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(generated from captions) president pick it up with time

and the prestige and influence

of his office probably after

elections in Israel, which look

like they will take place in

the spring. You were an adviser

to the Clinton Administration

in its final year when it was

quite close to having a peace

deal in the Middle East and the

whole thing spectacular already

fell over. There are lessons

that President Bush can draw

from President Clinton's

experience? I think so and it's

in this issue of handing over

the issue. Clinton tried with

Ehud Barack to get a final

deal. He had spent his previous

seven years working on the

issue. There was a chance that

he could get it. But when it

failed and the whole thing blew

up in terms of the intifada and

the violence and so on, it

became very easy for George W.

Bush to walk away. On top of

that, Bill Clinton said don't

trust Yasser Arafat, he lied to

me and he will lie to you.

That's the last thing that

Clinton said on the way ute of

the Oval office and I think

Bush saw this as a situation

which was hopeless. Eight

years of effort to build the

infrastructure of peace was

simply abandoned and it burnt

to the ground. Given that

pretty soon leaders in the

Middle East are going to be

dealing with either John McCain

or Barack Obama, what incentive

is there for them to really do

anything substantial with the

Bush Administration? I think

there's not a great incentive.

I think what you see the

regional actors doing at the

moment is positioning

themselves for the next

President. Also, agenting in

way s to calm the situation

down while they wait for the

next president. I think that at

this point the Bush

Administration is pretty much

out of juice and they all know

it, they can smell it, that's

how they sur sniefr the region,

by calculating what the power

quoesh yentd is and it's -

quotient is and it's

practically on empty. At this

late stage of the bad, many s,

can can we imagine there won't

be any make policies

taken? Like

bombing? Exactly. One can never

know for sure but I think it's

un likely. The president has

said he's pursuing diplomacy.

The diplomacy has not yet

played itself out. Iran has not

yet ros crossed the nuclear

threshold, that's what the

intelligence agencies are

saying. So it's hard to see how

the President could justify

taiging the nation to yet

another war on the basis of a premise that doesn't exist at

the moment. Iran does haven't

nuclear weapon s although it's

on the way. So even though the

clock is ticking, both on his

administration and on the

Iranian nuclear program, I just

don't see that he would start

another war. One of the

interesting indicators is that

the Secretary of Defence, Mr

Gates, can saying public ly we

can't handle another war, given

what we have going on in Iraq

and Afghanistan. So there would

be a fair bit of push back from

within their own ranks to that

idea? The chairman of the joint

chiefs of staff said pretty

much the same thing, not

wanting to have another war

now. In part they're signaling

Israel. They would rather

Israel didn't take military

action as well but in part they

may be zind signaling the White

House. Ice not like the lead-up

to the Iraq war. They're not

banging the drums and making

the case to the American public

in the way they did before they

went into Iraq. What about

Israel? How likely do you think

it is that they will take some

sort of military action against

Iran? In the short term, I

don't think so. What the

Israelis are doing at the

moment could be in the category

of famous last words but what I

believe they're doing sat

moment is putting the world on

no itis. They're making it

clear that it's intolerable for

them, the leadership that

threatens to wipe Israel off

the map, to have the ability to

do so. Leadership of Israel

which has a special

responsibility for preserving

the Jewish Commonwealth, having

been destroyed before and re

createded is some modern

miracle. They are not going to

tolerate it. But they

understand that this is not the

best option. It's a last

resort. It doesn't really solve

the problem. It just buys some

more time. They would rather

the diplomacy work and that's

where the focus of attention

is. I think the Israeli s have

been quite critical, at least

privately, about the way the

Bush Administration has bandled

the diplomatic effort, the way

it has not brought Russia and

China on board effectively to

pressure the Iranians. They

would prefer to see that play

itself out before they have to

contemplate military

action. We've just seen Barack

Obama on an international tour

designed to sure up his - shore

up his waifer thin foreign

policy credentials. With

expectation around the world so

high for him, isn't there a

real possibility that he can

only end up dis appoint

ing? First of all, I have to

counterer the waifer thin

characterise yition. I declear

that I am a supporter of Barack

Obama. I mean, I think if you

listen to what he has to say

you see a good deal of

substance and judgment. But in

terms of experience. He doesn't

have the experience, that's

true. Neither did George W. Bush, neither did Bill Clinton.

But I think he's shown he has

good judgment. But I think your

question goes to an important

point. The expectations around

the world are very high. There

will be such a sigh of relief

when George W. Bush quits the

stage around the world. And

Obama as you said is a rock

star, he has tremendous

charisma and he's young and

attractive, it's

Kennediesque. And so the

expectations will be very high

in the Muslim world where I

spend a bit of time, they're

convipsed she a Muslim even

though he is not. They see him

as one of them. Now, he as

President of the United States

is going to be protect and

promoting the interests of

United States. And therefore

he's bound to be doing things

that will not be popular in

Europe on the left or in the

developing world or the Islamic

world. He is going to support

Israel. He has made that very

clear even though he is going

to work on the peace process

and so on. They will be

disappointed inevitably when he

has to use force, and he will

have to use force at some

point: Then the disappointment

will be great. But, I mean,

everybody has to get used to

the reality. Martin Indyk it

was good of you to make time to

come and see us. Thank you very

much. My pleasure.

Now the the weather - rain

expected for Perth and

Adelaide. Fine in Canberra,

after an overnight shower.

Mostly fine and cool for

Melbourne and 'Hobart'. Sunny

in Brisbane and Sydney. And a

warm 30 degrees for Darwin.

That's all from us. Lateline

Business coming up in just a

moment. If you would like to

look back at tonight's

interviews with Greg Hunt or

Martin Indyk or revie any of

Lateline's diswroirs

transcripts, you can visit our

website. Now Lateline Business

with Brigid Glanville. Thanks.

Tonight - BHP says it will be

ready to move in on Rio Tinto

by the end of the year. But can

the miners keep up the pace?

People are going to get burnt

if they think that it's the

case that mining companies,

share prices are going to rice

indefinitely because history

will tell you that is not

case. Market meltdown - a

traders keyboard error causes

Kayon o on the exchange. And

the fallout from collapsed

trade talks in ge Neve ya. A

complete breakdown, that , that

is a disas tore the world trade

system and a blow to


First to the markets - and

after Wall Street's overnight

rally Australian shares ended

in the black, for the first

time this week. Boosted by a

fall in oil prices an a surge

in banking stock, the All Ords

added 85 points. The ASX 200

rose nearly 2%. Asian markets

tracked down gains. In Japan

the Nikkei climbed 1.5%. Hong

Kong's hang essential gained

2%. And in London, gains in

mining stocks have also pushed

the FTSE higher and we will be

crossing to London later in the

program. BHP says international

regulators will complete a

review of its takeover bid for

Rio Tinto by tends of this

year. Whatever the outcome, the

two mining giants remain firm

in their long-term vuf the

commodities boom. Rio Tinto

also plans to spend $2 billion

expanding production in Brazil.

Desley Coleman reports. In our

view - The chairman of BHP

Billiton has written to Rio

Tinto shareholders. Don Argus

says that by the end t end of

the year his company will be in

a position to formalise its

takeover proposal. But some

analyst believe the $142

billion bid is not a done

deal. From a BHP Billiton point

of view I can see Don

presenting that because he's

got to show there is momentum

occurring with that deal. If

you look at the 3.4 ratio you

can see that Rio is trading

well outside that ratio. So the

market itself is not overly

confident lit occur at this

point in time. The takeover of

Rio by BHP has flum rouse

competition hurdles to

manoeuvre, primarily by

European regulators. But the

back ground noise of BHP's

ambition has not showed Rio Tinto's own growth strategy.

Today the miner announced a

$2.3 billion expantion for its

kor kor iron ore project in

braz - kor um baa iron ore

project in braz yi. They will

continue on with this

urbanisation and it will drive

the steel demand well into the

future. While BHP Andriyo have

locked in record contract

prices for iron ore, the spot

praises of globally traded

commodities are sliding from

their record highs. The gold

price has fallen on a stronger

US dollar. Copper has led more

than $1,000 since June and the

oil price has slid to near

3-month lows. It would

represent the topping out of a

peak. Our long-term view is

that commodity prices will

gradually decline to a

long-term average which is

nonetheless high in the

historical context. Fresh

worries about global economic

growth grinding under the

weight of record energy prices

has triggered some technical

trader, particularly US hedge

funds, to reduce their exposure

s in oil and other commodities. Analyst Mark Taylor from

Morningstar says investors need

to be realistic: People are

going to get burnt if they

think that it's the case that

mining companies and share

price also rise indefinitely.

History will you that is not

the case, it just won't happen.

There are limits to what people

are capable of saying Pa I when

it comes to commodity

price. Demand from the

industrialisation of China has

been the beacon that miners

like BHP Andriyo have pigged

the majority of their future

growth on. Stephen Bartrop from

LimeStreet Capital says any

fierce of a post Olympic slump

in demand from China should be

ruled out. A lot of the market

expectations were that prices

would peak into going into the

Beijing Olympics an then demand

from China would be subdude.

Maybe we've seen some of that

re tracement of crisis

reflecting that anticipation.

Our expectation is in fact is

after the Beijing Olympics we

may start to get a recover in

the prices. While the complod

ity bull market has developed a

minor limp, the demand for

resources remains strong. The

advances our market enjoyed

today have been mirrored across

Europe. We ire joined now by

David Jones from IG Index. The

FTSE sup for a second day. Is

the market out of the woods

yet? I think it's a bit early

to say that we're out of the

woods but it is encouraging.

It's been a choppy week. We had

the news from mink that they

were writing off more from the subprime mortgage situation.

That put a lot of pressure on

the banks in London but we have

seen a good bounce back. There

could be further to do, maybe 1

or 2% less. But it's not

Goodman Group news. Lloyds Bank

has released some gloomy

results. What is in that? They

were really negative. The

market was expecting first half

profits from Lloyds T - TSB and

they've come in under $600

million and they've said that

it's really down to market

turbulence that they've had to

write some of their assets

down. They've taken a $585

million hit and that's affected

their first half figures. The

banking sector is closely

watched over here and it's

whether we will see a longer

term recovery in the banks.

We've seen a short-term base

made in July and the big

question now is the worse of

the news already in the price

for banks. Lloyds were hit by

around 3 to 4% with this news.

Maybe three months ago they

would have been hit

harder. What is the state of

the British housing market like

at the moment? It is dire.

There's no positive spin I

think you can put on it. Week,

in week out we get constant

negative news flow. Earlier

this week we had new mortgage

approvals at an all-time low

since rodding prices began. It

really is all doom and gloom at

the moment. Lend ers haven't

been following base rate cuts.

They've made rules for

borrowing money a lot more

stringent than they have been

because they're getting hit now

by bad debts. There are stories

that first home buyers now have

to find 25% dps deposit which

is a chunk of money for your

deposit. So the market has

almost stopped, transactions

are almost at a record low. The

expectations for further

weakness at least for the next

six months to a year, so no

light at the end of the tunnel

for US housing. What about in

the United States? How do you

see Wall Street travelling

today? Positive open. We were

up a couple of hours ago we

were up 25 points. ATP pointsd

came out an hour ago and we

expect the dhow to open up too.

Thanks for joining Lateline

Business. Thank you. To the

other major movers on our

market today. Bank ing stocks

were back in favour.

The Australian dollar has

dropped to a six-weeng low. On

commodity markets gold has

dropped 1% to 50 3-week low and

in New York strud oil has

slipped below $122 a barrel.

Hearts dropped across trading

rooms after a broker's keyboard

error sent the market spiraling

the into the red. QBE was

tradeling just below $22.20

this afternoon when an

unidentified broker offered

shares in the insurer at well

under 1 cent each. Shade ertion

seized the opportunity and

within minutes wiped off 85

points off the All Ords. The

ASX quickly suspended QBE from

trading and quickly cancelled

all trades below $20 2 2.20.

QBE shares closed over 2%

higher. Regional pay TV

operator Austar announced a 28%

rice in its first half profit

but interest payment and tafrm

caused a loss of 7.6 million

dollars. Austar increased

customer numbers despite the

sle yun in consumer spending.

Ads make up only a small part

of the revenue but the chief

executive says there's a

general slow ing in that area

across the medium market. I

think it's a possibly of a

harder landing than people are

forecasting. Particularly for

traditional ad supported media

companies. Austar shares fell

about 7% to $1.17. We will get

a better idea of how soft the

ad market is when Seven,

Fairfax and News Limited

release their results next

month. One of Australia's

biggest food manufacturer s has

announced it's laying off more

than 600 staff. Small goods

manufacturer Don s KRC as now

A-noised it will close its

plants in Melbourne and Perth

by 2010. The announcement

follows a decision by parent

company George Weston Foods to

move its manufacturing base to

central Victoria. Sonia Lear

reports. The Don brand won't go

but nearly aquarter of its

Australian work force will.

More than 600 employees were

told of the mass job cuts this

afternoon. It's a very sad day.

This factory has been here for

50-odd years. Dons small goods

is probably the most well known

small goods product in

Australia. And a lot of people

have lost or will lose their

job over the next two

years. 420 jobs will go from

Melbourne's Altona plant.

Another 220 from its Perth

factory: Workers had been

guaranteed employment until

Christmas but their future

after that is uncertain. Many

have worked for company for

more than 30 years. There is a

number of jobs closing down

around Melbourne, so I don't

think there is much of a chance

to find a job in a rush. The

company owned by tzuj tzuj

blamed ageing infrastructure

and losses of $80 million over

the past eight years. Despite

all the best efforts of

everyone at Don KRC, industry

and other pressures have meant

our current business model

simply was not sustainable. In

febl February, Don small goods

acquired KR Castlemaine in

Victoria and that's where it

will base its manufacturing

from 2010. When they buy a new

place, they're going to move

there. The job cuts stretch

from the production line all

the way to the general manager

of operation. The company plans

to keep its Queensland factory

open. It was meant to herald a

breakthrough in international

trade. Generating billions of

dollars for both rich and

developing nations but the

World Trade Organisation summit

collapsed overnight in ge Neve ya, costing the Australian

economy alone an estimated $7

billion. Earlier today, I spoke

to Mark Thirlwell,

international trade economist

for the Lowy Institute in

Sydney. Mark Thirlwell, thank

for joining Lateline Business.

After years of talks is the collapse really any surprise ,

no it's not a surprise. It's a

disappointment. It's a sad

event but not a surprise. We've

had a serieses of collapses. If

you go back to Cancun in 2003

and roll forward, the basic

store yoif the Dohar round has

been one collapse after

another. Why did the talks

collapsed? They collapsed for a

couple of reasons. The

immediate trigger was over a

safeguard mechanism, which is

the ability for some developing

countries to hike tariffs in

the case of a sharp price rice

in in inperforms. That was the

immediate trigger . The big

backdrop to this has been

entrenched dis agreement over

agriculture trade

liberalisation. It really came

down to the United States,

India and China. Which country

is to blame? At least plenty of

blame to go around on this one.

All sides have to take their

fair share. Neither side in the

end was prepared to make the compromise necessary to get it

over the line. Ultimately what

you would say sit's probably

the rich countries who should

have given up more than the

developing countries. So if you

wanted to zero on one you would

hope that the rich countries

did more. In particular if you

think ta the problem is

agriculture, if there's ever a

time for rich countries to

liberalise, it's now.

Agricultural prices are very

high. The case for subsidies is

pretty weak. Tariff barriers

are gone down around the world.

So if there was going to be a

compromise now would be the

time and it's depressing that

nobody can get a compromise in

conditions. Is it really just

the poorer nations that will

suffer? Short term, the

immediate impact of this will

be reasonably small. The sad

fact was that we got to the

point where any deal if we got

one up was not going to deliver

very much. We reduced ourselves

to the lowest common

denominator, so the likely gain

of a success was going to be

small. That means the loss from

no success short term is

actually not that big. But

longer term there's two big

losses - one is the sense of a

missed opportunity. Here we had

a chance to do something

important with the world

trading system and we've blown

it. We haven't manageed to do

it and second tli series of

failed attempts at doe haar. -

Dohar. The Minister says this

is the time we're going to

deliver and then failing to do

so. That's damaging to the

credibility so far. So erode

ing that cred yith is a bad

thing. The nature of the talks

has changed somewhere over the

last seven years. You have

China and India who are now

significant global players but

there's still developing

countries. Should they be

treated differently to, say,

Europe and the United States? I

think you've cut right to the

heart of the problem that's

laying at the end centre of

this and it's dogging a whole

bunch of international economic

policy issues at the moment.

You've got this paradox at

play. On the one hand you have the right of new economic

powers who are saying we're now major players in the world

economy, we should be at the

table, we should have a say on

these issues. But at the same

time these are countries that

have very low income per cap

ta, they're still developing

countries but they are saying

we should have a say but show

should treat us differently.

You can't expect us to act as

rich countries. For Washington,

for Brussell, this is tricky.

They can accept one proposition

and accept that this guy should

be at the table negotiating

from a signal of strength or

they should be treated

differently. It's turned out

have been very difficult, if

not impossible, to accept both

proposition at the same time.

It's a very hard one to sell

back to your voters. If your

voters have been reading about

the new global economic super

powers, to go back and say

we're going to give them an

ease yir ride, it's going to be

very hard to do even though

it's true. You sound quite

sceptical. Should Australia

just give up on a free trade

agreement after seven years? We

shouldn't give up. The line

I've been saying for a while is

we're poised between

disappointment and disaster on.

This even a successful

agreement will not deliver very

much but a complete break down

where everybody throws up their

hands and walks away, that is a

dst Das disaster. Working for

disappointment is probably

where we're left at. After this

breakdown, even disappointment

looks very hard to achieve. The Federal Government has favour

add broader terms of agreement. WhereAustralia now stand? Does

it mean that there is going to

be more bilateral trade

agreement? It does. In the

short term that's what we're

left with. If you can't

progress at the multi lateral

level you have to fall back on

regional and bilateral

deals. Can you a number of

bilateral deals work? They can

but not that well. Ultimately

you need a regional system.

Bilateral allow you to do

different things in different

areas, they're all foreign

policies like them because

they're a way of linking

countries together. They can be

a bit of an insurance policy

but they can't be an effective

institute for a global system.

The numb of agreement s you

would need 20 do that you would

need a number of agreepts and

to get them all together and

act consistent you would end up

with a tangle of agreements and

they would say we need to

invent a new system to smooth

this out. How do you get a

global free trade

agreement? What we're going to

have to do is go back to 2

drawing board and think of

structural reform at the multi

lateral level. I looks like

when we went down the the road

to the WTO, that everybody

would have to sign up to an

over arching agreement, that

does doesn't look like it will

work. We may have to go back to

the GATT where groups of

countries could sign up and

those who weren't able to sign

on were in a sense left behind.

You go to a two-ser spood or

two-tiered trading system that

has some negative costs but

compared to the al - alternatives on offer it's

probably where we're going to

end up. Thank you for talking to Lateline Business. Thank

you. While global stocks

enjoyed a bounce today, it

seems no-one to prepared to

call the bottom ovr m of the

market juz yet. Those who rely

on charting say there's no

clear signs that the turbulence

are ending. Some say the

markets may still have some way

to fall and a recovery won't

begin this calendar year. Neal

Woolrich reports. Two its

critics, charting is just a lot

of numbers and graphs that have

no beering on future stock

market performance but keen

users like Andrew Doig say when

applied properly it can be a

valuable investment tool in

even in these difficult

times. It's built on a premise

on a bunch of rules that have

worked in the past more often

than not and these patterns and

they will repeat themselves,

people are looking for the

patterns of repetition to

undertake a trade. Chart ing or

technical analysis relies on

historical data to show hisstor

cam trends. They can see when

stocks are become overbought or

oversold. Many brokers use it

to supplement lement -

supplement an & analysis of a

company. You need to make sure

the fundamentals of the company

there is there, the good value

is there. Once row've ticked

those boxes you can look at the

chart and try to get an extra

edge. Charting by itself is

far more risky. Dep you use

charting and technical analysis

alone, ex- fundamental analysis

in these sorts of markets you

could have done yourself some

serious damage. But even

charting supporters say there

are no clues as to when the

current downturn will end. Some

see parallels between this bear

market and the episode that

followed the September 2001

#2eror attacks which took

almost two years to play

out. You would correlate we've

had a similar fall due to the

credit crisis in August 2007 .

Now we're in 2008 and we're

finding new lows is the market

is trying to find a bottle.

Eventually some catalyst might

see us reach a new low and

recover from there

on. Financial stocks have been

the biggest drag on global

shares although Australian

banks recovered three 3% today.

Fat Prophet Greg Canavan remain

wearing and says buying

opportunities might be some

time off. From a charting

perspective we wouldn't be

looking at getting too

interested in those sectors or

stocks within that sector until

we see a lot more stability on

the charts there to use some

jargon, a bit of base building

on the charts an certain ly a

reversal in that down wend

trend. Resource s stocks still

remain the favourite and

Richard Pritchard says oil

stocks are attractive. If you

consider the trend is upwards

and we've had a fullback

recently of highs of $147 a

barrel to $125, there would be

support at $122 in some

respects it may be an

opportunity to buy oil, if your

attitude is still bull ush. But

the charts say retail taerns

bank s are the ones to avoid.

Now a look at the business

diary, it's dominated by three

pieces of economic data -

retail sales figure, the latest

international trade numbers and

the financial aggregates.

Alumina releases its interim

results. Euro zone inflation

figures are out. Before we go,

a quick look at what is make

ing nes in the business

sections of tomorrow's

newspapers. The the 'Age' says

today's weaker than expected

building approval numbers will

push rents hire. The

'Australian' hear s rumours

that Stewart tu is about to be

axed. The 'Australian Financial

Review' leads on the collapse

of the WTO talks and the

'Sydney Morning Herald'

interviews out going Aris crot

boss Paul Neil. As I leave you

the FTSE is up 91 points aton

Dow fut surs pointing to an

81-point gain. If you want to

re view any part of tonight's

program, you can visit our

website where you can watch the

entire program online: Aim

Brigid Glanville. Goodnight.

Closed Captions by CSI

Stop! Help! # Far away from the cold night air... # 'That's the one isn't it? No. Don't be daft. Course it is.' # Oh, wouldn't it be luvverly? # Luvverly... # Can you think of any reason why someone would want Miss Wisley killed? No. I've been kidnapped and they're coming... It's Emma Collins. I thought it was... I know. Where is she, Peter? Where's Jackson? They're looking for her. Come on! I need help, can't you see I'm in pain? Where's Maria? Shut up! What have you done with her? Shut it! MUFFLED SCREAM Come here. I know it's not because of what I said to her. People don't just disappear. They do, Andy, every day, you know that. If someone doesn't want to be found, there's not a lot we can do. No, no. Look, this is Jackson. It'd take more than a bad day to make her disappear. In any case, she's one of us.

I'm, er... I'm really sorry to have to press you, Mr Boddison, but Emma is the second person from the Arts Centre to be murdered... That's OK. Were you together last night? No, we'd had a bit of a row and... ..I went home without her. Where was she last night? She stayed on at the centre. She needed to talk to our artist in residence.

Mark Tatton. Sir! Forensics reckon the car that forced Anna Wisley off the road was a red Volvo, 1995. Good, get it circulated. Morning, Kirsten. So what would you like to tell us? I wanted to talk to you about Lisa. Go on. Well, thing is... ..she was meant to be meeting me, early this morning. Right... She didn't turn up. Didn't turn up for what, Kirsten? I was going with her to the clinic. You see, I had to go there myself once. What kind of clinic? An abortion clinic.

SHE CRIES IN PAIN I'm really not in a position to help you. Lisa was the last person to see Visha Iqbal alive. You spoke to Anna Wisley the morning she was murdered. Now there's been another murder, and you tell us that your wife and daughter still haven't made contact. Does your family's absence have anything to do with your daughter's pregnancy? So what happened, Mr Johnstone? Did you kill Visha Iqbal because he got your daughter pregnant? Anna Wisley found out about the murder? Are your wife and daughter in hiding whilst you sort this mess out? Or have you killed them as well? Richard, I can't stand this any longer. Tell them. Lisa's been kidnapped. We've been liquidating our savings and selling stock to pay the ransom money. I beg you not to interfere. We were told not to contact the police. # A man's got a heart # Hasn't he? # Joking apart # Hasn't he? # And though I'd be the first one to say # That I wasn't a saint, # I'm finding it hard to be really # As black as they paint

# I'm reviewing the situation # Can a fella be a villain all his life? # All the trials and tribulations! # I'd better settle down and get myself a wife # And a wife would cook and sew for me # And come for me, and go for me