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Good evening. Welcome to Lateline. I'm Ali Moore. It has been a happy week for global share markets
and Australia was no exception with local stocks posting their best week of gains in over a year.
The spike in optimism follows renewed commitments to recapitalise the European banks with investors
increasingly confident of a solution to the current debt crisis. But there's plenty to keep the
enthusiasm in check. Tonight 12 British financial institutions, including the Royal bank of
Scotland and Lloyds have had their credit ratings downgraded. That follows the news from the Bank
of England that it's printing tens of billions of pounds in a bid to prevent recession, and a
warning from the bank's Governor Mervyn King that the world may be confronting its worst ever
financial crisis. So where does that leave us? Our guest tonight is global economist Ken Courtis
who has just spent the past few weeks in Europe and the US and is now back in Asia assess ing the
different economic landscapes. He joins us from Singapore shortly. First our other headlines. Three
women their the Nobel Peace Prize for their non-violent struggle for women's rights.

14yo could face 6 years in Kerobokan prison

14yo could face 6 years in Kerobokan prison

Broadcast: 07/10/2011

Reporter: Matt Brown

Australia's ambassador to Indonesia is heading to Denpassar to negotiate the release of the
14-year-old boy arrested for possession of marijuana.

Transcript

ALI MOORE, PRESENTER: The 14-year-old New South Wales boy arrested for marijuana possession in Bali
has spent his third night in prison as Australia's ambassador to Indonesia heads to Denpasar to
meet his family.

The boy is reportedly being held in his own cell.

Australia's Foreign Minister, Kevin Rudd, has warned there's no guarantee negotiations with
Indonesian authorities will deliver the teenager's early release..

If convicted he could be jailed for up to six years in Bali's Kerobokan prison, along with a host
of other Australians including the Bali Nine and Schapelle Corby.

Indonesia correspondent Matt Brown, reports from Denpasar.

MATT BROWN, REPORTER: At Bali's police headquarters the boy's family are trying hard to keep his
spirits up.

It's every parent's nightmare, but early anxieties are easing.

MOHAMMAD RIFAN, LAWYER: The condition for the boy on this time is quite stable because the parents
are with, give their support. And then the police (inaudible) is really helpful.

MATT BROWN: An official from Indonesia's human rights ministry is now overseeing the police
investigation. And he could recommend the boy be released into his parents' custody. However the
decision will be up to a judge and the Australian Government's warning the case may not be resolved
quickly.

One of those officials is Australian Consul-General Brett Farmer.

BRETT FARMER, AUSTRALIAN CONSUL-GENERAL, BALI: I'm just going in to talk to the family now.

REPORTER: And what are you hoping to talk to them about at this stage?

BRETT FARMER: Just the general welfare of the child and legal processes.

MATT BROWN: The Prime Minister is monitoring the case closely.

JULIA GILLARD, PRIME MINISTER: He is subject to Indonesian law. That requires us to make sure that
we deal with this carefully and in a sensitive way. We will do that and we've got our best
officials in Indonesia on the job.

MATT BROWN: Bali police say the boy bought marijuana from a man on Kuta Beach on Tuesday. It's a
serious crime but his lawyers have convinced the investigators to ensure he's not treated as an
adult.

Are you optimistic about his case now?

MOHAMMAD RIFAN: At this time we're still optimistic. Yes.

MATT BROWN: The boy attended high school, then a religious private school, near Newcastle in New
South Wales, where news of his arrest has begun to filter through.

In a quiet street in Morriset Park, the neighbours were stunned to learn of a local boy in trouble.

MORRISET PARK RESIDENT 1: To have it your 14-year-old boy, it would just kill you.

MORRISET PARK RESIDENT 2: If he gets charged, what will happen? He'll be there for years in gaol.

MATT BROWN: The Foreign Minister says he's spoken to the boy's father.

KEVIN RUDD, FOREIGN MINISTER: The lad is sleeping in his own cell. I'm further advised that the
police authorities have made it possible for his dad to sleep in an office immediately adjacent to
his cell.

MATT BROWN: If the boy's parents can prove he's been getting treatment for a marijuana problem in
Australia, he could be released into their custody. That's still an option, even if he's charged
and goes to trial.

But there's always the chance he could face up to six years in prison.

Darwin barrister Simon Lee has written to Kevin Rudd to raise the plight of his own clients, some
of the 50 or so Indonesians detained in Australia despite their claims to be minors.

SIMON LEE, BARRISTER: I basically said that it was hypocritical that we have Indonesian children
here in detention, some charged, some not charged. And that as a possibility, it may be, however
unlikely, that release the Indonesian children for the Australian child.

MATT BROWN: Indonesia's foreign ministry has already played down any link between the two issues.

Australia's ambassador to Indonesia is expected in Bali tomorrow morning.

Matt Brown, Lateline.

Women's rights champions share Nobel Peace Prize

Women's rights champions share Nobel Peace Prize

Broadcast: 07/10/2011

Reporter: Karen Barlow

The 2011 Nobel Peace Prize has been shared between Liberan president Ellen Johnson Sirleaf, her
compatriot Leymah Gbowee, and Yemen's Arab Spring activist Tawakkul Karman.

Transcript

ALI MOORE, PRESENTER: Three campaigners for women's rights in the developing world have won the
2011 Nobel Peace Prize.

The winners, announced a short time ago, are Liberian president Ellen Johnson Sirleaf, her
compatriot Leymah Gbowee, and Yemen's Arab Spring activist, Tawakkul Karman.

The Nobel Prize jury says they won for their efforts to bring peace and democracy to their
struggling countries.

Karen Barlow reports.

KAREN BARLOW, REPORTER: This year's Nobel Peace Prize is being awarded three ways. But the common
thread is women in the developing world.

THORBJOERN JAGLAND, NOBEL PRIZE COMMITTEE PRESIDENT: Ellen Johnson Sirleaf, Leymah Gbowee and
Tawakkul Karman, for their non violent struggle for the safety of women and for women's rights to
full participation in peace building work.

KAREN BARLOW: Ellen Johnson-Sirleaf is Africa's first democratically elected female leader.

When she took power in 2005 Liberia was traumatised and spent by 14 years of civil war.

THORBJOERN JAGLAND: Since her inauguration in 2006 she has contributed to securing peace in
Liberia, to promoting economic and social development and to strengthening the position of women.

ELLEN JOHNSON SIRLEAF, 2011 NOBEL LAUREATE: I represent the aspirations and expectations of
Liberian, African women, maybe women all over the world. Therefore the pressure is on me to
succeed.

KAREN BARLOW: The Nobel Peace Prize Jury says president Sirleaf's rise to power would not have been
possible without fellow Liberian Leymah Gbowee.

She defied warlords and organised women across ethnic and religious divides.

One major act was to organise a sex strike.

THORBJOERN JAGLAND: She has worked to enhance the influence of women in West Africa during and
after the war.

KAREN BARLOW: The Arab Spring is represented by Yemeni blogger Tawakkul Karman. The 32-year-old is
one of the first Yemeni people to make a stand for democracy. Her efforts included several stints
in prison.

THORBJOERN JAGLAND: Because Tawakkul Karman showed the courage long before the revolution started.
Many years before. She stood up against one of the most authoritarian and autocratic regimes in the
world.

KAREN BARLOW: Tawakkul Karman says the award is a victory for Yemen and all Arab Spring
revolutions.

The representation of the Arab Spring was a must for the Nobel Prize Committee.

THORBJOERN JAGLAND: This is the most important issue in all of the Arab world, namely the
oppression of women. Therefore we are giving the signal that if one is to succeed with these
efforts to make democracy one has to include the womens and not set them aside.

KAREN BARLOW: Only 12 women have won the Peace Prize before.

Ellen Johnson Sirleaf faces a presidential election next week, The Nobel Peace Prize Committee says
it's not meddling in domestic affairs and could not delay the announcement.

Karen Barlow, Lateline.

Rudd attacks Richardson over leadership rumours

Rudd attacks Richardson over leadership rumours

Broadcast: 07/10/2011

Reporter: Tom Iggulden

Kevin Rudd has accused former Labor powerbroker Graham Richardson of having relevance deprivation
syndrome for suggesting he is plotting to overthrow Julia Gillard.

Transcript

ALI MOORE, PRESENTER: Kevin Rudd's taken aim at former Labor Party powerbroker Graham Richardson,
who's again suggested the Foreign Minister and two lieutenants are plotting to overthrow Julia
Gillard.

Mr Rudd says he's working with Julia Gillard to ensure Tony Abbott doesn't become prime minister.

Political correspondent Tom Iggulden has more from Canberra.

TOM IGGULDEN, REPORTER: Graham Richardson's repeated claims that backbenchers Mark Bishop and Allan
Griffin are gathering numbers for a Rudd comeback.

They've stayed mum.

Now the Foreign Minister's downplaying his relationship with them.

KEVIN RUDD, FOREIGN MINISTER: I think in the last couple of months I've probably seen Griffo twice.

And Mark Bishop, I don't know how long it's been seen I've seen Mark, but a long time ago.

TOM IGGULDEN: Mr Richardson says Mr Rudd has form.

(Reads statement from The Australian)

"He knows how to run long-term campaigns of guerrilla warfare," he writes in today's Australian.
"Mark Latham and Kim Beazley can attest to that."

KEVIN RUDD: You know there's a thing in politics called relevance deprivation syndrome? Is Mr
Richardson suffering from that? Probably.

TOM IGGULDEN: He also described Mr Richardson as a mouthpiece for the ALP's (Australian Labor
Party) factional bullies, who he's blamed in the past for unseating him as prime minister.

KEVIN RUDD: Is Mr Richardson taking hundreds of thousands of dollars a year at the moment in
salaries to go out there and bag the Labor party and the Labor Government every day? Probably. In
fact, definitely.

TOM IGGULDEN: But on the substance of the claims, Mr Rudd was less direct.

REPORTER: Would you say that you are actively trying to undermine Julia Gillard to get back into
the top job?

KEVIN RUDD: What I'm actively seeking to do is to do everything possible to prevent Mr Abbott from
becoming the prime minister of Australia. And in that context I'm working hard with the Prime
Minister and working hard with my ministerial colleagues to do that.

TOM IGGULDEN: He says he's been touring ALP-held seats not to seek support for a run at prime
minister, but to sell the government's policies.

KEVIN RUDD: The other reason for being out and about is also to get a clear message out about what
happens if Mr Abbott was to become prime minister.

TOM IGGULDEN: One thing he'd do is likely keep Julia Gillard's idea to require billion-dollar
resource projects built with government assistance to give local manufacturers a better chance to
compete for work.

TONY ABBOTT, OPPOSITION LEADER: Look I think all of us want to see more local content, and let's
see exactly what the Prime Minister's got in mind. But in principle, yes, I think that's a good
idea.

TOM IGGULDEN: But the Opposition's also used the idea to refocus its attack on the carbon tax.

MATHIAS CORMANN, LIBERAL SENATOR: If Julia Gillard was serious about increasing local content she
would scrap her carbon tax which will make locally manufactured goods less competitive.

TOM IGGULDEN: An Opposition-dominated inquiry's predictably recommended parliament kill off the
carbon tax.

MATHIAS CORMANN: So between now and 2050 the carbon tax will cost the Australian economy $1
trillion in today's dollars.

TOM IGGULDEN: A dissenting report from Government members of the inquiry, predictably recommended
the opposite.

JULIA GILLARD, PRIME MINISTER: And there are many ways in which Australian manufacturing can
benefit from a clean energy future.

TOM IGGULDEN: The International Monetary Fund issued a less politically-influenced view of the
carbon tax today; it says it's a good idea.

That was part of a report card on the Australian economy which said, amongst other things, that
house prices are overvalued by up to 15 per cent, that there was enough fiscal space to delay the
surplus past next financial year. And that the mining tax could be broadened to help pay for the
elimination of other inefficient taxes.

Tom Iggulden Lateline.

Moody's downgrades British banks

Moody's downgrades British banks

Broadcast: 07/10/2011

Reporter:

Ratings agency Moody's has downgraded 12 British financial institutions, saying the government is
less likely to provide support in the event of future trouble.

Transcript

ALI MOORE, PRESENTER: Ratings agency Moody's has downgraded 12 British financial institutions
including two major banks, Lloyds and Royal Bank of Scotland.

Moody's said the downgrade was not due to a deterioration in the strength of the banking system,
but reflected the fact that the government was less likely to provide support for some banks in the
event of future trouble.

The Chancellor of the Exchequor, George Osborne, confirmed the government was taking steps to avoid
any government bailout, but said that British banks were well capitalised compared with other
European banks.

Earlier, just hours after the Bank of England had announced a round of quantitative easing, which
will see the injection of 75 billion pounds into the British economy, the Central Bank's chief,
Mervyn King, warned the world may be facing its worst ever economic crisis.

American protesters take inspiration from Arab Spring

American protesters take inspiration from Arab Spring

Broadcast: 07/10/2011

Reporter: Craig McMurtrie

For two weeks America's Occupy Wall Street movement has been camping in New York's financial
district, frustrated with the financial system, Congress and the White House.

Transcript

ALI MOORE, PRESENTER: For more than two weeks they've been camping out in New York's financial
district.

Drawing their inspiration from the Arab Spring, America's Occupy Wall Street movement is now
spreading across main street USA.

Protestors have now taken over a square in Washington DC, within sight of Congress.

In his first comments about the growing movement, US president Barack Obama says the protestors are
expressing frustration at the financial system.

But, as North America correspondent Craig McMurtrie reports, they're also fed up with Congress and
the White House.

(Footage of protesters and police confrontations at barricades)

CRAIG MCMURTRIE, REPORTER: What started life as a small, mostly student protest against corporate
greed has touched a national nerve.

(Footage of protest and police confrontations)

FEMALE PROTESTER: The whole world is watching.

Shame, shame, shame.

CRAIG MCMURTRIE: Confrontations with police captured on webcams, live feeds on social network
websites, are drawing bigger crowds to Wall Street's sleep out.

(Footage of protests)

Big unions have joined in, network cameras have arrived and suddenly a ragtag operation is
beginning to look more like a national movement.

Just listen to the US Federal Reserve chairman on the Occupy protests.

BEN BERNANKE, US FEDERAL RESERVE CHAIRMAN: They blame, with some justification, the problems in the
financial sector for getting us into this mess and they're dissatisfied with the policy response
here in Washington.

CRAIG MCMURTRIE: Smaller protests have spread to 50 US cities. And the Occupy movement has now
moved on to prime real estate in Washington DC: Freedom Plaza, Pennsylvania Avenue.

LISA SIMEONE, PROTEST SPOKESWOMAN: It's symbolism, the fact that it's the word 'freedom' and we
think that many of us in America have lost our freedoms.

Our permit only goes til Sunday night at 10 o'clock, but we're not leaving. You know, we're legal
til Sunday night at 10, but we are occupying this plaza.

(Rapper sings)

RAPPER: It's time, to march, come on, it's time to march, it's time to march.

CRAIG MCMURTRIE: The occupiers are also doing something else, they're delivering a shot in the arm
to America's political left.

BENITA WEST, CONFERENCE DELEGATE: It has uplifted all of us. And I think you will see the Wall
Street movement as the United States movement very soon.

JOAN SULLVAN, CONFERENCE DELEGATE: Once the young people decided to make as stand on it, it kind of
energised everyone else.

CRAIG MCMURTRIE: Delegates to this year's conference of US progressive groups say they went to
sleep after Obama was elected in 2008. They're awake now.

RICHARD TRUMPKA, AFL-CIO UNION LEADER: It wasn't our class who declared war on working people and
people who work for a living. If they want to have a debate on class warfare, bring it on down,
we'll have that debate.

CRAIG MCMURTRIE: This year's gathering of civil and human rights movements and unions has twice as
many delegates as last year.

The ringmaster is a charismatic former Obama Adviser.

VAN JONES, AMERICAN DREAM MOVEMENT (Speaking to conference delegates): We're so excited to see that
we have a ...

CRAIG MCMURTRIE: Van Jones is a leading voice in the new American Dream movement.

His goal, to bring the energy of the Occupy protests and the professional left together to take on
the Tea Party and conservatives in a progressive fight back.

VAN JONES: Something was ignited this summer that the media missed. This is now becoming too big to
ignore. And what you're going to see going forward between the Occupy Wall Street movement and the
American Dream movement is a rising tide of protest and a rising tide of concern from ordinary
Americans who are saying "Listen, Wall Street and DC are off the rails."

(Protesters chanting).

PROTESTERS: No surrender. No retreat.

CRAIG MCMURTRIE: There could also be a hefty political payoff for his former boss. Though Van Jones
says that's not why he wants to unite the groups.

VAN JONES: The only way this president gets re-elected is if the base is fired up. But getting the
president re-elected is not the reason to fire up the base. The reason to fire up the base is
because the middle class are getting demolished.

CRAIG MCMURTRIE: It isn't hard to understand the anguish here. Since the financial crisis the
median wealth for American households has fallen more than 20 per cent. A few researchers found
that for black and Hispanic households it more than halved.

FEMALE PROTESTER: There's not jobs, I can't get healthcare.

DARRELL BOULDIN, PROTESTER: I volunteered on the Obama campaign. I've donated to the Obama campaign
and I thought president Obama was going to investigate Wall Street for their crimes and I am just
horribly disappointed.

CRAIG MCMURTRIE: They call themselves the 'other 99 per cent' versus the 1 per cent of Americans
with 40 per cent of the country's wealth.

Kevin Zeese is a long-time activist, he's one of the organisers of Washington DC's occupation.

KEVIN ZEESE, ACTIVIST: We have in this country 400 people who have the wealth of 154 million
Americans. 400 people.

CRAIG MCMURTRIE: And he has only bad news for Democrat strategists hungrily eyeing the growing
protests.

KEVIN ZIESS: I think Obama probably put it over the edge, you know, with his hope and change,
beautiful rhetoric and then delivering more corporatism and more militarism. They're trying to pull
this very moral movement, the Occupy movement, into the corrupt Democratic Party. If they succeed,
they'll destroy the movement.

CRAIG MCMURTRIE: Today at the White House the president was asked what he thinks about the growing
protests.

BARACK OBAMA, US PRESIDENT: Obviously I've heard of it, I've seen it on the television.

The protesters are giving voice to a more broad-based frustration about how our financial system
works. Right now we've got an emergency. And the American people are living out that emergency out
every single day.

(Footage of protest).

MALE PROTESTER: Where are the jobs? Where are the jobs?

CRAIG MCMURTRIE: Chaotic and noisy some of the protesters believe the Occupy cause could be the
start of the new independent political movement in America.

Others have no idea, but they plan to stick around to find out.

Craig McMurtrie, Lateline.

Europe has a sense of paralysis: Courtis

Europe has a sense of paralysis: Courtis

Broadcast: 07/10/2011

Reporter: Ali Moore

Global economist Ken Courtis says Europe has serious structural problems and it is difficult to see
what America can do but Asia is being pre-emptive.

Transcript

ALI MOORE, PRESENTER: Well now to discuss the world financial situation we're joined by global
economist Ken Courtis.

He's a founding partner of Themes Investment Management and a former managing director and
vice-chairman of Goldman Sachs Asia and tonight he's in Singapore.

Ken Courtis, welcome back to Lateline.

KEN COURTIS, GLOBAL ECONOMIST: Thank you very much Ali.

ALI MOORE: You've just spent a week in the US, a week in Europe, now, as I said, you're in
Singapore, does it feel a little like returned to the region of promise from the realms of the
damned, if you like, at least in economic terms?

KEN COURTIS: Ali I think you've sort of summed it up. In Europe there's a sense of almost
paralysis. That there's nothing that can be done, that we're just going towards a huge crisis and
there's somehow no way to stop it, is how people in the street feel.

We've seen yesterday a Belgian bank had to be rescued, effectively nationalised. And as this crisis
progresses I think the negativism, the fear, the depression in Europe is deepening and this of
course then is impacting how people are spending their money, how companies are investing.

And so you just have a pretty sombre environment. Indeed, yesterday the governor of the Bank of
England said that this may be the worst crisis, even worse than the crisis of the 1930s. So that's,
when someone at that level makes a statement of that importance, you know that we are in trouble.

In contrast, in Asia, well the regions still growing quite well. Probably on average at the moment
we're growing around 7.5, 7.8 per cent, from Australia at the lower end to China at the higher end
across the region.

What I feel is not a sort of a giddy optimism but more a sense of realism. And people are starting
to recalibrate, because they know if this crisis goes critical in Europe and impacts America and
Japan, which are already in difficulties, that inevitably that's going to hit this region. So I
think people are preparing for the worst and hoping for the best.

ALI MOORE: Before we look at Asia in more detail, let's go back to Europe.

Because I guess against the backdrop of what Mervyn King said, and we've also had the announcement
the Bank of England is going to start printing tens of billions of pounds, and we've had these
downgrades of British banks. But at the same time we've had a really very good week on global stock
markets, and there did seem to be certainly a real spike in optimism. What do you put that down to
and was it really false hope?

KEN COURTIS: Ali, I put that down to the following: number one, we've had several weeks of the
market going only one way, so probably the selling was sold out in a sense and there is a vacuum
there, a sort of relief rally has happened.

Number two, with the nationalisation effectively of the Belgian banks, I think there is a sense
among investors now that, as other banks get into trouble, as I believe eventually they will in
Europe, that governments will step up and take them over. Which is different from the Lehman
situation we had in the United States where the US government just abdicated and let the thing
collapse and that destabilised the whole world economy.

And I think, number three, there is more optimism today and in the last few days than there has
been in the last few weeks that Europe will begin to recapitalise its banks. And its banks are
heavily undercapitalised so they can't really absorb really big losses here without getting into
extraordinary trouble.

So I think these three or four forces have come together to give us a little lift the markets, may
go a little further. But I don't think anyone should get the view that the trouble is behind us.

ALI MOORE: Indeed with those efforts to recapitalise the European banks, and particularly that
commitment to continue the unlimited liquidity, does that help? I mean, is that a step on the road
to actually resolving this crisis?

KEN COURTIS: Well, it helps because it helps buy time. But buying time does not solve the
underlying problem. And the underlying problem is that the European banks have on their balance
sheets assets that are not worth the price that they're valued at on those balance sheets. And so
as they take losses on those assets, they have to ... they deplete their capital, but they just
don't have enough capital to absorb all of those losses.

So what has to happen is that the banks have to be recapitalised and then they have to get rid of
this bad debt, get it off their balance sheets and clean house.

You know there's a strange view afoot in Europe that bad debt is like good wine, it gets better
with age. Actually it's like garbage, it poisons everything around it the longer you leave it on
your balance sheet.

So the quicker that Europe can move on this, the smaller the crisis will be. And Europe is not
moving very quickly, and so as a result the crisis seems to be getting bigger rather than smaller
over the midterm.

ALI MOORE: Interestingly you're talking about clean house and you're talking about bad debts but
you're talking about banks, you're not actually talking about government debt. This really is a
bank problem, isn't it?

KEN COURTIS: It's a triple problem really Ali. It's the banks have a problem that they are just far
too undercapitalised. German banks are probably, have assets on their balance sheets 30 times their
capital, French banks 25 times their capital. So they're just way over-levered.

The second problem is you have a major fiscal problem. In a number of European governments they
just can't get their finances balanced.

And thirdly you have a structural problem in Europe. Parts of Europe are just not competitive,
haven't been competitive for years.

Take Portugal. Portugal hasn't had a trade account surplus since 1962. So these structural issues
are going to take a long time to turn around. And it is the convergence of these three problems
that is really at the heart of the European crisis, plus the inability of the political class to
come together and to make the right decisions.

ALI MOORE: Inability of the political class. You've just, you've been in Europe. We've seen huge
demonstrations in Greece. How big a risk do you think there is, a real social turmoil, turmoil that
could change the political landscape in Europe?

KEN COURTIS: Well, in Europe, like America, incidentally, is only inches above a stalled economy.
If these economies slow any further, just a tiny bit further, they could very easily slip into
recession. And given the weak fiscal position of most European governments, that would mean they
really don't have much strength to offset the downturn and so unemployment would rise further and
fiscal problems would get more difficult.

And I think in those conditions, these movements we've seen in Spain and Greece and a little in
Italy, they could become much more generalised. Unlike three or four decades ago, however, there is
no really organised left in Europe, like there used to be during the Cold War, so it's unclear how
these popular movements would go, what direction they would go, how they would channel their
frustration politically and what that would lead to in terms of elections.

But it's quite clear that this is going to be an extremely unstable period for governments.

ALI MOORE: Of course, we've also, as we just saw in that earlier report, had demonstrations, this
Occupy Wall Street group in the US that is now spreading across the country.

In about half an hour's time we get the latest official job numbers in the US. What's your reading
of America right now and whether or not it can avoid slipping back into recession?

KEN COURTIS: I think Ali that it's almost inevitable that America slip into recession over the next
12 months. What's interesting about this new movement of Occupy Wall Street and other ripplings now
that are occurring across the country, is that up until now the anger has largely been expressed by
the populist right wing through the Tea Party, and this is the beginning of an expression of that
frustration more on the progressive on the left side of America. And it will be interesting to see
how this plays out.

I think the Left has been, on the whole, quite dissatisfied with the Obama Government, thinking
that it hasn't really delivered as much as they thought it would, that it had been pandering too
much to vested interests in the financial sector and elsewhere in the economy.

And so this is going to be a real moment of truth which will partly calibrate how Obama, I think,
plays the election. Is he going to play a sort of a progressive populist approach to the election?

Or is he going to try to sail towards the centre and capture as many independents as he can that
way?

So I think we've entered into a great period of flux in America, like we have in Europe, and crises
of these nature always throw up new politics and new ideas and new people and new challenges and I
think now we've entered into that crucible where the economics, the finance, the politics all come
together and start to melt to throw up something new.

ALI MOORE: And as you say, you believe that recession is really unavoidable over the next 12 months
in the US. Is that even if Obama manages to push through even a part of his jobs package, if he
manages to get it through Congress, is there any lever government can pull, any lever the Central
Bank can pull?

KEN COURTIS: The jobs bill will help certainly. But the downdraft in that economy is very big at
the moment. You've got housing prices continuing to fall, unemployment is stuck, at best, at these
levels, we may get a little bit better numbers when they come out in 30 minutes, but on the whole,
companies are not hiring, companies are trying to cut costs, companies are being very careful about
investment.

Consumers are fearful, so they aren't spending, consumers have too much debt so they're trying to
save to pay off their debt. The government's fiscal capacity is very limited. So it's really
difficult to see what the US could do that is strong enough to offset these down pressures in the
short term.

ALI MOORE: You began the interview by talking about the different regions, and of course in the
region you're currently in, in Asia, this sort of caution about the extent to which it can remain
immune to what's going on in Europe and the US. What is your view about the ability, particularly
of China, to maintain, well maintain its growth?

KEN COURTIS: I think you've got your finger on it. I think China is the key to what happens in the
rest of Asia. It's also key to what is going to happen in the world because if China were to crack
here, and I know that there are many out there who think that China is going to have a very hard
landing and if that happened, then we would really be in the soup.

My sense is somewhat different. My sense is that across this region and in China in particular that
there is a lot of capacity in these economies to absorb the coming shocks. The levels of debt,
household debt and government debt are much lower, governments have a capacity to spend as a result
to offset the recession.

Because we've had higher inflation throughout the region, central banks have taken interest rates
up quite a bit, so they now have the ability to cut interest rates to relax those pressures quite
substantially through the months ahead as pressures build.

Also Asia has been very pre-emptive in a sense in many countries, although there are exceptions,
with trying now to squeeze out the excesses in the residential real estate sector, some excess
leverage in some of the corporate sector, some of the banking leverage problems. They're working on
those now so that if we have a real downturn in the world economy, they're in a stronger position,
six, nine, 12 months from now than they are now to absorb that.

I think the big strategy in China, the focus is to be the last man standing and to try to manoeuvre
through this. And Ali, if we look at China's record, although it's a complex society, a complex
culture, complex politics, the Chinese have a pretty good record over the last 30, 35 years of
managing this economy through good times and bad times. And I think they have a lot of levers they
can pull, in a sense more levers they have to pull because the state is more in control of that
economy than elsewhere, and also they sort of can use political measures in a way that we can't
always use them in the west.

So I'm fairly confident. I'm not one of those who thinks China is going to crash. I think China's
going to come down here, have a soft landing.

I think by next summer, unless something goes dramatically wrong in the world economy, China will
have largely released the squeeze that it's got on its economy now to try to make it stronger and
better prepared for the future, and it will start to turn up again by next summer.

So I'm fairly positive on my outlook for China. And as a result that makes me quite positive for
the region, although cautious.

ALI MOORE: Positive also, I guess, for Australia because of course we depend so much on China.

We're almost out of time but I do have to ask you a very specific Australian question and that is I
understand 10 years ago you were asked to forecast the Australian dollar over the decade ahead.

Now back then the Aussie dollar was sitting at around 52 US cents and you forecast parity within 10
years. Of course it's come to pass. We're no longer at parity, a bit below, but where do you see
the Aussie currency, which is so important for our manufacturing industry, where do you see it
going?

KEN COURTIS: Short term, I could, like over the next months I could see it coming down lower than
it is now. It's 96, 7, 8 against the US dollar at the moment. I could see it coming back to 90, 88
against the US dollar.

But midterm, Ali, if I'm right about China, if I'm right about the rest of Asia, I think the demand
for things that Australia produces will remain strong, that exports from Australia will remain
strong and there will be up pressure on the Australian dollar over the midterm.

So over this decade I wouldn't be surprised to see the Australian dollar eventually peak out at
US$1.20, US$1.25. And then I think we enter into a period that is beyond the range of forecast so
we will look at that in another 10 years.

ALI MOORE: Well, you got it right last time.

Ken Courtis, thank you so much for all your time and your thoughts this evening.

KEN COURTIS: Thank you.

Afghanistan marks 10 years of war

Afghanistan marks 10 years of war

Broadcast: 07/10/2011

Reporter: Sally Sara

Ten years after the US invaded Afghanistan there have been progress in areas such as health and
education but security and justice have not improved.

Transcript

ALI MOORE, PRESENTER: It's10 years since the start of the war in Afghanistan.

But a former commander of coalition forces says the United States and its allies are still a long
way from reaching their goals.

Retired army general Stanley McChrystal says the US went into the war with a frighteningly
simplistic view and only a superficial understanding of Afghanistan's history.

Amnesty International has welcomed progress over the past decade in areas such as health and
education.

But when it comes to security and justice, it found the situation has remained stagnant or even
deteriorated.

Afghanistan correspondent Sally Sara reports from Kabul.

SALLY SARA, REPORTER: For many ordinary Afghans it's not an anniversary to celebrate.

There's deep resentment over the presence of foreign troops.

And anger over civilian casualties.

HAFIZULLAH RASIKH, PROTEST ORGANISER (Translation): We've had ten years of this occupation by the
US and its allies in Afghanistan. Our people have suffered a lot of instability. Poverty has
increased and we have seen no benefits.

SALLY SARA: It's America and Australia's longest war.

And there's still no military victory in sight.

SETH JONES, POLITICAL SCIENTIST: I don't see this war subsiding or being won or lost in the next
several years. I think it's going to continue.

SALLY SARA: President Obama inherited the war.

He may be out of office before it ends.

BARACK OBAMA, US PRESIDENT: I have said that my number one goal is to make sure that Al Qaeda
cannot attack the US homeland and can not affect US interests around the world.

SALLY SARA: The bulk of foreign troops are scheduled to leave in just over three year's time.

At a NATO (North Atlantic Treaty Organisation) meeting in Brussels, the Afghan government expressed
apprehension about what will happen then.

ABDUL RAHIM WARDAK , AFGHAN DEFENCE MINISTER: Our joint enemies were assuming from the beginning
that sooner or later the international community will run out of patience and their interest will
wane and they will leave Afghanistan. And Afghanistan will be left isolated.

SALLY SARA: Ten years on, daily life for many Afghans is still bitterly hard. One in three lives in
absolute poverty without enough food, shelter and clean water.

Abdul Wali and his son, Abdul Shakur, search for anything they can sell, but wish for a better
future.

ABDUL WALI, RUBBISH COLLECTOR (Translation): Oh yes, I wish for much more. I have this hope to
provide for my children. I wish I could at least have my own house for my family.

SALLY SARA: The poor in Afghanistan are among the poorest in the world. The ten years since the
start of the war have delivered improvements in education, health and infrastructure but up to nine
million people are still living below the poverty line.

Places like this one give you an idea of the extremes in Afghanistan. Those who are collecting the
rubbish are living on only a few dollars a day. But they are here in a neighbourhood which is home
to some of the most powerful people in the country.

The remnants of the Taliban government blame foreigners for the country's problems.

MULLAH ABDUL SALAM ZAEEF, FORMER TALIBAN AMBASSADOR: For what reason they came to Afghanistan. If
they came for justice, there is no justice. If they came for security, there is no security. If
they came for the economic progress, there is no economic progress.

Right now the situation is very worse. And position of war is very terrible. And it's American
became enemy with the people of Afghanistan. And they are killing every day, dozens, dozens of
people.

SALLY SARA: A decade after the war began, it's still not clear when peace will finally come to
Afghanistan.

Sally Sara, Lateline.

Poisoning feared in horse deaths

Poisoning feared in horse deaths

Broadcast: 07/10/2011

Reporter: Imogen Brennan

Seven horses have died and five others have been euthanised at a property west of the Gold Coast,
leading to suggestions of poisoning.

Transcript

ALI MOORE, PRESENTER: Seven horses have mysteriously died and five others have been euthanased at a
property west of the Gold Coast.

Authorities were called to the Kooralbyn agistment after neighbours reported seeing a paddock of
horses struggling to breathe.

And a warning, some viewers may find images in this story distressing.

Imogen Brennan reports.

IMOGEN BRENNAN, REPORTER: Twelve horses dead within a day. Owner Steve Hogno is devastated.

STEVE HOGNO, HORSE OWNER: I have shed a few tears I can tell you.

IMOGEN BRENNAN: Neighbours found the sick animals yesterday and called authorities. But they say it
took hours for vets to arrive and the horses suffered agonising deaths.

AMANDA SULLIVAN, NEIGHBOUR: Tongues hanging out of their mouths, It's really just drowning in their
own fluids. It was horrible.

IMOGEN BRENNAN: Steve Hogno moved his 25 race horses from Toowoomba to the agistment property at
Korralbyn 10 days ago.

He flew back from work in Western Australia this morning as soon as he heard they were sick.

STEVE HOGNO: They were the cream of the crop and the youngest ones, and you know, it's devastating.

IMOGEN BRENNAN: Thirteen horses remain. Three of those are being monitored for the sickness.

STEVE HOGNO: We don't think that they're going to die, but they do need treatment. And firstly we
need to know what's happened to the other ones.

IMOGEN BRENNAN: Kooralbyn is near Boonah and Beaudesert, where a number of horses died of Hendra
Virus earlier this year. But Biosecurity Queensland tests have confirmed the 12 horses didn't have
the disease.

Steve Hogno has his own suspicions.

STEVE HOGNO: Possibly some sort of poisonings. They do have a few ticks on them but it doesn't seem
to be heavy enough infestation to kill them so quickly.

IMOGEN BRENNAN: The RSPCA was called to the property, but it's ruled out animal mistreatment.

The deaths will remain a mystery until the post-mortem results are released next week.

Imogen Brennan, Lateline.

Now to the weather: And that's all from us. If you would like to look back at tonight's interview
with Ken Courtis or review any of Lateline's stories or transcripts, you can visit our website. You
can also follow us on Twitter and FaceBook. I will see you again on Monday. Enjoy your weekend.
Goodnight.