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CNNW World Business Today March 2, 2012



affect the u.s. economic recovery with higher prices. >> more compensations cost for costa cruises. the costa allegra ship are offered full reimbursement. >> first off though, greece has made a lot of sacrifices to try and secure its second big bailout from the eu and the imf. unfortunately though, it seems as though it still hasn't made enough. eurozone members holding a meeting in brussels decided to withhold more than half of the $175 billion that athens so badly needs to stay afloat. that's the portion due to go straight into the government bank. while greece struggles, another aspect has been sealed. the finance ministers have approved the funds required to safeguard a $274 billion debt swap for greece's private creditors. they have lost more than 70% of their value on their bonds in real terms. early this week what we saw with standard and poors becoming the first of the big credit rating agencies to define in as a default. with them tasked with deciding whether default insurance should be paid out on the swap, investors disagree. the international swaps and derivatives association has been saying no so called credit event has actually taken place. credit event usually means default. many would beg to differ with that assessment. however, if there hasn't opinion a credit event as yet, the delaying of a bailout decision for another few weeks to come will say that a default could be imminent. the problem is being nudged aside as eu leaders consider the macro economic issues. they focus away from austerity and look at growth. charles is live in brussels for a look at these talks as they continue. charles, we should talk about what happens next after this. we'll do that in just a minute's time, but never mind the crisis surrounding greece and its deficits. it sounds as though the broader economic crisis really has been putting some of these leaders under pressure and you'd been speaking to them, i gather? >> reporter: absolutely, but i think let me just bring you right up to date with what's been going on in the last hour or so, nina. we've seen the signature by all the parties, it's being fed in to us here live in the press room of the eu treaty on financial stability. the treaty on stability, coordination, and governance in the european monetary union. this is the treaty which it's hoped will head off the possibility of any crises concerning debt and deficit such as the one that has affected not only greece but also ireland and portugal which have also required bailouts. greece here for its second bailout. but i think though to return to the macro economy to the broader economic picture, it has been a change of emphasis. i think rightly so from the point of view of the average european because the average european is being hit on so many fronts at the moment. we eve we're looking at higher taxes, lower government benefits, rising unemployment in the eurozone. we heard about that yesterday. also higher prices, inflation hitting 2.7% in the eurozone as against an ecb target of only 2%. there is a general sense of gloom and lack of hope, particularly among the youth and particularly in the south of europe. well, it has been tackled in earnest at this summit though there have been some differences with, for example, prime minister david cameron of britain preferring more an approach of deregulation supported by such nations as the netherlands but perhaps a more measured pace on that being set by germany and france who are increasingly ruling the roost at eu summits to the discomfort of messrs. cameron and others. but in terms of that change in emphasis, denmark currently holds the presidency of the european union. their prime minister told me she's glad of that change of focus. >> i am very confident that if we want to have solutions for the european economy, we need to meet, we need to take decisions and this is what we have done over the last few months. we have had a lot of crisis meetings in the eu and for the first time this is not a crisis meeting. this is a meeting where we do not only discuss what has happened in the past but we are also trying to look to the future and discuss how do we create new growth in europe, how do we create more jobs in europe? we have been bogged down in the crisis for a very long time. now i wouldn't say we have passed the crisis, but we have the energy to focus on other things. >> reporter: clearly crisis management has been taken up with greece and greece is not out of the woods yet. there are still certain conditions that have to be met. are you confident that this is all going to go through, that it will happen, and that greece will cease to be a problem for the eurozone? >> i'm confident that the decision that the greeks have to take will be taken. i am very confident that the fire wall that we built on will be sufficient for now and these are important decisions. people tend to take these decisions lightly. they are very important decisions that shows the solidarity between the member states of the eurozone. they have been solid with the greek people and i hope with this new fire the greeks will have the opportunity to pass the laws that they have to pass and get through to the other side. >> reporter: will the germans play along in terms of increasing that fire wall, getting together the $2 trillion which is envisioned by the g 20 and the imf. >> first of all, the germans have played along until now. they have taken a huge responsibility in terms of solving the crisis in europe, and i think we all have to rate that. but will they play along in the future? i hope so. and this is one of the discussions that we have said we will have this discussion if more is needed, we will have that discussion again. >> reporter: so that was the danish prime minister who holds the presidency of the european union. the minister -- sorry, the heads of government are back in session. they're discussing political matters such as syria. nina? >> charles, it must be a very difficult time to be holding the rotating eu presidency because this crisis seems to be snowballing from one day to the next and very few of these issues realistically remain firmly tackled in investors' points of views. tell us what happens next when it comes to greece? because that is the elephant that is in the room. >> reporter: yes. i hope you don't think i'm being roundabout if i answer it this way. i'll come back to greece. i think the most important issue that needs to be tackled now is something that's been pushed off the agenda here, and that is the issue of increasing the permanent rescue fund, the european, esm which will come into effect on the 1st of july. what stands in there at the moment is 500 billion euros. that's $667 billion. now there is pressure both from the g 20 and from the international monetary fund on the european union to increase that, but the people who are standing out against that at the moment are the germans. chancellor angela merkel and her finance minister. however, the pressure that they're under is great. what they have said is that they want to see the greece issue resolved. they want to see all of the conditions met and the key one there is the private sector involvement. that is, the private sector bond holders have to agree to the deal that was sput in place by the european union last week. once that happens and the deadline of that is the 9th of march, then i suspect that the germans without losing face will agree to that increase in the european stability mechanism's funding and the permanent rescue fund. at that point put that together with the g 20 in a bubble, imf money, you'll be looking at the most awesome top fire wall fund of some 2 trillion. there are a lot of ifs. >> if rather than when at this point. charles in brussels, many thanks for that. in light of everything that charles was just saying, we're seeing this playing out on the markets today. take a look at this. a lot of these markets basically flat. obviously the news coming out on the greek front, ministers deciding to withhold a portion of those really badly needed bailout funds. as charles was saying, the lack of decision about creating a fire wall to ring fence these issues. these are the issues that have these markets pausing for thought. we have the ecb loans helping things along. as you can see, only the markets like the cac are up .2. the athens composite is doing better. it was up earlier by .59%. it's weakening a little bit. it's still up .6%. greece remains in focus. >> it does. that seems to be, nina, a little bit of relief. i don't know how long that's going to laf. i think we have to bear some of those comments that charles made very much in mind. here in asia, not a bad day for the leading regional stock markets indices. banks, financials, these in particular were higher. this was picking up on what we saw in the u.s. overnight. their counterparts moving in a positive direction. we had that drop in the weekly jopless claims in the u.s. that was important. it can be an erratic weekly number but still encouraging so far as the jobs picture goes. a fall in the value of the yen against the dollar. that has helped in japan. we didn't see any move on the index. looking much better, up .75%. interesting story that's developing is about the shipping industry. shippers, those stocks moving up, particularly in korea. you can't see the cosby here, but this because container freight rates on asia to europe routes in particular have soared and some shipping stocks have gained in south korea, also in japan to the order of between 6 and 8%. investors are very hopeful about next week. it's the china national people's congress. they're looking for proposals perhaps from the government about supporting growth and what is the world's second biggest economy. we have the shanghai composite moving up this session. the focus as we head into friday and the open on wall street, nina, is going to be the dow and whether we can break new levels or not. >> it certainly will be. i'm going to be telling you about that right now. in the united states all three of the major indices gained on thursday's session. it wasn't the dow that hit a record, it was the s&p 500 which hit its highest level since back in 2008. thoughts were boosted by jobless claims falling to a four year low. after a stormy start it seems as though a number of these stocks gave up some of their early momentum following data showing a slower pace of growth particularly in the manufacturing sector. the session finished on an upbeat note with financial and material stocks in the vanguard of the advance as you can see. we have the likes of the nasdaq up by .75%. jpmorgan chase ended 2.5% higher. bank of america ended to have a gain of nearly 2%. car makers gained off the back of strong vehicle sales. ford rose 2.5% and general motors ending just shy of 2%. so what does it mean when trading gets underway on friday? here's how the markets like. the s&p interesting, just above that 1300 mark. moving lower fractionally some focus on what's going on in europe. a flat performance from the european markets. as always, nina, things can turn on a dime, can't they? >> they can but you're wearing green there given the fact that you're standing next to a chart full of red. still to come on "world business today," will they make up for a crippled cruise ship. things may be looking up for now for the u.s. economy. analysts still say that there's one thing that could derail it. guess what it is? we'll give you two minutes to find out because we're back after this. 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[ male announcer ] start asking real owners. ask me how to make your first move. ♪ it's the perfect time to save up to $300 on select mattress sets. tempur-pedic. the most highly recommended bed in america. . a very warm welcome back. you're watching "world business today." we're live on cnn. >> the costa allegra says that it's trying to make amends. an engine room fire cut the power ship's supply and that's caused passengers to have a couple of days at sea under grueling conditions. they've offered full reimbursement as well as up to two weeks worth of vacation time in the seychelles all expenses covered there. costa said that about 70% of passengers have taken them up on this offer. for those who didn't want to stay on the islands, the company has offered free vouchers for future cruises within the next two years. there was another payment offered to all passengers which they described as an indemnity. that means that those who accept it have to give up the right to sue the company. >> dan rivers was there in the seychelles when the crippled costa allegra finally docked on thursday. he spoke to am so of the passengers as they made it to land. >> reporter: emerging from the sweltering haze of the tropics, the costa allegra was towed into the seychelles by a french fishing troller, a rather ig nam min yous end to what should have been a luxury cruise. for the last three days life aboard has been anything but luxurious. passengers forced to camp on deck after a fire knocked out all powers. helicopters had to drop food. for an american couple, gordon and elner bradwell, the whole experience was summed up in one word. >> unpleasant because we did not have sewers, showers, no access to water, fresh food. we ate cold sandwiches for four days. the intense heat was a problem. >> after three days with no electricity, limited food and water, the passengers are now finally ashore. some of them describing their time on board as horrific. >> it's complete incompetence described by very, very good luck. that's what's happened. that's the only reason why there's people still walking around. >> we were up on the deck. it was extreemgly black smoke and so we knew something was going to happen. so -- excuse me. they sound the alarm. then we went out to our room to get our life jackets. >> happy to be ashore? how do you feel now? >> yes. yes. a little bit emotional because i prefer to go home. i am not in the mood to stay on holidays. >> reporter: 2/3 of the passengers are taking costa's offer and' refund with a cash payment. cost at that cruises is already facing a problem when it went aground in italy leaving 21 dead. they must be hoping this latest incident won't also result in litigation. >> it's been a pretty bad start for 2012 for costa. can your brand recover? >> i am sure. the other one was a human error. here we have the opportunity to show the world in case of an emergency like that, you know how we handle. >> reporter: but it's all prompted more questions, how did the fire start? why did a backup generator fail? and was poor maintenance rather than human error to blame this time? dan rivers, cnn on the seychelles. representatives of the company trying not to be pessimistic there, but it is still hard to tell what sort of impact this recent crisis will have on the company's actual business. after the concordia's disaster their bookings dropped by 1/3. shares of its parent company, carnival corporation, also plunged. if we take a look at the share prices, you can see the steep selloff. that was after january 13th. that was when the concordia wrecked off the coast of italy and killed 21 people. carnival shares then, let's take a look at how they stand. you can see down 12% since the 13th of january. doesn't look too good at all and it's going to take quite a recovery effort, i'm sure, neeb in a. >> it certainly will. it's so difficult to quantify the disastrous loss for the brand there which obviously is partly reflected in the share price but not entirely. still to come on "world business today," almost a year since japan's devastating earthquake and tsunami, we'll take a look at the world's third biggest economy and its pulse as it tries to recover. that story and plenty more to come on "world business today." oo you're watching "world business today" live on cnn coming to you from hong kong and also london. welcome back to the show. now it's almost a year since a double disaster battered japan exacerbating existing economic problems and forcing the country into crisis mode. while there have been several signs of recovery in the months since, economic data out this friday shows there's still a very long way to go. we can start here with japan's traditionally low unemployment rate. it crept up again to 4.6% in january from a revised 4.5% in december. meanwhile, would he can look at household spending which dropped far more than expected in the same month, down 2.3% from a year earlier. analysts had expected a fall near 0.8%. quite a difference there in the expectation. and then there's the country's core consumer price index. that reflected ongoing deflation ri pressure dropping .1%. that cpi figure excludes fresh food but it does include energy costs. of course, japan's economic worries have been overshadowed by the terrible human cost of last march's tragedy. images of the tsunami in full force have lost their power 12 months on. this video shot by a 16-year-old in the miaga prefecture has been viewed online more than 2 million times. the teenager actually saved the life of the man whose ordeal he captured forever. getting japan back on its feet after scenes like that was never going to be easy. one of the country's leading business men believes that the government must do more to help. tadashi ana sat down with andrew stevens and told him that japan doesn't just need a recovery, it needs a reinvention, and fast. >> translator: i'm extremely disappointed in the current state of japan. the japanese economy hasn't grown much in the last 20 odd years. in fact, we're becoming poorer, but since last year's earthquake, we've all realized that we can't continue on like this. we must have hope in the future and rebuild japan. to rebuild doesn't mean to go back to where japan was before but, instead, to create a new future without depending on the government. every citizen and every company must commit to rebuilding the country. because we've been in stagnation for more than 20 years, we don't have time to waste to think about how to rebuild the country, we must act immediately. >> watch that interview in full. it's on talk asia. that's coming up about an hour from now. 10:30 a.m. in london. nina? >> certainly interesting stuff. i will be tuning in myself if i can. coming up next on "world business today," americans frequently complain about petro prices that on the other hand is still the envy of the rest of the world, but as the u.s. economic recovery appears to be gaining traction, could their concerns be a sign of trouble ahead. sta

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