Browse content similar to 09/07/2012. Check below for episodes and series from the same categories and more!
Line | From | To | |
---|---|---|---|
Borgnine. Warped time now for the money news with Sally and World | :00:06. | :00:16. | |
:00:16. | :00:17. | ||
Business Report. Welcome to World Business Report. | :00:17. | :00:22. | |
The headlines: The deputy governor of the Bank of England must explain | :00:22. | :00:26. | |
his role in the interest-rate fixing scandal. | :00:26. | :00:30. | |
Welcome news for China's government and consumers as falling food | :00:30. | :00:40. | |
:00:40. | :00:41. | ||
prices lead inflation to cool. It could be a career defining | :00:41. | :00:44. | |
moment for Paul Tucker, the deputy governor of the Bank of England who | :00:44. | :00:48. | |
has ambitions of becoming its next governor. He has before politicians | :00:48. | :00:53. | |
today to explain his role in the Barclays rate fixing scandal. What | :00:53. | :00:57. | |
MPs would like to know it is if he encouraged the bank to lower the | :00:57. | :01:01. | |
rate at which it lends to other banks, the so-called libel rate. | :01:01. | :01:05. | |
Questions will centre around a phone call between Bob Diamond and | :01:05. | :01:13. | |
Mr Tucker in which Mr Tucker discussed the high interbank | :01:13. | :01:18. | |
lending rates. After the discussion, Barclays' rates fell. In his | :01:18. | :01:21. | |
testimony to Parliament, Bob Diamond said he did not consider | :01:21. | :01:26. | |
that Mr Tucker was asking him to lower the rate, but that a | :01:26. | :01:30. | |
misunderstanding arose further down the line. I didn't take it as a | :01:30. | :01:36. | |
directive, I took it as either an indication that we were high for an | :01:36. | :01:42. | |
audience that we were high. What I said, I am not quoting exactly, I | :01:42. | :01:52. | |
:01:52. | :01:54. | ||
said that the reality was that we at Barclays were coasting at the | :01:54. | :01:57. | |
levels at which we had to borrow, and other institutions who had to | :01:57. | :02:01. | |
take government money were posting below those levels. | :02:01. | :02:04. | |
What do you think Paul Tucker will say later today? | :02:04. | :02:07. | |
I think he will say that he was not trying to tell Barclays or any | :02:08. | :02:16. | |
other bank to the libel rates or a fixed interest rates. -- lower. He | :02:16. | :02:19. | |
will say he was just asking why Barclays was higher than other | :02:19. | :02:25. | |
banks during a time of huge stress in the banking system - in 2008. He | :02:25. | :02:29. | |
will ask if it is not a reasonable question to ask - the bank needed | :02:29. | :02:32. | |
to know what was going on at the time. He will say it was perfectly | :02:32. | :02:36. | |
innocuous. And that the Financial Times, what | :02:36. | :02:40. | |
do you suspect? Last week in the middle of this process when Bob | :02:40. | :02:45. | |
Diamond was giving his testimony, you had a graph to show a dramatic | :02:45. | :02:50. | |
drop in the interest rate. The conversations that went on between | :02:50. | :02:53. | |
Mr Tusk and Bob Diamond. There is no doubt that Barclays | :02:53. | :03:00. | |
Fixed its rate after the phone call -- and Mr Tucker. It is pretty | :03:00. | :03:03. | |
clear that other banks were doing something similar at the same time. | :03:03. | :03:08. | |
The question is, how much did the Bank of England No and was it given | :03:08. | :03:13. | |
tacit approval? I'm sure they didn't give instruction to the bank, | :03:13. | :03:19. | |
but was there a nod and a wink and was it appropriate? That is what we | :03:19. | :03:23. | |
will be trying to find out today. How effective you think this | :03:23. | :03:26. | |
committee is? Some who are on it have told the press that they think | :03:26. | :03:31. | |
they are powerless to get to the bottom of this. | :03:31. | :03:35. | |
The day-to-day stuff of finding out what is going on in the UK, they | :03:35. | :03:39. | |
are OK. When it comes to specific wrongdoing, they are not lawyers | :03:39. | :03:43. | |
and they do not have legal support. They don't have reams of evidence | :03:43. | :03:47. | |
so they are finding it difficult. They didn't really lay a finger or | :03:47. | :03:49. | |
a Bob Diamond except for the beginning when the chairman, who | :03:49. | :03:53. | |
had been clearly briefed by somebody, had the latest | :03:53. | :03:59. | |
authorities have you that Barclays' culture was very bad, which was a | :03:59. | :04:02. | |
shock to Bob Diamond. But after that it petered out. | :04:02. | :04:07. | |
Where will this finish? Is there a larger parliamentary inquiry into | :04:07. | :04:11. | |
what went on coming? Other banks will come to the forefront and be | :04:11. | :04:15. | |
named and shamed - what do you think the ultimate outcome will be? | :04:15. | :04:18. | |
I think it will be that the authorities will not be seen to | :04:18. | :04:22. | |
have done something wrong, although the taint of it might mean that | :04:22. | :04:25. | |
Paul Tucker might damage his chances of becoming the Governor of | :04:25. | :04:30. | |
the Bank of England. Briefly, the libel system will | :04:30. | :04:34. | |
probably be changed? Yes, it will be changed, as will | :04:34. | :04:38. | |
other markets that depend on the Lords and winks and things going on | :04:38. | :04:48. | |
:04:48. | :04:54. | ||
behind the scenes. -- on nods and winks. | :04:54. | :04:58. | |
Now we move on to other stories. Finance ministers in the eurozone | :04:58. | :05:01. | |
at our meeting in Brussels today amid concerns about the high rates | :05:01. | :05:04. | |
of interest that Italy and Spain are having to pay to borrow money | :05:04. | :05:09. | |
on the bond markets. Splits are emerging between southern and | :05:09. | :05:14. | |
northern members of the eurozone about how decisions are taken. | :05:14. | :05:19. | |
The new Greek government won a confidence vote late on Sunday, | :05:19. | :05:23. | |
which was widely expected. It followed a three-day debate during | :05:23. | :05:26. | |
which the Prime Minister promised to win back the trust of foreign | :05:26. | :05:33. | |
lenders. He also said he would ask Europe and the IMF with more -- for | :05:33. | :05:43. | |
:05:43. | :05:52. | ||
output from Tuesday... Much-needed breathing space for | :05:52. | :05:58. | |
Chinese policy makers as inflation hits a 29-month low. Selling price | :05:58. | :06:01. | |
rises make it easier for the government and Central Bank to | :06:01. | :06:05. | |
continue their campaign to cut interest rates and boost growth. | :06:05. | :06:12. | |
The Consumer Price Index rose 2.2% in June, that is five months below | :06:12. | :06:17. | |
target. This comes after Wen Jiabao said that the economy is still | :06:17. | :06:23. | |
facing a huge pressure. Joining was met from Beijing is the deputy | :06:23. | :06:33. | |
:06:33. | :06:41. | ||
director of the China forecasting service -- joining one... | :06:41. | :06:45. | |
Inflation is definitely in the control of the government now. We | :06:45. | :06:50. | |
see this figure at 2.2% - that is the third month in a row we are | :06:50. | :06:54. | |
reading a negative amount of growth. What we will see in the next few | :06:54. | :07:01. | |
months is that inflation will keep on being very low, although it will | :07:01. | :07:05. | |
become higher towards the end of the year. It is easy to say that we | :07:05. | :07:08. | |
will have no difficulty achieving the 4% CPI target for the | :07:08. | :07:14. | |
government. Yesterday Wen Jiabao said he was fairly pessimistic in | :07:14. | :07:18. | |
terms of what he said. What is he saying to us? How worried do we | :07:18. | :07:27. | |
need to be about where China is heading? If you combine today's CPI | :07:27. | :07:32. | |
with his report yesterday and last Thursday's surprise interest-rate | :07:32. | :07:35. | |
cut, I think that is telling us that the government already saw | :07:35. | :07:41. | |
that the CPI number will be below the market consensus and that the | :07:41. | :07:47. | |
second quarter GDP figure will not be looking very good. We are | :07:47. | :07:53. | |
looking at a 7.7% GDP for the second quarter, which will be the | :07:53. | :07:57. | |
bottom of the Year. The government is watching this very carefully. | :07:57. | :08:01. | |
They are very risk-averse. They do not want to see the economy | :08:01. | :08:05. | |
collapse. Especially because this is the year of a political change | :08:05. | :08:08. | |
of guard. They need to make sure there is good and steady economic | :08:08. | :08:14. | |
growth to lead for a good tradition for the government. What could be | :08:14. | :08:18. | |
the element that could cause real problems for the Chinese economy, | :08:18. | :08:22. | |
then? You say they are risk-averse. They have been very proactive at | :08:22. | :08:26. | |
the moment, we saw that rate cut last week which was a surprise. | :08:26. | :08:29. | |
What could cause real headaches here? Is that the property market? | :08:29. | :08:32. | |
The amount of credit that is swirling around the market at the | :08:32. | :08:37. | |
moment and what happens when that runs out? Good question. | :08:37. | :08:40. | |
Fundamentally, there are two main challenges for the Chinese economy | :08:40. | :08:46. | |
now. One is the export sector and the other one is investment. Export | :08:46. | :08:49. | |
is not as important to the Chinese economy compared to before, but it | :08:49. | :08:54. | |
still comprises about 30% of its total GDP. Especially what's going | :08:54. | :08:57. | |
on in the western world - especially what's happening in the | :08:57. | :09:02. | |
eurozone. The EU is China's largest export destination and their | :09:03. | :09:05. | |
biggest trading partner. Whatever is going on there will have a large | :09:05. | :09:10. | |
impact in China. When it comes to the investment story, that's still | :09:10. | :09:16. | |
very important because it comprises about 50% of Chinese total GDP. The | :09:16. | :09:24. | |
property market is very important. Wen Jiabao said clearly that they | :09:24. | :09:27. | |
were not letting the price shoot up to the sky as we saw in the last | :09:27. | :09:31. | |
seven years. Fundamentally, the demand is there, so the investment | :09:31. | :09:34. | |
into the property market will eventually pick up. Thank you for | :09:34. | :09:37. | |
your analysis of what is going on in China. | :09:37. | :09:43. | |
Let's look at the markets now, they are not having a good session today. | :09:43. | :09:46. |