Financial Markets Problem_003_3.2financial worrying-CSDN博客

Financial Markets Problem

Sally Heartcastle : Welcome to Business Brief. I am Sally Heartcastle. European car manufacturers are being warned that they face heavy fines if they fail to cut down on emissions from exhausts. The APEC meeting ended in Sydney with the 21 member nations, calling for those responsible for the deadlock in the world trade talks to get serious about breaking down barriers, and talk moneyman talk to us about the current concerns besetting the financial markets. European car manufacturers could face heavy fines if they fail to meet new restrictions on emissions from automobile exhausts. The warning comes from the European environment commissioner, Stavera Stimas who in a newspaper interview dismissed complaints from manufacturers that proposed targets for emissions were unrealistic. Legislation to cut the amount of CO₂ from cars by a quarter over the next 5 years is to be discussed by the European Union next year. Car makers are asking for an extra 3 years to make the changes. The Frankfurt Motor Show opens on Monday and I asked Al Bedwell of J.D. Power Automotive Forecasting whether we might see more hybrid electric and petrol driven motors there.

Al Bedwell : Hybrid cars typically offer about the same fuel efficiency as diesel cars or a good modern diesel car but they cost more. So that for the most people they don’t, yet at least, make sense financially.

Sally Heartcastle : So what kind of alternatives are the Europeans coming up with?

Al Bedwell : At the moment, what we’re seeing in practical terms, that I think will make a difference is really a package of improvement to the traditional petrol and diesel cars. These are technical improvements.

Sally Heartcastle : But they’re not very exciting, are they? And also they’re not going to excite Governments, are they?

Al Bedwell : No, the manufacturers are trying to make them exciting by giving them, you know, eco badges such as eco-netic or eco-flex. So they’re trying to make these modest improvements to existing technology more exciting by describing them in more exciting terms, emphasizing that they are offering, you know today cars which are more fuel efficient than they were, a year ago, for instance.

Sally Heartcastle : And is this a way of stopping governments from imposing more controls on CO₂ emissions, in other words they’re gonna say, “oh look, we can do this, we can’t do that so don’t try and use law against us.”

Al Bedwell : Well I think it’s probably gone a bit beyond that now. I mean I think we are likely to see mandated fuel efficiency targets in Europe. But I think in what format and how far ranging they’ll be is not yet decided, and that’s being discussed by European legislators at the moment. So clearly the car manufacturers want to show the legislators that they are trying to make efforts in this regard so that it’s more likely that the targets that are set will be more lenient. And of course they’re also, trying to get over the message that there are an awful lot of jobs at stake in Europe. If you use limits too stringent you put at risk manufacturing capacity and ultimately jobs.

Sally Heartcastle : That was Al Bedwell. And an organization of former heads of state is calling on industrialized nations to contribute $10 billion a year to help poor nations cut greenhouse gases. The plan is to be put to environment ministers at a G8 group meeting on a need to transfer technology to less developed countries. At the end of their meeting in Sydney, leaders of the 21 nations in the Asia-Pacific rim issued a plea for countries responsible for the deadlock in global trade talks to get serious in their efforts to break down barriers. After the APEC summit in Sydney, they said priority must be given to securing an agreement on agriculture and industrial products within the so called “Dohar” round of world trade organization, or WTO, talks. However, the Malaysian prime minister, Ahmad Abdullah Badawi admitted that while the WTO talks were floundering, arrangements for small, free trade areas, or FTA’s, were flourishing.

AHMAD ABDULLAH BADAWI : I think the failure of the WTO in a way has led to the development of so many FTA’s. I think it is easier to negotiate for FTA’s because it doesn’t involve too many countries. Normally an FTA is bilateral , so we can negotiate our position and we can give and take, and whatever we arrive at is an understanding of the two countries which are keen to see more trade and other economic co-operational activities and we understand each other, we have respect for each other; it is easier to conclude. But when it comes multi-lateral , there are more positions to have a rise and that always make it very difficult.

Sally Heartcastle : That was Ahmad Abdullah Badawi. Last week was the meeting of the world’s most important bankers in Jacksonhole, Wyoming, it’s an annually informal gathering but there has been a chill wind in the mountain air and nothing to do with the climate or the weather. It’s the lack of lending money and the banking system that’s worrying the financial world. The BBC’s Steve Evans has been talking to some of the world’s biggest moneymen.

Steve Evans : It seems unlikely but this is the place for explanations. On the plains of Wyoming in the shadow of the Teeton Mountains lies Jacksonhole, with wild buffalo growling close to a grand 1950’s wooden lodge. And it’s here in cabins in the forest that anybody who’s anybody in world finance has been staying. This is where the people who move markets, if not mountains, meet every year. The central bankers who have been shoveling money into a financial system suffering a credit crunch. Inside the bole line met Lyle Gramley, a former governor of the Federal Reserve, a veteran of financial crisis there, currently a wise, but worried man, because failed loans to poor people are now ricocheting through the whole financial system. Banks hold worthless assets, and that’s a problem.

Lyle Gramley : The danger is that if this credit crunch persists, it could push our economy close to or maybe even over the edge of recession. The most likely way that that would happen is if consumers begin to pull in their arms and spend less. The problems in housing per say are not likely to do that. But if that begins to lead to a deterioration of consumer confidence and a loss of consumer wealth then we could end up in recession.

Steve Evans : There must be two dangers, mustn’t there? If you’re in the Fed and that is bunker mentality where you just hunker down and you look at each other or on the other hand where you go with the whims of politics. How do they judge that?

Lyle Gramley : They recognize that they’re gonna be pressed by politicians to do more. They know that they’re gonna be criticized for creating moral hazard if they do too much. And they have to walk that very narrow line, and they’re used to doing that.

Steve Evans : Moral hazard, you can’t just bail out people who made bad mistakes.

Lyle Gramley : That is correct. But if you think about what’s been happening now, we’ve had dozens of mortgage companies go down the tubes. They’re not ever gonna be revived again. We’ve had billions of dollars lost both here and abroad from investments in sub prime mortgages, that money is not gonna be recovered again. Eventually we’ll get over this panic , but we’re never gonna go back to the sloppy underwriting standards, the sloppy investment practices that we had during my lifetime or perhaps during yours either.

Steve Evans : Lyle Gramley. Just outside the explorers room in Jacksonhole I bumped into Harvard professor Martin Felstine, one of the truly big figures in American economics. He was Ronald Reagan’s chief economic advisor and is now president of the National Bureau of Economic Research. The problem is sub prime loans, loans to people with bad credit ratings, who couldn’t then repay the money.

Martin Felstine : The defaults really triggered a much wider financial market problem. It caused market participants to question whether they had accurately evaluated the risk in those loans that were bought by institutions.

Steve Evans : If you were in the White House now and the president said, “Ok, give me the memo that tells me what to look at”, what would you stick on it, what are the points?

Martin Felstine : I would warn him that there’s a serious risk that comes from this double problem: the housing market downturn, sharp construction drop, sharp drop in prices beginning and at the same time a credit market problem where issues of trust, issues of transparency of risk are freezing up those markets.

Sally Heartcastle : Martin Felstine ending that report by Steve Evans. For now that’s it, from Business Brief.