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tv   Nightly Business Report  PBS  November 9, 2011 1:00am-1:30am PST

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>> i think european policymakers have been behind the curve from day one, and you can't deal with crisis that way. >> susie: former treasury secretary robert rubin criticizes the handling of the debt crisis in europe. he joins us for an exclusive interview. and italy's prime minister silvio berlusconi says caio after his government loses a key confidence vote. that's amore for investors. it's "nightly business report" for tuesday, november 8. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
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this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> susie: good evening, everyone. my colleague tom hudson will be along later in the program. big news from italy tonight-- the country's embattled prime minister indicated he will resign. silvio berlusconi is expected to step down after losing his parliamentary majority during a routine vote. his resignation ends a 20-year political career, but it could pave the way for italy to push through crucial financial reforms. we have a unique perspective on the situation in italy and the european crisis from former
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treasury secretary robert rubin. he served in the clinton administration, and was a key negotiator during the mexican and asian financial crises. we'll bring you my exclusive interview in a few minutes. but first, suzanne pratt reports on what that news about italy means for u.s. investors. >> move over greece, you're getting the bot. it's now all about italy on wallstreet. if italy is the new epicenter to the european financial crisis the stakes could be far greater for u.s. investors. as a result traders here at the new york stock exchange are sensitive to every headline from the italian parliament to the italian bond market. the anticipated resignation of the prime minister, he's skeptical. >> one has to wonder are we changing deck chairs on the titanic or is this a positive
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sign of progress to come with this country's particular economic problems. >> the concern is italy will need a bail out package like portugal, greece and ireland. the fear is they could spark a global financial crisis. >> michael gavin says itly maybe beyond the point of no return. >> i think investors around the world need to realize this is a global not just a european problem. something to watch carefully. >> watching it but realized italy easy economy is stronger than that of greece. >> the italian fundamentals are nowhere near as far out as whack as they from, for example, in greece, where a public default was the of at least a year ago and arguably before then. >> then there are optimists on wallstreet showing u.s. stocks
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are showing >> susie: let's turn now to my exclusive interview with former treasury secretary robert rubin. i began by asking for his take on the european crisis. deyou have to move
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powerfully and quickly and comprehensively to reestablish confident. >> what -- >> i don't think there is a simple solution. i think fundamentally they have to find a way. i think there are multiple ways to do this to get the resources to support the sovereigns that need support. they have to have trans parent see, credible transparency with respect to the bankses. they need capitol and fusions. they have to have the political will for the strong countries, primarily germany, continues to provide resources. so, the trouble companies engage in the measures many have been, they continue them. >> well, what about italy, what should be done to fix the problems in italy so it doesn't threaten the rest of europe? >> what has to happen is the europe zone countries that are strong have to create firewalls to prevent the problems in gross
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and weaker countries from affecting itly. italy has to have osterity, but it has to have balance and reform to promote growth. that means labor laws and other regulatory measures that make doing business in italy difficult. >> can italy pull it off? >> i don't think it's a question whether italy can pull it off. i think it's a question can the euro zone create the firewalls and at the same time italy do what they need to do. you have two sets of political issues. i think in the final analysis i think it's all very difficult. it's probably more likely than not that europe will nee do what needs to do. the alternative is so awful. it's a difficult set of issues and there are no certain tease. >> as you said the european crisis has dragged on for quite awhile now. what are the risks to the u.s.
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economy. >> number one it will adversely effect global demand. number two, a contagious to markets. you have seen that in the u.s. markets fluctuating to europe. then there is what i call a psychological contagent. i think it effects confidence and economic activity. >> what are the risks of all of this to american banks? >> i'm not a expert in american banks. my impression is from what i have heard elsewhere. i'm not a expert, while there are so exposures those exposed are not enough to create a real problem for the american banks. >> let me ask you about the euro, can it maintain it's dominance. >> i think the future of the euro is hard to predict. they have to get through the financial crisis. once they get through the financial crisis and reach sustain ability there will have
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to be major changes in the euro zone structure. from the very beginning the structure had a lot of problems inherent in it. >> i have asked ceos about fixing the economy, what do you think is the key to getting it growing again? >> i think the key to the american economy is basically laid out as a takework, even if you don't agree with the specifics, laid out by president obama his first labor day speech and the speech after that. he said, we have to have a stimulus now and we have to now enact a deficit reduction program to go down in two to three years. if you do that it will increase confidence now and we have to have strong public investment. we have to have significant rev now increases and spending constraints in all areas of spending. >> with that go over in
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washington, raising taxes? >> ultimately this is what we will have to do. i think the melt mate determinant of our economy is if we have the political will and my home at least is we do in the shorter term. then if we don't we have it after the 2012 elections. the elections will then be over and that will create a different political environment. >> secretary reuben declined to to answer my questions about citigroup. for ten years, he served as a director and senior counselor at the bank. citi and other stocks rallied after italy's prime minister promised to step down. the dow gained nearly 102 points, the nasdaq rose 32, and the s&p 500 added almost 15. as for volume, 878 million shares moving here at the big board; 1.8 billion on the nasdaq. american express is launching a multi-year, $100 million investment initiative designed to help target and develop new digital commerce technologies.
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the company will focus its efforts on startups working in various sectors of digital commerce, including mobile and online payment management, as well as security and fraud detection. another source of funding for small businesses is "crowd funding." it's a way for startups to use the internet to raise relatively small contributions from a large number of people. the only problem is that securities regulations severely limit the ability to crowd fund. but as darren gersh reports, congress is on the way to changing that. >> reporter: find a friend with extra bars of gold in the basement-- that's the traditional way entrepreneurs fund a new business. but for those who don't have a rich uncle, there is what's called crowd funding. crowd funding is a strategy to raise small sums of money from many people, even people all over the country. >> it really democratizes the ability to raise funds for your business. >> reporter: jason best is lobbying congress to pass legislation making it legal to crowd fund. the bill he backs allows entrepreneurs to raise up to
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$1 million; $2 million if companies provide audited financial statements. entrepreneurs would not have to go through the expensive process of registering their shares with the securities and exchange commission or state regulators. in a given year, investors can pitch in a total of up to $10,000 or 10% of adjusted gross income, whichever is smaller. >> this is an opportunity for entrepreneurs and small business people, whether they are in arnold, nebraska, detroit, michigan, or miami, florida, to be able to raise capital for their ideas and to build their businesses. >> reporter: to combat the kind of fraud that brought down enron, congress has tightened accounting rules, making it harder for companies to go public. entrepreneurs like idea lab's bill gross say crowd funding will provide cash before venture capital and the chance at an initial public offering comes along. >> at this first stage, when a company is just getting going, this could be a big boost to getting a company to go from, say ten people or five people to
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50 people, and to first revenues or even first profits. and i think that's going to be really helpful to the economy. >> reporter: but state securities regulators like heath abshure say crowd funding will lead to crowd fraud. >> the fact is that it is a wide open gate that a lot of folks can run through, and a some of those folks, we don't want them running through the gate. >> reporter: but supporters say the internet will help police the crowd. >> anything that happens is posted to the web almost in real time. anything that goes wrong or right is posted to the web in almost real time. and so, the crowd will be a great enforcement tool, along with regulators at the state and federal level. >> reporter: the idea of crowd funding is attracting an unusual crowd in washington. the president, house republicans and house democrats are all on board. now, the idea just needs to find a backer in the senate. darren gersh, nightly business report, washington. >> susie: a lack of funding is one problem facing new companies, and research has shown that growing firms are needed for the job market to recover. as we continue our series,
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"how to fix the economy," tom hudson recently spoke with eric ries, author of "the lean start- up." he began by asking how today compares to other tough economic times for new companies. >> in the innovation hub places like silicon valley, new york, boston we're seeing a entrepreneur renaissance that's unprecedented. unemployment is incredibly low and intense competition for the top talent. entrepreneurship is booming and the over all economy is struggling. whaeurpblgts is it about those location that's you mentioned that are fostering more entrepreneurialism and increasing employment. >> something exciting is going on. we're going to the ownership means of production over rentership means of production. if you have only a few hundred dollars you can get into the marketplace and test immediately by renting the infrastructure
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you need instead of owning it. so entrepreneur ship is accessible to more people who didn't the resources for a factory or a physical store. >> eric, you call this excited. others call it daunting and taking from what has been built from generations. >> it's -- yes, jobs are being loss, far more jobs can be created if we harness the power of entrepreneur ship. not just tech husbands about all cities. >> what can be done to encourage more startups and have the startups succeed to create jobs. >> the key to success is failure. silicon valley we embrace failure and under failure is a necessary things that happens on the way to success. instead of making a single business plan we advocate a testing base ad proefp to figure
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out quickly what is working and what is not. from a public policy won't of view you can't have people running experiencements and stepping out on their own if consequences are so high. that's why healthcare reform is very important. >> you talk about creative destruction. isn't that the cost of failure. >> -bgs actuall exactly right. it happens when disruptions happen. as the industries go into decline the people who worked in them are freed up to be entrepreneurs themself. >> you write in the book "success through determination, great timing, great product is a myth." is it all luck here, eric? >> it's absolutely not luck. in the movies it seems like the entrepreneur is in the right place, right time and it works out. if you look at the real stories of entrepreneur ship there were plenty of others in the exact
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right time at the exact right place who didn't succeed. what spraeudz those who were successful and those who failed? they had the process of doing what we call the pivot. they discover what parts were not working they kept one foot anchored. they do a dance and saying sa *g path. we believe in a start up move. we teach people to execute that in a disciplined scientific way. >> we have the flexibility and dynamic need for change. eric ries, thank you. >> than thank you, very
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>> susie: as we mentioned, optimism that italy can solve its debt crisis helped move stocks higher, and commodities came along for the ride. lets start with gold-- the precious metal rose to a six- week high. investors looked for safety as italy's debt drama played out. gold rose $8.10 to just under $1,800 an ounce. oil prices marked their fifth straight winning session. they rose $1.28 to $96.80 a barrel. the reason for the price spike-- if italy can keep from imploding, european growth could heat up, fueling demand for oil. meanwhile, hopes for a return to growth in the u.s. has the energy department boosting its outlook for oil prices next
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year. its predicting, on average, $91 a barrel in 2012. that's up from its previous forecast of $88. on wall street, a u-turn for stocks on that italian vote. the dow reversed a loss of over 160 points to a closing gain of more than 100 points. another comeback of sorts today- - we're talking about dynegy. shares skyrocketed after the energy producer arranged an unusual bankruptcy filing-- it put only one of its units, dynegy holdings, into chapter 11. the move lets dynegy cut its debt load without dragging shareholders through bankruptcy. dynegy stock up 81 cents, or 27%, to $3.76 a share. another setback for toyota. just as it was recovering from japan's devastating earthquake, its now dealing with heavy flooding in thailand, a key link in its supply chain. as a result, toyota reported
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today a 32% drop in its quarterly profits and it's backing away from its 2012 forecast for now. as for the stock, u.s. toyota shares lost almost a dollar to close at $64.61. they're off 18% since the beginning of the year. a high-risk, high-reward project goes up in smoke for astra- zeneca and targacept. this is a drug company that began as part of r.j. reynolds tobacco. their experimental anti- depressant that targets nicotine receptors in the brain failed in phase three drug trials. targacept shares tumbled sharply, down $11.51, or 60%; astrazeneca falling just over 1%. and finally, the iphone 4s getting the thumbs up from "consumer reports." the magazine says the 4s doesn't have the reception problems that plagued its predecessor. that endorsement boosted apple shares, up $6.50, or almost 2%, to $406.20 a share.
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and that's tonight's "market focus." >> susie: we're halfway through the current nfl season. but just four months ago, a labor dispute put pro games in jeopardy. nearly 3,000 jobs and $160 million in local economic impact were at risk in each nfl city. today, the league is enjoying one of its most successful campaigns in recent memory. here's rick horrow, with a look "beyond the scoreboard". >> reporter: football fans are watching nfl broadcasts in record numbers. through the first nine weeks of the season, fox is averaging a network-record viewership of nearly 20 million people per game, while cbs is having its second-best season since re-acquiring the nfl in 1998.
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espn has committed almost $2 billion a year to extend "monday night football" rights through 2021. and no tv partner has had more success this year than directv, whose nfl sunday ticket product led to 327,000 new subscribers in the third quarter. that's the company's best quarter in seven years. on the sponsorship front, pepsico signed a ten-year extension of its deal for a total of $2 billion. marriott signed on as the league's exclusive lodging partner, and the united services automobile association became the nfl's first official military appreciation sponsor. with nfl sponsorship revenue expected to increase 15% this season, league-wide revenue could reach a record $9.5 billion. that would make the nfl bigger than fortune 500 companies ebay, whole foods, and visa. not bad for a business that could have shut down for the year. with a look at the business of sports beyond the scoreboard, i'm rick horrow. >> susie: here's what we're watching for tomorrow:
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earnings reports continue to trickle in. we'll hear from anheuser-busch inbev, cisco systems, general motors, and macy's. and we'll get an update on the super-committee from one its members, maryland representative chris van hollen. also tomorrow, hilary kramer is our "street critique guest. email your questions to street critique at a hopeful sign that companies may increase hiring-- employers advertised more jobs in september than at any other point in the past three years. job openings increased by 225,000 to more than three million. that's the most since august 2008, a month before the collapse of lehman brothers. but the news isn't all good. even though there are more open jobs, there's heavy competition for each one. on average, four out-of-work people apply for each posting. that's slightly better than august, but more than the two- to-one ratio that economists say is healthy. and here on wall street, bonuses are expected to shrink by
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between 20% and 30% from last year. even steeper declines are expected for bond traders. the cutbacks reflect the difficult times many banks and securities firms are experiencing in this year's market turmoil. after weeks of a stalemate over
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the president's job bill, the senate will finally vote on a piece of the legislation this week. tonight's commentator weighs in on the impact divided government is having on the legislative process. here's bill rodgers, professor at rutgers university. >> last january, many americans cheered the return of divided government. neither party can implement policy that the other views as extreme. so, with respect to economic policy, what has divided government gotten us? too small a stimulus package, and the package's composition failed to maximize its impact. now, we are struggling to implement a badly needed jobs bill. for sure, there is no single approach to revitalizing the economy, but if our goal is to create an economy that doesn't leave lower- and middle-income families behind, the administration's policy menu offers the best chance. the problem facing the nation is that many stakeholders have lost the desire to advance the common good, negotiate, and compromise, thus exacerbating uncertainty on
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wall street and main street. clinging to one's ideological self truths and practicing corner solution politics might extend one's personal political career for awhile, but using it to conduct economic policy is wrong. the application of corner solution politics to economic policy deepened the great recession's impacts, and is now prolonging the nation's return to broad-based prosperity. i am bill rodgers. >> susie: and finally, what's heavier than a thanksgiving turkey and a couch potato's dream come true? one more clue-- it's ripped from the headlines. the answer: "law and order," the complete series dvd box set. it's likely the biggest dvd box- set ever! it contains all 20 years of the longest-running crime drama in tv history. that's 456 episodes on 104 discs. the price tag-- $700. but for "law and order" fans like me, it's worth every penny. that's "nightly business report"
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for tuesday, november 8. i'm susie gharib. good night, everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh >> be more. pbs.
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