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Business Today -

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Good morning, welcome to the

program. I am Whitney

Fitzsimmons. In Business Today

global contraction, the OECD

warns of falling growth and

Australia's central bank rising unemployment.

concedes the economy is likely

to be in recession and food for

thought. The plant turning

Singapore's left overs into

power. First take a look at

the markets. Regional markets

may open higher after a

stronger lead in from Wall

Street yesterday they were

mixed about the board. Japan's

Nikkei gave up about 1.5%.

Australia's ASX closed flat but

Hong Kong's Hang Seng gained

1%. Shanghai's index put on

three-quarters of a per cent.

The Dow Jones added over 1% and

the NASDAQ jumped. In Europe

trade was also higher.

For more on the market action

I am joined by Chris weston

from IG markets. Wall Street

has managed to turn around from

yesterday's losses? Yes, it

was a reasonable session. We

finished on the S&P up about

1.3% and we did trade above that 50 day moving average in

the 800 mark and rallied up to

a high on the S&P of 810.

Financials did quite well. All

the big tiered blue chip banks

posted reasonable gains. That

is with the data of the PMI

figures and housing figures

showing a bigger contraction

than expected and we did finish

up 1.3%. You mentioned that

data there. Despite that

bounce in the market consumer

confidence is hovering at a

record low. What more can you

tell us? It was encouraging.

We did see the markets rally,

even though we did see consumer

confidence come in at 26. That

came up from a revised figure

from February of 25.3. We did

improve on consumer sentiment

but it was expected to be higher than that. So that

wasn't the best. But we have

rallied. We did see it up a

little bit. Certainly that was

the previous reading was the

lowest they have ever had on

record since 1967. What

economists are taking away from

that is consume and businesses

are still low to lift spending

after we saw that recent

contraction in GDP. But take a

positive that the market still

rallied despite this. Moving

to the UK and staying with

consumer spending. This has

been moderately good news from

Marks & Spencers. What can you

tell us? Markets and Spencers

are the biggest clothing

retailer in the UK. We saw

their fourth quarter sales that

beat estimates. Their sal

sales in new stories open at

least a year declined 4.2% in

the 13 weeks up to 28 March.

That did beat estimates, we

were expects estimates to be

down 6.8%, so much better than

expected. Food offers they

have had there recently helped

and consumers want be better

value clothing as well. And

looking at the region, there

has been bad news for

executives at Macquarie group?

Yes, we seen Macquarie cutting

bonuses for about 300 senior

staff. Looking there to

obviously preserve capital.

And obviously trying to apeace

the social unrest we have seen

with failing companies offering

bonuses and we have seen their

share price down 60% much the

CEO said he will cut his cash component of profit share about

20 % in line with that. Thanks

for the update. Now let's take

a look at what's happening with

and commodities. , currents currency - currencies

The G-20 ministers will have

a lot on their agenda when they

meet in London this week as

there are more dire warnings

about global growth and further

signs of divisions between Europe the United States and

says President Nicolas Sarkozy Britain. The French government

will walk out and not sign any

agreement if he feels the

deliver krabls are not -

The Organisation for Economic deliverables are not there.

Cooperation and Development has

painted its bleakest assessment

of the world economy yet. It

expects tight financial

conditions and a generalised

loss of confidence this year.

It says developed economies

will shrink by between 4% and

7% and global growth will fall

by 2.75%. That's greater than

originally expected and will

send world unemployment rates

soaring. We forecast that the

OECD average unemployment rate

will reach slightly surpass 10%

in late 2010. Le for the US a

little - for the US a little

bit larger for the Euro area

touching 12% and in Japan increasing towards but not just

- but not reaching 6%. The

Paris-based think-tank says

prospects of deflation have

risen due to a synchronised

collapse in international trade

which is predicted to fall 13%

this year and drag down export

reliant companies like Germany

and Japan. We have a massive

decline in the last quarter of

2008 and a similar decline in

the first quarter of 2009.

Estimated until March 31st.

And we estimate for the year as

a whole a decline by 13% of

world trade for this year.

That prediction is backed up

by what the World Bank is

anticipating. It says the

global economy is facing its

worst outlook in 60 years. The

downturn is severe. We are

looking at a 2.1% growth for

developing countries as a group

and if you live China and India

out of that group it is 0. It is nil. No growth whatsoever.

The figures are a wake-up call

for G-20 leaders with many hopeful the summit will make

progress on the strategy for

economic recovery. But

divisions are emerging. France

is arguing for a stronger

global financial regulator than

proposed by the US and the UK.

The French government says President Nicolas Sarkozy will

walk out and not sign any

agreement if he feels the

deliverables are not there.

And splits on other issues

relating to the best way to

tackle the global economic

downturn have also begun to

occur. European countries are resisting calls to commit to

more spending this year and

next. Despite all the

posturing, it is hoped the G-20

leaders will reach agreement on

a new set of rules for

regulating global finance, as

well as measures to boost economic demand and support

poorer countries. And before

he left for the G-20 summit in

London Japan's PM outlined

plans for a new stimulus

package to shore up the

country's recession-hit

economy. He called on his

cabinet and ruling Liberal

democratic party to draw up

plans for an extra budget to

pay for the new measures, no

figure was given for the

package which is expected to

target jobs growth and stim

demand. Japan's unemployment

rate hit a 3 year high of 4.4%

in February. Spending on three

stimulus packages since last

October has totalled $765

billion. The latest proposed

plan could be finalised by the

middle of the month.

Australia's central bank has

conceded the country can not

escape a recession and a sharp

rise in unemployment this year.

The RBA's departmentsity

reserve governor warned GDP

would slump despite the huge

boost being delivered by

government spending. At a

conference in Brisbane Rick

Batalino said the slump in

global demand for experts will

push our economy into a

recession this year. The

limits as to how much we can

insulate ourselves from what is

happening abroad. Therefore

there probably still are

difficult times ahead. As

recent as February the Reserve

Bank tipped domestic growth in

2009 would average 0.5%.

However today Rick Batalino

said most Australian households and businesses already felt the

economy was in recession. No

amount of good economic

management can totally shield

us from what is happening in

the global economy. The

Reserve Bank is now in the camp

that suggests there will be a

recession. The Reserve Bank has essentially declared Australia to be in recession

for the first time. With

interest rates and 3.25%, the

RBA still has room to move next

week. They have decided that

at the moment anyway the

situation isn't deteriorating

at all. If anything, we saw

that rally on equity markets

over the last few weeks giving

some confidence about the

global outlook. So why not

maintain the on-hold stance and

hold back some capacity for the

times when the situation does

deteriorate further? Which I

predict will be the case.

Another senior Reserve Bank

officer, Dr Guy Debell says

while individual countries stimulus packages are beginning

to flow into the real

economies, there needs to be a

concerted efforts. The

restoration of confidence

between financial entities

within the system is obviously

a very necessary step on the

road to global recovery. He

says fixing the world's

financial systems is crucial.

The global financial system

remains disrupted T will

continue to undermine the

effect of the sizeable policy stimulus being provided round the global at the moment.

While there are signs of

improvement markets remain on edge.

Chinese bid for iron ore

miner Fortescue Metals Group

has won approval from the

Australian government. Chinese

state-backed steel company

Hunan Valin is not allowed to

own a maximum - 17.5% of FMG.

In return the miner gets more

than $644 million to bolster

its cash reserves to expand and

fund its iron ore operations in

WA's Pilbara regime. We can't

move forward in this country

without the investment. China

represents an opportunity to do

that. As long as it is fair to

the company, and reasonable for

Australia then one should expect it to be successful.

Hunan Valin has 10 days to

get approval from China's

central government. Meanwhile

Minmetals, the Chinese company

rejected over ins investment on

Oz Minerals on national

security grounds has tried a

different approach. Minmetals

has submitted a new rescue

takeover offer minus the

prominent hill mine and other

assets. Oz Minerals is still

in a trading halt but it says

the new proposal will provide a

complete solution to its $1.3

billion refinancing problems.

At the same time Chinalco, the

Chinese company bidding for a

stake in Rio TInto and waiting

on approval from the foreign

investment review board says it

is confidence of getting

clearance. Commodity prices

are under pressure as economic

growth slowing to a crawl. It

is this climate that's forced

Chinese buyers to come to the

rescue of many debt-laden Australian miners but we are

still waiting for regulatory

approval for most of these

deals as miners face crunch

time at their debt matures. To

discuss this and take a look at

performances of commodity

sectors broadly I am joined by Jonothan Barratt. Good morning, welcome to Business

Today. Firstly, let's look at

how commodities have reacted

overnight to data out of the

US. That shows the US is

stalling? The data last night,

a lot of the confidence data

came out. And it was a bit of

a mixed bag. But what we did

actually see is in some of the

numbers actually showing a

little bit as expected but just

shown a glimmer of hope that

some confidence is actually

coming back to the market. And

I think that in itself is

certainly going to help and

certainly did help the

commodities serk tor have a

reasonable - sector have a

reasonable lift. Particularly

in the primary input area. You

have said we are seeing some

alarm or mine panic on markets

as traders flak to the safety -

flock to the safety of bonds.

What impact is that having?

Over the course of the last

couple of weeks we have seen

these crisis trade s developing

and they are hamper ing the

ability for some commodities to

break out. When we see

negativity come out people are

selling equities, buying

dollars and bonds and by and

default we are seeing those

commodity prices stall,

particularly gold stall and if not trade a little bit lower.

Let's look at one of the

stories that has been at the

forefront of the regional agenda. The Australian

government has approved this

18% stake in FMG to be sold to

a Chinese company. What does

that mean for Fortescue? I

think it is important because

what we centre got to look at

is a lot of these mining

companies spend a lot of many

expanding, exploring, - money

expanding exploring looking for

continued growth. With the GFC

coming through they have had to

do this deleveraging process.

Which is quite harmful so they

can meet debt obligations. So

this form of cash injection

actually suggest they can

secure their production going

forward when we actually get

out of this financial crisis.

So when you look at that, I

think it's actually a very good

point that we are seeing this

capital injection so we can

keep this exploration and

production going and also this

expansion going. So if

anything I think it's a

positive thing because they are

looking to inject this capital.

And on the negative side we

have got the Oz Minerals case.

Now it has been quit a demise

and it is really teetering on

the brink of collapse now. That

in itself has been a very

interesting. Obviously I don't

think people foresaw what the

government would think

re-Woomera, that area there and

where prominent hill obviously

is but if you take that

equation out for Oz Minerals

and they can work a deal then

once again it is much-needed

cash. Cash injection. Which

will help and also help to

secure good supply of resources

going forward when we climb out

of these recessions. You

mention that they need to find

a workable deal. It really is

crunch time for Oz Minerals.

Do you think that this revised

deal will happen? I think it

needs to happen. I think we

have got to get approval. They

really need this injection. I

think it has got to go through.

When you really look what they

are doing and what they have to

do, I still think they have got

to go through a lot of

deleveraging but this gives

them a good comfort zone to be

able to continue on the

expansion programs, You think

the Australian Government will

reverse its previous decision

in I think they will,

considering they did it on the

value of security, Australian security. Where they did

reject it but this time I think

they will put it through, Why

do you think the Australian Government has been so cautious

investment at the moment? about Chinese foreign

Generally because it is in

everyone's interest. They want

to be seen to not fell the farm

but they have got to be

pragmatic about it and say "we

actually need this". China is

such an important player to

Australia they have got to

balance the public interest to

productivity. That is why they are being cautious about it and will continue to be cautious

going forward. Let's look at the commodity sector broadly.

You are expect to see some

downward pressure on all commodities because of the

connection to the US dollar.

But prices are in a bottoming

process. So how long can you

say that the volatility will

remain high? I think it's a

very large bottoming process

ooccurring. When we get some

form of negative in the market

we see this crisis trade put on

will see this volatility and it stalls the process. We

continue but when you get a

chance to have a look at some

of these commodities and how

they are trading you can

actually be quite positive in

fact this bottoming process is

occurring and we will climb out

of it sooner rather than later. Always good to talk to you.

We will have to leave it there.

No problems, thanks.

The new head of General

Motors has warned it may need

to shut more plants and launch

a new buyout program for

workers if it is to survive but

fridz Henderson says the

company may reach the goals set

by the American auto motive

taskforce. Fridz Henderson

told us changes will come fast

and hard after the President's

scolding. Is there more pain

and sacrifice ahead for the

employees of General Motors?

There is more pand and

sacrifice ahead for all of us,

yes. The new man in GM's hot

seat concedes that is the price

they must pay for taking

taxpayer dollars. The

President of the United States

sighting a failure of

leadership is he right? We

faced the extremely difficult

situation here certainly in the

last 12 months, and it frankly

uncovered the fragilities of

the company, and so yes we made

mistakes. The clock is running.

Even more concessions may not

be enough in car sales continue

their dismal spiral. Today the

dealers trade group pleaded

bankruptcy should not be an

option but at GM headquarters

the D word is plainly on the

table. Is bankruptcy now ar

more likely option? Yes. The

auto makers here under pressure

before have a gun to their

heads now. And they seem to

think the new sheriff in town

wouldn't hesitate to pull the

triller. An American car makers

are not the only company

struggling at the moment. Many fundamentally sound

organisations in Australia

could go to the wall as their

markets dry up, which is why

some experts believe

Australia's insolvency laws

need to be more flexible. The global financial crisis has

already claimed some high

profile victims. Highly

leveraged companies which

couldn't cope with the changed

conditions. The fear now is

that good, well-managed

companies will also bite the

dust. . It is really left no

sector immune. The current

economic environment. Making

matters worse is the

precricketive nature of the orp Corporations Act which says

director consist be personally

liable if the company incurs a

department if it is insolvent.

David Morris is a corporate law

expert with legal form DLA

Phillips fox. He believes the

law should give more support

for good companies which find

themselves on hard times, often

through no fault of their own.

They are forced into a

situation where many a time

they have the situation where

there - it is difficult to

determine whether they are

insolvent or not and the

conservetive approach is to put

the company into voluntary

administration. That is a time

for the company to re organise and trade out of difficulties

but according to David Morris

it can be the first step

towards liquidation. Once you

are there that triggers a lot

of default provisions in many

contracts and it is very hard

for the company to go back to

where it was before and become

profitable. Other ocountries

take a different approach,

allowing directors more

discretion on the issue of

insolvent trading. In the

United States they have a

business judgment rule which

effectively says that if

directors are acting with due

diligence and reasonably, and

it is reasonable to think that

the company can continue to

trade through the situation,

then the directors will stand a

good chance of not being held

liable. Jecial any recently

had - Germany recently will

laws to ours and they suspended

in part in response to the

global financial crisis.

Others left to clean up the

mess after a company goes under

have a different view. Veteran

insolve specialist Ian ferier

believes the existing law works

well. If the business can be

reorganised because it does

have sound business plans you

can use the law to actually

give you a mechanism to

implement that. Provided the

stakeholders, shareholders,

creditor, suppliers and

employees agree. Mr Ferier

says the onus is for directors

to be more proactive in

recognising problems are on the

reorganisation the company they horizon. When they want to

don't face up to the issues and

the catalyst which makes them

face up to it is a bankruptcy

notice or creditor demanding

money so that is more often

than not too late. The United

States has a system known as

chapter 11 bankruptcy which

allowance companies protection

from creditors while they

reorganise and hopefully return

to profitablity. Airlines in

particular have made good use

of it over the years but

whether chapter 11 would work

in Australia is a contentious

issue. The main objection

Australian creditors have to

that regime is the debtor

remains in control of the

company under the chapter 11

regime and also there can be extensive delays in the

completion of the China chapter

11 administration process. As

the economic slow down takes

its toll on corporate Australia

David Goldman believes the laws

around insolvency will be

increasedly tested in court.

Criticised in the past for its

dependance on fos aisle fuels

Singapore is starting to look

at allowed tive - alternative

power sources, one prospect is

methane. Eating is virtually a

national past time in

Singapore, in one of the city's

famous Hawker centres there is

a rich display of diverse

cuisines and despite the

popularity of the dishes the

left overs start to add up.

Singaporeans on average throw

away half a million tonnes of

food scraps every year. In the

past most of that would have

ended up in a landfill but

times are changes. These food

scraps at this Hawker centre in

the city are destined for

something far more important

and environmentally friendly. This discarded food is

distined for greater things.

Even the smallest food scrap

will be used to create energy

using state of the art

technology. Food scraps arrive

here by the tonne. Without

this plant, all of this would

end up in a landfill where it

would decompose and produce

harmful greenhouse gases.

Nearly 100 tonnes arrive each

day. And not a single morsel

is wasted. It is a staggering

amount of food but this

operation can actually take in

3 times this amount. So what's

the biggest obstacle? Getting

the public on board. They have

little idea that such exists

and that is what we actually

try to educate them, that

actually food waste can be

recycled or can be treated

separately. Once the food arrives workers here separate

it from the other trash. It is

then placed in a tank where

special bacteria eat away at

the left overs and produce

methane gas. The gas is then

used to generate electricity.

It is enough to power this

entire plant. With the remainder powering hundreds of

households across the city.

What's more, it is this

process also produce $compost

which is then sold to local

farmers. For founder Edwin Que

it is an elegant solution to

address some of us the toughest

problems. What drives me is I

think I can do something for

society. We have technology,

that can do it. And basically

up to now nobody has come out

with an integrated solution to

solve the problems of waste.

So as these diners dig into

their favour dishes what's left

will go towards powering a

greener future. And now let's

take a look at what's making

headline right-hand around the

regimon. A volatile trading

day in Hong Kong affected HSBC

shares. The financial times

says the PM has dismissed

Germany's warning of the risks of excessive public spend

anything the global downturn.

And the Wall Street Journal looks at why the International

Monetary Fund has assumed new

relevance in the face of the

global economic downturn.

That's all for this edition of

Business Today. If you would

like to look back over any of

our interviews visit our

website at -

We look forward to your feedback. I am Whitney Fitzsimmons. Thanks for

joining me. Enjoy your day. Closed Captions by CSI