the ecb has raised interest rates. they have raised their benchmark level rate by 25 basis points, 1.5%, signaling that battling inflation remains a top priority. the ecb also weighed in on the debate raging over rings agencies, that wl continue to accept portuguese that as collateral despite the decision by moody's earlier this week to lower their debt rating to junk status. >> praise for portugal from jean-claude trichet. it will privatize more state assets than stipulated by the e.u. and imf and will raise taxes. those are reasons why the european central bank is bending its own rules and will continue to lend to portugal despite its junk debt rating. >> whave decided t spe the minimum collateral requirements for the purpose of assistance and credit operations. in the case of marketable debt instruments by the portuguese government, this extension will be maintained until further notice. >> the eurozone debt crisis cannot stop ecb from raising its key interest rates. benchmark rates go up to 1.5%. but during the fin

>>reporter: but some are convinced the ecb, which does have a $32m rainy day fund... will never let a county go bust... >>i don't think that will happen... but ithere is it would be for the ecb board to consider as andwhen it happened. >>there's something like 52 football clubs that have gone into administration in the last 10 years. so far there hasn't been a cricket club and i hope that continues. >>reporter: although given current circumstances... that statement about the future of the game may be an optimistic... rather than bold declaration. >>and that's it for this week's world business. thanks for watching. we'll see you again at the same time next week.

it's a standoff between the leaders and what the ecb is going to be doing. he is going to be leaving. a number of question marks. also this question with portugal on the junk status. they put them to two levels below junk, into the junk status. it raises a huge question mark whether they can reduce the budget deficit from 9% of gdp down to 3% by 2013, and whether they, too, like greece, would need a second bailout. >> many portuguese say our finances are nothing like greece's finances. the kind of signal moody's is sending is not that. it's quite the opposite. what about the fact that the credit rating agencies are trying to get ahead of the curve and perhaps losing credence doing that as well. >> there's a big question mark. you can point back to 2008. they were behind the curve in regards to lehman brothers. these are numbers from the end of 2010. we saw the greek debt load at 142%. we know that will be 157% this year. italy passed the budget. it's still well above 100%. ireland and portugal will go above 100% of gdp. that's what the credit rating agencies

it's interesting that the incoming ecb president is italian. does he want his first action to be lar scale purchase of italian bonds. it's going to be a pretty tough thing to do. but in 2008 the central bank came into the rescue. this time around they could do so too but i think to a lesser degree and against the backdrop of thiloss of confidence in the politician. >> the ecb also has the ability to cause things to break apart because if the ecb stops handling greek bonds and stops accepting them as collateral in its operations as it is threatening it might do then that would have pretty devastating consequences. and again that could be the benning of the end game. >> go ahead. >> it could, but it would need to be i think in the end have to decide whether it wants to be a tough central bankith nothi to be a central bank of because it precipitates the breakup what is it going to do. >> are we missin anything here in this conversation that could have a dramatic effectn the conserations we are raising? >> you know, upside, downside. >> well, there

the ceiling of 2 that is key for the ecb. it wants to show it is tackling inflation. it will be looking at the core eurozone economies and the data there. >> let's take a quick look at the markets, starting in the asian region. i have to say chinese banks are certainly leading the charge in asia after the announcement yesterday that beijing has once again raise interest rates. it's the third time this year. just like we were talking about with the eurozone -- tackling inflation. european markets will be keenly watching not only the interest rate decision, but the very important speech from jean- claude trichet post announcement. we will be talking about this live at about 12:45. >> thank you. iran's president, ahmadinejad, is engaged in a public fight with the supreme leader. the supreme leader has overruled the president's decision to fire a cabinet minister. james reynolds reports the ayatollah has gone after ahmadinejad. >> the supreme leader may rule iran, but he now faces a fight with the man he approved as president, ah

>> t ecb also lost. the cliche the head of european central bank insisted they could not have a default. and the reason he was insist on that was that last spring, spring of 2010, the ecb ended up doing much of the blaling out-- bailing out and was left with a balance sheet filled with really dubious paper from greece and other places. and he was afraid that in the bailout he would be left holding the bag. well i looks like there going to try to find a way to make him hole. germany will pay. so now he backed off from that. both sides, both germany gave in, germany got their partial default which they've badly wanted. they thought the banks, that had lent to greece shod suffer some pain t of course to some extent they already have. >> rose: but that was their condition. >> that was the german demand for quite some time and he resisted it intensely. >> -- he wanted to tax the banks to share the pain and that didn't pass. >> rose: and so why, who objected to that? >> there was a concerted effort by the ecb

the ecb putting out. euro group statement. people don't know where to term. >> exactly reuters reporting euro group in july might come up with a partial debt restructuring in greece but today that was rebuffed. let's look at italy now. when the euro project was first imagined italy was considered the bad apple, the one who could upset the cart, the sick one in europe. now it's just beginning to enter into the big eurozone debt crisis as a potential loser. let's look at the italian economy. analysts can't pinpoint a particular reason for that. the worry is that it's down tos. the yield on ten-year bonds is 5.7%. while it can cope with portugal and ireland t simply can't cope with spain or italy. >> emily ruben, thanks. >>> just ahead, new reports former prime minister gordon brown was a victim of phone hacking himself and a look at how the scandal is affecting rupert murdoch's ability to take control of bskyb. >>> from cnn hong kong in london this is "world business today." welcome back. >> the phone hacking scandal that put "n

let's start off with a few stories from the ecb, head of the european central bank has indicated thate's against the eurozo eurozone's extra bailout plan for greece which entail psi or private sector involvement. on thursday, the central bank's president jean-claude trichet told reporters there's no change in the bank's view and strongly against any measures that would be considered a default. >> our position is clear in the case of portugal, we are waiving the threshold. in the case of greece, where we have psi, where we have these debate on the nature of psi we say no to selective default, full stop. >> members are considering a plan to ask private sector investors about a voluntary rollover of greek debts, this would prevent funds from flowing out of the country. this comes at a time when a leading credit rating agency has said the new bailout plan would still likely be considered as a default. >>> separately the ecb has raised its key interest rate by a quarter of a percentage point to dispel concerns about the inflation in the eurozone. this move brings the key rate to 1.5%. the

become the fourth euro nation if it were to do so to request one from the imf, the eu and also the ecb. this was the scene just yesterday as lawmakers approved a four year, $57 billion austerity plan. the lower house is expected to adopt some of these measures later on today. and newspapers have been having quite a field day with this situation. let me show you the front page of one of the newspapers owned by the prime minister berlusconi. they're on the bow of the titanic as that fated ship sinks. this is in reference to a comment made yesterday saying the situation of the country finds itself in at the moment is akin to the sinking of the titanic and not everyone the first class passengers are safe. >> you can always count on him for a very colorful sound bite. and another metaphor, the iceberg is all that debt under the surface. meanwhile time is running out to raise the u.s. debt ceiling. lawmakers are still at odds. another warning about a possible downgrade of u.s. debt. this time from standard and poors, has raised the stakes even higher with no compromise on either side, the u.

rebalancing,ffort from a the ecb or fiscal policy kwn as the get funds to the polal problems have been the day. >> the problems in euroland have the u.s. in but we have a really here for some on the debt s. coupled worsening of crisis in the weeks which shock financial when you have both at same te. the difference is, that it is a self-inducedess. >> the president tried to in his press >> absolutely. however say fundamental crisis that debt level countries are insolvent and the single basically the clue as to out of it. >> they have. np clarity on how they wil solve thk it is integrity of will start question. >> gillian? >> i was going to say a ago i wrote a colum that made me very unpopular among my colleagues plan to have a this year zanny says makings of a the next not just t towards a nasty shock zone. important stress test is the governments banks for their government bonds, stressed them the bank trading book, buy and sell. plan to hold to maturity has not actually haircuts. factored in the could lose the type of potential losses have been only in the greece or less, around are l

and portuguese banks they're out of the game already, nobody is willing to lend them money and the ecb only game in town. the ecb cannot take the place of the entire european wholesale bank market. >> the questions about solvency come to a head when you've got bond deals for countries like spain, one of europe's largest economies approaching 6.33% on the bond markets in terms of their yields, if economists are agreed that 7% is the cutoff point beyond which these countries can't finance themselves on the open market, what are the konconsequences? they could be huge. >> that is exactly what everyone's watching out for. yesterday we had italian ten-year government bonds trading over a 6% yield, that's a crucial level. because at that level it becomes very expensive for italy to fund its 1.6 trillion euro debt pile. spain as well as you said up to 6.3% yesterday, again becoming expensive to service to pay interest on its debt. those two markets have actually rallied a little bit today but again, watch out. i get a sense that hedge funds are just starting to test some of these lows and see

this country from becoming the fourth eurozone nature to go cap in hand to the imf, the eu and the ecb. pauline. >>> european stock market investors are watching italy's debt crisis very closely. here is where they stand at the moment. let's take a look at the moment. the london ftse making some gains, so is the xetra dax t. zurich smi is pretty much flat at the moment on this wednesday morning. nina? >>> pauline, of course, the effects of italy's debt crisis are being next right across the board. let's have a look at where the ftse is. the milanese has lost about 4,000 points in the last six months alone as fears of contagion after the bailout is awarded have been hitting the shores in italy. it is the southern and peripheral areas of the eurozone that are most at risk. we also have the euro trading at 1.40 versus the dollar. up a little bit. boy, is that a currency that has suffered over the last few days because a lot of people have been saying that if italy is the next country that requires a bailout, it could be too big to fail. >>> nina, we're also seeing investors flee to the sa

cards ecb president bush jean- claude trichet was among those you aligned with the then finance minister to welcome the new era -- the ec president jean-claude trichet was among those who aligned with the then finance minister to welcome the new era. less than one decade later, it is in crisis. >> this is a national debt crisis. this is what remains. we are seeing this especially but not only in the southern countries. there is uncertainty in the banking system, and we are heading to serious trouble if we do not help greece, because we will have to bail out the banks. no one is speaking about the problem right in front of us. >> agreed that is a major challenge for the euro zone, and it is -- agree to that is just a major challenge. -- greek debt is a major challenge. some think it could even become a curse. >> the german economy grew last year at its fastest pace since reunification, with exports leading the charge. higher consumer spending has now also become a major driving force behind the recovery. >> in this germantown, business is picking up again at the restaurant. -- in this ger

. >> the ideas did not sit well with the ecb and labour quit both at the end of april.hisxpertise and banking combined with his leadership eexpernce will enhance the stability of the bank and improve its outlook. >> women's world cup. japan made solid start in germananyarlier this week. the asian team has dealt a severe blow to mexico's hopes of making it to the next phase. >> fans of the japanese had reason to cheer early on. the captain hit in a free kick for the lead. two minutes later, mexico's 16- year-old goalkeeperer santiago s out-class. ono slammed across. there was more. sawa continued. 3-nil japan. in the second half, mayber -- mayer showed a sense of flair. japan kept up the pressure, and sawa got her hat trick. japan is through to the quarterfinals. >> the second game in group b ended with englandd beating new zealand. it was new zealand that got on the scorereboarfirst with a super effort. it took an hour until england even up the score. 10 minutes before time, just the court sealed the deal for england. new zealand has no chance of reaching the second rou

he would allow the facility to buy sovereign bonds but only with consent of the ecb. it could give states precautionary credit lines as long as they take action to reform their economies. the new powers are aimed at preventing the debt crisis from spreading to larger economies and to help larger candidates before it is too late. >> german stocks advanced for the fourth day running. the dax went too solid gains for the week as a whole. the eurozone leaders agreed on the new debt deal. >> there's lots of praise for the bailout plan for greece. this is the optimum that could be reached under the stock of stances -- under the circumstances. the marshall plan is very well accepted here. people say it is necessary to vote greece along economically. financial shares profited and the best performance this week in the dax. the dax gained about one and a half percent. there is uncertainty that remains. at the end of the week, silver is remaining at a high-level. >> we will look at the market numbers. germany's benchmark finish the day higher. the euro stocks 50 finishing higher

ecb is continuing to back them up and most are playing ball with them. one thing to our advantage, listen, who else are you going to buy? what other country's debt are you going to buy and another thing barney frank-- >> he says a law in the book effectively are now part of the financial law, i assume, that you don't have to do that. you can go ahead and hold those securities. not that it changes your posture going forward as senator lee told me to buy in the future. it could change the dynamics, right? >> it could change the dynamics, i don't think there will be mass selling. >> neil: we hope you're right, young man. charles payne in new york, we've got a lot more coming up, another hour. the likes of congressman joe walsh, dan quayle joining us and don imus, what doesn't belong and why? and also we'll be back here tomorrow. don't forget. 4 p.m. eastern time, the special edition of your world, i want to stress, democrats, republicans, liberals, conservatives we're not all red, we're not blue, we're green, all the time, we are on it.

will it be the ecb that doesn't want a private sector haircut, so to speak, loss on bonds, private investors are worried about contagion effect or will the german view prevail which says, yes, the private sector must take their fair share of the losses in order for us to move forward on this? the german, the pay masters throughout europe, are very concerned that once again the buck will stop with them and they will end up paying disproportionately large amounts to bail out not only greece, portugal, ireland and italy. we haven't got a concrete view yet, main stream view, which will prevail. it's a tense time building up to that thursday meeting. >> steve sedgwick in london, thanks. >>> >>> efforts in washington, d.c. to make a deal on the deficit. both houses of congress now rolling out separate compromise plans in a bid to stave off a u.s. default. senate majority leader harry reid is joining with his republican counterpart, minority leader mitch mcconnell, to craft a solution trying to appeal to both parties. according to reports, though, the proposal would allow the debt ceiling to be rai

the ecb, the european central bank, thinks that is stretching it to try to get that agreement. but angela merkel has been determined that they should face up to the music, just like ordinary people paying their taxes. those are the issues. a 500 billion ros bailout, not needed until the autumn anyway. final agreement on that would be later this month. probably the fourth week of july. >> what is the feeling in brussels? when did this economic crisis become a political crisis? >> for some, it already has become that, but largely, it is economic now. the trigger point toward becoming a big political problem will be when -- if one or another country falls out of the eurozone or defaults. there was talk today about the default of greece. with that ever be acceptable to those having to bail out the country? if the default or the leaving of the eurozone, a country regaining its currency, which is quite possible in the case of greece. that would turn this into a political crisis. >> could we see3 eu action against u.s. ratings agencies, which have been described as a cartel by the eur

interest rate decisions, european central bank, it's widely expected that the ecb president will raise interest rates for the second time in three months. with euro inflation expected to rise 25 basis points. 0.25%. that would take the lending to 1.5%. >> interest rates in asia as well. a mixed day after the markets, after china announced late yesterday, that hong kong and shanghai, moving in different directions. one thing analysts agree on this is likely to be the final interest rate rise in the current cycle in china. it's the third one this year. most say it's the last. inflation is expected to peak. we're seeing slower economic activity as a result of the rates to tackle inflation. in the other markets in japan, the nikkei ending a seven-day rally. it edged down by a couple of points. down to its four-month high. in australia, june's unemployment report beat expectations. the economy adding 23,500 jobs in june. the currency's stronger. the broader market flat. and in seoul, the cosbie was up and as samsung slid by almost 2%. it posted a 26% slump in second-quarter profits. the sal

it's one of the reasons why countries like greece, for instance, thood go to the imf and ecb for funding and needed bailouts. now, the other things that the markets have to look at is what's called the spread. this is the difference between the least risky euro-zone debt, which is obviously germany, a country which is the euro-zone's largest economy, plenty of cash in the bank. it's very unlikely this country would ever default on its debt and italy, which is next in the fire. as you can see, the spread is essentially the difference between these two. and as you can see, that stands at around 2.7%. that is why analysts and investors say they're worried about italy because the spread is widening and it means that investors will ask for more interest to hold ten-year italian bonds because they're perceived as being more risky. manisha. >>> well, let's get some market reaction here in asia. the news out of europe really did boost investor confidence over here. you can see the numbers here. hang seng climbinging over 2%. it's moving up quite strongly. heavy weights like hsbc, up more than th

we had someone from the ecb telling us the same thing that the world is watching and that's what they expecting. chuck, at this point there are a lot of nonbelievers on wall street when it comes to all of this rhetoric getting tossed around. they are betting and putting their money on the idea that there will be a resolution. >> well, when it's a politically-created issue, you have to figure that washington will figure it out. becky quick, thank you very much. >>> up next, a tiny break from the debt debate. some of the most competitive races in 2012. how do they do it. how dot democrats hold them off? that's next on "the daily rundown." ♪ you know how i feel ♪ sun in the sky ♪ you know how i feel ♪ breeze drifting on by ♪ you know how i feel [ female announcer ] weight watchers, rated #1 best plan for weight loss by u.s. news and world report. join right now and you can join for a dollar. weight watchers. because it works. and started earning loads of points. you got a weather balloon with points? yes i did. [ man ] points i could use for just about anything. ♪ ♪ there it is. [ man ]

we may be seeing lingering optimism from thursday when the ecb said it would still use portuguese debt as local collateral despite its rate having been cut. back to you. >> let me ask you about the newfangled, high-tech way for people to shop for groceries in asia in absenta. this seems so easy and high tech, it's confounding. >> yeah, it shouldn't come as a surprise it's coming from south korea. the perfect testing ground to launch a virtual supermarket. it's virtual, not a physical store. there are no actual goods on the shelves. this entire thing is called home plus, and it shows consumers pictures of the groceries. and then consumers can use a mobile phone app to take pictures of the products they want. they can check out, purchase them on their mobile phones. later they'll receive the groceries at their doorstep. so far 10,000 customers in seoul are using the service. pretty cool. >> it is really cool. all right. so quick, instant dpratification. all right -- gratification. all right. and you heard about this $200,000 picasso stolen from a gallery in san francisco. we're happy to

on wednesday that was effectively in the price we may see lingering optimism from thursday when the ecb said it would still use portuguese debt as loan collateral, despite the rating being cut. so the european authorities, if you like, sticking two fingers to the idea that portugal is producing junk bonds at the moment. they will accept these junk bonds, andrew. >>> a positive day here in the markets in asia to round off the week. it looks like the risk game is back on. it began last week. there has been quite a lot of money starting to come back into the emerging market after they fell out of favor for much of the year. if you look at the first six months or so of this year, the world index, according to morgan stanley capital index, shows it's been out-performing the emerging markets by a rate of 3-1. that seems to be turning around. analysts are saying that because the debt crisis in greece is settling and there's light another the end of the tunnel with the china inflation story that risk appetites are improving and we have seen it certainly, a good week and a good last week as well

act like the feds in the united states because the lack of a strong federal government requires the ecb to serve as the main unifying factor in the eurozone. this is achieved through a euro policy, stable prices and controlled monetary stipulation. in fact through the stability packet for the euro, the eurozone is governed by strict fiscal rules as toable levels of deficit, three% of gdp and toerable levels of debt, 60% of gdp. -- toerable. the political digs making in the eurozone, and u.s. president and his administration together with the u.s. cone guess. it is 17 different governments that operate within 1 different parliamentary systems and independent from 17 different national parcelments and operate with 17 different political and electoral cycles. the eurozone has strong governments that enjoy a fresh mandate while minority governments, -- governments, governments that prepare for elections in a few weeks. it is always very difficult for the governments to ask for approval by the national parcelments in order to provide assistance to other european countries like greece, portug

whether the ecb, the european central bank or others go along and subscribe to s&p's interpretation oronomy. it's not growing terribly fast. those are the headwinds. on the good side, companies doing well. on the bad side, greece, the debt and a slow u.s. economy. >> our economy is slow. we had a segment on that was controversial on the set. did you see the piece in the sunday times about corporate salaries and bonuses? >> i did not, but i can only imagine is what it said was corporate salaries and bonuses are going up much, much faster than incomes generally and much faster -- >> that was the bottom line. >> i spoke not long ago to a high ranking government official and a former administration. he said the achilles heel of american capitalism is executive pay. >> tyler, it's donny. how are you, man? are we seeing a divergfficul di in -- it's not the mentality, things are good and let's go, we're having this continued diversions in what's happening in the stock market and what's happening on main street? >> the corporate executives -- i think you're right. the corporate executives, int

important and very attractive understanding with our partners, with eurozone, european commission, ecb, with the imf, about the need and the priority to make the greek public sustainable. and now, we have new instruments, new measures, new guarantees for the sustainability of greek public debt. this is the condition for the successful implementation of the austerity problem. on the other hand, the privatization program is the program of structural changes. and also, a very important fund, so-called fund, for this new mechanism. and also for the necessary breakthrough. because without new elements, new instruments, it's impossible to make, organize this breakthrough. >> let me ask my colleague, jacob kirkegaard, if he has a follow-up question, and then we'll open up to the floor. >> thank you, fred it and thank you, mr. minister for your candid remarks. following up on fred's question regarding the prospects for growth, you mentioned the marshall plan and perhaps as much as 20 billion available from the european commission structural funds and it european investment banks with very limi

>> ecb the flying squirrels, until we found out there was rocky and the flying squirrels. we went through several permutations. >> losses in the band? and it was always me and my brother, and our drummer was john, and he passed away unfortunately, from a congenital heart ailment, so we have had a friend of ours from the old days came back and started drumming for us. and people who sit in. >> have you ever written a song? >> yes. none of them are any good. or i would not be doing this. >> how did you meet your wife? >> i met her through her brother. he was a high-school classmate of mine. >> children, how many do you have? >> we have three. george, timothy, and a million -- amelia. >> what did they think about your presidential bid? >> they think it is all right. they have other things to focus on the dead. have to consider what will happen and the eventuality that it did not get it. you have to devote yourself to no distractions. >> how do you do this? how do you win the nomination? >> the strategy is we are treating the first debate and straw poll as an introduction. tha

do you think the ecb has been overstating the risks of an orderly default or restructuring of sovereign debt throughout the continent? they clearly feel like this would set the dominoes rolling. they also have a lot of their own assets in play and at risk here. so, i'm wondering if you think that because of that they have overstated the risks? secondly, briefly -- i can't resist. do you think the staff here are all clones of each other? >> dealing with your second question, of course not. of course not. i attended the town hall meeting, you should have seen the room. your room here is full, but the room yesterday was just amazing. and what was even more amazing was the diversity that was clearly obvious in the room. what i suggest is that diversity is multifaceted. it's not just about gender, color, religion, sexual preferences, but also about culture, also about academic background. i think that we need to draw on the resources and the intellect developed in many corners of the world, because that will make us better and richer. now, on your first one, i have very, very clear recollect