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QUEST MEANS BUSINESS
Pols Go After Bonuses; BRIC Countries Look to Take Lead; Powerful Women Shape Online Giants
Aired September 18, 2009 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ADRIAN FINIGHAN, CNN INTERNATIONAL ANCHOR: Consigning the big bonus to history. Politicians talk tough on excessive pay deals.
Building with BRICs, B-R-I-C-S, India says that it's time emerging economies had more clout in the world.
And the in-crowd is online. Yahoo! and Facebook tell CNN that the future is looking up.
Hello, I'm Adrian Finighan, in for Richard Quest. This is QUEST MEANS BUSINESS.
Good evening. World leaders are marshalling an unprecedented attack on bonuses. They say they want to change pay culture forever so that it never again threatens the global economy.
The U.S. Federal Reserve is reportedly ready to reign in pay at 5,000 American banks. The Wall Street Journal says that the Fed is considering plans to oversee compensation policies and reject any that it thinks are too risky.
In Europe, all 27 leaders of the E.U. says they're united against what President Sarkozy calls the "scandal" of bonuses. Ahead of next week's G- 20 summit, they're calling for greater controls on bankers' pay. The German chancellor, Angela Merkel, and Sweden's prime minister, Fredrik Reinfeldt, both say they want decisive, coordinated action.
(BEGIN VIDEO CLIP)
ANGELA MERKEL, GERMAN CHANCELLOR (through translator): Additional results have to be reached so that Pittsburgh is a success. We have to reach something, an area of compensation. The issue of bonuses has not been discussed enough in London, equally important is to make sure that states cannot be blackmailed by big and interlinked financial institutions.
FREDRIK REINFELDT, SWEDISH PRIME MINISTER: We will discuss the return of the bonus culture in the financial sector that annoys a lot of people. We need to deliver on this. It's time to say enough is enough. And I hope that we tonight can say that the bonus bubble has burst.
(END VIDEO CLIP)
FINIGHAN: And while that's going on, while governments discuss ways to tighten the rules, it looks like the economic motor is finally beginning to run a little better, at least that's what a growing number of senior figures are saying.
(BEGIN VIDEO CLIP)
BEN BERNANKE, CHAIRMAN, FEDERAL RESERVE BOARD: From a technical perspective, the recession is very likely over.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We can be confident that the storms of the past two years are beginning to break.
TIMOTHY GEITHNER, TREASURY SECRETARY: I think the U.S. financial system today is in substantially stronger shape than it was three months ago, six months ago, nine months ago, and on the eve of the this recession.
WARREN BUFFETT, CEO, BERKSHIRE HATHAWAY: In our own businesses, we're not seeing any real bounce. We're not seeing any deterioration and we're in 70-odd businesses. So I see them across the board.
(END VIDEO CLIP)
FINIGHAN: Well, those optimistic noises are keeping the mood buoyant on the markets for the time being. But some are warning that any recovery will be fragile and that the economy will be vulnerable to a relapse.
Now Peter Morici is professor of international business at the University of Maryland, an old friend of the program. And he joins us now live from Washington.
Peter, good to see you again. So where do you stand in the debate about the state of the recovery, the health of the economy? Are we out of recession?
PETER MORICI, PROFESSOR OF INTERNATIONAL BUSINESS, UNIVERSITY OF MARYLAND: Well, Europe and the United States are likely out of recession, perhaps not Britain. But it will soon too because consumers are coming back. But they're coming back a slow pace.
At the same time, the West keeps importing more and more from China because of its undervalued currency, and in particular, the large U.S. trade deficit threatens to pull us back into recession once the stimulus spending in Washington is through.
FINIGHAN: Ah, now, the trade deficit, I'm guessing that you were going to tell me that that is one of the main threats that you see to recovery. What does the U.S. do about it? Is the Obama administration doing the right thing about the trade deficit? And what else is on the road ahead that we -- a hole that we may fall into?
MORICI: Well, actually, I don't think the Obama administration is on track to fix the trade deficit. It talks about boosting exports. But essentially boosting exports to Europe and Japan because we cannot penetrate China with its protectionist practices.
Frankly, until this administration is willing to join the Europeans together in taking on China and getting it to behave itself and not run such large trade surpluses to the detriment of everyone else, we won't make any progress there.
The other big threat, the banks. As you can see, the banks are back to their old tricks, writing engineered products, swaps and the like, to try and generate big bonuses and profits. And many of our regional banks are teetering at the edge because of the shenanigans on Wall Street and the overhang of too many commercial loans that are just now coming to foreclosure.
I sure hope the G-20 can reach some consensus and do something about those bankers in New York and London and elsewhere.
FINIGHAN: All right. What do you want to see coming out of the G-20 meeting, as you brought it up, in Pittsburgh next week, anything concrete?
MORICI: I would like to see them agree to regulate bank bonuses and compensation, to keep them from taking unsavory and unwanted risk, which is causing a calamity in our financial markets and essentially causing the threat of yet another breakdown.
FINIGHAN: So as far as the recession goes, we've had a lot of talk this week on the show about what shape the recovery is that we're seeing. I suppose you're saying with the bumps ahead in the road -- the potential bumps, you're predicting what, I would say, a W-shaped recession?
MORICI: If I have to -- if I have to pick a letter from the alphabet, it's a W. As the consumer spends, he imports more. As the stimulus money runs out in the United States and Europe, those imports, without adequate exports to China and India, will overcome the growth, and the economy will slip back.
There is also the danger of yet more regional banks failing, and businesses just not having the money they need to expand. So unless the Obama administration does more to straighten out the banks and more to fix the trade deficit, or has another big stimulus package, it will be a W.
FINIGHAN: All right. So supposing the Obama administration does those things and Europe and the U.S. work to rein in China, as you say, how long would it take to impact the U.S. trade deficit? We're talking massive numbers here.
MORICI: Well, it wouldn't eliminate it immediately all together, but it would begin to reduce it. And that's all we would need to get 3.5 or 4 percent growth in the United States for a very long period of time.
There is a lot of pent-up technology in the United States that could be put to very positive use if we had an outlet for it and we have a lot of excess capacity, as do the Europeans. But the Chinese simply won't import. They only want to export.
If we can get past that, then both the United States and China, Europe and China, together, can grow and prosper. But we can't all grow and prosper if someone wants to drink all of the water in the well.
FINIGHAN: Peter, it's always -- it's a great way to end the week, talking to you. Many thanks for being with us, Peter Morici, live there from Washington.
Now then, everyone seems to think that we're getting to the end of the recession, as you've been hearing. And compared to that views, you might think that worrying about the shape of the recession, as Peter and I were just then, is a bit of a waste of the time.
But economists would beg to differ. So with third-quarter data out in just a few weeks' time, it's time to -- perhaps to sort out those V-shapes from the U's and the W's and all of the rest. Here's CNN's Jim Boulden's jargon-buster.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): The story so far has been all about the downward slide of the economy.
(on camera): Here in the U.K. we've had five consecutive quarters of negative growth. We're sitting somewhere down here.
(voice-over): There are signs that the tide is turning. But the overall shape.
(on camera): . of this recession will be defined by the speed of the recovery. And that's where economists turn to the alphabet.
(voice-over): Relatively painless is the V-shape, with a rapid return to normal rates of growth. But there may already have been too many job losses and too much damage to public finances for a V-shaped recovery.
More worryingly, we might be sitting in the trough of a classic U- shape.
(on camera): This is when the downturn is followed by long period of slow growth. Now if it's really drawn-out, it can be more like the shape of a bathtub.
(voice-over): These and U's may not be so bad. But many hardened economists are talking about a much more pessimistic outcome.
(on camera): The most feared of all is the L-shape.
(voice-over): Reminiscent of Japan in the 1990s, years of crawling along the bottom of the recessionary pit, unable to recover.
(on camera): With the markets leading the way, and a few so-called green shoots poking through, L might be a little too doomsday.
(voice-over): There is another worst-case scenario that is starting to emerge as the frontrunner.
(on camera): For the past 12 months, economies have been kept alive by vast stimulus packages.
(voice-over): Like a shot of adrenaline, money is being injected into the system, running up huge budget deficits. Such drastic measures can only be temporary as governments are forced to rein in spending, economies may fall again.
(on camera): This lays the foundations for the letter W, a double-dip recession.
(voice-over): What looks like the start of a recovery is merely the cue for rising inflation, higher interest rates, cuts in spending.
(on camera): And ultimately, a second downturn.
When the full recovery does happen, the W is formed.
(voice-over): Whatever shape this recession turns into, we won't know until the recovery is complete.
(on camera): Before then, you'll hear talk about all kinds of shapes, a saxophone, a lightning bolt, and inverted square root, all variations on a theme. But for now, I'm afraid, it's all just educated guesswork.
Jim Boulden, CNN, London.
Well, if you think you know what shape this recession fits into, or if you can suggest a shape that we haven't even thought of, someone said a full stop, perhaps? Drop us a line. We're at email@example.com, or you can find us on Facebook, just search for QUEST MEANS BUSINESS. Please do drop us a line, we'd love to hear from you.
Well, as for the shape of the European stock markets, turning slightly flatter might sum it up this Friday. On most of the region's exchanges, a week of gains tailed off to a limp finish.
Indices in Frankfurt and Paris both fell as commodity stocks turned soft. Car-makers were also down. Renault and Peugeot both off by more than 3 percent in France. And VW losing 6 percent in Germany.
But the FTSE in London closed up just a little, completing six straight days of gains as banks and drug companies did well.
And traders here in London reported intense speculation over the future of Lloyds banking group. The bank said on Friday that it wants to rely less on taxpayers' funds. The government is insuring Lloyds with public money against losses on a huge portfolio of toxic assets.
Now Lloyds wants to reduce its involvement or pull out of the scheme completely. It said that improved economic conditions have led to the decision. But that followed press reports that British regulators had told Lloyds that it could withdraw from the arrangement as it couldn't raise enough new capital.
Lloyds, though, says that it's now in talks with the treasury and regulators and that all options remain open.
All right. Let's get you up to date with what else is making news around the world right now. Max Foster joins us from the London news room.
MAX FOSTER, CNN INTERNATIONAL ANCHOR: Adrian, in Iran, a rally meant to show support for Palestinians turned into a day of protests against the government. Opposition supporters took advantage of the government- organized Jerusalem Day celebration in Tehran's Revolution Square on Friday.
Witnesses say they chanted slogans like "death to the dictator," and held up fingers painted green to show their support for opposition candidate Mir-Hossein Mousavi.
More than two dozen people killed, dozens more wounded in a car bombing at a crowded market in northwestern Pakistan. Several buildings at a bazaar near the town of Kohat were collapsed by the blast. It's the second such in the area in the past two days. Pakistan's interior minister had warned of retaliatory attacks by the Taliban following the killing of their leader last month.
A small concession in Myanmar as its military rulers marked 21 years in power. The junta has released at least 25 political prisoners as part of a wider amnesty for several thousand criminals. Journalists and pro- democracy activists were among those released, but not Aung San Suu Kyi. Her lawyers did file an appeal with her recent conviction for breaking the terms of her at-home detention. A ruling on that is expected next month.
North Korea leader Kim Jong-il reportedly wants to resolve disputes over his country's nuclear program through, quote, "bilateral and multilateral dialogue." China's official news agency says Mr. Kim made the remarks during a meeting with a Chinese special envoy.
Last week the U.S. announced its own willingness to engage directly with North Korea. Pyongyang pulled out of the six-party negotiations last April.
Adrian, those are the headlines, back to you.
FINIGHAN: Many thanks, indeed, Max.
Now Aer Lingus is reportedly sending thousands of workers to the emergency exits. The Irish airline is making deep cuts as it tries to return to profit. We'll check in with Chairman Colm Barrington at Dublin Airport right after the break.
FINIGHAN: Hello, again.
Now big names in the business world, and all of them of Irish descent, are gathering right now in Dublin for the Global Irish Economic Forum. Their invitation came more as an SOS this time. And their task, well, it's to find a way out -- a way to fix Ireland's worst financial crisis in some 70 years.
So just how bad is it for the country that just a few years ago, remember, was called the "Celtic tiger"? Well, take a look at this. The housing bubble, just the like the U.S. and here in the U.K., the bubble burst, house prices began to fall in early 2007, that after a decade of growth.
The Bank of Ireland said that house prices fell 9.4 percent in the 12 months to July 2008. And since that housing bubble burst, banks have been struggling with toxic debt, much as they have been around the world.
Last September, Ireland guaranteed nearly $650 billion in deposits at its banks. And just a couple of days ago, Wednesday, it was on this show we were telling you about the government announcing a plan to spend a further $80 billion purging banks of bad real estate debts.
And of course, the recession. Ireland, the first of the Eurozone nations to fall into recession. That was last September, it's estimated that the economy could contract by up to 6.5 percent in 2009.
And amid all of that, Ireland's airline industry is taking a major hit. Media reports are saying that Aer Lingus will announce major job cuts after first-half losses over $100 million.
Colm Barrington, the chairman of Aer Lingus, has been telling CNN's Jim Boulden about the difficulties that his airline has been facing.
COLM BARRINGTON, CHAIRMAN, AER LINGUS: We are finding in Aer Lingus that the North Atlantic market is particularly bad and there is huge pressure on yields there. So fares in the North Atlantic are very low.
And if you look at BA's results and Virgin's results and the other U.S. carriers also, you'll find they're having the same problems. So the market generally is bad. In Ireland, and Aer Lingus's business is very much into and out of Ireland, it has been particularly bad because of our own economic and consumer conditions here.
So we are facing sort of a very difficult domestic and international situation.
BOULDEN: Aer Lingus has talked very publicly about having to cut costs. I think your new CEO said "amputation, not cosmetic surgery." How quickly will we be hearing about what drastic changes you're going to be making at Aer Lingus?
BARRINGTON: Well, we have to make some very significant changes because we have a lot of legacy practices here and a lot of legacy pay rates here. And we've obviously got to change those.
So in October, we will be announcing our plans to try and make Aer Lingus really cost-efficient because, as you know across the street, we have Ryanair, who is Europe's most competitive airline.
And they drive down fares very significantly. And we have to get our course set in-line to match those fares that are available to us in the market.
BOULDEN: That means you're going to have to go dealing with the pilots' unions, the -- all of the other unions that you have to deal with. It's going to be tough. Do you expect strikes? Do you expect walk-outs?
BARRINGTON: It's going to be tough. I hope that people will realize that if Aer Lingus is to survive and their jobs are to survive, and Aer Lingus is to have a vibrant and profitable future, that they're going to have to come along with the current market realities.
FINIGHAN: Colm Barrington, the chairman at Aer Lingus.
Next up on QUEST MEANS BUSINESS, the power of Facebook, not just hundreds of millions of members, it's actually generating a few dollars too.
Plus, how a woman's touch is getting Yahoo! over its mid-life crisis. We'll be back in just a moment.
FINIGHAN: Hello, again. Some of the most prominent names in business have been debating tough issues this week at a summit for powerful women in California. But as Poppy Harlow tells us now, there was also time for a little bit of boasting. Profits against the odds for Facebook, and successfully managing a mid-life crisis for Yahoo!.
POPPY HARLOW, CNNMONEY.COM: Well, some big news from the social networking world, Facebook this week topping 300 million active users. In just nine months, Facebook has doubled its users. On top of that, the company's bottom line is certainly improving.
Take a listen to what the chief operating officer of Facebook told me in our interview this week.
SHERYL SANDBERG, COO, FACEBOOK: We said a while ago that we wanted to grow revenue by 70 percent year-over-year, and that we would become cashflow-positive by the end of 2010. So we updated that to say we're, you know, basically ahead of those predictions, and specifically that we're cashflow-positive.
HARLOW: How did you do that in the midst of the greatest recession since the 1930s, when, especially advertising dollars are being pulled back left, right, and center? How did you do that and how did you beat your goal?
SANDBERG: Yes. So I think it is obviously a hard time and one we've had to work really hard through, but I think what has happened to us is that those advertising dollars I think are looking for more efficient ways to reach more people and really engage with more users.
And so even though the overall ad markets are down, and they've been down for a couple of years in a row, which is unprecedented. Our ad spend is dramatically increasing.
HARLOW: Still, though, Sandberg says Facebook has no plans to go public, no plans for an IPO.
Now one of the other women that I spoke with at that Fortune summit is Yahoo! CEO Carol Bartz. And she says, sure, upstarts like Facebook and Twitter are growing, but listen, she also says Yahoo! has something they don't have, and that's longevity.
She says Yahoo! will be a place she hopes where people will go to arrange all of their favorite sites and do things that they just can't do, she says, with the Facebooks of the world.
Take a listen to her.
CAROL BARTZ, CEO, YAHOO!: We have a company that really knows how to endure and knows how to -- for 14 years, deliver up what people are interested in. You know, we have a billion dollars year in free cash flow. We are a big, important company. So how are we going to beat them?
Well, we're going to beat them with a big global brand that really knows how to beat local. That really knows not only what we call hyper- local, which is what is happening in your community, but what is happening in -- you know, in your Taiwan, in your India, in your Vietnam.
So it feels like it is a personal center or portal for wherever and whoever you are.
HARLOW: All right. And I should note, Bartz says that Yahoo! has, she calls it, exciting plans to explain to people exactly what this company is going forward, especially now that it has pretty much given up on its attempt to beat Google in the world of search.
Yahoo!, of course, recently teaming up with Microsoft to power its search. You can see the complete interview with the CEO of Yahoo! and the COO of Facebook all on cnnmoney.com and fortune.com, our special Fortune summit coverage.
FINIGHAN: Cnnmoney.com's Poppy Harlow.
Don't forget, we're on Facebook too, you can tell us what you think of the show, please be polite, and the stories that we cover, log in and search for QUEST MEANS BUSINESS.
Now it is the third Friday of September, that's a significant day in the financial calendar. You'd be forgiven for asking what is so special about it? Well, I'll say no more than, quadruple witching.
After Jim Boulden does proud with his jargon buster earlier, it's time that Susan Lisovicz gave us her jargon-buster from the New York Stock Exchange.
I'm guessing that it has nothing to do with Shakespeare or the "Scottish Play."
SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: Ha-ha, "Macbeth," yes. What is it? "Double, double, toil and trouble, fire burn and cauldron bubble."
FINIGHAN: Something like that.
LISOVICZ: No, it has nothing.
FINIGHAN: "Is this a dagger I see before me?"
LISOVICZ: It has nothing to do with that. Well, no, actually, what you should see is horns, bull horns, because we have another nice rally. But what this means, the quadruple witching, is nothing more than an expiration of contracts.
And the reason why we talk about it is because there has been a tendency for volatility on days when we see the expiration of contracts, not only on that exact day, but maybe a day or two leading up to it.
But today is not such a day. Actually, we have a nice rally, which is pretty much the trend for this month. Let's face it, September, historically the worst month of the year for stocks, has been a terrific month and this has been a great week.
The Dow is up about 200 points for the week. We're now about 160 points away from 10,000, Adrian. So what? That was a milestone first reached 10 years ago. The stock market is telling us that it is seeing signs of improvement in the U.S. economy.
And so far the sense is that the gains that we've seen since early March are not overdone. We'll continue to monitor that.
FINIGHAN: Yes, I hope we haven't tempted fate. I said the "Scottish Play," you said the name of it, because it's bad -- did you know it's bad luck in the theater world to -- actually to say the name of the play.
So you said that, you know, September has been a great month. There is still time, Susan, I suppose, for it all to go wrong. And things fell a little flat here in Europe today. You don't see any sense of that -- the rally ending or coming to an end in the short -- in the near term over there?
LISOVICZ: Well, that's a double jinx. Not only saying the name of that play, but then also talking about a certain level for the Dow, which is also considered a jinx. So let me steer away from both of them, Adrian.
You know, we've had some pretty good economic reports this week. And I would say even ahead of those reports, we've had Ben Bernanke, the chairman of the Federal Reserve, saying -- for the first time that I'm aware of, saying that the U.S. economy is probably technically out of recession. Not that it will feel that way to most Americans.
Do we have problems? Sure. Sure we do. We have Palm shares down right now, 4 percent. I think it's its eighth straight quarterly decline in earnings. FedEx, which is considered a barometer for the U.S. economy overall, saying that it expects results to be -- continue to be weak as customers and companies alike cut down on their expenses.
You know, we had the unemployment with some new unemployment numbers coming out today, are really just a closer look at the unemployment rate, 26 our of the 50 states in the U.S. saw their unemployment rate rise in August.
I mean, we have distinct problems here. But the sense is it's not getting worse, it's either leveling out or getting better. And that's really what has driven this market for six months -- Adrian.
FINIGHAN: And I think we're all right, Susan. When we were talking about, you know what, I had my fingers crossed all the way through, OK? So I don't think we've jinxed anything.
Many thanks, have a great weekend. See you soon, Susan Lisovicz.
LISOVICZ: Yes, break a leg.
FINIGHAN: Yes, break a leg, no thanks. Live at the New York Stock Exchange.
Now governments from all over the globe say they want the world's financial institutions reformed. India's commerce minister tells me why he is right behind those calls and what he hopes the G-20 in Pittsburgh will achieve. That's just ahead, don't go away.
FINIGHAN: Welcome back. Live from London, this is QUEST MEANS BUSINESS. In for Richard Quest, I'm Adrian Finighan.
Let's come back to the G-20 summit that takes place in Pittsburgh next week. Now leaders will have more to talk about than just bankers' pay, I've been speaking to Anand Sharma, India's minister of commerce. And I asked him what he hopes will come out of the meeting.
ANANDA SHARMA, INDIAN COMMERCE MINISTER: Well, it's not only from the narrow perspective of the Indian economy, but from the world economy, what message comes out of Pittsburgh.
That information -- the commitment of the world leaders to ensure enhanced economic engagement between countries, access to markets, taking the WTO talks to a successful conclusion, and to shun protectionist measures, and to bring down barriers -- technical barriers, and on trade barriers.
FINIGHAN: You talk about the WTO and bringing the Doha Round to a successful conclusion. Do you think that's possible? It has been over a decade now. Do you think that it will ever be resolved?
SHARMA: It would be in the interests of the international community, both the developing countries and the developed countries, that this round, which is dedicated to development, is taken to a successful conclusion so that a rule-based multilateral trading regime can be put in place which should be fair and equitable. And the final outcome must address the legitimate aspirations and concerns of the poor and developing countries.
FINIGHAN: I've spoken to several captains of industry this week who - - who cite India, as well as China, as being the engine of -- of economic growth that -- that will help the world, that will pull the world from recession.
To what extent is the Doha round important for India in that any trade barriers will hamper its ability to do that?
SHARMA: Well, there are two aspects. When we look at the strength or the health of the Indian economy, it is not connected to Doha round or to trade, as of the moment. But, yes, when there is opening up of markets, better access, easy movement of merchandise and services, particularly the skilled manpower and professionals, surely that will help the services sector in India in a big way.
But India's economy has held, is good because of other factors. The fundamentals are strong. Our banks are robust. So are the financial institutions. None was ever threatened with a collapse.
FINIGHAN: What about the future for -- for the Indian economy?
OK. It's weathered the current recession very well. It's been in a - - in a fortunate position. Its economy is -- is managed very well.
But can it sustain the -- the level of growth that it's currently enjoying?
SHARMA: Of course. We -- not only that we'll sustain it, we would like to take it back to the previous session levels by 2011. We have been growing consistently at 9.5 percent. So we have also been dragged down. We are not saying that we have not been impacted adversely by the global meltdown.
FINIGHAN: Do you think that -- that countries like India should -- should have more say in -- in global economic politics?
SHARMA: Yes. The political and economic edifice has to change. It must reflect the contemporary realities. The structures which we have in the multilateral institutions, both political and financial, represent an order which emerged after the Second World War and they have remained frozen there for over six decades, which is very unhealthy. This is neither representative nor democratic and it's far removed from the realities of the geopolitics of today.
We cannot have these institutions being effective and credible which exclude in the final decision-making countries which matter more today and which will continue to matter much more, given the size of their economy and the base of their development.
(END VIDEO TAPE)
FINIGHAN: Tough talking there from India's commerce minister, Anand Sharma.
Right, let's get you up to date with the news headlines.
Max Foster joins us once again live from the London newsroom.
FOSTER: Hi, Adrian.
NATO is weighing in on the subject of anti-missile defense. In his first major speech since becoming secretary-general, Anders Fogh Rasmussen suggested that the alliance should work with the U.S. and Russia on ballistic missile defense. The comment follows a U.S. decision to cancel plans to base anti-missile launchers in Eastern Europe. Rasmussen said linking defenses would strengthen the alliance's relations with Russia.
A mining disaster in Poland leaves at least a dozen dead. Authorities speculate a methane buildup inside the coal mine was somehow ignited, leading to an explosion. Some were killed instantly. Others died from burns. At least 15 more injured -- more were injured whilst escaping from shafts more than 1,000 meters below ground.
And the U.S.-Middle East envoy leaves the region empty-handed. George Mitchell ends a week of meetings without an agreement to restart Israeli- Palestinian peace talks. He shuttled between leaders of both sides, but Israel's refusal to stop building settlements reportedly held up a deal. Mitchell had hoped to get the leaders and the president back at Darma (ph) together at a U.N. general assembly meeting in New York next week.
And a new fossil find is really shaking up the T. Rex family tree. Some call this guy tinysaurus rex -- a sort of precursor to the dinosaurs. The dinosaur world's top predator, nicknamed rat rex, it lived 125 million years ago. That's tens of millions of years before Tyrannosaurus rex. What's surprising is how similar, but scaled down, it is.
(BEGIN VIDEO CLIP)
PAUL SERENO, PALEONTOLOGIST: Raptor rex really is a pivotal moment in the history of the group, where most of the biologically meaning -- meaningful features about -- about Tyrannosaurs came into being. And the surprising factors is that they came into being in such a small animal. This animal, Raptorex, is only, as an adult, about eight feet long. It would stand right at about my chin height on the back, weigh about as much as I weigh, 175 pounds, maybe; but had everything that Tyrannosaur had in terms of its biology.
(END VIDEO CLIP)
FOSTER: A missing link, Adrian, discovered in the fossil world again. (INAUDIBLE) stuff.
FINIGHAN: Absolutely. Absolutely.
Max, many thanks.
Have a great weekend.
See you soon.
Now, which of us doesn't like the idea of getting something for nothing?
Well, newspaper publishers in London have been treating the locals to free papers for the past few years. But one media mogul is saying no more this Mr. Nice Guy. Read all about it in just a moment.
FINIGHAN: Now, economists have known for a long time that there ain't no such thing as a free lunch. Here in London, though, what we do have is free newspapers -- several of them. Well, at least until today.
As Leone Lakhani reports, one of the two evening freebies hit the streets for the very last time this Friday, leaving distributors out of work and readers wondering if free news is on the way out.
LEONE LAKHANI, CNN CORRESPONDENT (voice-over): Vira Prasad (ph) is a student in London whose part-time job is handing out free evening papers to passersby.
VIRA PRASAD: The same edition from the last one here.
LAKHANI: It helps pay the bills.
PRASAD: I spend my expenses -- my monthly expenses for (INAUDIBLE).
LAKHANI: But soon he'll have to look elsewhere for work.
PRASAD: Tomorrow is a very bad day in my life. Tomorrow is the last time. I lost my job. So I'm starting a new job and it's very difficult. At present, there's (INAUDIBLE).
LAKHANI: Prasad is employed by the London paper. But the paper's owner, News International, a subsidy of Rupert Murdoch's empire, is putting an end to it.
(on camera): Now, this is News International's free evening paper. It's been in circulation for about three years. But as of this weekend, it will be no more. Now, it might seem like it's just a local paper. But what happens to it is indicative of the company's broader strategy.
(voice-over): The company launched "London Paper" in 2006 to compete with another fact sheet, but it lost $21 million last year. Now, News International is changing tacks as it looks for ways to increase revenue, which includes a plan to charge for online services that were formerly free.
DOUGLAS MCCABE: It's consistent with what Rupert Murdoch was saying earlier this year about looking for value in news again. In other words, looking to do a U-turn on the free online newspaper and charging consumers for access to Internet news services.
LAKHANI: Free newspapers are funded by advertising. And given the economic climate, that's a volatile business.
MCCABE: It's very difficult with a free model where, really, in essence, your only income is your advertising, your marketing type income, because, clearly, consumers themselves are not paying for accessing the -- accessing the paper. So it puts you under severe pressure.
LAKHANI: As Prasad nears the end of his shift, the London paper inches closer to the end of its term. Free sheets like this may not become completely obsolete, but Murdoch's plans underline a changing strategy where paying for new content is the future.
Leone Lakhani, CNN, London.
(END VIDEO TAPE)
FINIGHAN: I'm going to miss this, actually. In fact, I'm far too busy to talk to you. I'm reading the paper.
Guillermo has got the weather and he'll get on with it while I -- while I continue to browse.
Star sign, Guillermo, Sagittarius, is that right?
GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes.
FINIGHAN: "It's yours for the taking if you want it, Sagittarius, but do you want it really? As you might come to realize this weekend, success that's handed to you on a plate smells a lot less sweet than success that's been earned the hard way."
ARDUINO: Oh, thank you very much. Now I'm going to look forward to a great weekend.
And the same in Japan here, because we have this cyclone, this typhoon that is already bringing rain into Tokyo. But no change in the forecast path, so this is pretty good.
And, actually, the cyclone is going to turn away from Japan, because it's a system that is starting a -- I've been repeating this for three days.
You know why?
Because the forecasts were so good that they have not changed. The updates were not necessary. So the same story. It's going to move away, but it's going to bring winds and battering waves and also some rain and eventually some delays at the airport, Haneda, in this case.
Taipei with windy conditions. And let me tell you about Europe, because there's a little bit of a change -- better. High pressure here for Britain, Northern France and the low countries. So Adrian, so nice weather in London. And we continue to see some. Saturday, maybe, you're a little bit rainy. Then it's going to improve.
And then this low in the Barcelona area continues to bring bad weather. And the -- the alerts shift a little bit into Southern France.
Italy is in better shape, but still the rain is going to stay there. There's this new system that it will bring some rain into London on Saturday then Monday and Tuesday, it's going to be much better. And the low stays here into France and into the Alpine region, into Italy.
So the weather will continue to be a little bit so-so, especially in the south. Winds going away. We're not anticipating delays at airports. Clouds in London, Heathrow. Dublin with some clouds. Milano with clouds, as well.
So things are much better, much better than what I reported before at the -- in the middle of the week -- Adrian, have a wonderful weekend, you, too.
FINIGHAN: Thanks Guillermo.
That's it for QUEST MEANS BUSINESS.
In London, I'm Adrian Finighan.
"MARKETPLACE MIDDLE EAST" is next.
I can't possibly hang around. I'm going to be at Wimbley. I'm going to see Coldplay tonight.
Richard's back on Monday.