24/12/2012 World Business Report

the first time. -- shown. Time for World Business Report.

Welcome to the programme. The markets after Mario Monti it.

The man credited with stabilising the Italian economy says he is

available to lead a future Italian government. Joseph Steve Lewis

tells us wh tells us wh between the rich and poor is widening. --

Joseph Stiglitz. The Japanese yen weakens as the

Prime Minister in waiting his at revising the law that guarantees

the central bank's independence. -- hints at. Mario Monti says he is

available to lead Italy if a coalition is formed in support of

his agenda but he will not run in the forthcoming election. Reaction

to that has been mixed, with critics saying he was too vague and

supporters thankful that he remained in the fray. Unemployment

now stands above 11% and rising. That will play into the hands of

his rival, Silvio Berlusconi. As entrenched

entrenched in recession and austerity measures have hit the

population very hard. Internationally and on the markets,

Minicredit Mario Monti with stabilising the economy. -- many

people credit Mario Monti. The cost of borrowing fell under the can't -

- under his leadership. Thank you for joining us. Looking at this

statement that he is made, it seems uncertain. Why would he not stand

in his own in his own a candidate? is not actually standing or running

officially because he has seen the Italian population i

supportive of him. At best, they give him or a coalition that would

support him 15% of the actual vote and that is not enough to guarantee

that he can the Prime Minister again. If he runs in the election

and is not able to form a government, he will not be able to

become Prime Minister again because... It seems something of a

catch 22. On the one hand, there are reasons why he should not stand

he says he will support a party that follows austerity and we know

that austerity measures are extremely unpopular in Italy.

is correct. In fact, he does not want to run officially and the

parties that what austerity will not get a lot of votes. At the same

time, we know the probability of having a hung parliament with a

might be pulled back by the left, the right, the centre, whatever

bring together, like in Greece. there is some kind of a hung

parliament, will it be the markets that the sight this? Nobody is

wanting uncertainty. 2012 was the year of grace. Nobody wants that to

repeat with Italy. -- year of Greece. Mario Monti became prime

minister because of market pressure. Bonds went very high. They were

super high at one point. That is probably still the key to having a

change in t change in the moment, it is fair to say that the

markets are not putting any pressure on pressure onn addition,

that is why things are so relaxed at the moment and there is such a

lack of clarity. And it is the end of the year as well. Thank you.

The challenges facing Mario Monti and the Italian political system.

The issue of wealth inequality was back in the spotlight this year

after more protests around the world highlighting the gap between

the rich and the poor. The top 1% of American households have seen

their income almost quadruple over the last 30 years. However, at the

bottom end of the scale, in comes have barely changed. What is behind

that growing gap between the haves correspondent spoke with the former

and the former Nobel Prize and the economist J economist Jglitz and asked

how ever did inequality had become approximately 20% of all the income

in the US, has approximately 30% of all the wealth and while they have

been doing very well, the rest of the country has not. The recession

has made things even worse for them and the recession recovery. 93% of

the financial gain went to the top 1%. What contributes to this?

Markets do not exist in a vacuum. We have all kinds of laws that

shape our e shape our ed the way they has been to favour the very top and

we have seen that in our financial markets, where the bank has walked

off with you mongers bonuses while the rest of America was left

picking up the pieces -- with massive bonuses. Chief executives

of companies were able to walk away with larger shares of the corporate

time not because they are more productive but because they have

mastered the art of taking a larger part of the corporate income for

themselves. How can this change? Will anything changed? The irony is

that as the income inequality has got larger, we have been doing less

marginal marginal tax rates of 70%. Now they

are at 35%. If you make your money by carried interest, capital gains,

the taxes UK are even lower than that. Mitt Romney, one of the

presidential candidates, paid taxes on his reported income, keeping

much of that outside the US, of only 14%. Other people making

their their living, were paying 28%, 35%.

We clearly have a system that does not correct to the inequality and

actually encourages a distortion in our economy. What are the long-term

implications, especially when it comes to the fallout for the wider

economy? America has always characterised itself as a land of

opportunity, the land of the American Dream, is a myth. It is no

longer true. And we have less industrial countries. What that

means is that a child's life prospects are more dependent on the

income and education of its parents than in the UK, much less than in

the Scandinavian countries. If you are born to poor parents, the

likelihood is that you will remain poor and that means that we are

wasting one of our most valuable resources, our human potential.

Joseph Stiglitz in conversation with our correspondent. The

Japanese yen has weakened it today after some rather forceful comments

from the new kind minister -- Prime Minister. What was he saying?

Shinzo Abe has been saying that he wants the Bank of Japan to set an

inflation target of 2%. Of course, he has now been elected and will be

weekend on local television, he said that if the Bank of Japan

refused to set this inflation target, he would consider revising

the legislation that currently guarantees its independence. If

that were to happen, it would mean that the government could put

direct pressure on the central bank to implement all kinds of measures

including what Shinzo Abe has been suggesting, which is unlimited

monetary easing - printing more money. That would flood the market

with extra Japanese yen, which he says would encourage people to

spend more money to boost the economy. In addition, it would also

devalue the Japanese yen. It is not as the prime minister in waiting,