17/10/2013 World Business Report

asylum application was rejected. Those are the latest headlines. Now

for the latest financial news with World Business Report.

Markets welcome the deal to end America's debt deadlock as analysts

begin to count the cost to the US economy.

Plus ` son of Libor? Regulators widen their probe into suspected

rigging in the global currency market.

Welcome to World Business Report. In just a moment, more on what could be

a massive new scandal to hit the financial industry. First, as you

have been hearing, the US Senate and House of Representatives have voted

through an 11 hour veal to raise the nation's borrowing limit and fund

the Federal Goverment until early next year. `` 11 power bill.

Financial markets breathed a sigh of relief. The risk of America

defaulting on its debts have been averted. US bond yields have fallen.

Analysts are already counting the cost to the US economy of the two

week shutdown of government services that has seen hundreds of thousands

of workers sent home without pay. Standard and Poor's and says that

the crisis have wiped around 0.66% off GDP growth this quarter. In

money terms, it has cost the American economy $24 billion. That

figure does not reflect the true cost to individuals and businesses

would to the reputation of the US in the eyes of global investors.

It is a busy time in this home. Her two homes are doing homework. A

single mother with no child support or alimony, she relies on her

government job to pay for everything. The last two weeks have

been a struggle. It is extremely difficult. The last pay cheque was

only for one week. I did not know I would be getting another paycheque,

depending on when we returned. There is no information as to whether we

would be getting in back pay. So we just stop spending and start putting

money into the economy. The American economy depends upon people like

this to spend money. With 450,000 federal workers pinching pennies,

the shutdown has come at a price. The last under the US government

shutdown, in 19 54 to anyone days, it cost the Federal Goverment $1.5

billion. `` in 1995 for 21 days. One research firm estimates that the

government lost $300 million each day. Goldman Sachs says that the

shutdown could shave as much as 0.9% from the American GDP this quarter.

Economists at Bank of America cut their forecasts for US growth this

quarter from 2.5% to 2%. While these may not seem like significant

figures, this is not a normal, healthy economy. America is still

recovering from a crippling recession. Washington's short`term

fiscal policies are becoming costly. It is driven by character ``

calendar driven crises. That is undermining economic growth by about

0.25% per year since 2009 and costing the economy some 900,000

jobs. For now, this mother is eager to hear back to her job but worries

that this is not over. I'm going to get back very cautiously. I will

have an expectation around January. These are some of the short`term

effects of the shutdown. The long`term effects remain unclear and

could be much more far reaching. For instance, America is now somewhat

tarnished in the eyes of global investors.

A rather gloomy outlook therefore America's future. Another take now.

These two week stand`off ` what damage would you say it is done in

terms of future growth in consumer confidence? This is building up to

be a huge issue for Q4. The longer this went on, the more of an impact

on GDP. Once we hit the debt ceiling, the implications for GDP

growth at just in the US but across the industrialised world would be

devastating. However, I do think that this has been resolved early

enough in the quarter for the US to make up quite a lot of the output

and the negative impact that it has lost through the crisis. The net

impact of this on Q4 US GDP growth may be very small indeed at the end

of the day. In which case, what effect if any do you think this will

have on the US Fed decision as to when to begin tapering or not? You

think that we will begin to see tapering any time around when the

new chairman will stand in for indeed before January 15 and we see

the government negotiations begin again? The crisis expectations for

tapering were pushed into next year. But I think that there is still a

chance that the Fed may go in December if the economic data

running into the end of the year is strong enough. The data next month

will be hugely distorted by what has happened. By the time we get to

December, a lot of these distortions will be ironed out. Remember that

the US economy was strengthened quite significantly running into the

crisis. The degree to which it can recover its boys may increase the

chances that we could possibly see Fed tapering before the end of this

year. I do not think that this will happen, on balance, but there is a

significant chance that it May. What damage you think, if any, this has

all done to the confidence that American `` America's foreign

creditors had? It has damaged confidence in the US Treasury and

the US debt obligations, quite significantly. The US is in a good

position in the sense that the dollar is the global reserve

currency and that there are very few close substitutes for US Treasury

debt. This has been a crucial factor that has underpinned the market

through this crisis. Had we gone into default, of course, that

situation would have changed radically. In the medium term, there

may be a small increase in the US Treasury yields as a result of the

continuing uncertainties. The debt ceiling shenanigans may be occur at

some point in the future. The medium`term damage is probably not

that significant at this point. OK, thank you for that. A moderate tone.

For more on that, go to the BBC website. We have a special page

dedicated to the US debt ceiling. You can find all sorts of

explainers, videos, and analysis on there. That's bbc.com/usdebt.

Regulators around the world are looking into allegations that

traders have been colluding to read the foreign exchange market. On

Wednesday, the UK financial regulators opened a formal

investigation after questioning information from several banks.

According to reports, regulators in the US are also involved. Now

authorities in Hong Kong say that they are also looking into the

allegations trading currencies is worth more than five trillion

dollars a day. What more do we know so far? What we know is that Hong

Kong's Kong monetary authority, is taking these allegations very

seriously. I got off the phone with a spokeswoman for the monetary

authority and they have confirmed that they are following up the

matter with banks and also with their counterparts around the world.

She did specify that they are not opening a formal investigation at

the moment. They are simply following up these of a board and

allegations that have been made around the world. She did not

mention or name the banks and not `` nor which regulators. We would

assume that they were speaking to regulators in the UK and the US. We

have been hearing for the last week that senior traders at unnamed banks

around the world have been colluding with one another, using knowledge of

their client orders, to benefit themselves. Regulators are looking

at the electronic Communications to see what they have been talking

about. Many thanks. In other news: We look

at the markets. While markets did a rally for the most part on Thursday

after that last`minute deal to lift the US government's foreign limit

and got a pet `` potentially catastrophic debt default stopped.

From the end of the team, goodbye. There is to be a radical overhaul in

the way that cases of child sex abuse are prosecuted. The Director

of Public Prosecutions has issued a final set of guidelines that include

the questioning of a victim's account less while questioning the

suspect's story more vigourously at `` more vigourously. Keir Starmer

called the guidelines the most fundamental attitude shift across

the criminal justice system for a generation.

The way in which child victims, sexually abused by Jimmy Savile,

were treated by the criminal justice system is a source of shame. Too

often, victims have been discouraged or dismissed. It has taken, I was

about ten or 11... This man's experience has in typical. In a

children's home, he said that he was abused by a man who was then a local

councillor. We were not believed. People are given the wrong

impression that the lads who are there came