08/06/2012 World Business Report

couples in 1989. Those are the latest headlines. Time now for the

money Newsweek World Business Report. -- money news weird.

Welcome. The headlines: The family US Treasury Secretary says why he

thinks Europe is a threat to the US economy -- the fan Mark. A new test

for Francois Hollande as he looks to tighten his grip on power with

this week's elections. The interest-rate cuts in China raises

the of a weaker than expected might -- may economic data which will be

released this weekend. The former US Treasury Secretary

has warned European leaders that they need to take more radical

action to solve the region's debt crisis. He was also an economic

adviser to President Barack Obama, he says that there has been a deep

and profound Saudi of realism in dealing with the problems. --

profound lack. It will affect our exports. European banks will lend

less money. That affects credibility to small and medium

businesses. There are large psychological effects in the sense

that a large part of the world's economy could encounter a grave

financial problems. There is uncertainty, and when people are

uncertain they wait, they do not spend. In an unsure economy, back

and be a serious problem. Europe is a threat, not only to itself, but

to the entire world. Some people think they do not get the markets.

They do not realise the urgency of dealing with the markets. Some

politicians think they are immoral and should not have the effect that

they do. I do not defend the way policy makers are handling this. It

has been a deep and profound and continuing failure of realism. If

that persists to this day, the international community has been

more timid than it should be in pointing out the unreality of a

variety of things that had been said. One does not know what he

said in private rooms. It is much easier to council, saying tough

words when you are in in an official position. I think that it

is a failure of realism. That has been a central part of what has

brought us to this point. Why are they doing that? It is for them to

describe the reasons for their actions. It is a desire to maintain

confidence. Sometimes, we sustain confidence by going along with

preferred beliefs. Sometimes, There is nothing more demoralising than

being told that the emperor is well clothed when you can see for

yourself that the emperor is naked. The areas had been made to maintain

compliments to perpetuate an illusion. -- the areas. The US

perspective on the eurozone crisis. The rate cut in China comes into

force today. It surprised economists. We have been gauging

the reaction and the markets did not like it.

It may be a rate cuts, usually we see markets rise. Most of them are

in negative Territory. Analysts are basically saying that the central

bank rate cut of 0.25 % is raising fears, not confidence, the numbers

would be coming out this weekend could be worse than expected. The

key date had been released tomorrow on Saturday are fixed investments,

retail sales and the Consumer Price Index. Some analysts are

forecasting that China will deliver at its weakest growth rate in years.

The numbers could be stabilising, we must wait and see. Economists

are expecting that this could be the first of several this year. --

first of several rate cuts. Two indicators are forecasting signs of

stability. Industrial production rose by 9.8%. Picking up from a 30

four-month low. While fixed asset investment growth in the first five

months will stay flat at 20%. Little change from April. Investors

will have to wait for the data and the market's reaction to them it

would be this coming Monday. A test for the French President

this weekend with the country voting fine National Assembly. The

socialist Francois Hollande is looking to consolidate his power to

get through the economic and social reforms he promised. He placed

himself firmly on growth, not austerity. He has cut the

retirement age for all workers. He has made it more expensive to lay

off workers. The markets are taking the rough bombs in their stride. A

bond auction Serb government rates failing to record lows. -- Searle

government rates. Why do you think the markets have reacted in what

would traditionally be an unexpected way? That is correct.

The markets had been very calm so far. Even though they have added,

they have included mad people on the Penzance then said in election

campaign. They have raised the minimum wage -- the pension. They

have backtracked on revenues. The market is focusing on Spain and

Italy too much. It expected that France will manage. There is a

possibility that France were not get anywhere close to meeting

budget deficit targets and that he may fail to generate growth? Yes,

the growth is dependent on it the entire European situation. France

is the largest trading partner of Spain. If the eurozone gram balls,

of France would be a fake dead -- if the eurozone fails. -- will be

affected. We have yet to see the announcement of the new government.

There is clearly a downside risk that the French economy. There is

also the role of Francois Hollande on the international stage within

the eurozone. But he has to say to Germany about the school

integration. Malware the sight of eurozone nations and their finances

-- eurozone integration. Right now we are seeing an alliance of the

three big countries in the eurozone, Italy, France and Spain. They are

leading heavily in favour of the banking union in the short-term,

that seems to be needed to bail-out the Spanish banks in Ely and a

fiscal union in the euro bonds. -- Spanish banks financially. We

expect them to make moves in the direction of the banking union, but

not be in any mood to precipitate that fiscal union.

The Japanese cannot make up Olympus will announce the 2,500 job cuts

this morning -- Japanese camera company. This comes after at 8

billion dollar furred scandal. Ali and pears is considering a Lyon's

office that -- offers from Fujitsu and Sony. The Argentine President

has promised to close down her personal savings account in dollars.

She will convert the money to local currency and encourage others to do