18/07/2012 World Business Report

salary. For the latest financial news with Sally.

You're watching the World Business Report on BBC. The headlines: A

significant slowdown, a warning from the top Bank are about the

world's biggest economy. -- Bank us. A possible green light for

government cash for struggling carmaker Peugeot if they plane to

reduce the number of job cuts. -- if they plan to reduce. The US

economy is losing momentum, a growth forecasts had been sliced

and unemployment remains stubbornly high. Now, a risk of recession.

That is the gloomy picture painted by the most senior banker, Ben

Bernanke. He will appear before lawmakers and markets would be

anxious to hear about what to be danced to markets. The federal

chairman painted a grim picture. He said the economy was growing, but

more slowly than a few months ago. He pointed to a weakness in

manufacturing, a former bright spots, and a slump in job creation

and declining consumer confidence. He said the Federal Reserve was

ready to add stimulus if things got worse. As on previous occasions, he

held out little prospect for immediate action. You are looking

carefully at the economy trying to judge whether or not the loss of

momentum we have seen recently is enduring. And whether or not the

economy is continuing to make progress towards its unemployment

and more satisfactory labour conditions. If that does not occur,

we will need to consider additional steps. His warning was to Congress.

He said the economy will slip into recession, albeit a mild recession,

if Congress failed to take action against a fiscal cliff. This refers

to the combination of Bush era job cuts and cards in shop --

government spending that are due to take effect at the end of the air -

- of the Year. He also spoke about the interest rate rigging scandal.

He said the Libor scandal Lee is structurally flawed and does not

hopeful confidence in the system -- is structurally flawed. Sir Mervyn

King was talents on the spy UK politicians yesterday. This was his

response -- was challenged on at these. -- on that the spy. You have

rules to prevent this. This is not the same as saying that you have

evidence. I am joined by a market strategist at CIB. A gloomy picture

painted by two of the biggest bankers in the world. It is about

who said what. The other point is that we have had a system that is

relied on as Sir Mervyn King said on self regulation that is now

being said to be seen as unworkable and uncertain. That is the suit as

far as the Libor scandal is concerned. In Japan, they are

talking about focusing on it who is involved in their scandal. If we

were to restructure the Libor scandal, would that be the same for

the other ones? We have seen other systems globally whether are seeing

that people are not keen to participate for fear that at some

stage the participation could come back to back them. That throws up

some interesting consequences. Less activity in the markets that could

lead to greater liquidity. That is an environment that we do not want

to go down. It is a case that the system has been in place for a

prolonged period. As system is linked to short-term Treasury bills

which can be influenced by central banks are aware that the

jurisdiction is. The problem is that derivatives contracts had been

linked to the specific interest rates. That would involve a huge

amount of structural change. Let's look at the US economy. Everyone

wants to know what Ben Bernanke is thinking and what they are poised

to do to help the US economy. He was quite downbeat. He said a mild

recession is possible if things don't change in the near future?

is difficult to be anything other than a relatively downbeat.

Internationally and domestically he is under pressure. The second

quarter in the US was subdued. They could be a slight improvement. We

have an external environment, the eurozone on one hand, the Chinese

on the other. It is difficult for Ben Bernanke to be anything but a

relatively subdued. What measures were introduced to help the US

economy? I will be surprised if there will be anything. We would

have a question and answer situation. We will have to wait

till the end of August until any substantial decision. There will be

a get to get that at the end of August before the September meeting.

-- get together. Let's have a look at other business stories. HSBC

head of compliance resigned as a US Senate here at -- hearing and other

executives apologise. They allow this money laundering to take place

for drug cartels and terrors. The French Socialists company is

tearing up a key labour market policy introduced by the former

president. Taxes would be reintroduced for all other than

companies that have less than 20 employees. Intel is warning that it

for me is its next profit forecast because of the weak economy. The

second-quarter income was down more than 4% from the same period last

year. It makes chips for 80% of the world's personal computers. BHP

bulletin has boosted its iron ore by 15% in the last three months,

despite a weaker demand from China. They say decoy be a 12th

consecutive record. -- it could be. Mario Monti says that's easily

could default. He wants confirmation that the Governor will

resign. Sicily has a special status with a debt of 5 billion euros. It

has an interest repayment of 500 million euros. The French Industry

Minister will meet the TAFE executive of Nissan -- the teeth

executive of Peugeot. Purcell is one of the cornerstones of the

manufacturing sector. They employ a 100,000 people. They are producing

too many cars for a declining market. Peugeot wants to close its

plant near Paris at the end of next year and lay-off 8,000 staff. The

government says that its managers need to soften the blow to workers.

In return, it will of the them a package of state aid.

government is looking into some local measures such as encouraging

French car buyers to buy cars manufactured in France. The problem

is that the car industry is very much an international business and

their problems will not be solved by raising sales in France alone.

Two decades ago, they dominated the core markets of France, Italy and

Spain in 2005. It builds up a cash pile that they are burning through

now. Now, they are relying on a revival in its fortunes on a new

model of car. Candy is put them back in the black? It cannot make

up the shortfall. Be it must be cost cuts, but that is why a

factory closure comes in. Over the next six happened 12 months, we

will see what the contributions by the government make. It would not

be a solution to the problem. new models and however much the