tv BBC Newsnight PBS July 24, 2010 12:00pm-12:30pm PDT
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what can we do for you? >> we are a nation of explorers. we seek new ways of living, of thinking, and of expressing ourselves. we take risks. we learn from experience. and we keep moving forward. that is why we encourage and celebrate the explorer in all of us. >> and now "bbc newsnight." >> the pain in spain. it the economic crisis at the heart of spanish society. this week, as the eu as the means the extent of the banking
crisis, we go to spain where there are 20% unemployment and 1 million new houses. >> this is the product of the housing boom and the credit crunch. it it could still sink this country's economy. >> we have a report from paris on the race to find the so- called god particle, the elusive higgs boson. and how one man bought up a big chunk of the world cocoa supply. >> he is alleged to have cornered the world market in cocoa. will we end up paying more for our food? >> hello. all eyes on in europe this week have been on the central bank and its stress tests to determine which banks might potentially by -- be in trouble.
spain has particularly been under scrutiny. they have more than 1 million new properties lying empty. the trouble with the banks and the housing market are affecting the whole country. >> the land is harsh and dry. it has been a hundred years since christians reconquered this terrain, but in all the time, no one managed to conquer the thistles. the it was one of spain's least populated places. so, when the property boom reached here, it should have been a signal things had gone too far. but the signals were ignored.
this is a giant speculative building project now turns, three years after completion, substantially empty. can we go in? the developer here ran into problems with water, political influence, and ultimately with credit. all of them that. -- bad. it is not until you realize what 3000 brand new, unsold apartments look like it you realize what a mess spain is in. this is the product of the housing boom and the credit crunch. it brought spain to the brink of a sovereign debt crisis and it could still sink this country's economy. across the road, in the populated half of the city, much of the retail space is still just space. many of those who live here are
migrants. this man, rents because he cannot afford to buy. the cause of many property boom collapsed, so did the jobs market. -- because when the property boom collapsed, so did the jobs market. >> it used to be, you do not like job, you change it. you get another one. now you have to keep it because he will never find nothing. >> there are now 1 million brand new, unsold homes in spain, even with 100% financing. few people are buying. prices are still falling. bad debts are rising in the banking system. spain lived through the good times, confident the banks were rock-solid. there were checks and balances, lots of capital. but in a small corner of the banking system, on notice, there
was also trouble. -- on notice, there was also trouble. it turned out that have the money that fuelled the property boom came from 42 small property banks. they are small, traditional, not for profit. half of them are being run by politicians and even priests. they had managed to plant the property developers 400 it -- 450 billion euros. so what could go wrong there? well, everything went wrong. analysts say these banks gave up 45 billion euros worth of losses. two have been nationalized and the rest at been forced into mergers. there is a strong suspicion that
the money that they have to lend now comes from a european central bank, because no one else has the money to lend. >> it is a big bank, and they are in the market. so every financial position right now in the crisis -- [unintelligible] some of them are very small. some of them have problems with private debt of people who are being fired through the crisis. [unintelligible] >> but the banks are not the only problem. spain's economy looks and feels dynamic, even now. but that is deceptive. and it the markets in may of this year was the long term prospects of low growth and high debt. the domestic economy has been in recession for nine quarters.
only exports keep it above water. unemployment has doubled to 20% of the work force. this year, the cost of insuring the spanish government's debt shot up. with such a large unemployment rate, it is hard to see consumption recovering. -- >> with such a large unemployment rate, it is hard to see consumption recovering. why? there is the large amount of real-estate assets that have not been a marked to market as yet. there is no credit. without credit, it is hard to see how spain's economy is going to grow. there is not one factor that is questioning the growth scenario, but it is just something similar to a perfect storm. >> now, the crisis in the small banks has spread to the industrial center.
>> [speaking spanish] >> key has handled this engineering business from scratch. last year, he borrowed money to expand. then the small bank got into trouble and stopped lending. and so did all the others. >> be bank fell out of love with their debt. we had agreed to guns fort 750,000 euros. then they disappeared. add any other banks got scared. i do not know why, but they did. they stopped lending money. it became all 1 million euro problem. >> and now he has to lay off 10 workers. but by law, he has to pay every worker heat sacks for 45 days -- heat sacks for 45 days redundancy for every year
worked. and he cannot. for years, spanish as had generous labor legislation. this is what happens when the global economic problem hits the european social model. the small banks are in trouble. financing is being pulled. said they have to lay people off. but the cost of making the layoffs and that some factories are just making -- that for some factories, just making 10 people redundant takes them down. but the spanish law is not just in result of the european social model. it is actually a leftover from fascism. general franco fought for unions like this. when democracy returned, the scars were sealed with generous amounts of state funding. spain's tolerate history has
been softened by years of prosperity, social welfare, political consensus, and unsustainable, cheap credit. the big fear here and dying in the rest of southern europe is that, faced with stagnation and austerity, the social ideal begins to fall apart. anras nicolas as been laid off from a factory -- andras nicolas. now he is worried about more than just the factory. >> the core of the family will be destroyed because right now there are many families and in spain in which every member of the family is unemployed. >> one has lost his livelihood. the other is about to lose his. in my case, in the only one bringing home a salary. my son has not done anything in
two years. >> with a useful employment at 40%, it is the family that holds things -- with youth employment at 40%, it is the family that hold things together. in july, 1 million cattle landsc cattleatalans took to the streets -- catalans took to the streets. social unrest has struck and -- and sharpened by the fiscal crisis. the message and in the streets was not reassuring. >> [unintelligible]
they have been robbing us. >> it is because of the brilliance. riots. and also the money, money we give to the spanish government. >> the problem is those decades of easy money only masked deep social tensions that emerged at the end of fascism. now the working class and rest is all coming back to the surface. the politicians lined up behind the catalan flag are right-wing nationalists. the hecklers and once them and the socialist shop stewards heckled. protests grind on. hear, tube workers are on strike
against a 5% pay cut. >> it is a cut in our pay for all the lines. we have to stop this. >> this year, but the austerity measures will change the spanish life style forever is well grounded. ultimately, it may be impossible to achieve. >> it is very important to the guy who decides the election. he has this extremely protected job. a very generous pension. 100% free help service. very strongly subsidized social programs. free roads. fast trains. and of course, he is going to try to hold on to that. >> so nobody can reform it? >> the markets can.
>> but the man in charge of the finance system looks not so much what the problem as an opportunity. >> 50% are submerged. they are all undergoing restructuring plans. that is a major restructuring that has not happened in other places. [unintelligible] we have a major adjustment taking place and in europe. i believe we are going through major readjustments from one sector to another. >> but the questions remain. will the scale of the adjustments sink spain fell cutbacks will 1 million unsold homes hang like -- will be scale of the adjustments sink spain?
will 1 million unsold homes hang like a millstone around the rest of the economy? >> now, how useful should science eight? it should be about knowledge, were given the age of austerity, should governments look for a financial return on the public money being invested in scientific research? that question was brought up with a gathering of top physicists seeking in the so- called god particle, or higgs boson. >> they were enjoying the sunshine in paris. a group of scientists were preparing to inspire young people into taking an interest in science. across the city, the same group was settling down to hear the latest findings and one of the
most exhilarating of scientific pursuits. it is being billed as an on miscible a meeting of minds. scientists gathered in paris to talk about everything from dark matter to neutrinos' to the first results from the largest and most powerful particle smasher. if they are lucky, they will get to hear from the elusive higgs boson, too. >> this higgs boson -- this is probably the most exciting meaning in the league -- the last decade at least. now we have the game running. it is a tremendous jump. >> the nhc is a ring buried underground near the swiss border with geneva. it takes subatomic particles,
called hadrons, and this case protons, and smashes them together. the collisions result in energy and a shower of smaller particles. one of which it just might be a higgs boson. the physicist and in paris care so much about the higgs boson because it is part of an elegant theory that explains why everything around us has mass. without it, the standard model for how particles interact would need a radical rethink. >> it is an new frontier. what we are seeing is house subatomic particles be paid -- halt subatomic particles be paid. -- how subatomic particles behave. it is very difficult to understand and calibrate. these results are calibrated 9 extent so well that we can
actually generate interesting science so well. which is actually quite a big link. >> and some of that science is now out. these new images show known particles released from its high energy collision. in the race to find the missing higgs, the europeans are not alone. this is keith tevatron particle collider in chicago. the american team is also prepared to present their funding. in public, the rivalry is friendly. in private, it is more edgy. the new hadron collider is a brand spanking is. andy tevatron collider is older. they have more data. there are rumors they have already discovered the higgs. >> no, they have not.
currently what we do is present results here at this conference, excluding a big part of the allowed range where the higgs boson could be. we will not produce -- present any evidence of that or any data that showed we found it. >> so it is and narrowing down of where it could be? >> yes, that is exactly what we can do. we already know from theory and experimental measurements there is a range of the use for the mass of this particle, where it could be. we make this range smaller and smaller. this time will present -- we will present findings that will make it significantly smaller. >> so which team will find it first? >> i think all the odds are in our favor. our machine is operating quite well. all the odds are in our favor. if the tevatron makes it, good
luck to them. they worked very hard. >> if that does not exist, this would also be extremely exciting, because that would mean our current understanding of the standard model, which is the theory which describes article interaction is not collapse. -- is not correct. and there is something else out there. if we do not find the higgs boson at the tevatron and can exclude its existence, wow, there should be a lot of new a physics to be done. we will know there will be something completely new. even more exciting. >> so, even if there is no higgs, these scientists will not be retiring just yet. there are other forces at play. physics is enjoying its day and
his son with unprecedented publicity. but at a time when pensions are under threat, why should taxpayers spend their money on a flashing particles? the hunt for the so-called god particle has captured public imagination, and so far funding looks secure and the age of austerity. but if there is now higgs, will there be money to work out a new model to explain what happened in the big bang and how the universe works? >> that is from paris. most of us like chocolate, but one hedge fund manager has made what he hopes will be a very sweet investment. he has bought up a big chunk of the world's cocoa. now he might make a killing in the cocoa market, although some claim his profits could be at the expense of farmers in developing countries. >> housing, oil, gold -- all
have been in the subjects of asset price bubbles. now there is another one we may need to add to the list. cocoa. that is right. the stuff of comforting bedside drinks and sweet snacks has been bought up by the modern day of bogyman, a speculator. here is what has been reported. a trader in these in major offices is alleged to have spent 658 million pounds buying up a large chunk of the world's supply of cocoa. he has brought cocoa prices to a record 32-year price. so will his trade mean we all in the up spending more on our chocolate treats? he says his company has of very carefully-planned strategy. here is our rare interview with
the man himself. >> everyone recognizes that the world is growing. food and water is the critical thing. we specialize in this. so we follow the seasons and the crops. we go west to east, east to west. it could be weeks. investing at the wrong time can make a difference up & yield difference. -- a difference of 10% yield difference. >> his intimate knowledge of the weather could have meaning for his purchase. 40% of all cocoa crops and in the world of had a bad harvest. he saw that as an opportunity to jump in and buy a big chunk of
the market. it reflects a growing interest by speculative traders in all commodities. just look how prices have risen over the last decade. peaking in 2008, and falling back rapidly as the credit crunch hit. but prices have surged back up. that is because the current market in its commodities particularly attractive -- makes commodities of particularly attractive investment. >> interest rates are almost zero. that is creating a lot of money in the global economy. there is concern that might lead to inflation. commodities are a natural hedge against inflation. the trouble is, those markets are relatively thin. the amount of money trying to find a home in them is much greater. if you get a small supply and demand in balance -- this is being exaggerated by the large quantity of liquidity that is trying to find at home. >> he now owns 240,100 tons of
cocoa. 7% of the world total. clearly, it helps to make a profit, but at what cost? if prices do arise, we will all end up paying more for our chocolate bars. campaigners say the speculative interest in so-called soft commodities, food and other perishables, have consequences for the poorest people in the world. >> potentially in the poorest countries, people spend up to 90% of their income on food. a rise in prices has a massive impact on how you cope as a household. for the last couple of years, there have been over 100 million more people. >> but this week profit speculators like anthony ward -- sweet breath as speculators like
anthony ward hope it will not be as difficult as they hope. >> if you do find what is called cornering a marquette, just being the sole buyer yourself, eventually the market blows up and you end up losing a lot of money. >> that is something the cocoa price would seem to bear out. look how it has risen of the last year. now look at this week's figures. the price fell back sharply, losing 7% of its value. it looks like the profit of his big gamble may yet melt away. >> just went -- justin rowland reporting. that is it from us this week. goodbye. >> hello and welcome. >> see the news unfold. get the top stories from around the globe and click to play video reports. go to bbc.com/news to experience the in-depth, expert reporting of "bbc world news"
online. >> funding for this presentation is made possible by the freeman foundation of new york, stowe, vermont, and honolulu. newman's own foundation. the john d. and catherine t. macarthur foundation. and union bank. >> union bank offers unique insight and expertise in a range of industries. what can we do for you? >> "bbc newsnight" was presented by kcet, los angeles.