16/05/2012 World Business Report

The headlines: The price of democracy with Greek membership of

the eurozone hangs in the balance. Widespread reports of the FBI

launching an inquiry into $2 billion loss at JP Morgan. Beat

India in intervention by the bank in the currency market. The markets

get a boost. Another election is on the cards for Greece after nine

days of failed Nicosia Asians to form government. The leading

parties will now hold talk for a caretaker government before a fresh

election. It means further uncertainty for people and

investors. It may determine the fate of the eurozone. The election

will take place in the middle of June. It's a critical month for the

eurozone? And salute the point We see Spanish bonds rising to the

critical level of six %. We see stress been peripheral markets. We

also see the anti- bail-out party support gathering momentum. That

may in effect spell the end of the Greek membership to the eurozone.

Can the authorities prevent this contagion? Exposure to Greece is

manageable but not easy. The big thing is, can may prevent the

stress going throughout the eurozone especially with Spain.

the big picture, focusing on Greece, the anti- bail-out parties, some

argue they will vote on whether they will stay in the eurozone.

Those parties, if they were to get into power, what do they hope to

achieve? They do not want to exit the eurozone. They want some middle

ground? Are think so. They will bet that the authorities do not want to

see Greece exit the eurozone and potential chaos that would him by.

They want to remain but see the softening of the bail-out

conditions. The Incas hardly dried on the bail-out deal. These

tortuous negotiations to lead to the stage mean that they would not

ease out easily. They were no sign after the meeting between Angela

Merkel and Francois Hollande to even broker us off Dean of these

measures. They were both together on this. They are concerned that if

they soften stand on Greece, that may throw up a can of worms in

terms of a contagion within the eurozone. It may set a bad example.

They do not want to do that. They want Greece to take their medicine

to remain in the eurozone. Brief fling, what do you think will

happen? We will have another election. After that, where will we

be? Will they exit the eurozone? Potentially indications are that

the anti- bail-out parties may gather Waltzer port. If they do

manage to put together a coalition, I think the risk is that we may see

authorities cut off the current bail-out and not lend any money to

the Greek banks and the banking system would collapse forcing an

exit to the eurozone meaning they would need to prevent that

contagion from spreading. Needless to say we are on the case here with

all of the details. On Tuesday there was widespread reports that

the FBI will inquire JP Morgan following revelations they suffered

their $2 billion blunder. They have not said it yet but it's widely

reported that the FBI has begun investigating the huge loss at JP

Morgan. That is significant because the at the Ida's criminal

investigations. The first hint that some rumbling may be involved. It

may be just a routine precaution. All this came hours after the boss

of the bank faced shareholders. It was not a stormy affair. He

apologised profusely and saw off a motion that may have challenged his

authority by splitting the role of chairman and chief executive. The

biggest container ship group will report a slide in earnings. The

profits have halved in the trading year. The downturn means fewer

people are buying goods and shipping them around the world. Too

many ships means the Giants of the shipping world have taken on a

price war between Asia and Europe. Possibly the worst timing as fuel

cost is increasing and the global economy is weakening. These ships a

slow trying to save fuel. Here at this exchange in London, the index

which measures the cost of shipping, coal, iron ore and rain is down to

its lowest level in 25 years. With more ships coming, experts say the

rates that set to stay low meaning staging a rebound will be difficult

for this industry. No matter how many container ships try to

diversify and cut costs, almost all of them have awarded more ships to

be built before this financial crisis. They are now expanding

their fleets but with less cargo. It will be a very long slog. Its

overcapacity. It's across the industry. There are many ships

coming and that is slowing down. In the next two years it's a big. To

see if many will make it or not and many companies are in trouble with

bankruptcy is forecast. It's a cyclical industry. This boom and

bust has long been a bugbear. It's a question of the right decisions

at the right time and how you operate through the bad times.

supply of ships in excess it will take a long time for there is sheet

in lines to close the line between supply and demand. Many may put

their prices up by $100 per container. But it needs to work in

the favour of the companies and this will be very difficult. The

Indian Central Bank has intervened in the currency to prop up the

rupee. Explain what has happened here. Why has the rupee been

propped up? According to the dealers, this intervention was

conducted by the state run bank to the tune of $500,000. This has

pushed the rupee higher. There's no doubt about her Central Bank being

able to defend the rupee as the economy is impacted by the were

some global environment. Also the widening budget deficit. The bank

is wasting resources in putting up -- propping up this currency

because it may go to the level of 55 against the US dollar which

favours the exporters. Some people say the Reserve Bank as close to

$300 billion in reserves. They also use other measures to convert

foreign currency to buy bonds to keep the currency from the