Global Slowdown; Deal for Greece
RICHARD QUEST, HOST: Get on with it. The OECD secretary-general tells me economic risks are everywhere. Into the furnace. ArcelorMittal's chief executive meets President Hollande and his company's accused of blackmail and threat. And debt insured. Better safe than sorry says the chief exec of Lloyd's of London. I'm Richard Quest. We have an hour together, and I mean business. Good evening. The momentum has gone and the global economy is weakening. So says the OECD in its latest economic outlook. Recovery has given away to relapse. Forecasts have been slashed and the OECD is now warning a major contraction cannot be ruled out, especially when you consider the fiscal cliff and Europe's debt problems. Join me at the CNN super screen. Hesitant and uneven. That's the definition of the recovery that the OECD is seeing as a whole. The 2013 number has been cut back. If you just take a look at it, this year is 1.4, next year will be 1.4, and growth doesn't pick up again until 2014, when it gets to 2.3 percent. But within this, the United States, look at the growth rate there. It's 2.2 this year, 2 next, and 2.8 the year after. Slow growth that will have limited effects on US unemployment. As for the eurozone, spin the globe. Recession this year, recession next year just about, and even in two years' time, just small growth. The unemployment projection has been raised. It's expected to hit -- you'd better be sitting comfortably here, because it's an uncomfortable number -- 11.9 percent. 11.9 percent. The eurozone is witnessing fragmentation pressures and could be -- pressure that means fragmentation could be in danger. The emerging market, there's a lot of numbers there, but really what I want you to focus on is just the nature of those numbers. Fours. Threes and fours. Eights. Fives and sevens. That really shows you the huge difference that there is between it all. Factor it all together and you see a world that is growing slowly and in some danger. Angel Gurria is the OECD's secretary-general. He told me that leaders need to take notice of the numbers and get their act together.</s>ANGEL GURRIA, SECRETARY-GENERAL, OECD: It's a wake-up call and saying, not only for the next two years, but for the next five and ten years, it is going to be sclerotic, it is going to be mediocre, it is going to be undesirable, so let's do something about it, OK? Let's get those measures, those structural measures in place so that we can improve the outlook so that we can have a better story and we have a better narrative, better positions going forward.</s>QUEST: They finally took the decisions on Greece, decisions that you knew they were always going to have to take, which is to cut the debt burden. The only question is what took them so long?</s>GURRIA: Well, this has not been for the last few months. We've been pushing for this for the last three years. Then eventually, it happened for the first time last year. That was not enough. And of course, now because of lower growth overall, you're having Greece struggle. But what is more important is you took an integral view. You're asking efforts from the Greeks, yes, but you're giving them a little bit more time in order to get their goals, and you're giving lower interest rates, longer periods to repay the public debt, and you have decided to go and buy back the private debt at a big discount.</s>QUEST: Right. It's time --</s>GURRIA: And you're also giving them --</s>QUEST: -- I'm just going to --</s>GURRIA: -- back the profits from the central bank.</s>QUEST: I'm just pausing you there because if they're dealing with Greece, it's time to deal with Spain.</s>GURRIA: No way. Absolutely nothing to do. These are two different things. Spain has done its homework. Spain has much -- half -- half the debt of Greece, OK? In terms of GDP. And Spain had five years of surpluses in their budgets before the crisis struck. So, what Spain needs is unequivocal message from the Europeans and the IMF to the market saying if Spain decides to request support, because they've done their homework, because they're performing, and because they are a viable economy, then they will be supported, and that request will be enough to detonate the ECB to go and buy their bonds in secondary market if need be. I'm betting that just the announcement that the bazooka is ready, that it's loaded and ready to fire if need be will make it unnecessary for the bazooka to be fired.</s>QUEST: How kind of you to talk about the bazooka, because I'm going to tell you there's a nuclear weapon waiting to explode in Washington: the fiscal cliff. If they don't deal with that and the longer-term deficit, Secretary-General, that -- never mind fiddling around with a short-term deal, a long-term deal on the deficit.</s>GURRIA: Absolutely. And the question is, if you can avoid going over the fiscal cliff, then why should you? The road maps are very clear. There's a very competent team there with Tim Geithner and Jack Lew and you have an experienced, competent team with a political -- with savvy, who are going to be facing the music there. And I think they should get it. Now, the other thing is I'm just looking at the politics being very cynical. I think no party is going to want to be responsible for having put the United States in a second recession.</s>QUEST: Final question: what would you say to those people in the United States that say, "Nah, go over the fiscal cliff, that'll teach everybody, only after we've gone over the fiscal cliff will we get real, long-term, structural deficit reform, take the cliff, jump"?</s>GURRIA: Well, I think that is absolutely nonsensical. I think that's cutting your nose to spite your face and nobody in their right mind should do that.</s>QUEST: Now, "nobody in their right minds," says Angel Gurria, would go over the fiscal cliff. After 12 hours of talks in Brussels, a deal has been done on Greece's debt bailout burden, which will help to finance Greece for the foreseeable future and bring the debt burden down. Jim Boulden is with me now.</s>JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Yes, Richard. Well, this deal takes Greece a step closer to billions of dollars of bailout cash. It also reduces Greek debt by more than $50 billion in some creative ways. Now, of course, these protracted negotiations were all about drawing a line under the Greek debt crisis. So, let's look at these lines. What's the top line? Well, lower in the interest rate on bilateral loans and extend the payback time for Greece. Also, allow Greece a bit more time to buy back some of its debt. The idea here is cutting Greek debt to help the economy. What were the red lines? Well, these talks went into the -- well into the night. Why? Well, sustainability. That was the IMF red line. Any deal had to show that Greece would eventually become sustainable. No more cuts? Well, of course, that's what the Greeks wanted, that's what the Greek government and, of course, the Greek people. Enough is enough with the austerity, we don't want any more. No debt write-offs. That, of course, was Germany, Germany's saying no official haircuts for now. Well, what's the bottom line? The bottom line is, $56 billion for Greece to pay its bills and inject cash into its banks starting in December. That loan goes, and then there'll be three more, a total four injections, three more in 2013. Safe for now? Well, that means the eurozone is safe for now, it looks like, until at least the German election next September. That's really what Germany wanted to make sure happened, Richard.</s>QUEST: Is the bottom line in a word, this is over and done with for Greece for the time being?</s>BOULDEN: For the time being, but I'll tell you, Barclay's put out a report and says, "With very few details released, we are unimpressed with the measures put forward so far." They want to see more about debt sustainability, what -- how that would be addressed. A lot of people say it isn't over over, but it does give them time. It's not just kicking the can down the road, I don't think, Richard. I think they've made some serious decisions. It doesn't mean we won't have to revisit it sometime in the future.</s>QUEST: Jim Boulden with the Greek debt crisis. Jim, we thank you. Sparks are flying in Paris. There's a row. It's a particularly nasty row between the French government and ArcelorMittal. It's at melting point, and we'll tell you why President Hollande is threatening nationalization in a moment.