:00:16. > :00:20.- and the winners Financial News with World Business Report.
:00:20. > :00:23.Hello and welcome to World Business Report.
:00:23. > :00:30.One fiscal cliff avoided - watch out for the next one as Washington
:00:30. > :00:35.prepares to do battle over America's $16 trillion debt.
:00:35. > :00:40.More evidence of a rebound in a china's economy, with the numbers
:00:40. > :00:45.confirming a strong December for the services sector.
:00:45. > :00:48.Do not crispy -- do not repeat our mistakes of the 1930s, a US
:00:48. > :00:58.billionaire tells European leaders white austerity is not the way
:00:58. > :01:02.
:01:02. > :01:06.US stock markets started 2013 with their best day in more than a year,
:01:06. > :01:09.US politicians late on Tuesday. The deal heads off $600 billion worth
:01:09. > :01:15.of tax rises and spending cuts, the so-called fiscal cliff, that
:01:15. > :01:20.economists warned could push the US market euphoria could prove short-
:01:20. > :01:25.lived. The deal, already criticised by the IMF, merely delays $100
:01:25. > :01:31.billion of government spending cuts until March 1st. And around the
:01:31. > :01:34.same time the US will reach its trillion dollars. The debt ceiling
:01:34. > :01:44.can only be raised after agreement in Congress which means the US
:01:44. > :01:45.
:01:45. > :01:48.could be on the brink of another cliff in a matter of weeks.
:01:48. > :01:56.Here at the New York Stock Exchange, the first day of trading got off to
:01:57. > :02:01.a very cheery start as American here.
:02:01. > :02:07.here. In just eight weeks, American lawmakers must once again attempt
:02:07. > :02:14.to tackle two fiscal related issues. One is the debt ceiling. The other
:02:14. > :02:18.new year dealt with that tax cuts but did not deal with the spending
:02:18. > :02:23.side of things. Lawmakers must face each other around the table again
:02:23. > :02:30.come March. The other issue is the debt ceiling. The US Treasury
:02:30. > :02:35.more money to pay debts. President Obama says he refuses, he does not
:02:35. > :02:37.want the debt ceiling to become a point of negotiation. The
:02:38. > :02:42.Republicans have already indicated that there that there oval
:02:42. > :02:46.for an increase to the debt ceiling if they get more spending cuts and
:02:46. > :02:54.entitlement reform. These all sets the stage for a test of the new
:02:54. > :03:02.Congress and a Test for the new confidence of the financial markets.
:03:02. > :03:08.analyst Louise Cooper. We are relieved that they got a deal in
:03:08. > :03:13.the end but we are looking ahead. That is not that far away? That
:03:13. > :03:20.rally we saw it is a relief rally rather than sustained euphoria.
:03:20. > :03:25.Remember that the stock markets did not really fall on fear of no deal
:03:25. > :03:29.therefore one wonders if they will rally on a mini deal. Sustainably
:03:29. > :03:34.rally. More rally. Morey rally. I wi rally. I wit that that is
:03:34. > :03:39.not the case. Asia is pretty flat. We had not seen a significant fall
:03:39. > :03:43.but it is significantly flat. is interesting that the fear index,
:03:43. > :03:47.the volatility in the American market has fallen quite
:03:47. > :03:55.dramatically over the fast -- past few training sessions. That is
:03:55. > :03:59.significant. I volatility means a investors may be more confident.
:03:59. > :04:05.That is summit watch as we get into the new year and trading volumes
:04:05. > :04:11.increase and people return to their desks. They will have to discuss
:04:11. > :04:15.the debt ceiling, the credit card is max out in the US. They have to
:04:15. > :04:23.come to a political agreement on that. That will mean spending cuts,
:04:23. > :04:27.would it? It seems that the Republicans feel that they had to
:04:27. > :04:35.compromise and they will be looking for paybacks in the next deal. That
:04:36. > :04:40.is the political dimension. It seems that investors, I think, I've
:04:40. > :04:44.starting to get bored with the whole crisis. As with the eurozone
:04:44. > :04:49.crisis, they got bored. They may be getting bored of the fiscal crisis
:04:49. > :04:55.in the US and may be willing to just ignore it. The assumption is
:04:55. > :05:00.that some kind of deal will be down, that the politicians will not
:05:00. > :05:05.commit economic suicide. Because a low interest rates, investors are
:05:05. > :05:09.forced and equities - maybe they were just ignore it. We will speak
:05:09. > :05:13.more about this in about ten minutes. She will return as we look
:05:13. > :05:16.This This fiscal This fiscalama is all of
:05:16. > :05:23.the papers, so we will talk more them.
:05:23. > :05:31.more evidence that the economy there is rebounding significantly.
:05:31. > :05:41.Figures confirm a strong month for the service sector. Happy new year
:05:41. > :05:42.
:05:42. > :05:47.Good news for the manufacturing now. It is a picture that is
:05:47. > :05:51.seemingly across the economy. Is that what people are saying?
:05:51. > :05:59.In things like we are seeing an improvement on both sides of the
:05:59. > :06:09.economy. We're seeing the services sector rising to a four-
:06:09. > :06:09.
:06:09. > :06:13.month high. 56.1 % in the month of reading above 50 indicates that
:06:13. > :06:19.growth is accelerating while a number below 50 is an indication of
:06:19. > :06:23.a slowdown. The fastest-growing services industry has so far
:06:23. > :06:29.weathered the global slowdown much better than the factory sector in
:06:29. > :06:33.will be a major stimulus for the mainland's economic stimulus going
:06:34. > :06:39.forward. Th forward. Tht potential will be coming from the services
:06:39. > :06:43.industry. One of the key drivers for this jumper is the construction
:06:43. > :06:50.industry which supports about 40 other industries. The size on
:06:50. > :06:54.strength de strength deernment restrictions... as you say,
:06:54. > :07:00.combined with manufacturing data, the shows and the revival in the
:07:00. > :07:03.world's second largest economy. To Europe now, where the crisis in
:07:03. > :07:07.the Eurozone has been calmed in recent mont recent montks to the
:07:07. > :07:10.European Central Bank pledging to governments. That has bought those
:07:10. > :07:13.governments some time to get on with their reform efforts. But are
:07:13. > :07:16.they going about it the right way? Definitely not, says influential US
:07:16. > :07:26.publisher Steve Forbes. He told the BBC that European politicians are
:07:26. > :07:31.
:07:31. > :07:38.repeating some of the mistakes the US made in the 1930s. European
:07:38. > :07:41.countries they should realise that what they're doing now in these
:07:41. > :07:45.countries is not much in terms of restructuring. They tried it in
:07:45. > :07:51.Italy and did not get very far. The Germans had not put much pressure
:07:51. > :07:57.on it. When talking about structure are you talking about propping up
:07:57. > :08:04.up up a legal business. If you're an
:08:04. > :08:10.outsider in Italy, it is difficult. We have tried it in Italy. War
:08:10. > :08:16.would be easy, in combination with government assets is reducing the
:08:16. > :08:22.tax burden instead of piling up. Spain has raised the top tax rate
:08:22. > :08:26.22%. The It 22%. The Ite raising it as well. Greece is raising everything
:08:26. > :08:31.and collecting nothing as businesses flee to neighbouring
:08:31. > :08:34.Bulgaria. They must realise that this is not the way ago and going
:08:34. > :08:39.the opposite direction. And then those economies will start to
:08:39. > :08:46.revive and that's it anyway bell built to service their debts.
:08:46. > :08:51.implication is that surely even more savage cuts in public spending
:08:51. > :08:57.programmes which are already giving and politic and politicms. The only
:08:57. > :09:01.way to preserve their programmes is of balancing a Budget, what they're
:09:01. > :09:04.trying to do now is the way they tried to balance budgets in the
:09:04. > :09:08.early 1930s which was piling on taxes which meant you had a
:09:08. > :09:13.contracting economy which make your revenues were always disappointing.
:09:13. > :09:18.Greece is perpetually about run out of cash. Spain is not meeting
:09:18. > :09:23.revenue per -- projections. They must learn that this is not working.
:09:23. > :09:33.The only way to do it is to get a grip -- by but economy. Revenues
:09:33. > :09:37.
:09:37. > :09:41.the US still sluggish, is China the saviour? China will do better this
:09:41. > :09:45.being an engine for the global economy, not enough to pull us out
:09:45. > :09:54.of the morass that we're in. We must and internally, not count on
:09:54. > :09:57.others to pull us out?. Al Jazeera says it's buying Current
:09:57. > :10:00.TV, the struggling US cable channel co-founded by Al Gore. The Qatar-
:10:00. > :10:03.based news network says the deal will give it access to more than 40
:10:03. > :10:05.million American households, compared to less than 5 million at
:10:05. > :10:15.the moment, putting it in closer competition with US news channels
:10:15. > :10:17.
:10:17. > :10:22.like CNN and Fox. Marcus today. China and Japan are