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tv   Counting the Cost 2017 Ep 43  Al Jazeera  October 29, 2017 6:32am-7:00am AST

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percent voting was suspended in some opposition strongholds and the election has been marred by violence. attacks that led to more than twenty u.s. embassy staff recently being recalled from havana the u.s. says the staff were injured at their office and residence is. there's no evidence that the attacks have taken place. the leader of iraq's kurdish region is reportedly not planning to extend his presidential term past november parliament's due to meet on sunday to redistribute the powers held by massoud barzani he's been facing mounting pressure to quit following september's controversial referendum iraq's government opposed the vote calling it unconstitutional. the bodies of thirty six unidentified people have been found in a village near the eastern libyan city of benghazi locals made the grim discovery they say the victims were critics of general holly for hafter some of the bodies
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were found with signs of torture and gunshot wounds to the head areas and have to ask control well those are the headlines the news continues here on al-jazeera after counting the cost of. his native am increasingly struggling to survive in today's world. and they're trying to protect them at this time. hello i'm sam is a than this is counting the past and al jazeera your weekly look at the world of business and economics this week out of pocket and out of patience italy's rich northern regions vote make a break from rome. also this week china enshrines the president's political
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philosophy into the constitution or will it mean for the nation's pocket book plus cashing out traders get ready to say goodbye to hong kong stock exchange its computers take their job. millions of citizens in two of italy's wealthy northern regions of voted to take more control over their own economic affairs echoing recent developments in catalonia lombardi and venator have shown their on happiness at their tax money being used to pay for services in poorer parts of the country the result of the ballots were non-binding do say an awful lot about the desire to break away from rome officials say around five and a half million people headed to the polls to have their say in the referendum and final count showed ninety five percent of voters in lombardy said yes to greater autonomy and this number rose to ninety eight percent in the veneto region the referendum was organized by the northern league political party it wants to cut the
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gap between taxes sent to rome and the value of state services they get in return citizens feel hard done by the lombardy region says it's shortfall comes in as around sixty four billion dollars which it says is the highest in italy for nato claims it shortfall comes in at eighteen billion dollars so what's next for italy as the two richest regions try to take back power from rome well joining us now from london is russell jones russell is an economist and partner at the well and consulting and independent economics advisory firm thanks for joining us today so what do you make of the economic impact of the lombardy investor referendums are they going to overburden the italian economy. well right now what we're seeing is the italian economy doing quite well as is the eurozone economy but this is a reminder and if the surface both in italy and in europe there are
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a number of fault lines both politically and economically it is a reminder that the populist pressures the pressures for regionalism still remain pretty strong beneath the surface does it represent a danger in the short term to national unity initially when i i think probably not but there is a fear that this could be the thin end of a wedge if you like and over the course of the next few years you could see this kind of development continue to gather impetus to gather momentum but there is still a bit of a struggle it's not a challenge when it comes to the debt to g.d.p. ratio for the economy that's correct it's really has a very high debt burden on the good news latterly is that the economy has started to grow again and we should also remember that the italian government does run a fairly large primary budget surplus as well so the combination of growth and that
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primary surplus means that at least for the moment that debt burden is likely to come down rather than to expand the problem for italy comes as it does for a number of peripheral economies in the eurozone the problem comes when there's next a recession when that g.d.p. growth dissipates disappears and once again i think you would see the financial markets focus on those countries like italy that have a very high level of sovereign liabilities and we talk about some of these movements for greater autonomy is it all about the bottom line the money that is fueling and driving these movements well certainly a town. in case the northern part of the economy is responsible for about thirty percent of g.d.p. and the states that that held the referenda feel that they're not
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getting their fair share of influence and of tax revenues so i think there is a sense that this is this is economic the northern league which has long been a mouthpiece for greater autonomy for the northern parts of italy certainly see these votes as an opportunity to to expand their influence so yes i think economics is a is a very big part of it. whether we're talking about autonomy movements separatist movements referendums is this do you think going to take a toll not only in the european project but in european markets as time goes on. i think for the moment as i said i think the economic situation is is pretty positive for europe i mean finally the cyclical position of the european economy and that certainly includes italy as well is in good shape the problem is that
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a lot of the underlying fault lines and structural issues that europe has still have not been addressed the process of structural reform has slowed down a lot the question you have to wasc is whether structural reform will progress in that area is actually consistent with a situation where you have these populist movements well you asked the questions let me turn it around and say that was going to be my next point is can any of those structural reform challenges really be addressed now given the sort of political environment that you are explaining that well on the one hand there is a hope that a combination of mrs merkel in germany and mr maccarone in france can put their heads together and forge some progress on those reform policies on the other hand i think the problem with that is that the still a reluctance to swallow any unpleasant meds and around the periphery
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a lot of people are looking at what happened in greece and all saying do we really want to go down that direction there is a great sense of reform fatigue across the euro area i think personally that mrs merkel that mr macro on are going to have a very very difficult job in accelerating this process of reform my sense would be that when the next down to comes and it surely will come at some stage over the next few years that a lot of the underlying issues which europe is suffered from for many years for decades will once again reassert themselves all right russell jones then thanks for your thoughts. thank you he's now officially the most powerful leader china has had in more than forty years the ruling communist party voted to add president xi jinping is name and ideology to the constitution that puts him on the same level as mousy dong it also suggests she will influence policy including fiscal policy in
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china for decades to come will be talking to an economist about this shortly but first our correspondent andrew thomas' been to lying to her to find out more about president she's humble beginnings when she paying lived in liang jaya her in the early one nine hundred seventy s. it was a rural village where people lived in caves and in poverty now people ride in on electric shuttle buses most villagers have left their home turned into an open air tribute museum honoring the man who's now president. some very young tell a sanitized version of the she story what he learned here what he did here and how loved he was visitors see the bed in which those flea infested she is said to have slept they hear how he built dams and duck world's most groups are brought here by communist party workers and photographed in front of she's wise words. she was
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born the son of a senior communist party member in beijing but in one thousand sixty nine his father fell out of favor the family was banished by chairman mao during the cultural revolution fifteen she was sent to remotely angle her he spent seven years farming in fertile land living and working alongside some of the poorest people in china they were his formative years she became a leader of the local branch of the communist party he'd go on to more senior roles all over china until becoming president five years ago she never forgot her returning for a visit to years ago the village has become an important part of who he is the president with the common touch and go here i am happy and excited this is where uncle she started his long march all his hard work began here the official she
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story one of hard work honesty innovation and empathy means the president sounds authentic when he demands those qualities of party members and of the chinese at large this is essential thing park extension of the shooting ping brand what these people have come to see for themselves is the setting for a story that hundreds of millions of chinese people are reading about daily in state media and learning about in schools at the entrance to the enjoy her workers are expanding the car park and building a grant ticket whole two and a half thousand people already visit every day but a lot more expected for many years to come. joining us now from hong kong is alex wolff alex is the senior merging markets economist with the u.k. based standard life investments good to have you with us so as we know china is set soon to become the world's largest economy what's driving the chinese development miracle as some call it. well it's change over time but in one word the short
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answer is reform they've sustain a very high rates of growth over a long period of time through progressive reform efforts that go back to dunk shopping's reform and opening when he unlocked avenues of productivity through agriculture reform so we reform and opening up to foreign direct investment of course that change post post crisis when they relied more on on debt specially credit fueled investment and so very much investment driven at the moment and that's why you're seeing increasing levels of debt with it with structurally lower growth rates will come to the debt in the second but can the long run of growth that you mentioned continue looking forward if i get you to dabble into a crystal ball a little bit. no i don't think it's not possible i think it one of the things that one of those that has sustained growth over the long period time of course has been demographics of as well they've benefited from what's called a demographic dividend where they've had increasingly a larger labor share of the population that also has fueled growth but now china's
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facing a much different demographic situation where demographics are increasingly going to be a drag and so it's going to be very difficult if anything next to impossible to sustain the rates of growth that they're targeting especially their target through twenty twenty with the with with declining labor share labor share of the population and so the only way to really sustain high rates of growth is through is through increases in increasing productivity and they'll have to increase productivity they'll have to launch structural reforms that are will be quite difficult i think in their system you mentioned a moment ago debt columnist so warning it's being the gleick said what can president xi do about. well there's a lot of there's a long list of things he can do and this list is relatively well known in fact they themselves published a list of what they think they can and should do back in two thousand and thirteen and it was known as the third plenum document that discussed s.o.u. reform so reform of state enterprises labor reform in terms of who go read
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householders land reform opening up sectors to foreign investment into private sector investment things that can unlock productivity growth but also reform the relationship between the state and private sector so just creating a even level playing field where the most productive firms can succeed and the least productive firms can fail and leave the market but in fact that they're trending in the opposite direction and a lot of what they talked about in the work report at the party congress was reforming the role between the private the state but in fact it wasn't reducing the role of state it was increasing the role of the state and so this is i think will make it very difficult to achieve the growth rates that are targeting especially if if you would expect is as i do that productivity growth will likely not not bounce back without the without the reform trajectory that they need or i alex will thanks so much thank you twitter says it could be on calls to finally turn its first ever quarterly profit to social media network has lost over two billion dollars since it
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started in two thousand and six and has struggled since it went public in two thousand and thirteen three hundred thirty million people who use the service kobe still has taken another hit in the fraud scandal it's lost an important industrial standard certification to some of its products japan's third largest steelmaker recently came under fire off to reporting fake quality inspections at least five hundred companies the thought to be affected by the dots of fraud. seen its global sales climbed six percent in the last quarter topping analysts. its chief executive steve easterbrook has been credited with winning customers back after the company suffered years of decline well he's now investing in tech to ramp up home delivery and mobile pay services along with shaking up the menus. taking selfies might not be everyone's fault today especially for those of us who are
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a little camera shy but you might want to work out what your best angle is banks may soon want our faces as well as our fingerprints and voices to verify who we are is set to launch a platform that allows banks to integrate various types of biometrics into approving credit card applications and payments so the common counting the cost end of an arrow why traders at hong kong's last stock market floor are saying bye bye to the bad. the wall street crash began this week eighty eight years ago a stark comparison to today in the u.s. stock prices of more than tripled since two thousand and nine but many investors are wondering if the current upbeat sentiment can last this political uncertainty and warnings of fiscal tightening by central banks including the fed chris is salumi has more from new york. with a nuclear armed north korea making threats international trade deals on hold and
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involving door after white house staff u.s. politics have been anything but predictable under the tramp administration. nevertheless stock prices have been steadily climbing recently passing twenty three thousand for the first time defying conventional wisdom that the market craves stability. since president donald trump selection the dow jones industrial average has shot up twenty six percent and shows little sign of slowing there are some signs of some cracks in some of the most forecasts were generally still looks like we have further run particularly because markets are a little. that said i what so far has been a strong earnings season and some positive notes about possible tax reductions the market also continues to benefit from low interest rates and a policy of quantitative easing that started under president barack obama seven years ago studying the market on its current upward climb but if history is any guide this trend won't last forever. and whether it's the stock market selloff that
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led to the great depression in one nine hundred twenty nine. or black monday in one nine hundred eighty seven the superstitious point out that the greatest market drops have taken place in october some warn that safeguards meant to stop such slides not kept pace with modern technology do i think that something like that can happen again i mean anything's possible i think that with the advent of computer technology and the speed of which that technology is transfer on the market i think it's very possible i think it would be a very quick move for now however with the possibility of tax cuts on the horizon the market continues to skyrocket and vester is hold on tight for the ride. well joining me now from london is yan lambert global head of financial market research at the netherlands based robbo bank good to have you with us so you know what's going on with the u.s. equity market then how is it defying all of this i would say gravity of political
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uncertainty you know currently it is indeed defying that i think there's a couple of things really playing out at the moment obviously corporate earnings so far this season has been pretty strong and that helps on top of that the market's been very pleased with the pushback against regulation sort of deregulation sort of angle that the trump government have in house is lending very well in the market at the same time the markets traveling in hope are traveling in hope that the tax reforms will come of something that money will be repatriated and as a simple math there that will all benefit stocks so at the moment a hopeful equity market posting one high after another or how much higher can the market get on the hopes and confidence do you think it's going to continue to push the numbers north so far it's been really good at defying gravity even told a question about the fed chair person of course coming up has been sort of sidesteps and there's quite a range of candidates there for the market could be more worried about that i think on deregulation they want to see more action particularly tax forms is going to be
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absolutely crucial if talks if the term administration cannot deliver on that there will be a bit of a reckoning in equity markets don't forget those are still a lot of central bank money sloshing around trying to look for returns that is a benefit that is of benefit to these equity markets as well globally but there's also warnings as i know i'm sure you know you and sixty percent the bottom sixty percent of americans are struggling are we being misled somewhat by some of these headline numbers and this is the big dig it to me the big paradox of course on the one hand if you look at the s. a clock people classes. bubbles are forming it seems a lot these markets are doing well you can come up with structural reasons we're not there bubbling up of course in part because banks have been supporting it but underlying in many. the societies globally in the u.s. is no exception there there is a large underclass of people who are wondering how this recovery is working for them they don't see the real wage increases that's the big missing factor here and that's of course where such a statistic like sixty percent of the american struggling from paycheck to paycheck
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is coming from it is real it is really out there it's not just politics it is something that needs to be addressed central bankers have been in charge of addressing it it seems because politicians have taken a step back i think politicians will have to do a step up in the next years to come because central bankers have used up most of them initially really well i'm glad you mentioned step up and the slow wage growth what does that mean for monetary policy in the key missing ingredient in this current recovery if we would have had wage growth at the moment the central banks would have had no problem hiking rates as it stands right now they're gambling big with high stakes trying to hike rates even at a gradual pace because if that goes wrong they will be blamed for cutting the recovery short day being the central banks here of course by all those people who like i said over the past decade have not seen their real wages increase and they are really puzzled by it central bankers they don't have a clear answer to it they're wondering whether the phillips curve that dictates that as an employment false wages would normally start rising is broken and if it
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is broken what does that mean for monetary policy do they have to come up with a new monetary theory a new way of running the central banks those are some key questions out there and so far very little wage growth to really go by the markets also been excited about you know talk of a tax overhaul by the u.s. president if that comes to fruition who do you think it's going to help the most where is he going to leave things from a market perspective. if you would have asked me that the star of the year tom's plans were very much in favor of the wealthy so and that is a bit of an issue as an economist or strategist because you're trying to lift real wages if you're trying to relive the economy given the biggest cuts to the wealthiest is really going to help because they will just piling in more as a bubble so really it's not going to be spent there's only so much because you can eat in the day after or steak for that matter now as it stands in its current forms it is more generous towards the entire population now but we have to be careful because these plans are still being discussed still very malleable the still being
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formed so it's hard to get a verdict out there until we see it actually passed that's a big give already and if it passes in what form time will tell i guess thanks so much you're welcome. the trading floor in hong kong stock exchange is shutting down at the end of october for thirty years the exchange floor was full of energy and shouting as brokers in brightly colored vests made and lost fortunes all of that is ending now thanks to online trading their vehicle paula reports from hong kong. with a bang and much enthusiasm goal rise of china base logistics company debuts in hong kong stock market initial public offerings from chinese firms are becoming more frequent with more than a thousand companies from across the border trading their shares on the hang seng index you have only with hong kong within greater china there's a large equity market place that basically is accessible as long as you're
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a qualified company so without government interference you can easily come here with the size of china's economy that just pushes more of these quality companies to the listing opportunity here chinese entities account for about half the number of companies on the hong kong exchange compared with five percent in one thousand nine hundred seven and the territory transition from a british colony to a special administrative region of china hong kong has always been a financial hub but over the past two decades the nature of the city's markets have changed drastically along with china's economy chinese companies and investors looking for international exposure or now is huge part of the financial system but there is a nother big change why be taking place in the city stock markets. the news that hong kong stock exchange is shutting down its trading floor by the end of the month has caught many by surprise despite the fact that it's used by only a few brokers now online technology and trading back in pewter have made this place redundant before you. get to so many friends and so made
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a connection is. changed by. the exchange has shrunk over the years but has always remained an important symbol. in the early nineties a popular t.v. series captured the excitement and the exchange floor and the lives of traders in the red vests within. our crowd. and we sat. down to settle all the classics like this. although there are those who are less sentimental. to close because they know working in there anymore because everyone is people in there it's the end of an era where you spend thirty years here but i can use the wonder of. how. from next month the trading floor becomes a part of a museum dedicated to the stock market making it yet another piece of hong kong's
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unique identity delegated to history and finally. number of the week thirty million dollars that's how much the world's largest known fancy intense pink diamond is expected to fetch when it goes up for auction the ranch pink is exceptionally rare and weighs thirty seven point three carrots so the base auction house has been showing it off to prospective buyers in london and hong kong for it goes on sale in geneva next month and that's our show for this week there's more for you online at al-jazeera dot com forward slash counting the cost will take you straight to our page which has individual links and the entire catch up on. for this edition of counting the cost. from the whole team here thanks for joining us.
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yes. we wanted to for. now. just. jump on the truck. with the one today. this time on al-jazeera news has never been more available it's a constant barrage of it every day but the message is a simplistic you have the frame a good logical rational people versus the crazy monster and misinformation is rife dismissal and denial of well documented accusations and evidence is part of genocide the listening post provides a critical counterpoint challenging mainstream narratives at this time on
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