Pay a price for its actions in ukraine. That comes as u. S. President obama blames moscow for the crisis. Welcome to countdown. Get to our top story this morning. Our exclusive interview with the german finance minister wolfgang schauble. European central bank has run out of ways to help the eurozone. With bloomberg at the Business Leaders conference. Is sayingrio draghi again and again is what is needed is reform. It is not for the ecb to implement. There is a government. We agreed. Monetary policy can only buy time. Problems asderlying a matter of fiscal policy in this globalized economy. We have the competitiveness. If you look at whats going on , its veryal economy important that we all know in to do this we have again and again to enhance competitiveness. If we are complacent even in continueif we do not to enhance our competitiveness, we will lose. Should the ecb do more to fight inflation . I do not think they have the instruments to fight inflation, to be frank. Interest rates are at a historic low. It is not aiming too low but too high. Has comeonetary policy to the end of its instruments. What we urgently need is confidence regaining by investors, markets, consumers. We have the geoPolitical Risks on the half of our experts. But this is driven by an internal demand because we have. Onsumer investment the reason why we have such high because it is sustainable. We have stuck to what we promised. Increase thenue to investments. Raise ourve to development. That is what we have decided to do. Go straight to paris where carillion the caroline joins us. You also spoke to minister cabinete about france reshuffle. What did he have to say . His visit has been planned for a very long time. He did not expect it to be so much in the spotlight in the middle of this crazy week for france with the resignation of the government, reshuffling, and the whole rebellion of policy. The german finance minister told me he was not happy at all about the comments from the former economic minister who called the austerity policies in europe absurd and dogmatic. He said the new economy minister pro business, politician and the competitiveness which Wolfgang Schaeuble says was the main problem with france. We are fine with it. I have met my french colleague who used to be Prime Minister and he will continue. Economic think french policy is going in the right direction . We agree that every member state needs to do this and to be very frank, we were not doing this when the former minister of economy has been happy that it has not been agreed upon by the president of the republic, by the Prime Minister, the new minister of economy saying the same as the finance minister. Will welcome enhancing competitiveness for sustainable growth. Of course, we need to choose. We have to regain confidence. With markets, investments, and consumers to be reliable to stick with what we have agreed to again regain confidence. Do you think france will be able to meet their deficit targets by next year . Neededce will do what is in line with the rules. They have done so again and again. Now we are ready and we are optimistic that they will deliver what they promised. Of the Economic Reforms in germany, that could be different for france . We have a tradition of a social market economy and i think our experience is a good partnership. Unions itmpanies and is very helpful. In this direction, the responsibility has been announced by the French Republic as is going in the right direction. Way totnership is a good implement social, structural in everyhich is needed member state. Its always difficult to implement because theyre always refuted but politics sometimes has to make those tough decisions. Markets and more focus on competitiveness but still france needs to keep in sight cutting the deficit. That is the advice from the german finance minister to france after this crucible crucial week for france. They have already abandoned deficit targets for this year. Above 4 of gdp. The french gdp has not grown at all for the last two corridors. Saying the difference between competitiveness and france and 160 billion euros. Of course, germany needs france holdinger because it is back the whole euro zone growth especially at a time when germany is also going through a slow down of its own economy harmingsian sanctions the German Economy. Back to you. A very interesting conversation there. We will bring you more of course from our exclusive conversation with the german finance minister later on in the program. Says russia has innovated. Nato puts the number of troops at 1000 and president poroshenko has asked the world for help. International trust on didnt hans nichols joins us now. Obama rhetoric is very strong. Costs and consequences, violating sovereignty repeatedly. This is really a game changer in terms of rhetoric, isnt it . Yes and no. President obama was careful to say there would not be any military action and he declined to call it an invasion and that almost puts them at a different position rhetorically than the u. S. Ambassador to the u. N. Samantha power quite strong saying what they were doing in terms of moving additional tanks and artillery into ukraine proper. Obama said it did not mark something new, just more of an escalation of something that we had seen. After he spoke of the white house, they put out a statement saying president obama spoke with his counterpart in germany, Angela Merkel, talking about the prospects of new sanctions. Angela merkel also spoke in berlin earlier in the day but nothing suspicious specific on new rounds of sanctions. We have a leaders meeting tomorrow in brussels. Asked week there will be a nato summit in wales. It struck me how detailed they were with satellite images. Nothing really concrete or specific run either Angela Merkel or president barack obama. Vladimir putin praised the saying what they were doing was good work. He used an ancient czarist term referring to eastern ukraine. There are 20,000 troops that are close to the border with ukraine and this could escalate yet again. Those nato comments of 1000 troops operating within ukraine and opening up a second front. Obviously huge with everyone just stepping back one inch from using the real language that reflects what nato was saying. Nobody wants to go over that line. Lets talk about sanctions. Aland and merkel referring to any movement on energy talks because thats critical. Gazprom. Ne, and inthe Energy Minister was berlin yesterday and he basically wants a twotrack plan, short payment and longterm arbitration. Listen to how he put it. It is clear that there is aggression. [inaudible] they need a clear agreement. Ukraine pays now and then international arbitration. The goal is to keep gas flowing into western europe. 15 of the supply here is provided from gazprom. This is going to be a much more crucial issue the closer we get to the colder months, manus. That the facts. Hans nichols in berlin, thanks. Wecoming up on countdown, look at the case of quantitative easing in europe after a short break. Welcome back to countdown. 6 16 a. M. German finance minister Wolfgang Schaeuble speaking exclusively to bloomberg. He says the ecb has run out of plays and its time for the weakest governments to do more to spur growth. Saying mario draghi is again and again is what is needed is reforms. That is not for the ecb to implement. It is up to the nations governments. Guillerme joins us on set with more. When is the burden of where is they burden of responsibility now . A reformrnment with agenda, Monetary Policy . At the the burden has to be shared essentially. Mr. Schaeuble is right that there is more than they should be able to do. But for reasons and timing considerations, these considerations that could be lamented later this year will take time to see through to the economy. The quickest way to give eurozone a bit of a boost is for Monetary Policy to, again, go through the adjustment process. You say that draghi is essentially setting a trap for the rest of the politicians. What do you mean by that . I think mr. Draghi is being very careful. Being very clever. There is this overall message and the closer he gets to 0 interest rate, the less easy it is for policy to have an impact. Is basically telling us that aggregate demand is too low. Unless we have a better policy to acty will be forced on the mandate. Unless the government do a lot more awfully quickly which clashes with the timing of the procedures been Central Banks in the next few months will have to conclude that their role has to be enhanced. How much wiggle room is there, to loosen the fiscal Purse Strings . The are governed by stability pact. What impact actually would have if governments were able to loosen the fiscal Purse Strings . We listen to the upcoming president , mr. Junker, with his Publicprivate Partnership program. How frontloaded would that be . How aggressive could the european fiscal rules change in the next year to deliver a bit of growth . I would have thought that maximum half a point of fiscal stimulus could be enacted. When draghi talks about the skull stability and flexibility is talking about the germans spending more or rules being relaxed to allow the french and italians to do reform and as a result possibly break some rolls along the way . Giving thinking about every country above 3 gdp to adjust their balances. Basic rule stays but generally the lack of domestic Economic Activity which is not been made apparent to germany is forcing a bit of a reflex into the wiggle room that governments can find. On given this, you will not meaningfully change what happens you mean meaningfully change what happens in europe . You get the euro down. What about japan . Given where we are, theres quite a bit of room to try it out. This is the reason why you were seeing governments and central bankers generally talk about this generally different stage. How low does the euro have to go . It is the longest losing streak since 1999. It is bordering at 1. 30. Ratethink in Exchange Terms effective, i think 10 gives you half a point of additional inflation. Eurodollar on could add about half a percent . Thats right. Eurodollar would need to be a around 1. 20 level. The longterm average . Guillaume menuet staying with us on countdown. We will continue our conversation with him after a very short break. Welcome back. This is countdown. We are back with guillaume menuet. Thanks for joining us. We got the cpi data. Is there a number that could force the ecb into surprise action at next weeks meeting even though projection is for inflation to pick up over the next few years . Is there a number that could shock them into doing anything next week . 0. 2 could be a problem because then you are getting meaningfully close to zero. There are so many special effects in this august number, fruit prices, etc. , but its probably going to be a low point in the euro inflation cycle. The over fiveyear draghi talks about or entirely politics and entirely the ecb relationship with the bundesbank that matters . He mentioned it because he needed to find an inflation metric that was relevant. If he sticks with the fiveyear every time it reaches the 2 level, the clamor for ecb action will be obvious. Thats a longerterm measure of inflation expectations. Highat matters now is how inflation will be according to the ecb, in 2016. Its quite conceivable that rate cuts including negative deposit rates, longer liquidity windows, the staff from the ecb when they crank out the models will show inflation in 2016 being back up maybe a decimal point. Your call is for qe, 6040 split between public and private debt. Or will really a goal it not be what changes europe . It will be one of the little concessions the ecb can give to the market in addition to support. We are going to have to leave it there. Thank you so much for joining us this morning, guillaume menuet, from citigroup. Taking a short break. 6 26 a. M. In london. Welcome back to countdown. Cranny. S lets check on the fx markets. Down velocity and the dollar drove higher on the back of the gdp numbers. Retail a little bit lower, but you are seeing a pretty big spend an investment taking the dollar higher. Lets see how me going to that. I think with interesting here is dollar going higher, tensions on ukraine rising i think thats probably an understatement. This is over five days. High inust coming off a terms of the yen. It is the highest weekly advance almost saying that the yen willing to continue to rise. I whole host of data from japan today. Industrial data missing target. Housel spending dropping. None of those factors were able to move the yen lower. Ubs says to look out for 105 dollar yen. Risk is driving the dollar yen. Dollar will be the key focus. We had an exclusive conversation here at bloomberg saying the ecb has spent their billets, quite literally, nothing left to help the overall growth story in europe. That is the german sentiment from mr. Schaeuble. The longest losing streak since 1990 nine. Eurodollar on the lows of the day. We are waiting for the cpi to come in. Bloomberg top headlines. The bloomberg exclusive with the german finance minister. He says the ecb has run out of ways to help the eurozone. Ecb has thehink the instruments to fight, to be frank. Interest rates at a historical level low. We will bring you more from our exclusive conversation with Wolfgang Schaeuble shortly. President obama says the u. S. Has no immediate plan to conduct strikes inside syria. He also says that he has not made a strategy at four confronting the group outside of iraq. And eu are blaming russia for the escalation in eastern ukraine. They say president clintons troops have crossed into the before now discussion going to moscow. David cameron has made another plea to remain part of the united kingdom. Speaking ahead of next months scottish referendum, he says there are huge benefits to being in the union. Is one of ourrket unions greatest advances. Together, scottish businesses have better opportunities. Scottish consumers have more choice. More jobs. Ve why put all of those great advantages at risk by going into the great unknown . Vivendi has entered an agreement for an exclusive discussion with telefonica over the sale of gvt. They are favoring the spanish offer. Lets talk about it. Caroline hyde, u. K. Business correspondent. Cash is king. Is that a fair take on this . Seems to be. They raised their bed by 11 . Its much more than the counterbid from Telecom Italia. It looks like winner could take all. This would propel telefonica into being the secondbiggest player in terms of broadband and internet in brazil. That would be just after current biggest provider but it would leave telefonica with about 30 of the market. And poorently have 27 old Telecom Italia, 1 . Very big in mobile phones. Where Everyone Wants to go is a package. Everyone wants their internet come a landline, all together that is something that they will now find very difficult to provide. Leave telecomthis italia with less of 1 of the market in brazil but what else . Many fear its time to say goodbye. When i say winner takes all, they could decide to actually exit entirely. Titfortatis whole was actually a way of just driving up the price of its unit in brazil. Many feel that they were always basically looking to exit. There has been so much speculation about what it would since may, they have been saying, lets break you up around some of the players. Its quite a small pair. They are said to have batted that offer away. They came out and said we would potentially like to buy heart of you, not all of you. They are looking at how they could fund it. At the moment, the unit that Telecom Italia basically owns part of, at a whole is worth 12 billion. The unit they are selling is worth about 8 billion. Probably cannot stomach the whole of that nor would it perhaps be allowed to but it wants to carve up between Telefonica Brasil and america mobile. Where does this leave vivendi . It has more cash and it still has a stake in the brazilian doesned unit if the deal not go ahead. What next . They have three months of discussion. We got interesting numbers from vivendi. They are now saying they are a purely media company. They want to distribute content. They had universal music. Whats to keep these relationships, these partnerships going potentially holding stakes to distribute content. What is interesting, the chairman who came on board who june butreins back in probably could have taken it back in 2012, hes trying to shake up this whole company, slim it down, make it a more interesting proposition. Hes been rolling up his sleeves and the whole of this getting down and dirty with the leaders of telefonica, the leaders of Telecom Italia. They want to navigate to just focusing on media. Maybe more deals with youtube, spotify, how to distribute the content. What really was highlighted in the numbers was just how prize an asset is gdp is. Sales down 3 , profit down 7 . My telefonica is wishing they were offering so much cash and so much at stake in Telecom Italia as well. Should we talk luxury as well . Up thanks to high sales in asia a narrow beat. Constraint and high prices cushioning the company from weakening asian demand for large Luxury Brands like a 10,000 birkin bag. Japan is where it is all happening for this company right now, the introduction of this the and the fight against euro contributing to the 6. 3 drop in secondquarter revenue which of course is one of its largest markets. They did warn earlier this year because of whats happening in japan that it would impact its profitability this year. It is expanding its french production boosting its Global Distribution network which costs but ultimately they are hoping will benefit the company. A narrow beat today for arm as hermes. Telefonica announcing they are expecting the transaction to be in negotiation for three months. It is expected to close in mid2015. We will see how that progresses. That is still a year away. Lets get more from our exclusive interview with german finance minister Wolfgang Schaeuble. H