Transcripts For BLOOMBERG The Pulse 20140401

Good morning, everybody. You are watching the pols. I am guy johnson, my colleague Francine Lacqua is off today. Explore the to criminal underworld. We will tell you why laundering money is becoming easier than laundering clothes. And johnny depp excepts a new china. Ilm ambassador to find out why you stepping into the Fastest Growing movie market. For after the european debt crisis erupted in greece, European Finance ministers are in athens today. Are your editor david tweed called up the greek finance minister. David, thats it, were done. No more bailout money, right . Well, maybe. There are a lot of things contingent on that third one of them is the economy returning to growth. Last year, the Greek Economy contracted by 3. 7 . The jury is out as to whether it will expand this year. There is a lot of good news that the finance minister is pointing at. The Budget Surplus is sustainable. That mean about whether youre going to need more money . Today, the finance ministers are going to sign up on the last portion of the last bailout. The situation is much better than expected. Along with the better performance on the fiscal side, it is enough to cover us fully for the next 12 months. Under certain conditions, that could continue, up to well inside 2016 under certain conditions. There are conditions. The first condition that the finance minister gave me was that the banks would need to further recapitalize. I asked him again, does he think that greece will need a third bailout . Up to the moment, we dont see a need for a third bailout. Guns. Stick to our i think the basic thing that the economy needs to do is continue performing well as it has done so far. This is going to be the catalyst. Guy, one of the big test is whether the government can return to the solid bond market and tap that market. He says they will be able to do it in the First Six Months of this year. Not much time to do that, but that is what he is betting on. What else have you got for us throughout the day . In five minutes time, im going to be speaking to the chief executive officer of the piraeus bank. Of then i will build i will be talking with George Papandreou. Gazprom has raised ukraines heftyices, earning a discount on russian gas supplies. Ryan chilcote joins us with a take what this means for ukraine. They have cut the discounts of this is applied when yanukovych made a deal with moscow. Basically, december 17 the russians offer the ukrainians 15 billion in aid and the second part of that was a discount of one third off their gas price. What theyre saying now is there , so theyreeir debt going to pull the discount. The the way theyre going to theythis is because thought they were going to be allied with russia and instead are allied with the west. Theres a second discount which russia offered ukraine for permission to house its black sea fleet in sebastopol. If for no other reason, the west is going to have to pay for this because ukrainians dont have the money. So they said ok it will not be that aggressive. They would get the money later. To the average man on the street or at home, what does this mean . The german city of greece could be a good example of what needs to happen in the ukraine. Ukraine isgas and super cheap by european standards. They paid 84 per 1000 cubic meters. You probably use 2000 cubic meters a year to heat your home. If you were ukraine and youd be paying 168. The average price is actually 385 for all of europe very but ukrainians subsidize a gas price for the consumers to the tune of about 80 . Theyre going to start hiking from may the first. Households will be expected to pay 50 more than they pay right now which is still threefold less than youre paying. Industry will have to pay 29 more and over the next four years the ideas that everybody in ukraine will start paying market rices. But remember, incomes are much lower than they are here. At the to oking are looking at Energy Prices is almost symbolic. Ryan chilcote on the latest in the gas story coming out from russia and the ukraine. Following his defeat in local elections, frances president Francois Hollande has replaced as Prime Minister. The reshuffle was widely expected, but marks a turn in french politics. Tell us about the new man . I have to say i dont know a great deal about him. Well, he has actually been one of the most popular among the french ministers in the previous government. His popularity has been rising just as Francois Hollande popularity was plummeting. He is considered on the righthand side of the socialist artie. Some might call him a french tony blair. He is in favor of more flexibility to the labor market heard he does not hesitate to criticize the 30 five hour week. He also favors some kind of social vat in which we could see lower taxes and wages in he isge for exchange popular and that is what Francois Hollande is looking for. It is a kind of shock treatment for france. With paris and the Prime Ministers job are being taken over. Look, talk to me about what is happening elsewhere. There is a key man missing in athens. Is peter muscovy see. We are wondering what is going. N he is represented by some civil servants. He is actually waiting to see whether he will stay or not, whether he will be part of this new government. List in a local election. Speculations that he might be seeking a job in some kind ofecome super commissioner for the of the new eurt commission. Obviously, we will know more and a few hours. One question is who is the best person to replace him. We hear different names, such as the budget minister or the labor outsidersr even some such as the former wto director. We will see all of the members in the new cabinet in the next few hours if not tomorrow morning. Lets go to the other side of the world. Abenomics faces its biggest test yet. Prime minister shinzo abe has raised japans sales tax to eight percent from five percent 5 . 8 from it is the outlook which may be raising a bit of concern. That is correct. The sales tax was raised today. Some people are buying extra things. The qs yesterday at the train. Tation people are buying or appliances or cars ahead of the sales tax hike today. Sales fortlook for companies as well is not so rosy in the next three months. By looking ahead for this forecast to fall off, businesses are very conservative. They are already pessimistic about what is going to be happening after the sales tax rises. Wages arese that going to be picking up . He pushed attack start up and that starts to act as an upward drag on wages. Is are Companies Going to be paying more . Data came up for february today. Base wages fell for the 21st month in a row. We have not seen any real increase in wages yet. Have said they will increase wages from this month, from april. All countries have said theyre raising wages. To twos like maybe up percent in some places. With current inflation of 1. 3 and the sales tax rise pushing up prices by another two percent, wages are not going to be keeping up with the rise in inflation. That is going to really hurt consumers purchasing power. Companies are quite pessimistic going forward. Whether this really does cut into consumption or whether it is a temporary blip, it remains to be seen. Wages are not keeping up with they were keeping up with them before the sales tax rise, but they are not now. Are we going to perhaps go to 10 , james . It will depend on what the data shows in december. If the economy contracts for one quarter and then returns to growth and the growth look strong in the third quarter, looks likely they would raise the sales tax to 10 . If the economy does not recover quickly , it is unlikely the government would be able to do that. James, thank you for your time. Bloomberg Japan Economy editor. Lufthansa has canceled thousands of fights a flight scheduled for next week. Hundreds of thousands of passengers are affected. Chief executive officer mary barrow is testifying before Congress Today about the previous recall. A sayso sergio muskie on they have beat annual sales by more than half. I was as diverse a book question whether it was possible to produce 6 million plus cars and the answer is, technically yes, we can. He seems to be permanently surrounded by mobile supporters. Well be talking to one of the ceos from a bank that is raised him was 2 billion in capital from foreign investors. More on greeces recovery, next. Good morning, everybody. This is the pulse. 17 minutes past hour and it is time for another exclusive interview from greece. Our europe editor david tweed is in athens. Lets go straight to him. David. Guy, i have the chief ofcutive operator officer the biggest bank in greece. Just got off a bond issue two weeks ago. You got off a capital increase. Apparently investors are lining up at the door. You oversubscribed. That is frankly very s surprising. Are you surprised . A bit. What was most surprising was that on the equity side we had to greet banks coming on the market at the same time, raising 3 billion euros. And that was both times. Is there a change in the sort of people looking at it . Mostly it is an opportunistic hedge funds. In the first round of investments, indeed. Emergingmarket funds, fixed specialist, a huge diversity in the accounts that we are being offered. There are still a lot of . Silver greet banks. What is it going to take for you to get up to Investment Grade . Inwe need to be seen more terms of the market outlook. The kind of support we are getting from the market is about the confidence that the markets are putting in the greek recovery on how the assets will play out in the coming months. I am more confident than ever. You have still got a lot of nonperforming loans, nearly 40 of the portfolio. Indeed. What is your outlook for this loans . We forecast by the end of the year it is going to be over. Were looking at it in at an inflation point by the end of the year. We will see a massive comeback after the volatility of 2012 abated. Gone into a short hiatus. E will see a gradual pickup as we short out certain tax obstacles that will impede this is one of the things i was talking about. It is the tech situation. He says he has a new tax regime in place. Can i take any confidence from that . We need the regime to be embedded in peoples psyche and expectation for some time before they get on safe ground and are confident to start repatriating. Im hopeful it will take place this year. Im sure a lot of outside investors are worried. Theyre thinking they have the stress test coming up this year. More capital . Adam ring so i dont think so. Surprised ifry these tests come up with massively different results. Think the banks in greece are prepared as well as any other Banking System in europe. And scale of one to 10 will detect the bond market . A straight 10. They havent got much time to go until the end of the first half of this year. But the money is on it. David, thank you very much. Fascinating stuff. He will be talking to another man who gives us another take on what exactly is happening with his Greek Economy. Withxclusive interview former Prime Minister George Papandreou is coming up. Welcome back. It is time for hotshots. At the red bulls ski event in switzerland, competitors took heart in a slalom race. The swiss dominated the podium in that one. It was quite unadventurous for red bull. Kind of the normal, regular downhill slope. The slopes were in great condition. It . Is more like it, isnt pretty hardcore. Verizon driver will cower theres got to be the best name for a race driver. Final sprint from will power. Manus cranny, over to you. Druggies conundrum. Month forconsecutive manufacturing which is dipped slightly. It is hitting a new record down here in italy at 13 . That shows you that split. It is almost right down the middle. You have france expanding. The fastest rate we have seen for a couple of years. That is the survey data. The robust data is consumer pricing index. Eurodollar pop higher on the back of the soft survey. Today is a confirmation. Up she went to one dollar threes 1. 3789. This is what prompted draghi to act. The ozzies left rates unchanged. Back to you. Coming up, the nextgeneration music video. We will speak with the ceo of a startup behind bob dylans viral sensation. Once good morning. I am guy johnson. Francine is off today. Let us bring you up to speed with the top headlines. The chinese sector is showing increasing signs of weakness. To 40 in march. That is the lowest reading since july. That is the unofficial number. The official reading is a broader base for surveys and it showed manufacturing improving from the month before. Not a great level. The secretary of state, john kerry, is in the middle east for peace talks. He is meeting with benjamin netanyahu. Twitter is ramping up television efforts in europe. Francesbuying company. Lets get more on the story. Caroline hyde is here to take us through what they have been buying. And, why. We watched breaking bad and what ever television program. Bloomberg, perhaps. I was about to say. But many people are engaged in footer. It is a phenomenon of Second Screen. Twitter has noticed that you can really cash in on this. Broadcasters to be made aware. And goe trying to go out to broadcasters and Television Advertisers to say that you can actually engage with your viewership better if you see some of our analytics. They have teamed up to create a Television Rating system. They are expanding that in europe and asia. They are making purchases in france and united kingdom. They are trying to drive the analytics in europe and cash in. They make a lot less money outside of the United States. It is better in United States than the rest of the world. They need to cash in and make moves like this. The Business Model has three quarters of those using twitter outside the United States and three quarters of the revenue comes inside the United States. They get one quarter of the revenue internationally. They need to change that and monetize the value from asia and the developing world. This is why they are looking towards acquisitions. They do not know the bang for the buck. The notable interest is the one and united kingdom. It is a Big Partnership with facebook. The question is whether facebook and that partnership unravel or it is something they can continue to do. Are looking. They they all want part of the Second Screen phenomenon. Twitter is snatching away facebook. It is getting nasty out there. Whats it is getting dirty. Thank you very much. Reimagined for the 21stcentury and the video went viral. 70 Million People have viewed it. Up video was made by a start called interlude. Elliott look at it and joins us now. I was not in it. I asked the ceo and cofounder if i can be in the next one. You are the former musician. One of your videos from your previous life is on screen. Had he go from making music and being in music videos to facilitating other artist to make them. Not a former musician. Still a musician. You never quit that. Is for myp company band and we all have add side a geeky side. Musiciansbig need for was the lack of patience that people have and the amount of exposedthat they can be to. We want to write songs and music. We wanted music videos to be deep and not wide. And must take an enormous amount of effort to record all of these alternative scenes to give viewers the choice of deciding what happens next. One of the things that we did was, the platform has a Strong Technology background. Getmake 21 scenes and you 2005060 for combinations. 256bob dont video, combinations. In the bob dylan video we said, let us record all of the solos and see what people choose. About the 70 Million People live viewed it. 70. Named it theine most innovative video of the year last year. How successful did you dream it would be this successful . We have a manic vision. We really want to transform the way people watch films. People are proud of this. We are launching a nonlinear film category. Know, thinking that, you the time is right for the next evolution of how people interact with films instead of just watching them. s i heard that bob dylan kids said he was cool. We have had good reactions. Thatu have sequoia, intel, is impressive. We really believe in what were trying to do and it is not coming to solve a problem. It is creating a new campus for creation and it is a little bit different in the proposition. If we can do what we are trying to do, it can be revolutionary. It is not easy. Plans for more money or an ipo . Plans to take over the world. Why just an ipo . How difficult is it for someone to come into the market and do what you are doing . Some may say that you are a one trick pony. Your court a few scenes and you put out. It is harder than that. The whole concept of a nonlinear film is not new. A director asked people if they want to change the film reel. We want to make a similar solution. Alable way tot sc deliver this. It is harder then and looks. It is simple for the user and we have actually been able to solve all Problematic Technology issues. I am going to thank you. The cofounder of interlude. I was going to try to have an option for viewers to decide what happens next. Perhaps we will try that version online. Back to you. I like being able to decide what happens next. Thank you very much. Great stuff. Johnnydwinning actor, get, has accepted a new role. He is going to be the hollywood film ambassador to china. He is the latest name to step into the movie market. We caught up with the star in beijing. And maybe his first visit to china. By the looks of it, johnny depp is embracing the secondbiggest movie market. He says that hollywood and china have a lot to offer each other. To settle one thing. Whats i am not going to ask for a hug. I am not going to ask for a hug. Can i hug you . People are warm and welcoming here. He hugged and mugged and hugged again. He showed his chinese character tattoo. Spokesman chinese. Spoke some chinese. And, yes, hugged some more. He is promoting transcendence. It costars Morgan Freeman and is produced. Experts a terminally ill in Artificial Intelligence whose consciousness is uploaded to the internet before he dies. You can save him. Not like this. The intelligence that you are talking about is not that far down the road. It is pretty incredible. Are you an early adapter or a luddite . With any sortss of computer or phone or anything. Literally, they break if i look at them. The same could be said of the many screaming girls were welcoming johnny depp to beijing. The 50yearold johnny depp is good looking and talented. Transcendent will open in china on the same day as the United States next month. A rare move and it is important to limit piracy. Hollywood films are often on the internet for free or in pirated dvd shops. Covertonman three, options between hollywood and china are on the rise in china onll has strict quotas hollywood imports and the Chinese Box Office booms. Domestic box office outsold hollywood. China is a scary market. If one in 1000 people like someone, that is more than the entire u. S. Market. Memorys a distant anyway. It has been a wild since i have had that. It is hard to be anonymous when you hook everything in sight. You want to hug them . I do not think anybody minded one bit. Stephen engle, bloomberg. Making quite an impact. Talking about piracy. We are heading back to athens for another bloomberg exclusive. Just a reminder, we have another exclusive interview. We are talking to the former Prime Minister of greece. We will see you in a minute. I will stick to the phraseology of the euro group. Surpluse purdue uses a produces a surplus, our peers will take the necessary measures to bring that down even further, if necessary. I will stick to this. The finance minister spoke to bloomberg in an exclusive interview from athens. He says that greece will not need another bailout. Lets go back to athens and david tweed. Guy, he is one of the leading industrialists and greece. In greece. His companies have made profits throughout the greek crisis. His Holding Companies in is in that his Holding Company is in aluminum and energy. Greekoptimistic about the economy. He says the Greek Economy will go back into a recovery and start growing again this year. What is your sense of what is going on in the economy right now question mark box welcome to athens, david right now . , david. Me to athens it is the first day of spring. Welcome. He is an optimist and he is right. Finally, things are turning and changing. We can now look forward to better days stop youre telling me this better days. Once you are telling me this this. re telling in thime there seems to be a gap between what ordinary greeks are experiencing and what you are seeing. You see the micro numbers. You see the economy on the street. There is no doubt. The macro figures are better. Of theonic problems fiscal deficits and the current account deficits have now become a surplus. Both the fiscal and current account. The real economy is suffering. All you have to do is see the number of unemployed. You need to see growth in businesses. From your experience, what is going on with financing . Are you able to cap bond markets . Companies like us, previously, the bank did it with success. They can go to the markets and do it with relatively good industries, relative to what we have seen. This could be the beginning of the start of the quiddity in the market liquidity in the market that could spread. If we do not have liquidity, there is nothing we can do. At the moment, liquidity is not there yet. How do you expect that to come . After 2012, we had during investors come in with money. 2013, more conservative investors. We are looking at longterm investors coming in. I heard you talk about the difficulty that companies have with a lack of clarity about the tax regime in greece. It seems to always change. I asked the finance minister if we would see clarity. Can we believe that . Minister has said a lot in the last 18 months. He could bring clarity to the system. That is true. On the other hand, the burden of the tax regime in greece is overwhelming because of the government being a crisis government since footie 12. 2012. They have done crisis measures. One of them was heavy taxation and the economy suffered. When we see the taxation on. To come down, production come down, that will help. Let me ask you about the ukraine crisis. It must be having an impact. Natural gas comes in and you ume one third of natural gas. How does that affect things . We are worried. The flows of rationed gas go through the ukraine. We are worried and i hope that sense will prevail. I hope things to not become worse than what they already are. We will still have gas. Otherwise, we have to use other measures. Like, bringing and a and doing other things. In energy and doing other things. One of the big steps is tapping a bond market in the first part of this year. How confident are you that they will do that . The government can go into the market and do that. I would like to bring a tone of caution and i would like to see the first issue of the greek republic be a great success. There are a lot of people out there who would like to see that. Guy, back to you in the studio. And, thank you. Thank you very much indeed. Doesnt the parthenon look pretty today . Biggest phone company has sold their headquarters. The carrier will remain in the building as a tenant. Shares are searching. Ing. Urgo they may be willing to pay 30 a share. A manufacturer of rock crushers. A big return from the state sale of the royal mail. A watchdog says that the policy makers expect an effort to lock in priority investors. Up next, exploring a criminal underworld. We will tell you why money is easier to launder. We will see you in a moment. Welcome back. We like to think of ourselves as a fullservice Financial Television channel stop im kidding television channel. Ares talk about a series we putting together. Money laundering used to require a network of people. Now, it takes a few clicks. Criminalnant you are a that is carrying around a big bag of money for all your nefarious deeds. The cash in your back will get you a visit from shadowy men in dark sunglasses. You need to launder the money. Here are the two common methods. The first is digital. People hide large amounts of money by setting up an offshore company to park cash. There are Companies Online that start one up in minutes. A few clicks of a mouse and jims caribbean imports exists. It may be hard to believe, but this is legal. From here, money can be wired to new companies in small amounts. Fedsin mind that the track any deposit over 10,000. Small deposits can fly under the radar. Course, criminals can also go analog. Then, it is as simple as assembling no good friends and handing them cash. Unlike betting on course races or playing slot machines, casinos are not required to issue tax returns, regardless of the amount. Cash ts later and the the chips are cashed in. 10,000 is likely to catch somebodys attention. To make sure you avoid the tax man is to make sure that the money never goes into a bank account. We have all the angles covered on bloomberg television. For those listening on the radio, the first word is next. For our viewers, is the second hour of the pulse. We will talk about the japanese tax hikes. We are going all hello kitty. Taxhould i say, hello, hikes. The greek government says the country will not need a third rescue. We will speak to the finance minister and the former Prime Minister. From helle this hello kitty to shopping is more expensive in japan. We will see if the sales tax will hurt the recovery. The automaker is recalling more cars. Good morning. Good evening to those of you in asia. A warm welcome to those of you just waking up in the United States. I am guy johnson. It this is the pulse. What we got for you today . We are going to be exploring the criminal on the underworld. Just one click and you are done. Data. E unemployment that is crossing the tape as we speak. Lets look at the numbers. A slight dip as the euro is up by 2 10 of one percent. The numberst what look like. Manus cranny is sitting next to me. Quibble while rome burns. That is the point. You have a 50 Unemployment Rate 15 unemployed rate in italy. That is a record. Things are improving in greece. Were going to speak to a former Prime Minister. What does that mean for taxation . What does that mean for your debt load . Are you going to escape from any assistance . This makes the debt load on your back all the harder to carry. That is the take away message. It is virtually unchanged. You cant get excited about it. Germany is six point seven percent. Austria is five percent. This is for the whole argument comes in as to whether the Northern European countries should be doing more to carry the periphery of europe to a better recovery place. The u. K. , we are having this debate. There is a thing called the output gap. Nobodys been able to nail down at what it means. It is one of the Biggest Challenges right now. Challenge. Huge janet yellen says there is some considerable slack in america. Think of it this way. A parttime worker is looking for more hours. A fulltime worker is looking for more overtime. I own a factory and i have production. I dont need to build another factory if i get enough demand. That is it. This is something that points to the inflation. You start thinking inflation is creeping into the economy. An inflatione problem. You may have a disinflation problem. Correct. Europe is the imf. Until 2018. Se thank you very much. Before the debt crisis erupted peoplece, the finance are in athens. Theyre likely to sign off on the next. One of the next things it is going to be when the imf and ecb comeback. They will come back and discuss debt sustainability. 140 of gdp is not sustainable at the moment. How will they restructure it. It what does greece want . That is what i asked the finance minister. Andepeat, if we produce other parts of the program. We will take the necessary measures to win debt down even further if necessary. You that no one is speaking about it on the record. It no one is speaking about it off the record. Reading between the lines, a solution for greece is some debt writedown by the Public Sector debt holders. Targets have been completed. Stay on aslan to finance minister for much longer . That depends on the will of the Prime Minister. The fate of the minister is in the hands of the Prime Minister. I feel very happy to be the finance minister. Would you be interested in being a central banker at sometime it . That was my other part that i asked the finance minister. There is been speculation that he would step down. Read between the lines in greece. I think he is looking to step down. He is not saying it on the record. Im trying to count them i had the number of finance ministers there have been it recently. Quite a few in greece and it looks like we could have another one shortly. Thank you very much, david. There is other finance minister that is not in athens today. This is raising questions about who could be the next french finance minister. Let us turn our attention to what is happening in ukraine. As prices are ending discount. We are tracking the story. What does this mean for the country . Removed a discount that they extended to ukraine back in december. President putin agreed that they would give them aid. They only gave them 3 billion. They would reduce the gas price by one third. Tot they are now saying is negotiate and get rid of the discount. You still owe us 1. 7 billion. The other way to read that is the idea of the discount before was that ukraine would be allied with russia. Ukraine is moving toward the west. That youis for russia cannot eat your cake and eat it too. We will not give you this cap. It could have been worse. It is worth pointing that out. What is this mean for gas . And is a statecontrolled company. It is listed. This obviously is a good thing. Products like to see sold at the highest possible price. Rarely, what russia was selling ukraine was below market price. The average for the eu countries is 385. That is the same price ukraine will be asked to pay. If you take one of politically motivated handout away and you replace it with another one. They are now going to be supplying gas to crimea. That is going to cost them some money. They will have to build a pipeline to crimea. ,f you look at the share price that has been rebounding since the middle of the month. The big issue is not the bottom line. It is a very profitable country. This is the most Profitable Company in the world. It is very cheap. The big question is the threat of economic sanctions. That would hit them very hard. Of sanctions is diminishing. It does look like we are seeing russia pulling the troops back a little bit. There is a deescalation of the crisis. Thank you very much. That is the latest on ukraine and its relationship with russia. The stock about a rumor that is floating around. That relates to where the u. K. And a Finnish Company will get together. This is coming out of helsinki. With weir. In talks they are in the process of considering their proposal. They are not engaged in any kind of talks with the business. We will see where this ultimately ends up going. The bid is unsolicited at the moment. The share prices rising since that information has come out. We are on the session. He saw a massive gap higher this morning. 19 on the day. Let us move on. Gm has hit the brakes again. They are announcing a rude call of 1. 5 million cars. The ceo heads to capitol hill. Let us bring in greg trudell. He is covering detroit. Talk about what is going to happen on the hill today. What is she going to say . It is going to be interesting. It is not going to be a grilling. She will say that gm does not know what took so long. The company does not know why it took them a decade to recall these vehicles. These are the ones that got this recall going. Regulators say that we would have pushed gm to make a recall had they given us more information. We have an opportunity not only for gm to take some hits, you have the regulator coming under criticism as well. There could be some sniping. Ask us talk about the cost of this. Longer estimated a cost of 300 million. It is now saying that the cost of these recalls will be 750 million. It will be interesting to see what cost that number moves around the. To First Quarter results. Thatshould be a number does not move around much for the costs. The question will be what kind of costs go beyond that. These are reputational costs. It toyota had a sterling reputation and at the time for that reputation to be rebuilt. Gm did not have the reputation that toyota had. It will be difficult for gm. Thank you. They are giving us the latest on a gm. There going to be taking hearings live on bloomberg television. There is a pilot strike. This will cause problems for hundreds of thousands of passengers. This is according to the financial times. The ceo says the italian face annual sales off 55 . I was asked a very simple question. Could you produce 6 million cars . The answer is technically yes. Can the japanese economy stand the sales tax hike which comes into force today. Youll find out. Coming up, greeces former Prime Minister George Papandreou joins us live this hour. Welcome back. Ofare showing the reaction data we had released. But us deal with pmi. There is some evidence of manufacturing growth cooling down a little bit. The other thing i want to note is that we have points in the fpc. We are talking about the aggressive rate hikes and they could have impact on financial stability. That is in the mix as well is morning. That will have an impact. Mpcs affect to hike up rates. Lets talk about the economics of japan. Hiked toales tax gets eight percent from five percent. Shopping gets a little bit more experience expensive. You are pretty relaxed about this. We will see a reaction. Car or highpriced goods will factor. These kinds of issues will deftly falloff. By july or september, it will even out. Our Employment Situation is coming back. Are comingports back. There is a feelgood factor that is starting to rise. If we do realize these two things at the same time, we will have a good issue coming up. Does this push the wage hike story further . Is ¥25 trillion. Is it isof the matter easily done to show that we are trying to include discipline into our system. That is one thing. It is only a percent. It is 20 here. Citizenstio of senior is the same at 10 . Years, we could not raise consumption tax. It is really now or never. I am curious. If i have to pay another two percent, do i asked my boss for another two percent . We stick to lifelong employment and seniority. We have to see base wages rise. See this simmer down to the pyramid. The Large Company is doing well. We have to see these domestic sides follow these large exporters for the second half of the year. This is what you just said. It is a little less rosy going forward. It is the forward picture i am interested in. We get to the difficult bits and things increase, the cap tatian will go to 10 . Do you think that will happen . We are a long way away. What july,on september gdp figures are. They will probably make a decision around november. Again, my argument is most likely. Japanese spending patterns are not on a cash income. It is more to do with stability than employment. You are getting that. The jobless rate is at a sevenyear low. You are seeing much better conditions. This gives much better feelgood factor. If we can wage increase, consumption will be fairly stable. It is working . So far so good. I think the market is asking for too much too soon. Of course it is not going to work right away. It does not happen overnight. It is a big economy. Inthere is a lot of rigidity the system. That is not going to be easy and it will take a lot longer. Thank you very much for joining us. Were going to take a break. We will be back in a couple of minutes. Good morning and well come back. Watchingh you are the pulse. Dealingch president is with voter disappointment. We are joined from paris. What do we know about this guy . He is the interior minister and now. His 51 years old. He was born in barcelona and became a french citizen when he was 20. He is the most popular member of the government. He is very popular with centrist voters. He is not popular with socialists. He is on the right side of the socialist party. He gets his inspiration more from tony blair. He is in favor of getting rid of the 35 hour week. He has talked about cutting taxes and cutting labor costs. He was quite the law and order guy. He continued expulsion of illegal immigrants. He dismantled gypsy camps. He is an interesting choice and a bit of a gamble. Any other changes . Certainly going to have to change the cabinet. He has to be replaced. Tighter anduch smaller government. They will probably get rid of a few ministries. 20 members to the cabinet. He will probably group some of those positions. There is some complicated equilibrium that has to be respected. Some have said they just will not serve under him. They think he is too much to the right and he does not want to be in the government. Thank you very much, indeed. It thank you for joining us from paris. About moneyking laundering a minute. Good morning. It is half past the hour. Were live from bloombergs European Headquarters in london. Francine is off today. Mostly about the top headlines. The manufacture sector is showing signs of weakness. To 48 in march. That is the lowest reading since july. An official reading shows manufacturing is slightly improving from the month before. John kerry is in the middle east for urgent talks on the peace process. To meeta surprise visit with the israeli Prime Minister. He then headed to meet with the palestinian president. We have had the latest european unemployment figures. They are slightly better than estimates. Rate is 11. 9 . Let us find out with manus cranny. We have a debate in terms of the hard data which is the cpi. We have slight slowdown in terms of some of the survey data here in the united kingdom. What does all that mean . A little bit softer. Janet yellen is talking about stimulus. What you have is the challenge for mario draghi. Unless you see a eurodollar trade up through 140, you will not see much action from the European Central back. A lot of people talk about united funds. The mcginty some data. In the First Quarter, u. S. Funds have bought etfs. That is just under one million. They have added 100 million in terms of their conditioning. You are seeing a money going to portugal and spain. Italy. E, in some quantum in terms of what these u. S. Funds are doing. Take that across and translated into currency, you begin to understand. That begin six point part of the currency strength. We are coming back ever so slightly in terms of sterling. Was just coming back from absolutely racing ahead. This currency has got further to run. I leave you with a look at that. Youll get some pmi data. As janet yellen says, the u. S. Needs stimulus. Equity traders will be quite happy to hear that. Back to you. Thank you very much indeed. You are looking at some pictures coming out of brutish in the bottom of your screen. The chinese president is about to address students in brutish bruges. Let us turn our attention to athens. That is refined our euro editor. Lets go to the greek capital. Two nights ago, the voteament here there was a on laws and had to go through. Pay out the last chunks of money to grease in its second bailout. One man voted against that. T was George Papandreou thank you for joining us. I want to ask you. It was a very important vote. You voted against a small part of it. It was a vote against bank recapitalization. I did vote on the majority of the proposals. Thisld vote against similar vote from a parliament. The basic reason is that i can understand the difficult circumstances we may need to privatize. ,o put that into law particularly when greeks have think i amso much, i against that principle. You took a very big risk. It seems to me that you are willing to risk the stability of the government or an early election. I would not jeopardize the majority in parliament. This is a personal vote and a political vote. It was a statement on some of the things that i think we need to see. Not only in greece, but also in europe. We do have a systemic problems around the biking banking crisis. We are still dealing with the banking crisis. E have a Banking Union we are trying to fix that differential between the low Interest Rates and the high Interest Rates. That is very important. We are doodling in europe. We are not looking at the big picture. We are still asking for our taxpayers to pay for the banks. It is systemic. The democratic process gets underway with elections at the end of may. It looks as though the government is going to have a difficult time getting much support in those elections. What happened to the government . We are not really sure what the outcome might be. The polls show that it is going to be a close race. It is not that clear. A protest around europe. Therefore, that would be seen as reflecting more on the particular situation greece. I am worried about the government and whether it could supportd to see its decimated in those european elections. Thatgovernments would say is all right. We have such a wafer thin majority. Personally have been all these years supporting the government. I designed this to create a coalition. This is the same coalition i created. A i am in favor of the success of this program. Nobody would really want to closureze the coming to of this successful adjustment program. Can the government bring this to an end . I think it is possible. Emphasis one reform. We have a record of fiscal adjustment. That aslse is ever done much as we have. Onneed to put more emphasis implement reforms. It is about executing. It is about executing the reforms. Capitalism that is endemic in some countries. I think we need to create much more vibrant, strong institutions which will allow for Greater Transparency and a sense of social justice and development. Can we do that under the Current Coalition . Do you think that coalition will last until 2016 . Supportwill garner the of the Greek Society if they move forward with this. It can last if it moves in that direction. Are you talking about new reforms . Are you just talking about execution . There are certain issues that i believe are necessary for revamping the political and electoral systems. That was one of the priorities i had when i was Prime Minister. I think implementing reforms from a justice to tax issues to open up professions is necessary. You will push for those for the reforms. Are you going to support the coalition notwithstanding your vote from the other night . I have always done that. Things inbe many which we took measures dictated to us. Issues were necessary. I think deeper reforms are going to make this. I do want to say that greece has great potential. There is great investment opportunity. There is political instability is overblown. You are are rumors that planning to step down and start your own clinical party. You categorically say that you do not plan to step down and start your own up local party . These are rumors. Talking about rumors on april fools day is very dangerous. Thank you very much. Politician. Wily thank youndreou, very much for joining us. Thank you very much, indeed. That was david tweed join us from athens. The automaker is putting the brakes on again with another recall. Details of that testimony is up next. New jersey is about to become the third u. S. State to ban direct sales from tesla motors. Car dealers are battling the extra electric car company. Who is in the driving seat . Let us break in the numbers. Interesting numbers. Announced a new recall of 1. 5 million vehicles. Have 700 million in recall charges. Some moving parts. Good morning. There are all kinds of things going on. Is there a sense that this industry is regaining traction . We get bogged down with news with what is going on with gm and tesla. Weve seen some great recovery in the industry. I think where we can pinpoint some key areas of growth is in the compact suv segment. We have seen some great growth in north america alone. If we take the luxury segment as well, we see strong growth there. That is a growth of about one half million alone. There are some positive signs in the industry. We see more and more collaborations coming to light. Seattle fiat and chrysler relationship. Are some real winners and losers beginning to emerge. Look at how well that has worked. I want to talk about something slightly different. Ship between dimer and aston martin. It strikes me that aston is better the slightly or end of the stick. There are two artemis. Aston martin is a great brand. Segment,xury vehicle that is one of the key growth areas. We see one of the biggest markets in china. We actually see the chinese takeover the u. S. In this market. Ultrahigh brands are key in those markets. The savings are strong there as well. Are the only vehicles that are based on entrylevel luxury vehicles. Be a higher will mark. Are you going to be able to compete with volkswagen . Aey have the platform that is suv crossover. That is being rolled out. Out intoeing rolled the bentley line and the lamborghini line. They will get a lot of commonality out of all of it. Can aston compete . Mercedes is well known for their suvs already. One of the biggest selling models is the gl model. Aston martin will be building an suv based on the suv known as gl. This is really where we see the market growing in terms of number of Seats Available in suvs. That is an attractive market for china. The large suv is starting to take over. It is a sexier product for people to purchase. Thank you very much indeed. Andrew lee is joining us. Laundering is getting easier than ever. It takes just a few clicks of your mouse to commit the crime. We will talk about that right here on the pulse. Will come back. Theaw news being broken by mpc. Theyre hinting at the fact that a rapid rise in Interest Rates in the u. K. Could be destabilizing. That is a little bit obvious, but it goes back to the message were hearing that rate hikes are going to be gradual. Currency, lets get into the underworld. The criminal underworld. Wandering money is getting easier. Are talking about digital economy. It takes just a click of your mouse to commit a crime. Sam grobart reports. Pretend you are a criminal that is carrying around a big bag of money for all your nefarious deeds. So big that the cash in your back will get you a visit from shadowy men in dark sunglasses. You need to launder the money. Here are the two common methods. The first is digital. People hide large amounts of money by setting up an offshore company to park cash. There are Companies Online that start one up in minutes. A few clicks of a mouse and jims caribbean imports exists. It may be hard to believe, but this is legal. From here, money can be wired to new companies in small amounts. Keep in mind that the feds track any deposit over 10,000. Small deposits can fly under the radar. Of course, criminals can also go analog. Then, it is as simple as assembling no good friends and handing them cash. Unlike betting on course races or playing slot machines, casinos are not required to issue tax returns, regardless of the amount. A few bets later and the chips are cashed in. Anything over 10,000 is likely to catch somebodys attention. The only way to make sure you avoid the tax man is to make sure that the money never goes into a bank account. Like to think of ourselves as a full service channel. Keep an eye on her. Why did it take so long for them to admit fault in the ignition . She is going to have some very hard questioning. Foreign ministers are meeting in brussels. The quarterfinals of the world series of boxing. Ukraine versus russia. Ukraine is lost the first line. That was on sunday. Maybe they will have a better chance of their home turf. What sunni watching for out of athens . Be watching the Greek Television news. The interviews that we just did with George Papandreou was the first and only interview he is doing today. He was first on bloomberg. Work, david. Thank you very much for your coverage. Keep right here on bloomberg tv. Surveillance is up next from new york. This is Bloomber Bloomberg surveillance. The fbi highfrequency trading. April fools. You feel like that on facebook. Merck it surges in front of jobs data this friday. Good morning, everyone. This is bloomberg surveillance. We are live from bloomberg World Headquarters in new york. The dow is at 20,000. Tuesday, april 1. There is a lot of news flow. No april fools year. Chinas pmi fell to the lowest level since july. Very different story in europe where manufacturing hovering near a threeyear high. German payrolls expected. And japan a new sales tax. Intended to lower the extreme government that. Is someers, i manufacturing as well as construction spending. Throughout the day, the latest auto sales figures. There is a ton of stuff