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Business Today -

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(generated from captions) Sol Trujillo Wittney Fitzsimons This Program is Captioned

Live.

Good morning, welcome to

the program, I'm Wittney

Fitzsimons. In business today

- mixed picture. America's

biggest banks still need more

capital the survive.

Spending impact, South Korea

pledges more stimulus the

avoid recession. Investment

priorities t debate over Chinese ownership of

Australian resources. Those

stories shortly but let's

look at the markets -

For more in the market

action I'm joined by Amanda

Tann from St George. Wall

Street has given up recent gains

Yes profit taking prior to

the result of the US bank

stress test. We also saw some

analyst down grades of

several companies and this

has weighed on equities so

telecommunications and financials,

materials were the key driver

of losses. We saw the US

share market lose up to 2.4%

overnight Still in the US

this has been interesting

data out there. What are the

details? US consumer credit

was shown to fall by 11.1

billion dollars in the month

of March a record fall, three

times larger than market

forecast. It reflects the

impact of the ongoing

recession in the US. We did

see other data adding to the

true that despite the

weakness he are seeing green

shoots emerging in the US

economy. The number of new

jobless claims fell the their

lowest level since January.

It indicates the pace of

employers laying off could be

moderating in the US How

will regional markets end the

week? Morning given the poor

offshore sentiment this could

place downward pressure on

regional markets today.

Turning to currencies, how is

the green back performing

against the other majors?

The greenback has increased

against sterling and the

Japanese yen compared to 24

hours ago but it has weakened

against the euro. The euro

was boosted by the fact that

a new measure introduced by

the European Central Bank the

boost economy and economic

conditions was considered to

be not agrass I've enough to

weigh on euro which pushed up

theure question and I

cordingly the US dollar fell

against the euro Any

economic data we should pay

attention to do? The Reserve

Bank this morning releases

its monetary policy

statement. This is released

four times a year. It

includes an assessment of the

bank's view of current economic conditions and

includes infliction and

growth for casts. Tonight in

the US the official employment figures for and

will be released. The market

has centred on a loss of jobs

of 60 0,000 for the moment an

the unemployment rate in the

US to move closer the 9%. Let's look at what is

happening with your than sis

and commodities -

as we heard the US government has delivered its

stress test report card on

how America's bank are faring

during the financial crisis.

10 of the country's biggest

banks need to come up with

$75 billion in additional

capital. The drip, drip of

news about which big bank are

strong and which are weak

finally ended today. These

actions today will bring an

unprecedented level of

transparency and clarity the

health of the nation's

banking system The chair map

of the Federal Reserve said

the result should provide

considerable comfort. 150

bank examiners scoured the

backs of the nation's 19

biggest bank the see what

would happen if unemployment

reaches 10.3%, home prices

reach 22% and the recession

drags on into 2010 of nine

have enough cash the ride out

the downturn. Of the 10 who

do not - The total short fall

is $75 billion. A big number

but some worry not big enough

especially if unemployment

expected the hit 8.9%

tomorrow continue the move

higher. The trough stress

test is more like 11%, 12%

unemployment so I think you

have the stress these balance

sheets harsher the really

solve all the problems With

the results now in weak banks

will have 6 months to come up

with the cash Reg hey fors

say they need. The government

says they can either raise

the money from private

investors, sell off assets,

give the Government a larger

direct stake in their banks

or ask the Government for

more cash. Some of the bank

are going to find it easier

the rays the money over the

next three months. Some will

find it difficult and will

need new money Meanwhile

there are signs the British

banking sector is turning

around. The big banks have

recorded better-than-expected figures possibly indicating

the worst of the credit

crunch may be over. We have heard from to big British

banks, one Barclays is growing profits again very

sharply and the other Lloyds

confirmed that it has more

than enough capital the

absorb the losses it expects

tot make this year. A former

chairman of Citigroup a

banker for 45 years is cautiously optimistic. Do you

think that for the world's

big crest banks that we are

over the worst? Do you know, I think as far as the bank

are concerned we are probably

over the worst. We have

thought that a number of time

but I think my stomach nowes

the me we probably are over

the worst. But banking is

global and the US Government

is taking steps to ensure

that America's 19 biggest

banks have enough capital the

cope with the economic

contraction. The Chairman of

the US Federal Reserve today

lamented how little capital

the banks had been carrying

Whether it would have avoided

the current crisis I don't

know but I think it would

have been of some assistance

since the firms would have

come into this period with a

bigger buffer and more

ability to withstand the

losses that were taken. We

have had 20 months of

lurching from banking crisis

the banking crisis Northern

Rock appeals for calm and

urges customers not the

panic A day of turmoil on

the world's financial

markets. Shares plummet

after the collapse of one of

America's biggest investment banks.

thousands of jobs at Lehman

Brothers in jeopardy in the

US and here in Britain, it is

all change for the British

banking system. ?37 billion

is the price for rescuing

some of our biggest High

Street banks. But just

possibly we are at last

through the initial phase of

this extraordinary global

economic shock t phase that

was all about the seizing up

of financial markets t

contraction of the banking

system t collapse of

individual banks. Which mens

that there is one less thing

to worry about. Though we are

still dealing with a

consequence of the unprecedented financial

trauma, a global recession.

Australia maybe in recession

so a fall in tonne employment

rate has surprised markets

and economists but the figure

are highly volatile and are

not trust by many experts. The official numbers have a

huge margin of error and the

trend figures which show the

Australian economy continue

to shed jobs are regarded as

a more reliable indicator.

The green shoots of recovery

continue to sprout. These monthly labour market figure

are quite volume till and you

can get the odd rogue result

such as the one we had today

According to the Bureau of

Statistics on access untilly

adjusted basis 49,000

full-time jobs were created

in and with part-time

employment falling by 22,000.

The number of people looking

for work also fell which took

the unemployment rate down

30.3 of a percentage point.

However t trend estimates

which are a bit like a company's underlying profit

tell a different story. They

show the unemployment rate

increasing every month since

last September The lead

indicators t trends are

pointing towards a

substantial rise in the

unemployment rate. All our

piss surveys, our confidence

surveys et cetera so I think

you have to think about

trends in a situation like

this and on the trend basis

the message still remains the

same That may be true but

when the employment figures were released the Australian

dollar spiked and money

market interest rates also

rose suggesting the end of the Reserve Bank's interest

rate cuts may be getting

closer. It is a view shared

by add yar Carr who believes

infliction is still too high

for rates to keep falling We

need to be confident the

recovery when it comes will

be sustainable. In order to

do that I think if the gle

billion economy stabilises,

the domestic economy continue

to pick up the Reserve Bank

will be left with no choice

but the hike rates Whatever

the quality of the latest

labour force figures some

business are still hearing

such as Mateo's in Fitzroy.

The proprietor says he has

been surprised how busy he

has been March, and is a

good month and you have the

Melbourne informed and wine

festival, you have the

fashion festival t Comedy

Festival, you have the Grand

Prix and there is Easter But

while the ABS says full-time

employment bounced in and in

the restaurant business it is

part-time workers who are in

demand Full-time is too

difficult, you are locked in,

you have to give them the

hours so I'm cautious, I

would be lying if I side it

is guilt but definitely it is

a part-time position It was

an issue occupying the minds of many of Australia's leading economists as they

heard from the US Federal

Reserve San Francisco

president. John yet Jellan

says the ranks of the

unemployed are dra maddingly

growing in the US The under-employment rate which a

broad measure which adds

people working alongside the

unemployment is 14.2% which

is a whopping 6.5 percentage

point higher than at the

start of the recession. A

situation which is being

replicated in Australia as

more and more people struggle

to mindful time work.

General Motors is posting a

$6 billion first quater loss

increasing the prospect that

the US car get in will fill for bankruptcy at the end of

the month. The result was

slightly better than analysts

forecast but still down 47%

from the same time last year

due to a drop in revenue of

car sales. General gone has

moved to control costs and

inventory slashing global

production by more than

900,00 vehicles or 40%.

However it still burnt

through more than $10 billion

in cash. Debt-ridden General

Motors has taken $15 billion in government loans an face

as deadline in early June the

complete a mayor restructuring plan or be

forced to follow its rival

Chrysler into bankruptcy.

South Korea will continue its economic stimulus policies as

it attempts to avoid

recession. The finance ministry confirmed the focus

on boasting the domestic

economy including

infrastructure spending and

tax cuts. In February the

Government unveiled a fresh

stimulus package with $6 60

million in special loans for

private firms involved in the

construction of new highways,

roads and bridges. The

region's fourth largest

economy skirted recession in

the fourth quater with GDP of

0 of 0.1 of a%. As the

global economic downturn

continues to take hold it has

called into question the

notion of globe liesation,

its effects and how it

impacts on the way we live.

It has also sparked many to

reassess values and wonder if

they should return to a more

simple way of life. This is

one of the issues that writer

Alain focus s on in his new

book. I asked if globalisation has made the

world more difficult It is

noise if goods come from far

away and you have the hand a

whole set of products et

cetera but nevertheless it is

weird to live in a world

where we do not know where

stuff comes from, who made it

and in what conditions. It

Leeds the alienation a loss

of wonder, guilt, what went

into that product. 200ers ago

we used to know who made the

table, who brought the food.

We used to have personal

relationships the people who

made the objects we consumed

and used. That has general

and in its place has come the

world "Globalisation". When I

wrote my book I followed a

tuna fish if the Indian Ocean

all the way if the British

supermarket on the a plate.

Why on earth did I have this

strange prevehicle? I wanted

the find a relatively easy

food commodity that nowadays

gets influenza around. I took

a picture of every person had

came into contact with the

that tuna fish and tell their

story. What I was ding was

fighting globe liesation

trying to say there are human

beingings involved in these

global chains and they are

not just economic chains they

are Hugh machine and if you

don't know it you will feel

weird in side. It is the task

ever artists and economists

involved in the field to

remind us we a working world

but we are not just workers,

we human and we are connected

as humans Do you think we

will see a turn around in mass produced products to a

more community-based source

of items such as food sources

and things like that?. I with

like the belief that but I'm

aware of certain rules of

economics. One of the post

butter full rules is scale

makes things cheaper. The bigger the thing the cheaper

it is so the idea of locally

produced bed and all the rest

of it has real challenges. In

my book I hung out with one

of the largest biscuit

manufacturer in the world. It

makes biscuits using 15,000

people. It is a loviathan of

a business. You bake a

cookery, it makes it

industrial. Many people felt alienated because they were

so far from everything. I

remember feeling despair

thinking what are they doing

making these biscuits but I

read Adam tonight the great

profit of capitalism. There

is a fascinating passage

where he says it is very easy

the feel this trade - he as

writing at the beginning ever

free trade - all this trade,

shopping, merchandise is a

waste of time and we should

get back to a more simple

life. He wrote this in 1780.

He said the problem with a

simple life that is the

bottom 10 to 15% of your

population t weakest most

needy members will star of,

they will not make it through

famine and a bad harvest. In

other words it has globe

liesed trade and it is mass

industries that enable

societies to look after their

weakest members which is as

true today now in Australia

as it was enEdinburgh ever 1780 which is always what we

have to remember when we

sometimes want the go back to

the simple life and making

our own bread, remember as it

were not the privileged mass

of the population in an affluent society like

Australia but the weakest t

most vulnerable We are

seeing a rise of this

insidious type of

protectionism which is very

different from the type that

we saw in the 1930s. How

concerning do you think this

is to the global community?

It is like many things. We

cannot quite believe a dose of unpleasant medicine that

is supposed to have a good

after effect. Anybody in a

calm position the read an

economics textbook, to

understand the financial

reasons will realise why free

trade is a good idea but when

it is your job on the line

and when you are in a bad

mood you are to not going to

be in the mood the read Adam Smith and take this

rationally so I understand

both sides of the debate Do

you think this will have a

negative effect on the global economy going forward and down the future? One of the

thing the downturn is doing

is enabling people the step

back going "What is important

in life? What are my values?"

And when things are booming

people have little time and

people are in a workaholic

culture so if there is any

kind of silver lining it is a

chance to take a step back

and wonder what you are doing

is new hi what you are cut

out to did. All of us end up

in jobs in haphazard ways, we

come out of school,

university a door opens, many

close, we head down a path

and it is very hard the

change it. I have met a few

people recently had say in a

way it is the best thing that

happened to me, I was laid

off, that dream I put off at

22 I'm going to revisit that.

It gives you the courage to

take that risk when you are

down at rock bottom it is

interestingly a place where

things can be built up

from. There has been this

emergence of this term

"Pessimism porn" I'm not sure

if you have heard it but it

is lrnly directed at those

who seem to take great

delight in these doom and

gloom theories. Why do you

think people are so obsessed

with it? When people are

pessimistic you must not

believe they believe the most

pessimistic things they are

doing. We express these

feelings partly to purge our

receives of our own fears. It

is a version of thinking it

will go terribly wrong, not this you believe it but you

are afraid lit happen and you

feel if you say it long

enough and hard enough it

actually won't happen so in a

strange way these pessimistic

voices are deep down like

this. They are genuinely

causing harm to the economy

unfortunately so it is fine

for them but not others. I'm

a man of a relatively percent

his tick temper but I do it

to feel better. There is a

love already quote from a

German philosopher had says a

man must swallow a toad every

morning to be sure of not

meeting with anything more

disgusting in the day ahead.

Nurtdz a bit of toad cereal

sets you up if you are

watching this in the morning

and you have a busy day in

the markets, have some toad

cereal. Not the say you

expect everything to plunge

but if you have that

pessimism in your stomach you

can only be lessantly

surprised That is all we

have time for. Thank you.

pb the Japanese lender has

posted a loss as investments

in the US and Europe slumped.

The deficit for the year

ending in March was four times bigger than the loss

forecast in February

according the a preliminary

filing. The bank record add

65 billion yen profit for the previous year. Rio Tinto's

head of strategy has launched

an attack on critics of

Chinese investment in

Australia saying it it

perverse the argue China is a

negative force. Doug riffy

says the Chinalco dealing is

relevant but the company

faces a battle to convince

the public and political

leaders there is nothing the

fear from Chinese investment.

As Rio Tinto courts a $30

billion investment from Chinalco it is fighting a

public relations battle on

two fronts. First to convince the Australian public to

accept more Chinese

investment in the resources industry. This presumption

that as I said before that

China is some monolith that

does things for nefarius

reasons is so perverse And

seconded to convince its own shareholders the deal

represents good value. Some

have argued the recent

rallies make Chinalco's bid

for Rio Tinto less attractive

but Doug Ritchie says that is

aer for shareholders the

decide in two months time the

market is extraordinarily

volatile. There are views to

say the equity markets have

run ahead of where the real

economy is so I would refer

just to not comment on the

deal in that sense, it is a

strong deal, it has lots of

attributes and they have been

well explained Doug Ritchie

told a business forum it is

myth this foreign investment sucks wealth out of Australia

and for every dollar of

income generated only 5 cents

goes overseas. He says Japan contributed it fromly to the

Australian mining industry in

the 70s and '80s with fears

about Japanese investment

eventually proving unfounded.

Mr Richie argues Chinese investment is likely to

follow a similar course and

should not be feared.

Because we dictate the use of

assets in the country, we

have sovereignty over the

laws, the enforcement of

those laws, we tone police

and so on, then we get to

dictate the use so the

ownership is not the

issue. The Lowy institute

warns that Chinese owner ship

Australian resources faces

political and public

Opposition We asked them

should Australian

authorities, officials treat

investment by foreign

governments or

foreign-controlled investors

differently, 85% agreed or

strong hi agreed with that so

dwfts responsible to people

who elected them have to take

the views into account But

Dr Paul Monks says Chinalco

is not a commercial

enterprise independent from

the Chinese Government and

when the state buys up

foreign assets it does so for

strategic and Gee quo

political reasons This is

not the case of a commercial

entity cashed up saying they

will put their money on the

table but the Chinese say in

through this arm we will make

this acquisition While Rio

Tinto is looking to Chinalco

for salvation others are

hosing down market hopes that

China can pull the global

resources industry out of its

current slump. Although

commodity prices have firmed

in recent weeks Alumina's CEO

John Bevan told the AGM

demand for aluminium is

likely to fall 7% The

aluminium build-up of stocks

everywhere has been an issue

for the globe. In China we

are seeing early signs of

demand picking up but overall

we see that it is only

getting back the levels it

was in the middle of last

year That is a long way if

the boom times of earlier

years. Now let's look at

what is making headlines

around the region - the

standard business section

looks at the 2.3% surge of in

share prices but brokers warn

profit-taking is imminent.

'Financial Times' says

European Central Bank haves

intensified their effort to

combat the recession with

bold moves to buy assets and

boost growth thaw low

interest rates. The 'Wall

Street Journal' looks at the

same story saying the move

shows European policy makers

are still very concerned

about the downturn. That is

all for this edition of

Business Today. If you would

like to look back over any of

our interviews please visit

our web site. We look

forward to your feedback. I'm

Wittney Fitzsimons, thank you

for joining me. Enjoy your

day. Closed captions by CSI