:00:03. > :00:13.couples in 1989. Those are the latest headlines. Time now for the
:00:13. > :00:14.
:00:14. > :00:21.money Newsweek World Business Report. -- money news weird.
:00:21. > :00:27.Welcome. The headlines: The family US Treasury Secretary says why he
:00:27. > :00:32.thinks Europe is a threat to the US economy -- the fan Mark. A new test
:00:32. > :00:39.for Francois Hollande as he looks to tighten his grip on power with
:00:39. > :00:43.this week's elections. The interest-rate cuts in China raises
:00:43. > :00:53.the of a weaker than expected might -- may economic data which will be
:00:53. > :00:57.
:00:57. > :01:00.released this weekend. The former US Treasury Secretary
:01:00. > :01:06.has warned European leaders that they need to take more radical
:01:06. > :01:09.action to solve the region's debt crisis. He was also an economic
:01:09. > :01:18.adviser to President Barack Obama, he says that there has been a deep
:01:18. > :01:24.and profound Saudi of realism in dealing with the problems. --
:01:24. > :01:29.profound lack. It will affect our exports. European banks will lend
:01:30. > :01:34.less money. That affects credibility to small and medium
:01:34. > :01:38.businesses. There are large psychological effects in the sense
:01:38. > :01:43.that a large part of the world's economy could encounter a grave
:01:43. > :01:48.financial problems. There is uncertainty, and when people are
:01:48. > :01:52.uncertain they wait, they do not spend. In an unsure economy, back
:01:52. > :01:57.and be a serious problem. Europe is a threat, not only to itself, but
:01:57. > :02:01.to the entire world. Some people think they do not get the markets.
:02:01. > :02:04.They do not realise the urgency of dealing with the markets. Some
:02:05. > :02:12.politicians think they are immoral and should not have the effect that
:02:12. > :02:19.they do. I do not defend the way policy makers are handling this. It
:02:19. > :02:25.has been a deep and profound and continuing failure of realism. If
:02:25. > :02:30.that persists to this day, the international community has been
:02:30. > :02:34.more timid than it should be in pointing out the unreality of a
:02:34. > :02:41.variety of things that had been said. One does not know what he
:02:41. > :02:45.said in private rooms. It is much easier to council, saying tough
:02:46. > :02:51.words when you are in in an official position. I think that it
:02:51. > :03:00.is a failure of realism. That has been a central part of what has
:03:00. > :03:06.brought us to this point. Why are they doing that? It is for them to
:03:06. > :03:14.describe the reasons for their actions. It is a desire to maintain
:03:14. > :03:19.confidence. Sometimes, we sustain confidence by going along with
:03:19. > :03:24.preferred beliefs. Sometimes, There is nothing more demoralising than
:03:25. > :03:34.being told that the emperor is well clothed when you can see for
:03:35. > :03:35.
:03:35. > :03:42.yourself that the emperor is naked. The areas had been made to maintain
:03:42. > :03:46.compliments to perpetuate an illusion. -- the areas. The US
:03:46. > :03:54.perspective on the eurozone crisis. The rate cut in China comes into
:03:54. > :04:00.force today. It surprised economists. We have been gauging
:04:00. > :04:07.the reaction and the markets did not like it.
:04:07. > :04:12.It may be a rate cuts, usually we see markets rise. Most of them are
:04:12. > :04:19.in negative Territory. Analysts are basically saying that the central
:04:19. > :04:23.bank rate cut of 0.25 % is raising fears, not confidence, the numbers
:04:23. > :04:27.would be coming out this weekend could be worse than expected. The
:04:27. > :04:31.key date had been released tomorrow on Saturday are fixed investments,
:04:31. > :04:37.retail sales and the Consumer Price Index. Some analysts are
:04:37. > :04:43.forecasting that China will deliver at its weakest growth rate in years.
:04:43. > :04:50.The numbers could be stabilising, we must wait and see. Economists
:04:50. > :04:59.are expecting that this could be the first of several this year. --
:04:59. > :05:05.first of several rate cuts. Two indicators are forecasting signs of
:05:05. > :05:10.stability. Industrial production rose by 9.8%. Picking up from a 30
:05:10. > :05:15.four-month low. While fixed asset investment growth in the first five
:05:15. > :05:20.months will stay flat at 20%. Little change from April. Investors
:05:20. > :05:27.will have to wait for the data and the market's reaction to them it
:05:27. > :05:31.would be this coming Monday. A test for the French President
:05:31. > :05:34.this weekend with the country voting fine National Assembly. The
:05:34. > :05:38.socialist Francois Hollande is looking to consolidate his power to
:05:38. > :05:43.get through the economic and social reforms he promised. He placed
:05:43. > :05:47.himself firmly on growth, not austerity. He has cut the
:05:47. > :05:53.retirement age for all workers. He has made it more expensive to lay
:05:53. > :05:59.off workers. The markets are taking the rough bombs in their stride. A
:05:59. > :06:06.bond auction Serb government rates failing to record lows. -- Searle
:06:06. > :06:12.government rates. Why do you think the markets have reacted in what
:06:12. > :06:20.would traditionally be an unexpected way? That is correct.
:06:20. > :06:25.The markets had been very calm so far. Even though they have added,
:06:25. > :06:31.they have included mad people on the Penzance then said in election
:06:31. > :06:38.campaign. They have raised the minimum wage -- the pension. They
:06:38. > :06:48.have backtracked on revenues. The market is focusing on Spain and
:06:48. > :06:54.
:06:55. > :07:00.Italy too much. It expected that France will manage. There is a
:07:00. > :07:08.possibility that France were not get anywhere close to meeting
:07:08. > :07:16.budget deficit targets and that he may fail to generate growth? Yes,
:07:16. > :07:22.the growth is dependent on it the entire European situation. France
:07:22. > :07:30.is the largest trading partner of Spain. If the eurozone gram balls,
:07:30. > :07:40.of France would be a fake dead -- if the eurozone fails. -- will be
:07:40. > :07:41.
:07:41. > :07:47.affected. We have yet to see the announcement of the new government.
:07:47. > :07:50.There is clearly a downside risk that the French economy. There is
:07:50. > :07:54.also the role of Francois Hollande on the international stage within
:07:54. > :08:02.the eurozone. But he has to say to Germany about the school
:08:02. > :08:11.integration. Malware the sight of eurozone nations and their finances
:08:11. > :08:17.-- eurozone integration. Right now we are seeing an alliance of the
:08:17. > :08:21.three big countries in the eurozone, Italy, France and Spain. They are
:08:21. > :08:27.leading heavily in favour of the banking union in the short-term,
:08:27. > :08:37.that seems to be needed to bail-out the Spanish banks in Ely and a
:08:37. > :08:47.
:08:47. > :08:51.fiscal union in the euro bonds. -- Spanish banks financially. We
:08:51. > :09:00.expect them to make moves in the direction of the banking union, but
:09:00. > :09:06.not be in any mood to precipitate that fiscal union.
:09:06. > :09:12.The Japanese cannot make up Olympus will announce the 2,500 job cuts
:09:12. > :09:17.this morning -- Japanese camera company. This comes after at 8
:09:17. > :09:23.billion dollar furred scandal. Ali and pears is considering a Lyon's
:09:23. > :09:27.office that -- offers from Fujitsu and Sony. The Argentine President
:09:27. > :09:31.has promised to close down her personal savings account in dollars.
:09:31. > :09:36.She will convert the money to local currency and encourage others to do