly growth will slow in China this year and the next year.

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Thank you. Qantas has called off talks with

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Malaysia Airlines to set up an Asian premier career.

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What has happened? As he is said, essentially the

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talks have broken down. It has had a bad impact on Qantas shares today,

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falling as much as four descent. Qantas says the two could not agree

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on commercial terms. They had announced plans to start this joint

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venture airline in Asia last August and this was an attempt to try to

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turn around its international arm, which is currently making a loss.

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This was part of the five years strategy to revive international

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operations. We know that Qantas lost $200 million in the 2011

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financial year. The collapse in talks comes just as Malaysia's

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national carrier announces plans to launch its own premium regional

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airline in April. That is part of its restructuring plan after

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suffering its biggest loss in history in 2011. Qantas's chief

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executive said Qantas would continue to explore opportunities

:07:00.:07:05.

in the region through alliances and joint ventures. The airline's

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attend to become more profitable by setting up an airline outside

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Australia had angered a lot of workers, leading to a strike and a

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grounding of the Qantas fleet. This news is not likely to help Qantas's

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international operations. America's job market is slowly

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repairing itself. Companies have added 200,000 workers to pay roles

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in recent months. The official figures hide millions of workers no

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longer counted as unemployed and even more who are working less

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:07:51.:07:51.

hours than they want. A rich colour suits me best?

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These sunglasses were created by a couple inspired by the military.

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The business has taken off and they are adding whole people.

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We have been expanding nationally. Many people are buying and we need

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more help with sales. We are bringing on a series of sales

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representatives to represent us too small boutiques around the country.

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Small businesses created 50% of all the jobs last month in America.

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Selling sunglasses to baby might not be an industrial powerhouse of

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a Business but put together with all the other small companies in

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America, this will pull the US out of an economic slump. It looks like

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the unemployment picture is improving.

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While the headlines look good, or digging deeper and there are

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millions of Americans who are out of work and no longer officially

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counted as unemployed. Many remain angry at the job

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situation like these protesters. Teachers are being fired. We have

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got to bring money into education, we have got to build a middle class,

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health companies create jobs. This recruitment expert says there

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has been a huge change in the labour market.

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Three it is better than it was but there is still very much a two Tear

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labour market. People with skills in education and those who do not.

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Those who do not are being left behind.

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That is the Disconnect currently in America. The jobs market is

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improving but millions of Americans remain out of work.

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