06/03/2013 World Business Report


06/03/2013

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sanctions. Those are the latest headlines from BBC World News. Time

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now for the money news with Sally Hugo Chavez dies. Be transformed

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Venezuela's economy, what next for the oil-rich state? -- heat.

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Sluggish growth, persistent unemployment and a political

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deadlock. But US shares still hit a Welcome, you're with World Business

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Report. I'm Sally Bundock. Also in the programme, we're going to look

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at a Sharp's shares, their rising sharply on news of a white knight

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in the wings. -- they are. As you've been hearing, Venezuelan

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President Hugo Chavez has died after a long battle with cancer.

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During more than 14 years in office he transformed Venezuela into a

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socialist state. He was fortunate to be in power during a surge in

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oil prices. When he took office prices for Venezuelan crude were

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less than $9 a barrel and surged more than ten times that to around

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$126 a barrel in 2008. Hugo Chavez took control of the oil fields more

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than a decade ago and that paid for a nationalisation fries seeing the

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state take control of almost every industry -- drive. I'm joined by

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Neil Atkinson, who worked for Venezuela's main oil company, for

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19 years. Thank you for joining us. You have an insight into his legacy.

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Been your introduction you hit one of the nails on the head, when

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Chavez came to power in 1999 the oil price was around $10 a barrel -

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- in. A decade later it got to nearly $150 a barrel. That huge

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increase in wealth, that huge increase in oil revenues, gave

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Chavez the opportunity to basically spray money around Venezuela's

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initially giving money to poorer sections of society, to support

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projects which clearly were necessary and were needed, but as

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the years went by it became increasingly obvious that the

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watchwords of the Chavez years were basically waste, incompetence and

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corruption. Sadly when you go to Venezuela today and you look at the

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physical infrastructure of the country, you read about the quite

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extraordinary crime rate. It's the murder capital of the world these

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days. And you mentioned the lack of food staples in the shops, the

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economic legacy of Hugo Chavez is actually pretty sorry. When you

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left the company, you say you left a company in chaos. It was a

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smaller version of the big picture. One of the criticisms that was made

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about the company was that it was a state within a state. In some

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respects it was because the national oil company prior to the

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Chavez era was by any standards a very well run company, especially

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by the standards of national oil companies. That time there was a

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major investment programme planned which would have increased

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Venezuela's oil and gas production capacity, and Venezuela could have

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been producing twice the amount it does today. Since Hugo Chavez came

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to power, you could almost say it has been looted. Oil production in

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Venezuela has been falling in recent years, and certainly

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struggling to keep up. What now? Obviously Hugo Chavez has died, he

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has this legacy that he's left behind and he's been in power for a

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very long time. It will be quite a job, won't it, to turn things

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around and change things? Who's in the wings to take over. Buys

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President Maduro is the favourite to be the ruling party candidate --

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vice-president. Is difficult to see how Chavez can be replaced. -- it's

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difficult. This is like the : phenomenon in Argentina. It will be

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hard for somebody to live up to Chavez's charisma, and his

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undeniable hold on the affections of a large section of Venezuelan

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society. We know we will find as the election comes and goes and the

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months unfold we will have to look to the army as one of the key

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indicators as to where the direction will be. It is a story

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and situation that we will keep our eyes on on World Business Report.

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The Dow Jones industrial average closed at an all-time high on

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Tuesday. The main share market beat the previous record set in October

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2007 before the global economic downturn. Given the current

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political stalemate over the budget in the US and the slowness of the

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recovery, why such exuberance? Michelle has more from New York.

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From the opening bell... stocks roared ahead. The Dow Jones

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Industrial Average, which tracks the performance of some of the

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biggest names in corporate America, climbed more than 125 points during

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the day to close at a record high. A huge achievement after the losses

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triggered by the financial crisis. Psychologically it's very important.

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It's an indicator to the rest of the world that the equities in the

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stock market is a safe thing. You need to put your money to work in

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the stock market. Investors were cheered by a statements about

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spending from the Chinese and a positive report on America's

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service sector -- by statements. There's no doubt Wall Street has

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come a long way to reach this historic day. From the credit

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crisis to the collapse of Leeman brothers and to Europe's debt

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crisis. -- Lehman Brothers. But the optimism shared inside his building

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is not shared by most Americans. With all the dramas people in this

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Manhattan shopping district were not feeling too celebratory.

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I'm still poor. I have no money. It's very hard. Specially with jobs,

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it's very hard to get a job. -- especially. Do you think the

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economy is getting better? No. Jobs are still hard at the moment.

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Unemployment is up. It's definitely not getting better. I'm a retailer,

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it's turning round but very slowly. I'm in the wine and spirits

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business, it's turning round very slowly but I'm happy because I

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making lots in the stock market. might want to thank those inside

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this building for the strength of the market. The unusual steps taken

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by America's central bank have helped to boost stock market prices.

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The question now is will the recovery be strong enough to

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maintain those games once these support is withdrawn? -- games.

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Thank you for joining us. What do you make of this, given the state

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of the economy in the US these markets are out of control, aren't

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they? To a certain degree. Some people would even say the prices

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could even be artificial. I would say that the biggest driver behind

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this recovery on Wall Street has been the continued central bank

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activism by the Federal Reserve's by supporting the economy through

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increased stimulus -- Federal Reserve. And the ultra-low rates

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keeping a favourable environment for investors, to increase their

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appetite for risk. But as you said it is out of control. It doesn't

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match up with the US economy. It is a slow, gradual recovery in place.

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Some could say it may even stall at some point given the US sequesters,

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the spending cuts. That's one of the big concerns go wing-forward.

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Whenever we see these record highs being hit and markets rallying in

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this way, we think just around the corner there will be a big reaction.

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-- going forward. Absolutely. Some could say the sequester itself

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could be a positive catalyst because the Federal Reserve have

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pledged to keep an accommodative rates remain stubbornly high. If

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the US economy stalls unemployment will remain very high, and that

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would be positive. Markets. -- positive. Markets. The problem is

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Europe and China. So there are issues going forward, though. I

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think investors should celebrate right now. Are right, thank you for

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joining us. -- all right. Australia's economy

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continues to grow at a healthy rate in the final three months of last

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year. It crewman at an annual rate of 3.1%. -- it grew at. Australia's

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also seemed growing demand for its farm products like beef. -- also

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seen. Shares in a Sharp surge in Tokyo today. At one stage they were

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up almost 20% -- in Sharpe. They are potentially in talks with

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Samsung over a future investments - - in Shah. -- over future

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investments. -- in Sharp. Let's show you those numbers for the

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markets. Let's enjoy it while it lasts, but a cautionary tale.

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