>> the end of an era and a start to a new one. barack obama selects -- elects the new fed chief. >> the president getting ready to meet with republicans to find solutions to the budget and the debt ceiling.

>> and also coming up, we will be looking at mexico's economy and efforts to keep inflation under control, and we will be taking a look at europe's fracking industry and how it is struggling to get on track. lets check with philip yen, who is at the white house with the latest on janet yellen's nomination. >> the big story is janet yellen nominated as the next chairwoman to replace ben bernanke. >> she wasn't the first choice, but she seems like a safe choice. that may be just what the president needs. larry summers bowed out of consideration for the post. president obama announced his nominee for chairman of the u.s.

reserves. >> janet yellen. >> the nomination comes as the federal reserve is considering how and when to ees economic stimulus policies -- went to ees economic stimulus policies. she is expected to keep interest rates low for the immediate future despite fears the fed's policy may lead to immediate inflation. >> we can make sure it is in check and does not undermine the benefits of a growing economy. we can safeguard the financial system. >> she met her husband while working at the federal reserve in the 1970's. >> it has been said janet found love at the federal reserve. >> their son also works there. >> you can imagine their

conversation at the dinner table. i have been told their idea of a great family vacation is the beach with economic books. >> yellen will have to be confirmed by the senate, which most consider likely. her ability to create jobs is causing concern by some who think it is overreach by america's central bank. >> too many americans cannot find a job. they worry about how they will pay their bills. >> she will be the first woman to hold this powerful post. yellen is expected to be confirmed by a wide margin. >> normally i would not ask this

question, but the chairman needs to be approved by the senate. have republicans caused any trouble for the president's nomination? >> i am not going to take that. the democrats would only have to bring over six republicans, which is probably not hard, but a lot of it would depend on what kind of damage is done between republicans and democrats during this shutdown battle. with how tense everything is i don't think you can take anything for granted. >> she's supposed to be the safe choice. let's take a look at how the markets are react to him. -- are reacting. we had a very sharp selloff yesterday. this stock has been under restructuring for some time. they got it higher for next

year. the stock getting a boost. i'll come -- alcoa stopped moving as well. finally, nike was also in the news. they said they could add 10 billion dollars in revenue by the year 2017. you can bank kids and women's apparel. -- thank kids and women's apparel. professor, welcome to the show. let me ask you. i was talking about how safe is this choice and how likely is the nomination to go smoothly? >> it's a safe choice. it's exactly what they expected. i think the nomination will go smoothly. i don't see a lot of upside for republicans opposing this

nomination. what is plan b? >> what i have read from different media outlets is wall street likes her. explain why this is. >> she is a known quantity. she is well qualified. she is respected within the united states. she was one of the earliest financial forecasters to sound the alarm about a potential housing crisis, and in the united states. >> some of us are asking, is there a difference between yellen and ben bernanke? >> i think so. one thing she will do better is forward guidance. that is where bernanke fell off. he will set the market up for one great move and deliver

another, and it caused volatility. whether you like the direction it will be consistent with her actions. >> you have been on a number of times as an expert on what the fed is doing. the federal reserve is supposed to be nonpartisan, but it's hard to not say any inc.. does the fed play any role in trying to get both sides to compromise at this point? >> i think the fed has already played that card. ben bernanke has said there is only so much monetary policy can do. now it your turn. it's fiscal policy. we need regulatory rough form. we need streamlining of the tax code. we can only print so much money, and it doesn't have much impact if you print one more dollar. >> the other big story just down

the street from here on pennsylvania avenue, you can see the white house, but a short distance away is congress. it did not get much easier, but there was slight hope as the president met with democrats today. >> democrats are prepared to make sure the government pays its bills, but good policy, good economics, and building confidence for the american people would be extending it for a substantial time so the markets will have confidence of where we are going to be next week, next month, and next year. republicans are expected to come to the white house. 20 members of congress are expected to meet the president. he has not had a face-to-face meeting outside the key leadership. the markets are hoping perhaps there might be some sort of compromise in the

next 24 240 eight hours. the markets remains ethical but hopeful. we are moving to puerto rico where they deal with their own issue. the rising debt becomes an issue. bondholders demand a war on interest rates, and to put it into per spec if, puerto rico -- in perspective, puerto rico does 7 billion -- owes $7 billion. coming up next, we will have much more from mexico live. we will talk about inflation and why inflation laws are under control. they are still struggling in the working class.

>> welcome back, broadcasting across the usa and around the globe. in mexico, inflation continues to hold relatively steady. the mexican government says core inflation rose a modest one third of the resent it point -- of a percentage point. frank joins us live from mexico city. what are the details? >> the mexican government is glad to report it has been able to keep a lid on inflation for five months running. that's good news for consumers. this comes despite the fact hurricanes swept through the country. they did major damage to

important food crops, and that has driven prices up for certain foods. fuel prices have also been rising. >> it is one of those necessary products most people in mexico use for heating water and cooking. prices for this gas have been going up steadily. this is how the product is delivered to customers across most of mexico. the fuel contained in this tank has a weight of around 60 kilos. the slow and constant rise in the price of cooking gas is felt all across the economy, especially by the poorest mexicans who make up 50% of population. the way the government calculates core inflation does not include basic foods. business analysts say mexico's central bank has done a decent

job of keeping inflation in check. >> the overall index or a basket of food they are purchasing does not necessarily go up, or it goes up less frequently. >> the steady rise in the price of cooking gas has an effect on the most basic foods, including prices for the all-important corn tortilla. cindy gonzalez and her husband work to make ends meet, and they are weeks away from having their second child. >> prices rise, but our salaries remain the same. >> it's an ongoing story that is retold every month. the government reports inflation is under control and prices for essential items continue their

slow and steady rise. >> as you can see, nobody here is happy to know prices are rising. for its part the mexican government says more than a decade it has been able to keep control over macroeconomic inflation. >> meanwhile the imf has revised the gdp from mexico lower. what has been the reaction? >> this is important news. as you will remember in july it was forecast the gross a mistake product would be somewhere around 2.9%. that was back in july. in the last few days the imf updating its forecast and bringing the numbers further

down, now suggesting texaco's economy will only grow one point two percent. it is largely citing three reasons, the first one having to do with the lower level of governments bending from the mexican administration. it is spending less than sending less money to its providers around mexico, also citing key issues like imports around the united states. still low and affecting the decision to turn down the forecast. >> thank you for that report. the price of gas is a major political issue in mexico. president me at joe has made -- nieto has made reforms a crucial part.

at the summit the mexican president said why he thinks such a move will be good for mexico. >> the state will be the owner of hydrocarbons. the state is the owner of resources, but we are taking into consideration what has worked in other places in the world that we are beginning to open up to the private sector are. >> some may look at the industry and may not agree. would you say they have enough to attract foreign investment? >> pemex will be owned by mexicans. that's not going to change, but

the energy bill is one that opens up to private investment. they don't have the resources necessary to exploit sources of energy. i believe the private sector and are could be instrumental. the united states more than 9000 wells have been drilled for shale gas. it could only work in three. we know our reserves are quite large. energy is abundant in our country. therefore we need to exploit our resources away it should be, and

that's my proposal. it will trigger debate, and some will disagree, but congress will have to review my proposals. some other political forces have presented their own bill, but we need to find the best formula to create energy safety. >> that was mexican president nieto speaking. coming up, our special series continues. we will be looking at europe's hydrolytic fracking industry. the region is trying to get it off the ground, but it is facing challenges. stay tuned for the details.

>> welcome. it's a weeklong look at the practice of hydraulic fracturing

or fracking. it's a controversial process that uses a mixture of water and chemicals to extract gas from underground rock formations, and we turn our attention to europe, where lawmakers have just voted to force him pennies to carry out audits before they begin fracking project. they also expand rules pertaining to oil and coal exploration. environmentalists say this could prevent risky shale projects, and that is according to a french spokeswoman for the group. members say it goes against the trend in europe of minimizing regulatory burdens on businesses, and it's the latest blow to the shale gas sector in europe. even countries like poland and norway which hoped to have

resolution similar to the u.s., suffered set backs. reserves have been slashed dramatically. it's the combination of public anger and government opposition that has set the industry apart from what we have seen here in the united states. more on why fracking has not caught on in europe. >> energy companies have been digging deep across europe for the ever elusive holy grail supplied, a source that is independent, reliable, and she. -- she -- cheap. western firms came up with not very much. demonstrators shatter the quiet of the english countryside in

opposition to an exploratory drill of the u.k. company. fracking has become a fashionable cause. >> land we stand on is liable to be polluted in order to make money for these energy companies. >> the u.k. government is in favor. fracking could increase self- sufficiency, create dozens of jobs, and boost tax revenues. >> we need secure supplies so our businesses can thrive and consumers can benefit from lower prices. >> the conflict of views that risks undermining investment potential. in romania the church has weighed in against fracking. in france environmentalists

remain watchful. >> this is a serious drill that can go down to 3000 meters and drill horizontally. everything is in place for it to happen. >> and this, a symbol of why the new tech knowledge he is so tempting for european governments. 1200 kilometers of pipeline that stretches like and on the little cord -- umbilical cord across the country. fracking and europe is complicated. as long as they continue exploration, these protesters will remain in place, and that is ready much reflected across the continent. >> while the opposition to fracking and europe has taken the form of public protest to

action, many individuals are feeling the effect closer to home. jack barton has the story. >> i reinforced easement helps hold up the house and the far north of the netherlands. it has been shaken by hundreds of earthquakes the government now admits is caused by conventional gas extraction. >> you can see one of the cracks on the wall. there are hundreds. >> no surprise he is alarmed the north is considered for trials of hydraulic fracturing for shale gas better known as fracking. >> their goal is making profits, making money, and not to take care of the earth, to take care of the safety of the people. >> he's not the only one in the

region that is worried. about 10,000 houses have been affected here in the north of the country. a quarter of them have been repaired, and many of them are considered too dangerous to live in and are abandoned. fracking won't happen anytime soon. the dutch government just put a freeze on trials for a year and a half. earthquakes aren't the only issue. >> a main concern is pollution. we see drinking water companies have been involved in the debates. >> a concern shared by other european countries like france and germany. officials also worry the practice would prove a setback for reduction goals, and energy experts say a european fracking

revolution is unlikely and not because of carbon emissions. >> in europe it is only seven percent in the world. this is less than countries like mexico. >> and poland the cost has been much higher than expected. as the eu seeks to break its dependency on russian gas, fracking is expected elsewhere. he now feels much safer standing outside his house, still shaken by regular earthquakes. >> do matter what happens in europe for my countries will be looking to the u.s. for examples of what to do and what not to

do. companies here are required to list exactly which chemicals they are pumping into the ground, but the industry has complained by doing so it is giving up trade secrets. we spoke exclusively to a top regulator, and she asked why it should not be a concern. >> it protects proprietary information in the sense that we don't require the companies to put their exact or portion now it he of each chemical they use. there are some trade secrets, and each company has different experiences with which fluids work the best for them, but that being said, i am comfortable that based on the testing we

have done that these combinations of materials handled the way they have been handled are being injected safely. >> our complaints going on? complaints from homeowners, any complaint about water, air, or an altercation with the company. >> the number of complaints typically center around drilling activity, potentially causing water well contamination. the number of complaints, i think they are down generally. one thing we found going through this process is water well construction standard are lacking.

there are no standards, so in a number of areas where we thought oil and gas drilling may be the cause of migration, it either wasn't the cause because you had faulty water well construction, because there is methane found in the ground, so the methane travels and can enter a water well if it is faulty, if it's not construct did well. we found instances where oil and gas activity was not the cause, and we found instances where oil and gas drilling activity was the cause. >> let me move to something that is actually happening in the attorney general's office, not in your department, but it impacts the industry, and that

is polluting. this is a subsidiary of exxon mobil, and it was an employee who found the initial violation of leaking wastewater back in 2010. you are aware this is going through the courts, and i want to know what is the role of the department of environmental protection now. will you follow up if there are findings in this case? are you already following up? >> we have our own proceeding. we investigated the case. we referred it for criminal investigation. we did our own investigation, and we do have what i would consider a resolution we could

move forward with, but with respect to the criminal case we are allowing that to play out. it could be better. >> what do you think would make it better? >> there are unintended consequences. i have noticed there are some industries. i use conventional oil well operators. there are requirements, notification requirements that really don't apply at all to the conventional well operator who has five oil wells drilled in 1910 and produce a gallon of crude oil a week, yet meeting that regulatory requirement has

a real cost to these guys. their margins are slim already. while the regulatory framework is strong, it was primarily focused on unconventional operators, but we didn't always make that distinction, so other folks got caught up in this framework. >> there are other jurisdictions considering some sort of resolution. what would your take away before them? fax i would say, put together a commission of folks from all walks of life, from all sides of the issue, sit down, meet the way this group did, have meaningful dialogue that centers around facts and science. there was a lot of hype floating around this industry. we all had to deal with it. some of it was not grounded in

reality. others was right on target. i look at the work the commission did and said, these folks got it right. i don't think anybody should be left with the impression that we think it is being done perfectly. but we are certainly going to strive to get there. >> thanks for your time. >> you are very welcome. >> shortly after he was nominated to be part of the department of environmental protection. this requires confirmation by the state senate. we are taking a quick break, but next we will check on the u.s. real estate market, plus do it or risk riding the whole world down. the international monetary fund says global recovery could be

derailed if the u.s. government fails to end its shutdown. >> the u.s. government is cutting hundreds of millions of dollars in aid to egypt. an upsurge in violence on the streets. an impending trial of morsi, and the u.s. will withhold military aid and stop direct cash assistance. barack obama has nominated janet yellen to be the chairman of the federal reserve. she will become the first woman to hold that pose. they are expected to confirm her. she currently holds the number two spot and will replace in bernanke after eight years. she said the u.s. economic

recovery is not yet complete. in eastern china the verdict is in for a group accused of selling guttural oil. it is made from kitchen waste taken from gutters around restaurants. it is not safe for consumption. the group is accused of selling $10 million worth of it. >> welcome back. i am philip yan at the white house. >> taking a look at some of our other top headlines, applications for u.s. home loans rose last week as refinances outpaced purchases. the mortgage bank says activity rose one point three percent. german industrial production rose in august tom another sign the economic recovery is on track.

production of big-ticket items rose nearly two percent, and samsung have launched a curved screen. it is packed with features meant to compete with rival phones from htc and apple. over to you at the white house with the latest on the imf. >> inc. you. the imf is warning that failure to raise the debt ceiling would imperil the global economy. these comments come as they are meeting in washington for their annual meeting. they set the federal reserve's plan to taper the program. it is still unclear as to when or how much the fed will begin to taper it 85 elliot dollar a month stimulus program. joining us is tracy. she is that the imf and world bank meetings in washington with more.

>> that's absolutely right. the imf it warned it is concerned about the usd faulting on debt. they said if the u.s. does default it could have significant repercussions. that's not the only focus of this report that came out today. the imf did say when the federal reserve decides to start tapering its stimulus program, they could potentially see a spark in global interest rates. i interviewed the chief financial counselor. he was also the former deputy governor of the bank of spain, the central spanish bank, and he spoke about the challenges of monetary tightening here in the u.s.. >> the first challenges for u.s. of doherty's, and that's to keep the tapering process consistent with normal work -- normal

markets and avoid volatility of interest rates, so that would be the main challenge for u.s. authorities. >> you talked about the importance for europe to set up and implement a banking union as soon as possible. do you think banks in europe are well capitalized today? >> i think there has been a lot of problem's in the last few years in that ranks in europe are more capitalized than they used to be, but now we have the opportunity to see if there are any banks that need further action regarding capital. this is the balance sheet assessment the european authorities are going to conduct in the near future. >> the ecb ice president made some comments, and he said the capital ratios in europe are

much stronger than the u.s.. the you agree with those comments? >> i think u.s. banks capital ratios are good. the large bank capital ratios certainly are good, and this owes very much to the actions taken by the u.s. of doherty's through stress tests to make sure the banks have enough capital. this has allowed more credit for economies. >> do you think weaker banks should have more capital or they should just the dissolved? >> at defense. if you have no viable institutions there is nothing you gain. you need to resolve this institution. >> how wearing is the political

stalemate in washington for the imf? >> i think it's not good news for the united states or the world, and what we hope is fighting ends and the united dates can get its act together in dealing with the fiscal situation which is a serious one , and that it can put in place a fiscal strategy, which the united states needs. >> if the u.s. fails to reach its debt ceiling limit and default on its debt, what sort of ramifications do you think this will have on global markets? >> if there is a default on u.s. debt, this is going to be a big negative for confidence in financial markets.

it may have repercussions, and that's something that needs to be avoided, because otherwise it's going to be a serious disruption to the global economy. >> the worries of the u.s. economy extent beyond the current government shutdown as well as the looming debt ceiling deadline coming up on october 7 ian. the imf is going to monitor the federal reserve begins the tapering of its economic stimulus program. the imf leaves that currently is the biggest challenge to financial stability. >> thank you for joining us live. i am sure there is a lot of behind-the-scenes discussion. coming up, much more to come, including market reaction from asia.

>> global efforts to reduce child labor have met with some excess -- success. the number has fallen by a third, but much will remains, especially him latin america. stephen reports from the city of maseo. >> dr. gomez is taking us to see something the government wants to stop. >> we are going to a flea market because possibly we are going to find evidence of child labor. >> this seaside state is notorious for child labor. average wages here are exceptionally low. it's easy to find people to work

for very little, and children work for nothing. he goes ahead to see if he can find any underaged laborers, and in minutes he does. when he find someone he suspects of working illegally, he takes a note of their details. the aunt of this young girl saw no problem with the fact her niece was working. >> if she is not working, she will just he and the streets. >> the fact that child labor is still rebel and here does highlight one of the contradictions of refill. this is a country with a strong economy but a society that is still struggling to give up some of its habits of centuries past. to see what effect child labor is having on this country we went to the school on the outskirts. 1002 hundred children are registered to study here, and every day around a third failed

to show up. so few children attend every day that part of the school which once had last rooms now lies abandoned. the headmistress says a solution needs to be found for the sake of the country, but what about the parents who insist work is good for children? >> we have noticed for many years. children stop coming to school so they can work with their parents in the streets, selling ice cream and kebabs. here it is considered wrong. >> how do you change attitudes in this unequal country. result has lifted more than 40 million people out of poverty -- brazil has lifted 40 million people out of poverty, but sometimes it seems like the process has stalled. here is a reminder that for millions of children homework

still means this. the region is famous for shellfish and family business usually involving the entire family. the brazilian government has set up a scheme where families are given cash of their children attend school. the problem is school hours or so brief plenty of children still work longer than they study. back in the city, we meet a young woman who feels her future was almost stolen from her. she is 33 now and studying to be a nurse. at the age of 10, she and her sister were destitute, so she was given to another family to work unpaid as a made. -- maid. >> i started working for this woman at 10 years old. i started doing the washing up,

cleaning the bathroom. i never had a chance to play. the normal life of a child was something i never had. >> the truth is no one knows how many. when we visited, we came across several people who were happy to admit they had kept child laborers in their houses. >> we brought up a child. she was not like a maid. she worked, but a child does not know how to run a house. she was very helpful. >> the problem is some people here feel what is called child labor can be seen as a social service, but a woman who experienced it from the other side sees things very differently. >> you are stealing the childhood of the child. the time she is doing things for

you you are stealing from her. >> the issue of child labor is just one of the many challenges brazil faces as it launches itself on the world stage, another reminder this developing country is still struggling to rid itself of its past. >> coming up, the latest on asia's markets, plus full speed ahead for four -- for ford motors in china. find out whether it is pinning its hopes on the chinese market. stay with us.

>> welcome back. let's check how the asian markets are doing as investors adjust to the news of janet yellen's nomination as the next fed chief. serena has details. >> a major stock index is trading lower than in the previous session. markets in korea have reopened after a public holiday. shares are higher. ozzie stoxx underperformed as investors await a crucial job report. fears over a possible default have dampened news despite news of janet yellen us the next fed chair. under yellen the u.s. is likely to stick to its policies for as long as it takes to lower unemployment.

the automaker saw a 61% jump in sales compared to the year before. toyota is still having a tough time. general motors and volkswagen still dominate the chinese markets. another u.s. firm has warned that china sales recovery could take a while longer. restaurant sales have plunged over a food safety scare linked to last year's outbreak of bird flu. the ceo says yum will launch an aggressive campaign to restore consumer trust in the brand. that's the latest. act to you. >> thanks so much. switching to latin america, and cuba is trying to reinvigorate through a series of economic reforms.

they are trying to turn the area into a tourism and entertainment complex. >> for the first time in half a century havana bay is getting a facelift. they are making way for a new pedestrian walkway. they are also putting the finishing touches on what would be the largest bar in cuba, complete with its own microbrewery. this bar and restaurant complex is housed in a former tobacco warehouse on a disused key sticking out into havana bay. next door recently converted houses home to the arts and crafts market. it is all part of a waterfront regeneration or object.

>> it's all going to be commercial. it will be a tourist port like others around the world such as barcelona or new york. >> havana bay is a natural sheltered harbor which for centuries has served as the main port, but the channel which connected to the sea is too shallow for today's large cargo vessels, so the existing facilities will soon be replaced i is $600 million deep water port nearing completion along the coast. once the new port facility is operational, the plan is to gradually start moving all the ordered -- all the old facilities and industrial complexes out of havana bay. cuban authorities are well aware urban waterfront can be turned

into prime real estate. the plans may be in place, but where the funding will come from is far from clear. >> a car that runs on air. it sounds like science fiction, but it could be a reality. they have developed a petrol engine that uses compressed air, creating the first-ever hybrid air car. kate parkinson is the first journalist to take this car for a test drive. >> it has been three years in development, and they are finally ready to show the hybrid air vehicle to the world. with promises it will cut fuel bills nearly in half, hitting more than one hundred 88 kilometers or 118 miles for a single gallon of petrol, which is double the average gas mileage for hybrids.

the technology could shake up the entire auto industry. >> you cannot say the future will be based only on one technology. the usage of the customer an expectation of the market will be different. i am not going to say it is a revolutionary technology. it can be a game changer, and it can fix the future. >> there was only one thing to do, try it out for myself. the first thing you notice when you are driving the hybrid air is just how quiet it is when it is running on air mode. it's also really easy to figure out what's going on. that change in noise, that's

because i have just switched from using the engine. i had run out of air, but it happens seamlessly. that shows me how much air i have got. when i ease off the accelerator, it starts replenishing the air supply, and i accelerate again. then we are back to using air. the technology has spawned around 80 patrons so far, new technology packed into cars they plan to have rolling off reduction lines as early as 2016. although it will still be a few years before we know if they can fully realize the promise of hybrid air technology, if and when hybrid air vehicles do become a reality, it can breathe new life into the struggling french car company. >> not quite the hover aircraft

of the future i was hoping we would have i now. japan's television manufacturing industry seems to be moving towards extinction, and that is after panasonic announced he will be closing the last tv production factory by march, 2014. in its heyday, japan's economic surge strongly relied on the tv makers. they produced cutting-edge tvs at affordable prices, and living rooms all over the world featured their products, but no longer. japan's db maker slowly slipped into irrelevance, and eventually more nimble competitors overtook their japanese counterparts. the mighty have fallen. that's it for tonight. thanks for watching.