tv World Business Today CNN June 16, 2011 1:00am-2:00am PDT
♪ >> that's it. [ applause ] >> jimmy fallon. thank you so much. >> congrats on this gig. >> congrats on this gig. you're awesome, man. you're awesome, man. 6 >> i'm going to end this with this is cnn breaking news. i'm zain vergee at cnn in london. an indonesian court delivered a guilty verdict in the bashir case. the radical cleric had been convicted of several terrorism charges. kathy kianna was in the courtroom. tell us about the case and what happened. i said jakarta district
court found him guilty of terrorism charges and he was sentenced to 15 years in jail. the specific charge is planning and influencing others to provide money for what would be used for terrorism acts. and the charges were actually part of several others that were first put forward in its case when it started three months ago. ba'asyir was first arrested for a training camp in early 201. police say he and his organization was involved in setting up the camp and police claim that the militants were preparing to launch attacks similar to the one in mumbai in 2008. now, in the past, authorities tried but failed to directly link him to the major terror attacks in indonesia.
this was his third trial in a decade. in the first two trials, the officials tried to link the elder to attacks in bali and jakarta. he was charged with lesser charges and spent about 26 months in jail and released in 2006. this time around, after his latest arrest, they found him again guilty of terrorism charges. he's always denied the allegations and they called this verdict blasphemous. his lawyers are saying they'll appeal his case. this also just coming in to cnn, a month and a half after osama bin laden was killed al qaeda has a new leader. a website lunged to the terror organization says ayman al zawahiri has been pointed his its new chief. the egyptian was al qaeda's number two man for years and personal adviser to bin laden.
al zawahiri is reportedly a surgeon and often referred to as the brains behind al qaeda. those are the headlines. i'm zain vergee in london. "world business today" starts now. good morning, from cnn london and welcome to "world business today," i'm nina dos santos. these are the top stories on thursday, june 16th. the bears move the markets as the grisly greek debt crisis shakes investors. and samsonite hopes it can pull it out of the bag despite a disappointing debut. and we take a look back at tech titan ibm. and i'm jeff defterios at the russian economic forum. we'll talk to a major shareholder of the tnk/bp joint
venture who keeps their door open to bob dudley before he comes tomorrow. >> plenty to come on this jam-packed show. first up, that sunking feeling is hitting the markets this thursday. it's all bleak and the reasons almost all greek. as uncertainly rattles the debt-ravaged country, it's clearly rattling investors as well, throw in, of course, poor u.s. economic deet and you can understand why everybody is seeing red. increasing worries about greece and whether it will be able to avoid a default are weighing on the european markets heavily this thursday. here's where we stand. a number of the markets into the red already in the first hour or so of trading. the zurich and smi down nearly 0.75%. losing that amount for the second day in a row. the same concerns about greece are also affecting the currency markets where the euro is falling today and the u.s. dollar is sharply up against the
common courtesy. the british pound trading at 1. 144 versus the u.s. dollar and the euro at 1.4129. this moves come just a day after frustration exploded into violence on the streets of athens. engaged protesters battled police, expressing their anger over the government's austerity measures. many demonstrators say their families are on the brink of financial disaster. unemployment in guess has skyrocketed to more than 1 % in may. it's risen by 40% since just last year. the prime minister is pushing for additional cutbacks hoping to get the fifth payment of a $158 billion european bailout. the new proposed cut backs include an additional 20% cut
for public sector jobs, something that's bound not to win much public support as you can imagine across athens and the rest of greece. here's how the athens market is looking at a moment. this is a market that's been heavily hit over the last year and a half as greece has repeatedly applied for bailouts and received one of them. it's now in talks for a second bailout. the athens general intex is curre currently falling by 1%. we are joined from the greek capital, he's monitoring the unrest and greece's teetering economy. first up, talk to me about the politics there. it seems as though there's quite a bit of an impasse and this will have huge ramifications for greece going forward. >> that's right. the bill failure yesterday was of the two main parties in the country, the conservatives and the socialists who getting to
and form a gran coalition, which has been there for many months now. the prime minister has made c conciliatory noises. yesterday after the very brief talks broke down in the afternoon with new democracy, the prime minister was quite angry and his tone was suggested that the chance has now been permanently lost. his new government is going to be on much shakier ground than a coalition would have been. >> we should also talk about this vote of confidence. how much will that help? or not help? >> well, he's going to need the vote of confidence, merely as a technicality. i'm sure that he'll get it.
but the real question is whether the austerity measures that he presented to parliament yesterday will cause a similar popular reaction when they are brought to the floor for a vote or whether they will cause defections from his party. he needs his bloc of voting mp rz in parliament to get the bill through. yesterday, we saw two mps publicly defect which brought his majority down from 166 to 154. that's only three mps away from an outright majority, which is what he needs. i'm sure there were other rumblings of deeffects that caused him to go to the phone and talk to conservative new democracy before attempting to force the issue. that's going to be the real test, the voting of the bill. >> john joining us from athens. many thanks to that. >> as tensions in greece escalating with so too are the yields on the country's
government debt. the ten-year bond skyrocketed to a high of 17.9%, just adding to the country's huge debt burden. in two years, bond yields have hit a high, rising more than 28%. those bonds were around 14% six months ago in january. this gives you an idea of how much the greek crisis worsened. >> the debt crisis in greece was center stage in asian trading. ramy inocencio has that. >> it's looking stormy out there in the markets today. fairly dismal u.s. data have conspired to spark a sell-off in asia. first to japan. every time that the u.s. sneezes, the big exporters catch a cold and that was the case on the nikkei. it dropped more than 1.5% with nissan, toyota and sony all losing nearly 2%.
meantime, over here in hong kong, the hang seng dropped 1.75%. the big story was samsonite's ipo. they've paired some of the losses since. i'll be chatting with the ceo later in the show. the asx, the seoul kospi and the shanghai composite led more than 1%. and the sensex in india, hit a three-week low, thanks to a tenth hike in interest rates in the last 16 months. more on that later in the show. nina? >> we certainly will. thanks for that for the moment. let's tell you what happened on wall street on wednesday. stocked turned sharonly lower on the back of more concerns about greek debt problems. also bleak manufacturing consumer data that ramy alluded to before. at the close, the dow jones industrial average dropped by nearly 1.5 rers and the nasdaq and the s&p 500 each lost 1.75%.
looking ahead to the next trading session in wall street, it seems as it's a bit of a mixed bag. of course, we have a couple hours to go if not more than that before the markets start trading. the s&p 500 remains in the flat territory. the other two markets down. coming up next on "world business today," he's one of the richest oil men in the world. now he's talking to cnn. up next, victor vixleburg. and in india, the central bank has yet again hiked interest rates. more on that on the show, just coming up after the break. uh, laugh lines?
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hello and welcome back to "world business today." an economic forum is taking place in st. petersburg. the host nation can expect to take center stage. business brains are lining up to maximize russia's untapped potential. the nature of that potential is no secret and neither are the perils of doing business in a country that stands accused of stifling investment and innovation. just ask this company, bp. since it merged with aar to form thk-bp, they've had more headlines than financial success. the gloves came off most recently in january, when bp's
billionaire partners moved to block a deal with rosneft. on the table, a 1 billion share swap as well as antarctic venture. more doubt now has been cast on russia's suitability as, of course, a destination for foreign investment. john defterios joins us live from st. petersburg. i had, john, it must have been an interesting conversation with victor vexleburg. what did he have to say? >> that's interesting, nina. you hear about the oligarchs, those who hold the key to this market of 140 million consumers. victor vexleburg has sizable mining interests here and throughout the region. he's a major shareholder in tnk. it's fascinating. we sat down for an interview and
intentionally left the door open to bob dudley before he becomes the vp of the st. petersburg market. >> we try to find the best solution for both sides. in today's climate in russia, it's trial and tribulation. it's important to see what the issue is and try to make serious conclusion about why there's this transaction or this deal between bp and rosneft doesn't happen, because bp tries to ring in our share holders.
i think for bp, this is unbelievable, perfect investment in russia. >> at this stage, would a rosneft fit into the equation from your standpoint as one of the major shareholders of tnk. >> it is difficult to make comments on behalf of rosneft. they try to do the best for rosneft shareholders. >> you don't see a three-way partnership evolving here? >> i don't believe that can happen. >> there's discussion about you listing your gold mining group into hong kong. what's the time line now with some trepidations about the speed, the overheating of the chinese economy? still want to proceed in that direction? >> i think i was scheduled for the project, i would like to see a capital program.
i believe the program will be ready to get the final understanding of what is the best schedule is end of this year. >> so it won't be in 2011 you don't think? >> no, no. this is not 2011 for sure. it's most probability this will be next year. >> you have obviously a very strong place in the russian economy right now. do you see russia partnering with china in a greater significance going forward? >> in general, of course, it is a huge market, a huge opportunity for russia. at the same time, its activity is between the russia and chinese companies. i believe it should be successful relation. >> victor vekselbert here.
hu jintao is in moscow as we speak, meeting with vladimir putin and the president mr mr. medvedev. they're hoping to announce a new investment fund for russia, this $50 billion private equity deal and they're hoping to get a landmark gas deal done before he leaves on saturday. if you read between the lines of the rosneft deal, potentially bp is talking about selling its stake in that joint venture and rosneft could be one of the partners. that's not something he wanted to answer just yet. the walls will be burning tomorrow when bob dudley shows up to st. petersburg. >> let's talk about the greek debt crisis. from asia to wall street, everybody is talking about this. the latest we understand is a member of the ruling coalition has now resigned. we have the government and the prime minister going for a vote of confidence in the parliament soon. is it the hot topic of
conversation there where you are in st. petersburg? >> absolutely, because russia's fighting a capital flight problem right now ahead of presidential elections in march 2012. $25 billion so far in the last year. they're concerned about any run on any country. i did an interview with jim wolfenson, which we'll run later on cnn. he talked about the gap between the private banks and the government and the people. the gap is far too wide. he thinks the european union and european central bank and including the imf have gone a step too far to protect a private investor. that's joe ackerman of deutsche bank. the german and french banks are on the hook for $100 billion in greece alone. that's why we've seen the difficult negotiating which is have come to the brink now. the cabinet reshuffle probably won't do a whole lot on its own. the unity government was a good idea but they didn't get the result they were, looking for.
nina. >> john defterios, thank you for that. this global situation weep be talking about something else in the world, the inflation rate in india, just keeps on ridesing. after the break, we'll be talking about hout central bank is spongd responds by raising i rates again. the cream disappears but your wrinkles don't. ♪ introducing neutrogena® rapid wrinkle repair. it has the fastest retinol formula available. in fact, it's clinically proven to smooth wrinkles in just one week. so all you have to do is sit back and watch your wrinkles go away. new rapid wrinkle repair. from neutrogena®.
india's ranking among biggest economies is number ten. that's almost what its increase in inflation hit last month. it shot up by 9.06% for the month of may. the country has the highest inflation rate of any large asian economy. today india's central bank raised interest rates to tame those runaway prices. i'm joined by a.j. roy, an economist and adviser to the federation of indian chambers of commerce. thank you very much for coming on cnn. ten interest rate hikes in 1 months. that's a pretty shocking figure. >> yes, inflation is very high and interest rates have been going high. what actually we need is lower inflation and higher investment. because inflation has got generalized from food inflation to manufactured goods inflation.
what we are witnessing now is shortage, shortage of industrial raw materials, intermediate products. this is pushing up costs for industry. and that's how manufactured goods prices are going up. what we need is exactly creation of capacity down the line, for example, in creation of capacity for more coal production, oil production, cotton production. this will be affected by the constant hikes in interest rates. >> will today's interest rate hike, as i was just saying, will it be enough to try and tame these runaway prices? how long will it be before india manages to get inflation under control? >> it will depend critically on the availability of food grains and food products. actually not food grains but the kind of food that india is increasingly consuming,
vegetables, meat, eggs, dairy items. and also how fast we are able to overcome the shortages of industrial products. industrial intermediaries. of course if interest rates depress the need for automobiles. demand must increase if india is going to grow at a fast clip. and approach by controlling demand by hiking interest rates will not exactly increase growth rate or development of the economy. >> india is not the only country coping with imported price increases and inflation. the uk itself has this kind of problem. what happens if india doesn't manage to get inflation under control. i suppose is this the other side of the argument that you
sacrifice higher inflation for growth? >> yes. that is what the reserve banker is saying. it was saying it will sacrifice growth for containing inflation. inflation is an important factor in india. a portion of governments rely on inflation, particularly food items. it is predictable that the rbi will take this course. but to be honest about it, the interest inflation in india has proved to be insensitive to inflation interest rate hikes. inflation is going up as interest rates are going up. so we have to take a supply side management approach for inflation control. that possibly would yield better
results. it is difficult, no doubt, but maybe in the meantime that is the approach we have to adopt ultima ultimately. >> thanks ever so much for coming on cnn today. now, you're watching "world business today." up next, andrew stevens heads to the house of jakarta for a look at the downside of the kmeconom. we'll be right back.
exploring the rapid growth rate of indonesia, a country of some 240 million people which by some accounts could become the world's fifth largest economy by the year 2030. it's not a bric country yet at least, its economy is still about less than half of the size of russia's, for example. but like the bric countries, it does have a growing middle class. and those middle class consumers do have a tendency to shop and spend. at the same time, indonesia still faces a number of economic challenges including corruption, a lot of red tape and weak infrastructure. for some in indonesia, the picture is even more dramatic as the country's rapid development squeezes them out of their homes. from the capital, andrew stevens brings us the story of a family living below the poverty line on bore rode time. >> reporter: a small, close-knit community on the outskirts of jakarta.
nama has been a part of this village for virtually all her life. and this is your house? can we go in? the house she now lives in with her husband and three sons was built by her family nearly 40 years ago. it's simple and cramped but it has the basic essentials and room enough to live. but now their way of life is under threat from indonesia's booming economy. nama and her family are living on borrowed time. this whole area has been earmarked for a new toll road that will link west jakarta with south jakarta. already you can see the demolition has begun. these are the neighbors' properties. four months ago, nama and her family were given 0 days to move out. they say they can't. they haven't got any money. late last year she got a letter from the authorities who wanted her land as a toll road.
she agreed to compensation about $6,500. she says she never got the money. she was told the land belonged to someone else. >> translator:my husband went to that person's house to ask for the money. she said she didn't get any. >> reporter: this is not an unusual story. in indonesia, land ownership is often disputed, records are incomplete and official help can be hard to find. >> translator: i think this isn't fair. this kind of treatment towards poor people like us. they're supposed to guide us. in the initial agreement they promised to explain the issue to each resident but so far it hasn't happened. >> reporter: her story is a classic dilemma for emerging economies. they can't have sustainable growth without modern infrastructure but building it can devastate the lives of the most vulnerable members of society. there's no doubt that indonesia's creeking infrastructure is holding back growth. just 87 kilometers of new toll roads were built between 2004 and 2009.
but a new economic master plan launched this month aims to make the economy one of the world's top ten by 2025 and new roads are a priority. a new bill now before parliament will allow a quicker and fairer way of acquiring land, says the minister for economic planning. >> the process is that there will be an independent appraisal that can assess the value, the fair price of the value of the land. and if there is still not an agreement, then the party, the owner, can petition or can supplement the case to the district court. >> reporter: while the parliament debates the bill and the draws up plans, nama waits with increasing desperation. you must be worried about what could end up happening to you and your family. >> translator: where would i end up in it's possible i could lose
my house. what happens, living under a bridge. my family and relatives don't have money. most of us live day to day. >> reporter: these are the growing pains of economic development. with a very real human face. andrew stevens, cnn, jakarta. join us tomorrow when andrew stevens will be talking to the chairman of indonesia's investment coordinating board about the challenges of shoring up foreign investment. that's on friday, right here on "wbt" on cnn. now it's day one of the international economic forum in st. petersburg. the world will be watching on friday as the russian president, dmitry medvedev steps out with his chinese counterpart hu jintao. the kremlin is courting some international attention it seems as it plans a multibillion
dollar private equity fund. john defterios, live from st. e st. petersburg on what that will mean. >> what is a framework is getting a firm foundation as a result of an interview we did an hour ago. >> we are open to foreign investments. the second is creating a specific instrument for them to be comfortable working from russia. the russian government is ready to give some comfort by matching foreign investments with funds, managed by professional team, not by the government itself. >> the chinese investment corps has decided to come in. we just don't know the scale just yet. that's positive in terms of russia/china relations. >> it's a good signal, a real
partnership, relationship here. also strategic private equity funds from the west are coming to join us and sovereign wealth funds from a number of countries. also thinking about that and we are quite optimistic about them coming in. >> we have satellite issues there with john defterios in st. petersburg. we'll get back to him later on in the show. technology pending. in the meantime, we're heading into a break. the luggagemaker samsonite got off to a poor start. we'll be speak together company's ceo, tim parker and ibm will be celebrating its 100 years in business today. stay with us for a look at the u.s. technology pioneer through the decades.
debuted on hong kong stock exchange today. the shares fell by more than 10% in intraday trading. samsonite's listing is the latest in the series of high profile luxury goods ipos in hong kong. prada will be debuting next week. let's go back to ramy inocencio. a bit of a difficult time to be putting shares on the market. how did samsonite do in the end? >> that's what it looks like. every company hopes the company will pop on the first day of trading. that's not what it was like for samsonite. let me bring you on up to a touch chart that we have. basically outlining the day's performance. samsonite's share plunged more than 10% before it peared some of the losses. the stock was down 7.6% at the close at 13.4 hong kong dollars right there. tim parker, he's ceo of
samsonite international here in the studio. thanks very much for being here. >> pleasure. >> samsonite's ad campaign is called step out. and basically you guys stepped out today but you sort of stumbled in the market today. tell me about that. >> i wouldn't say it's a stumbling. the market stumbled and we've stumbled a bit less than the market. to end up where we have, to be honest, is not a bad result, considering turbulent conditions out there. >> all right. what are you citing right now for the performance. >> in what sense? >> the terms of it pluni inging and coming back. >> my view is you have to take a medium term perspective on these things. a lot of the people investing in our company are investing for the medium and longer term. it's been a tough day on the market. i think over the longer term people will be rewarded for
investing in our business. >> the last few weeks we've been talking about the potential for a global economic slowdown. along the past few weeks have you ever thought maybe we shouldn't ipo right now. maybe we should push it back a month or two or more. >> never had any doubts. always felt this was the right place to come. that was the right time to do it. there's never a perfect time. we actually feel although there are a few wobbles at the moment in world markets, conditions are actually quite good over the medium term. >> all right. spoken like a true flag bearer of the company right there. i understand that asia accounts for quite a large part of sales. tell me about that, please. >> yeah. last year, asia accounted for, i think over 0% of our profits. in fact, very shortly it will be the majority of our profits which are in the region, which, of course, is the reason why samsonite is here in hong kong and not any other market today.
i op that markets in asia are going to grow fast, especially china and india. indonesia is another great market. and actually we have strong positions in south korea and japan. all of those things together mean asia will become a much bigger part of our business, i think. >> now, who are your biggest competitors here in asia? >> we don't like to talk too much about competitors, because -- >> it's all about competition here. >> they are so much smaller than us. and so i wouldn't even like to mention any of them, because they just don't figure that prominently. this is say unique business, really, we're the leading position. which is so much further ahead of its competitors. there are one or two smaller companies out there but hardly sfig enough to mention on your program. >> thank you very much. tim parker, ceo of samsonite international. guys, back to you.
join john defterios at the economic forum in russia. we have you. you were telling us about privatization and the deals there. take it away. >> they're trying to start this on the right footing, nina, basically. a $50 billion private equity fund, $10 billion being put up by the russian government. this is seen as a safety net, knowing that one-fifth of the money would come from russia. hu jintao is attending here and is in moscow right now. they've had discussions with at bui dhabi investment authority and the kuwaiti investment authority as well. $50 billion if they can get it, over a five-year period to start new companies in russia. >> you know, john, the economic prognosis for russia if you listen to reports from, for instance, the imf is still the same. it hasn't really changed in the
last five years. the russia's economy is too dependent on the oil and gas money. if they're doing privatization with countries like qatar, that still doesn't solve the problem, does it? >> it's at the heart of what this meeting in st. petersburg is all about, nina. i saw the imf report. basically russia is at 4 to 4.5% growth in 2011. that's half of what they had precise is. 2007 they had 8.5%. as a result they've seen their foreign direct investment drop in half. what they're trying to do here is saying we need to go beyond oil and we need to diversity. they're targeting $59 billion of privatizations in 2011 to 2013. the aid with that we earlier on the program, a key aide to mr. medvedev seed they need to up the ante. they know this is a critical
window between now and the sochi games and the world cup in 2018. the huge question will be who will be president in 2012, mr. medvedev or mr. putin, who is the prime minister. this is causing capital flight in the tune of $25 billion. it's the heart of what you're saying and they know it very, very well. >> significant figures there. john defterios. keep up the good work. we'll see you for the next edition of "world business today" a little bit later on today. now let's change tack and move on to the technology industry. ibm once the biggest name in the computer business turns 100 today. it may no longer be at the top of the computer industry but with the market capitalization of $197 billion, it's, of course, still a major player. it was ibm that created the personal computer, the bar code, that magnetic strip on the back of your credit card and as ibm's
vice president of innovation shows us, big blue has come a long way since the time of clocks and punchcards. >> what ibm innovations has been about if you get down to it, the recording and tabulating of data and doing something with that data. it can be computing, deep analyt analytics, any of the above. even if you go all the way back to the very beginnings of the ibm country, we're talking 1911 we were about that. we did time clocks. fast forward to the time data became a huge challenge was after the great depression. we developed the machines that did all of the counting and all of the account for, for instance, the rollout of social security. what would you do with 30 million people you had to keep track some of it's physically impossible without these machines that could sort the data. the ams of data are tens of millions of times more complex.
if you have more data tens of millions of times you need to be able to work with it tens of millions of times more quickly or it's useless. we came up with the disk drive. the monster there, the large platter was part of the original disk drive. in the mid-1950s when we invented it, the unit that held five mega bits of data held ten tons. today's laptops if we did no further work would weigh about 250,000 tons, two cruise ships. we developed the first digital calculators based on things called vacuum tubes. this is a switch that turns things on and off and it does computing in this kind of machine. it doesn't do a lot, a couple thousand operations a second. okay. now you move further forward and you say, well, we need, for instance, to be able to operate
more quickly. if you do, disks don't actually store data and release it very quickly. so we start inventing what they call solid state memory. this is actually an example of it. this thing is about 100 bits of data, give or take. that's all. look at the size of this. if you fast forward to the feeds of today, you'll wind up with things like this, which are billions of bits. in fact, the chip that has it on it, we have to put it in a holder because it's so tiny. the thing that ibm that changed history frankly and uhl of us are familiar with, we invented the personal computer. now, there have been many breakthroughs like that, the ibm company has created not just the personal computer but the typewriter was another breakthrough, the magnetic strip on the back of your credit card, the bar code, the eximer laser.
imagine you're reshaping somebody's corn that, which is how you do laser surgery yet you can do that without damaging the underlying tissue. that's a huge breakthrough. that came from ibm. ibm has been able to continuously re-invent itself. that's incredibly rare, especially in a field that moves at the pace of the field we're in. >> let's take a final look at the stock market action in europe. the financial and social turmoil in greece is weighing heavily on sentiment across these markets. as you can see, the cac 40 still down by 0.9%, the zurich smi and paris cac 0 are also down almost 1%.