05/02/2013 World Business Report


05/02/2013

Similar Content

Browse content similar to 05/02/2013. Check below for episodes and series from the same categories and more!

Transcript


LineFromTo

Those are the latest headlines. It is now time for the latest

:00:03.:00:13.
:00:13.:00:22.

financial news with the World The US government says it will soon

:00:22.:00:25.

credit rating agency Standard and Poor's for its part in the global

:00:25.:00:31.

financial crisis. Two years on from the Gulf of Mexico will spell, B P

:00:31.:00:35.

shows that it is still paying the price for the disaster. It is

:00:35.:00:45.
:00:45.:00:46.

expected to announce a slump in profits. Hello and welcome, this is

:00:46.:00:51.

World Business Report. We are also taking a look at Toyota's latest

:00:51.:00:55.

profits news as it reclaimed the title of world's biggest seller of

:00:55.:01:00.

cars. Five years on from the financial

:01:00.:01:04.

crash that triggered a global recession, credit ratings agencies

:01:04.:01:07.

may face a legal fall-out. Late last night the US government

:01:07.:01:11.

announced it plans to file a lawsuit against Standard and Poor's.

:01:11.:01:17.

It is accusing them of giving top recommendations to certain mortgage

:01:17.:01:21.

products when they knew that they were not a safe investment. It is

:01:21.:01:25.

argued that the ratings encourage financial institutions around the

:01:25.:01:33.

world to buy and sell what proved to be toxic financial products.

:01:33.:01:38.

Since 2007, many questions have been asked about the role of the

:01:38.:01:42.

crowded regions agencies, particularly what they played in

:01:42.:01:47.

creating the housing bubble. These agencies have a key function in the

:01:47.:01:53.

financial industry. Their job is essentially to assess the

:01:53.:01:57.

creditworthiness of bonds for companies and even governments. As

:01:57.:02:06.

we now know, in many cases they are potentially responsible for

:02:07.:02:11.

fuelling the financial crisis. The US government is expected to file a

:02:11.:02:15.

civil lawsuit against Standard and Poor's and the model it used to

:02:15.:02:19.

calculate its ratings for mortgage bonds. Standard and Poor's says

:02:19.:02:23.

that it denies any wrongdoing and that any lawsuit would be without

:02:23.:02:28.

factual or legal merit. But of course, many will be watching this

:02:28.:02:32.

closely as if the government's first action against a ratings

:02:33.:02:38.

agency rated to his behaviour during the financial crisis.

:02:38.:02:45.

More analysis from market strategist at canter index. Five

:02:45.:02:51.

years on, a lawsuit happening. Your take on these events? A hardly

:02:51.:02:56.

surprising. When you cast your mind back five years ago, the crisis and

:02:56.:03:05.

recession really came from the analysis of mortgages. Traders and

:03:05.:03:08.

banks and credit ratings managers within the banks are very reliant

:03:08.:03:14.

on this information. Especially from three agencies. Standard and

:03:14.:03:19.

Poor's, Fitch and Moody's. They are expected to provide the rating and

:03:19.:03:26.

quality. Particularly at the troublekph level. -- trouble they

:03:26.:03:32.

level. Everybody looks for excuses. Depressed people who came under the

:03:32.:03:39.

hammer or was of course the ratings agencies. They are pretty small.

:03:39.:03:45.

When you think of the huge, trillions of trillions of dollars

:03:45.:03:50.

of global debt, to be reliant upon an agency is like asking Libor to

:03:50.:03:56.

be reliant on the British banks. their job is to say whether a

:03:56.:04:00.

product is safe and whether the rating is good. They gave good

:04:00.:04:05.

ratings to the subprime mortgage products. If you run expert and

:04:05.:04:08.

spent a long time researching them, perhaps you would think they would

:04:08.:04:13.

think, no, no, No This is not a good product. Many would say they

:04:13.:04:20.

are not in the -- are in the pockets of clients. But I do not

:04:20.:04:25.

think the role of the ratings agency is powerful enough. If the

:04:26.:04:29.

Department of Justice and other people are successful in are suing

:04:29.:04:33.

these people, companies who own these things are not big enough to

:04:33.:04:39.

be able to cope with it. It is like everything else. If somebody does

:04:39.:04:42.

not tell you the information that you need correctly, it is difficult

:04:42.:04:48.

for those companies to assess. But the information that was imparted

:04:48.:04:52.

around the world was hopeless. There is no other word. Absolutely

:04:52.:04:59.

inadequate. This story is in today's papers. We will talk about

:04:59.:05:03.

it later. As well as the other stories in the papers today. That

:05:03.:05:07.

is later on. Taking a look at some more business stories.

:05:07.:05:12.

Once a giant in the Our World industry, BP has spent the past few

:05:12.:05:16.

years selling billions of dollars of assets to pay for its part in

:05:16.:05:21.

the 2010 Our World spill in the Gulf of Mexico. It spent some $24

:05:21.:05:27.

billion on clean-up and compensation. Later today it is

:05:27.:05:31.

expected to report a 20% drop in profits in the 4th quarter of last

:05:31.:05:36.

year. The company needs to come up with a new strategic focus if it

:05:36.:05:43.

hopes to rebuild itself. BP estimates that it will

:05:43.:05:46.

eventually spend $42 billion on cleaning up after the disaster.

:05:46.:05:52.

Paying compensation claims and findings for pollution. To raise

:05:52.:05:57.

cash, it has sold off assets. Those are profits. It is thought they

:05:57.:06:01.

will be 20% lower than they were a year ago. The disaster has left BP

:06:01.:06:08.

a shadow of his former self. Five years ago it was worth $212 billion.

:06:08.:06:13.

It was one of the world's biggest energy firms. Now it is worth only

:06:13.:06:23.

$141 billion. It is now chad -- second tier. The strategy is shrewd

:06:23.:06:30.

to grow. They have done the shrink part of it. There will not be

:06:30.:06:34.

significant growth in production this year. We could start to see

:06:34.:06:40.

some of the benefits of the strategy in 2014. And how can BP

:06:40.:06:46.

rebuild itself as an international oil major? It does not have the

:06:46.:06:54.

cash to do so. But what it has to do -- done is produce a lot of

:06:54.:07:02.

exploration licences. Brazil, Australia and India. Developing

:07:02.:07:09.

deep water oil prospects. That will set us up for the long-term. Given

:07:09.:07:13.

that its emphasis has been on rebuilding the reputation for

:07:13.:07:19.

safety, let us hope that will stand it in good stead. BP also has high

:07:19.:07:24.

hopes in Russia, which has agreed to take a 20% stake in a national

:07:24.:07:32.

oil firm. The deal is due to be sold next year. BP hopes this will

:07:32.:07:36.

lead to more business in Russia. But it is Russia's government that

:07:36.:07:40.

will decide how much it can do there. So much depends on whether

:07:40.:07:45.

the executives can keep in with the rulers.

:07:45.:07:51.

Taking a look at it company that had a good year in 2012. It was

:07:51.:07:54.

good what theatre. It rebounded strongly from the previous year,

:07:54.:07:59.

when it was hit by the tragic earthquake in Japan. In the hour,

:07:59.:08:06.

it should report its latest earnings. We have not quite got the

:08:06.:08:16.
:08:16.:08:17.

numbers yet. What are they expected to say? The strong rebound is a

:08:18.:08:22.

sign that it has reclaimed the title of the world's largest auto

:08:22.:08:27.

maker from General Motors. Sales are said to drive Toyota's earnings

:08:27.:08:33.

today. China, the world's largest auto market was a big problem. But

:08:33.:08:38.

sales started to pick up in January. North America continues to be a

:08:38.:08:45.

bright spot. Sales topped 2.2 million units in the US last year.

:08:45.:08:50.

Several models continue to be extremely popular with American

:08:50.:08:56.

buyers. China is still a weak spot. It is down 15% amid tensions

:08:56.:09:04.

between Japan and China over the islands. We have seen a turnaround.

:09:05.:09:11.

Sales rose. 23.5 % gain compared to a year ago. The first rise since

:09:11.:09:18.

June. If you are talking about Rio de's rivals, the likes of Nissan

:09:18.:09:23.

and Honda, they have been recovering since October but have

:09:23.:09:27.

not yet regained prior levels. In their bid to regain their leading

:09:27.:09:31.

position, these Japanese companies have taken a series of measures in

:09:31.:09:36.

recent months, including offering larger discounts on new cars and

:09:36.:09:40.

compensation for owners whose cars were damaged during protests during

:09:40.:09:47.

the territorial dispute. We will take a look at the numbers

:09:47.:09:56.

when we get them. Time to take a look at the markets. I have to save,

:09:56.:10:00.

the eurozone fear factor has returned in a major way. We are

:10:00.:10:05.

seeing a bit of a sell-off. The interest on debt in Spain and Italy

:10:05.:10:12.

Download Subtitles

SRT

ASS