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QUEST MEANS BUSINESS
Good Q3 Profit for Non-Bailed-Out U.K. Banks; G-20 Ministers Talk Taxes, Climate Change
Aired November 10, 2009 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL ANCHOR: (INAUDIBLE) to the top, British banks make good money.
A world apart, members of the G-20 show their divisions.
And picking up the pieces, we follow our job-seekers as they hunt for work. Tonight it's "JobQuest."
I'm Richard Quest, I mean business.
Good evening. Banks again at the top of the business agenda. Barclays and HSBC, two British banks that didn't receive any government money, have made a chunky profit. On the other hand, Lloyds Banking Group, which got a helping hand from the U.K. taxpayer, is cutting its losses.
Tonight on QUEST MEANS BUSINESS we're going to take a look at the contrasting fortunes within the British banking system, slightly, perhaps, of course, wider, since HSBC now does have such vast undertakings to shift its operations towards Hong Kong.
But we -- let's begin with an overall view. It was an interesting day in the banking sector. From HSBC to Barclays, and let's start with Lloyds where they announced 5,000 layoffs and job losses. Half of them will be temporary staff and contractors. The other half will be permanent staff. They will all go in 2010.
QUEST: And this is on top of the other layoffs, some 6,400 layoffs that were announced last year. Lloyds, of course, is 43 percent owned by the U.K. taxpayer, and it was Lloyds that did the disastrous deal with it very quickly picked up HBOS, and that, of course, has caused huge eruptions.
Now Barclays, a fascinating case, Barclays took Gulf money, it then, of course, bought Lehman Brothers's U.S. assets. And now it has announced $4.5 billion in third-quarter profits, down 29 percent. The large reduction, of course, has been because of an increase in the impairment, 65 percent -- impairment to you and I is basically bad losses.
It's a posh way of saying, put money aside for when things go wrong. The investment side, from Lehman Brothers, did very well. It was the U.K. banking sector that performed. But this, of course, was the interim trading statement from HSBC, third-quarter profits significantly higher, significantly ahead. HSBC is rapidly turning into the star, if you like, in the U.K., and therefore international banking sector.
But how did all of this play out on the share prices? As you might expect, let's just very quickly go through what was the -- the reasons for these -- I'll move this 'round a bit, fool around with this and you can get a better idea.
HSBC up sharply because of its trading statement. Barclays because of the impairment. RBS, well, you know, poor old RBS. Same with Lloyds. They are both in the doldrums. Those sort of prices still pretty well underwater.
David Buik, who, of course, always makes common sense when talking about these things, joined me earlier to put in perspective the banking numbers and those banks that had done particularly well.
DAVID BUIK, BGC PARTNERS: Well, I think it's -- we need to look at these banking results in isolation and separately. I mean, HSBC, in all of the years I've been associated or known of Stephen Green, the chairman, and Michael Geoghegan, the chief executive, I have never known them to be so upbeat and effusive about a recovery.
And not only for HSBC bank, but also the world's economy on a global basis. Rarely have I ever heard that before. And I think they are hugely encouraged by what they see in China, Asia, and the emerging markets which they believe will trigger this recovery.
And clearly that's the reason why Michael Geoghegan has set up office as chief executive in Hong Kong, rather than in London.
And then you look at Barclays and you see Barclays's results, as you so rightly say, Richard, quite excellent in isolation. But a concern that Barclays Capital, the investment bank, is contributing over two-thirds of the profit of the bank, which means that retail banking has fallen in terms of profitability substantially in the course of the last year.
And this cannot be allowed to carry on without some sort of correction.
QUEST: Not only that, revenues were up sharply at Barclays. But it does come, as you say, from the acquisition of Lehman Brothers and not the retail sector where we're seeing increased impairment charges.
So the Lehman purchase looks wise, the rest of the bank looks dodgy.
BUIK: I think that's too strong. You are right in saying that 5.6 billion pounds worth of impairment charges is, by anybody's standards, very grown-up and cannot be allowed to carry on on that basis. But on a (INAUDIBLE) basis, with other banks both in the U.K. and around the world, that figure actually isn't too bad.
I don't want to make light of it, but what obviously the management of Barclays has done in the course of the last year is not only write quite a lot of paper for fresh capital to go out to the Far East, but it has also fought off the possibility of having to be partly owned by the government and being involved in the asset scheme, which is absolutely punitive in terms of charges.
So therefore I think it is job done in first round. But in the second and third round, these impairment charges have got to stop and we've got to see the lending pick up.
QUEST: We have now, certainly in the U.K. -- and let's stay with the U.K., we now firmly have a two-tier class system for banks, don't we? Between those like HSBC, and like Barclays, and those like RBS, Lloyds, and everybody else that is simply being swept along with the tide.
BUIK: Yes, but there is some light at the end of the tunnel, though I think the price paid is, again, too rich. And that is Lloyds Bank, and I think no amount of praise due to Win Bischoff -- Sir Win Bischoff, the chairman, and to Eric Daniels, the CEO, could possibly be enough.
It has been very costly, raising 21.5 billion pounds in terms of fresh capital, 13.5 from existing shareholders. I mean, that is a mind-blowing sum of money when you consider it's less than a year ago that they asked them for 12 billion pounds.
But anyway, it has been done, the matter has been put to bed. For the cost is -- and this is, I think, a huge criticism of the U.K. government, allowing the European Unions to trample all over them with hobnail boots, enforcing a downsizing of the balance sheet and the sale of assets precipitously, which means roughly that Lloyds will have to get rid of something like 600 branches, whether it comes from TSB Scotland, or whether it comes from Cheltenham & Gloucester, or other areas, and the Royal Bank of Scotland, which, of course, is deeply embedded in the asset scheme, is going to have to lighten up by 312-odd branches.
This is really why we're getting such seismic amounts of redundancies, which we've seen posted by Lloyds today, which is getting rid of what is superfluous to requirements, and what they're going to to have to do in the long term.
QUEST: David Buik, joining me earlier from BGC. Now a four-day winning streak ground to a halt on the Euro bourses. And it wasn't much helped by the banking stocks, of which you saw earlier. The main markets all closed flat or lower, telecoms were down after Vodafone said it needed to make cuts worth an additional $1.6 billion, billion.
Volkswagen was the biggest loser in Germany, down 8 percent after Qatar Holdings sold 25 million preferred shares, that will be conversion. A downbeat reading from Germany's Zew Index of economic sentiment, a forward-looking indicator, it all added to the somber mood.
The news headlines now, Max Foster is with us at the CNN news desk.
MAX FOSTER, CNN INTERNATIONAL ANCHOR: Richard, a memorial service has just begun at Fort Hood in Texas. U.S. President Barack Obama and first lady Michelle Obama are there. Earlier they met with the families of the 13 people who were killed last Thursday, Major Nidal Malik Hasan is the sole suspect in the deadly rampage that wounded 42 people.
As you can see, live scenes from the podium where people will be speaking. The Obamas are expected to pay a visit to the wounded who are still hospitalized. The latest on that as it comes through to us.
Some 26 people are reported dead after another devastating bombing in Pakistan. Sixty people were injured in the blast when a suicide car bomb detonated at a traffic circle in a town around 30 kilometers north of Peshawar. It's the latest terror attack to hit Pakistan as the army presses its offensives against militants in south Waziristan.
The bodies of six British soldiers killed in Afghanistan are being returned to England. Five were killed when the Afghan police officer they were training turned his gun on them. The other died in a roadside bombing. The latest casualties bring the number of British service members killed in Afghanistan to 232. Ninety-five were killed this year, the highest casualty level since the 1982 Falklands War.
For years, North and South Korea naval vessels have patrolled the contested western sea border between Pyongyang and Seoul. Today, shots were fired. Each country blames the other for triggering the brief skirmish. White House spokesman Robert Gibbs is urging North Korea to exercise restraint. A South Korean military chief says the South suffered no casualties during the two-minute firefight.
Those are the headlines, Richard. Back to you.
QUEST: Thank you, Max Foster.
Now it's a proposal which promises to make banks pay for their mistakes in advance. The French say this is very interesting. The British seem to be getting cold feet.
(BEGIN VIDEO CLIP)
STEPHEN TIMMS, U.K. FINANCIAL SECRETARY: People can see the reason for doing it, and the attraction of doing it, given what has happened to the banks and to taxpayers over the last couple of years. But there are lots of technical issues.
(END VIDEO CLIP)
QUEST: The transaction tax, is it going anywhere? In a moment.
QUEST: The British prime minister seems to be pouring cold water on a tax proposal that was his own idea. The transaction tax was first floated by Mr. Brown at the G-20 at the weekend. Now at his regular monthly press conference, he is saying it's only one of a possible number of ways to make banks act more responsibly. He says what he really wants to do is debate on what he calls a new social contract between banks and society.
At the weekend, the French finance minister, Christine Lagarde, said that a tax on financial transactions is certainly an idea worth thinking about. She told me.
CHRISTINE LAGARDE, FRENCH FINANCE MINISTER: The transaction tax, or the transaction withholding, or any type of withholding for that matter -- I'm not sure that the transaction is actually the right basis for that, is a very interesting proposition. Very interesting proposition because the banking system has clearly exposed our societies to major risks.
As a result, we governments had to engage taxpayers' money to cover that risk. I think going forward, it would be only fair if the banking system itself was to care for itself and provide for the appropriate level of insurance against similar risk. It's in that -- you know, with that perspective that I consider that transaction tax as quite appropriate in terms of exploring a new project.
QUEST: So if the IMF comes back and the various modalities can be worked out, you would be in favor of it?
LAGARDE: If the IMF comes back with a proposal that is international, that applies to all, which offers a level playing field, and which helps with the risk coverage for all our citizens, yes, we would support that.
QUEST: On the question of stimulus versus now withdrawal of stimulus, exit strategies, the communique talked very clearly about the challenge facing. When to do it, how to do it, and consulting in doing it.
LAGARDE: We need to coordinate because when we coordinate, we are stronger and we are better, which just means that we are all doing it at the same time. Number two, my view is that we should tip-toe out of it. We cannot withdraw suddenly. We cannot take the crutches away when the economy is still fragile and stepping into a recovery process.
QUEST: So far so good, as seen from the French point of view. They like the idea of a tax. It's quite a radical one, really, traditionally countries that have relied heavily on financial services, like the U.K. and the U.S., have been against the idea for very obvious reasons. It hits their financial services, whether it's the City of London, or Wall Street disproportionately hard.
Stephen Timms is the financial secretary to Britain's treasury, part of finance minister Alistair Darling's team. And I said to him that such a tax would discriminate against the city.
TIMMS: That is why the prime minister underlined the need for any such measure to be global in application. It wouldn't be possible and the prime minister was absolutely explicit about this, for the U.K. to do it on its own, for example, for a couple of countries to do it on its own, it would have to include all of the main financial centers and to be worldwide in its effect.
QUEST: When we look at this tax, the one thing that everybody has always said in the past is the unworkability of it. A nice -- you know, it comes under the rubric, nice idea, shame it won't work.
TIMMS: Well, nice idea, I mean, I think that view was pretty clear around the table today that people can see the reason for doing it and the attraction of doing it, given what has happened to the banks and to taxpayers over the last couple of years, but there are lots of technical issues. That is the reason for the IMF doing this detailed work.
And I think everyone is going to be waiting with a great deal of interest to see what their report said in April and then to the G-20 leaders in June.
QUEST: When we talk about the other issue, this balancing act between insuring stimulus packages continue, but at the same time coordinating and consulting on exit strategies. Everybody agrees now is not the time, I believe, to -- for an exit strategy.
TIMMS: Well, everybody agrees that we need to continue to support the world economy until recovery is secure. And that was -- that's the first sentence, I think, of the communique, and all of the countries represented here agreed with that.
QUEST: When it does come time for different exit strategies, and some countries are already implementing their strategies, is there a feeling that if there is not consultation, the whole thing will end in tears?
TIMMS: Well, I think the first point is that there has been a huge amount achieved through the collaboration, the G-20, over the past year. What people want now is to maintain the benefits of that collaboration and coordination in the future.
We've launched at this meeting the G-20 framework for growth and the process around that. And really the first test of that will be the coordination of exit strategies in the period ahead.
QUEST: This framework is unique. Never before have countries been requested and required to put forward their policies and the proposals of direction they intend to take to the IMF in such a fashion. Now it's -- we can argue about whether it's giving the IMF the role of a policeman, a doctor prescribing medicine, or whatever, but it is a seismic shift.
TIMMS: It is a big shift, the idea has been around before. What's new now, I think, is the commitment to making it work. And it's a mutual assessment process. It's countries looking at each others' plans, making sure that they are properly coordinated with advice from the IMF. But it's the countries in the driving seat.
QUEST: I don't want to be a harbinger of doom before the thing has even got going, but it's a recipe for disagreement about ultimately countries will -- I mean, we just know from the Article IV process that the IMF goes to on regular with countries, countries don't agree with it.
Now if you start out, basically, peer review of economic policies, it is destined to be doomed.
TIMMS: Well, I think what is new now and what is different is the very clear and urgent enforcements of doing exactly this kind of mutual assessment, because if countries' policies are incompatible, and if there is instability in the world economy as a result, we can all see now from our experiences over the last 18 months how damaging that can be.
So I think everybody now sees the need for this kind of assessment. And that is what is different, and that's why I think it's going to work.
QUEST: The financial secretary to the U.K. treasury, Stephen Timms, on the issues of the G-20.
In just a moment, you know, of course, that millions have been laid off, they have been made redundant. And if you've ever lost your job, you'll know exactly how this woman is feeling.
(BEGIN VIDEO CLIP)
LISA MATHESON, JOB-SEEKER: I am a recently displaced worked who is currently looking for a communications role.
(END VIDEO CLIP)
QUEST: Our latest "JobQuester" when we return in a moment.
QUEST: So as we've reported earlier in this program, Lloyds Banking Group is to cut more than 5,000 more staff from the payroll. They'll be joining the thousands of others from the bank who have already been made redundant, who join the many millions thrown out of work during this "great recession."
It is our priority on QUEST MEANS BUSINESS to bring you the faces behind those jobless figures. Never let it be said the jobless numbers are faceless people. And today we meet a new "JobQuester." Lisa Matheson is in Atlanta, she is looking for a post in communications. Rodrigo Medina is in Barcelona, and Rodrigo had a busy week with at last a little bit of good news.
UNIDENTIFIED MALE: Last week on "JobQuest."
UNIDENTIFIED MALE: We have been working for about half an hour now, and we have seen 29 business close, which is about a business per minute.
UNIDENTIFIED MALE: ... nice to meet you.
UNIDENTIFIED MALE: Good to meet you too, sir.
UNIDENTIFIED MALE: Now, I like to use the "how can I help you" (INAUDIBLE). How can I help you and then maybe in turn we can help each other in our job search.
MATHESON: I'm Lisa Matheson, and I am a recently displaced worker who is currently looking for a communications role.
The economic situation today, you know, a lot of companies are tightening up and they're laying off employees. And unfortunately my role was eliminated.
What I've noticed is a lot of times when the economy constricts that communications professionals are kind of the first group to go. They don't seem to have as much value.
And quite thankfully there are a lot of communications positions out there and that makes me feel good that the economy is beginning to turn around.
Of course, I'm trying the old tried and true, looking at the Web sites where you have the standard job search engines out there. I've tried those. I also look in industries that I'm attracted to, looking at their associations, because they often list jobs out there.
And a lot of what companies are going to now is to have resume scanning, where they pick out key words from resume. And I've found that if you don't have those key words that specifically match and are tailored to the individual job description, then the likelihood of your resume being seen by a human is significantly decreased.
So it's a combination now of making sure that you're networking and ensuring that your resume is tailored to the specific position to increase your chances of getting seen by a human.
I have parents who are a little bit older, and they were told that Social Security would be there for them. And they do get Social Security, but it's really not enough. That's something that keeps me up at night, so it's very important for me that I get another job very quickly and that I continue to be able to help them.
Want to go outside? You want to go outside? OK! Here we go! Come on, all right!
So this is where Maya (ph) and I take our walks every day so she gets her 30 minutes of exercise, and it's a good way for me to clear my head thinking about all of the jobs that I'm applying for, how I need to tailor my resume for the next job. So I really enjoy being out here because it's very quiet.
I bought in this association approximately two years ago. And there are houses or condominiums that are still on the market that were on sale when I bought in here. So that doesn't make me happy as someone who might have to sell and sell quickly. They say that which does not kill us makes us stronger. And I really do believe that.
RODRIGO MEDINA, JOB-SEEKER: So I'm just getting ready to go to my second interview of the day. I'm really excited today because it has been a really productive day. It's not very often that you get three interviews in one day. This is another sales position opportunity and hopefully it will be an interesting one.
But I'll let you know when I'm done with the interview. So wish me good luck.
So I'm just exiting from the interview I had with the consulting company, and it was rather disappointing as the conditions were really bad. Pretty much no contract, no base salary, and commission-based only. So I'm not in any position to accept these kind of terms.
I am just getting back from having coffee with a friend of mine who knows my situation. It seems like their company is looking for somebody to help out part-time with the marketing department and he thought of me. So from now on I'll be collaborating part-time with this company and together with tennis lessons, it will give me enough leverage to stay in my apartment.
This, of course, will take a lot of pressure off my search, and also of my relationship, because lately we've been having so much stress about leaving the flat. So now I just need to continue on with the search and I'll be a bit more busy.
QUEST: It's a fascinating thing, and the thing I love about our "JobQuesters" and following their lives is it really is the story of real people going about the recession and how they're finding their jobs. We will keep up with them. There will be another "JobQuest" this time next week.
In just a moment, we will put aside to the financial crisis. India's GDP may be down, but it was because there wasn't enough rain. India's finance minister talked about the importance of the environment to the economy.
(BEGIN VIDEO CLIP)
QUEST: Do you feel a bit alone on the climate change issue?
PRANAB MUKHERJEE, INDIAN FINANCE MINISTER: (INAUDIBLE) I cannot credit (ph) (INAUDIBLE).
(END VIDEO CLIP)
QUEST: In just a moment, more of that.
QUEST: Good evening. I'm Richard Quest, QUEST MEANS BUSINESS. This is CNN.
It was a very strong session to start the week on Wall Street on Monday. The question, of course, is whether that was able to be maintained. Were we at...
... record highs? Well, by virtue of the fact it was at a year high yesterday, then yes. But unfortunately up 4 points barely registers on the excitement meter. Well, I don't think -- (INAUDIBLE) up 3 points, 10,230.
Susan Lisovicz is in New York. Hey, Susan, I mean, better to be up than down, but not much to get excited about there.
SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: And I think that's kind of healthy, frankly, Richard, because we've had a lot of big moves. When you think about it, in the last 11 sessions, six of them we've seen triple- digit moves on the Dow, basically evenly divided between -- to the upside and to the downside.
So volatility returning a bit, but a terrific rally on Monday. And quite frankly, today there is not a whole lot on the plate for investors to digest. So it seems like we're taking a breather. And that's OK.
QUEST: Nothing wrong with that. As we look forward now, Susan, with the third quarter out of the way, there is no major -- I mean, there is the regular monthly economic numbers, but it is a cake that is baking, the recovery at the moment, isn't it?
LISOVICZ: ,Yes, and so corporate earnings are out of the way. Once a gain, cost cutting a big, big factor there; in fact we have more cost cuts announced today, whether it's from a major phone company like Sprint - 5 percent of its workforce - or Electronic Arts, which is a very popular game maker -- video game player eliminating about 17 percent of its workforce. You know, that's a problem. And so is consumer spending. A very big question mark as to what's going to happen in the weeks to come. And that will indicate just what kind of recovery we have going forward.
QUEST: And Susan, you and I will talk about it more in the quiet days, so we can leave it there for the moment.
Susan, many thanks, indeed.
As we have covered the G20 in all its extremities, one nation, of course, must always garner our attention -- India, where the finance minister is promising to put the nation's economic house in order. And here's how Pranab Mukherjee plans to do it.
You've only got to think about an increase of domestic demand with the hundreds of millions of potential middle class consumers on the horizon. More infrastructure spending in investment and agriculture and, most crucially, no exit strategy or no exit -- no stimulus exit strategy until absolutely necessary.
On that exit strategy, the stimulus withdrawal, in his words, will be in due course. Now, there's a need to cut the fiscal deficit, because -- he wants to cut it to 4 percent by -- GDP by 2012. The reason, of course, the minister accepts 6 to 8 percent is not sustainable in the medium to long-term.
Overall, economic growth of 7 percent is forecast in India for 2010.
I spoke to the finance minister, Mr. Mukherjee, at the G20 and asked him about the IMF's role in India's exit strategy.
QUEST: When we talk about exit strategies, the IMF has now been charged with coordinating, consulting -- whatever word we want to use.
And are you comfortable with putting your plans forward to the IMF for their review?
PRANAB MUKHERJEE, INDIAN FINANCE MINISTER: Different countries have different points of time responded to that in terms of financial crisis. It is not that at one point of time all the countries were affected to the same extent and their response was (INAUDIBLE).
QUEST: But do you foresee a potential conflict in this role of the IMF?
MUKHERJEE: No. IMF are (INAUDIBLE) for consultation in the (INAUDIBLE) currency. But so far as these issues are concerned, countries can still have their own sovereign, independent decision-making process. And they act (INAUDIBLE).
QUEST: When we look at climate change, which is also on the agenda, now India has taken a particular point on this, along with some other developing nations. Agreement could not be reached on the financing of such a deal.
MUKHERJEE: In this work of the financing arrangement, I'm afford there is no commonly accepted views about the climate financing. But there has been a commonality of approach in the sense that this issue will have to be studied in depth and even if CCT (ph) at Copenhagen. And there was an agreement that we should expect a positive outcome and (INAUDIBLE) of what time is available to them.
QUEST: Do you feel a bit alone on the climate change issue?
MUKHERJEE: (INAUDIBLE) agreement, I cannot predict what will be the outcome. What I can say is that we want there for to be a positive outcome and we should try for the positive outcome.
QUEST: When the G20 is in session, there is a very disparate range of growth between yourself and China at the top end and, of course, the other countries who are still in recession. So it must have some -- an interesting dynamic.
MUKHERJEE: It is not a structured group as such and there is no memorandum of understanding or rules of (INAUDIBLE). But, at the same time, it is the (INAUDIBLE) of those who can contribute in this process, they are brought together. And it is a good idea to have fair and frank exchange of views.
QUEST: If we turn to India's economic growth, your prime minister has said 6.5 percent is reasonable for this year.
And is that still your understanding, as you come to the end of the year?
MUKHERJEE: Well, no, this year we could have -- reach around 7 percent GDP growth, provided if we had good rates, because a part of our agricultural production will be affected because of the deficient rainfalls. But still, we do hope this year it could be around 6.5 percent.
QUEST: Minister, many thanks, indeed.
MUKHERJEE: Thank you.
(END VIDEO TAPE)
QUEST: Mr. Mukherjee talking to me after the G20.
As QUEST MEANS BUSINESS continues, we're going to tell you about how the world will get a massive energy bill -- a demand for $10.5 trillion. Find out why if we don't pick up the tab, the planet will pay the price.
QUEST: These are pictures coming to us at CNN from Fort Hood in Texas, the scene, of course, of a shooting in which 13 soldiers were killed and 42 others were wounded. The fort soldiers, their families, other members of the press and public are waiting for the arrival of President Obama, who will lead a memorial service that is to be held there.
We will, of course, bring you the president's comments when, of course, he arrives and he speaks.
It is interesting to note the president has been speaking and meeting families of those who were killed and injured. And we will bring you the president's comments as and when that event happens.
As we continue our coverage -- our business coverage here on QUEST MEANS BUSINESS, as one crisis in the financial world begins, another one -- well, it could be, perhaps, on the way. The International Energy Agency has warned today of a looming energy crisis as the recession eats into investment in the sector.
Now, the interesting thing about this is it's all about the prospective drop in investment that will happen as a result. Whether you look at the plummeting costs, the costs of delay or the price tag, in all its extremities, it's in the billions.
Let's begin, of course, with the plummeting costs.
The energy sector has fallen by 90 -- investment by $90 billion in 2009. That's the result of falling oil demand. Some people believe it will pick up. The lack of investment, though, the lack of investment threatens energy poverty. In other words, there simply won't be enough energy provided in the future because we haven't provided for it in today.
And there, of course, the cost of delay in doing this will be seriously large -- $500 billion a year is expected to.
Let's pause for this for one moment and let us take you back to Fort Hood in Texas, where you can now see President Obama returning to the stadium. It will be a while before the president speaks, but obviously this particular...
QUEST: That's the American national anthem, of course. And the sign there of the 13 boots, the 13 rifles, the 13 helmets of those who fell at Fort Hood.
QUEST: Colonel Michael Lembke of the U.S. Army chaplain there giving the invocation and, at the same time, reminding us of the first names, which, of course, makes the whole event and the whole tragedy so much more real, when, of course, names can be put to faces, can be put to the bereaved and the deceased.
We will be back in Fort Hood, Texas when President Obama addresses the congregation.
While we await that -- and do be assured we'll go to there the moment it happens -- let me turn to Guillermo.
Guillermo Arduino is at the CNN World Weather Center -- Guillermo, tell us the main headlines of the weather and I'll apologize if I have to interrupt you on the way.
GUILLERMO ARDUINO, CNN METEOROLOGIST: Oh, no problem at all.
You know, our eyes were set on this tropical depression now. It was a hurricane before, then a tropical storm, because we have a lot of oil rigs here -- hundreds, in fact. And then refineries on the ground. And 30 percent, actually, of the operations were halted.
But now, because this system weakened so quickly, everything is going back to normal. And they estimate that either tonight for us -- because it's 2:44 p.m. right now -- or tomorrow morning, that 30 percent operation that was halted in the oil rigs is going back to normal.
So that gives you a little bit of perspective of the eventual impact that we would have seen with it. And it's the end of the tropical season at the same time, the Atlantic hurricane season. So we're happy to report that we have not seen much activity. There is a problem with a cyclone, though. It is going to continue here on a terrain that has been saturated by rain. So we may see some floods. But you see it will be short-lived, especially this area. Practically the entire state of Georgia all the way into Alabama, where it made landfall, are going to see a nice weekend. So in two days, everything will clear from here. So that's good news.
Let's switch to Europe now. And this is the area that will continue to complicate things. And we see there in the Alpine Region into the Czech Republic and Poland, two things -- first floods and maybe some snow showers. And this is into Thursday, so you can plan accordingly if you're going there.
Now, in Britain, we don't see much of a problem. Friday in London maybe some rain showers. Thursday appears to be OK. It's not terribly cold, either. We see the fronts coming and going, so no problems there. Temperature wise, this is what we expect for tomorrow, so you have an idea -- 10 in Paris. So it seems that gradually, you know what, we're turning into the single digits, so that this is -- this is not a nice picture anymore. (INAUDIBLE) Zurich, as I told you, with some snow; Vienna maybe some rain showers; then Dublin with winds and rain showers; and London the same thing; and Rome, especially. But everybody else appears to be OK. This is transitional weather.
Also, improving soon in Greece. But then it's the time for the Aegean Sea here in Turkey and into Cyprus later on to see some storms.
Stay with us.
Richard will be back after the break.
QUEST: "Sesame Street" 40 years old today. The iconic children's program, when it began, it only had money for one season. Now even America's first lady has appeared on "The Street."
(BEGIN VIDEO CLIP FROM "SESAME STREET," COURTESY SESAME WORKSHOP)
MICHELLE OBAMA, FIRST LADY OF THE UNITED STATES: We're planting vegetables like these right here. And veggies taste so good when they come fresh from the garden, don't they?
(END VIDEO CLIP)
QUEST: "Sesame Street" feeling the same pain as Main Street. The production company which makes the series, Sesame Workshop, was forced to cut jobs this year because of the downturn. It has even made an episode trying to explain how children can learn about recession.
(BEGIN VIDEO CLIP FROM "SESAME STREET," COURTESY SESAME WORKSHOP)
UNIDENTIFIED CHILD: Why isn't mommy at work today?
UNIDENTIFIED FEMALE: Well, darling, there's -- there's something your daddy and I want to talk to you about.
UNIDENTIFIED MALE: Come on and sit over here, son. Sit down here.
UNIDENTIFIED CHILD: OK, daddy.
UNIDENTIFIED FEMALE: Right. Well, you see yesterday, I lost my job and I'm not going to be working, at least for a little while.
(END VIDEO CLIP)
QUEST: Now, that is a fascinating way in which an age old program is turning into a new way of teaching.
Earlier, the chief exec of Sesame Workshop, Gary Knell, joined me.
And I wanted to know how the show has stayed popular using those sort of tactics for so long.
GARY KNELL, PRESIDENT AND CEO SESAME WORKSHOP: One good idea can actually last a really long time if you are open to change. And I think you don't get in love with your own work, that you've got to be open to new innovation. And I think, you know, recently, there was an article about us that said same street, different world. And I think that sums up how we've tried to evolve "Sesame Street" all these years.
QUEST: You see, I was looking online and, of course, you have tackled some of the most important issues of the time, including the great recession.
KNELL: We have. And, in fact, we just did a program here in the U.S. about how to talk to your kids when you lose your job or when you've got to move in with your grandmother. You're home on a Wednesday, mom, you're never home on a Wednesday. And what it is, is giving parents coping skills using the power of these iconic characters, the Muppets, to really role model behaviors that are based on real kids that gives parents the ability to talk to their kids about these tough topics.
QUEST: And it won't come as a surprise to you that I need to ask you, obviously, about your own company's position. You're a not-for-profit, but at the same time, you did have the very unfortunate time of having to lay off a large part of your staff.
KNELL: Yes. I mean we did go through -- we did go through a downsizing and a sort of a refocusing. We're not immune from the economic troubles that America and, frankly, the rest of the world were in. And we've adjusted well and I think we've come out of that as a -- as a stronger company today. And we're moving ahead on a -- a lot of different fronts now in -- in trying to move this important mission forward in the 21st century.
QUEST: You see, that -- let's just talk about that mission for a minute. I mean, you've got reading, you've got writing, which everybody always remembers. Some, like myself, would also throw in the bigger one, arithmetic. And some would also throw in, for example -- for example, the need to learn about business, commerce and you've got to make money.
How important is to...
QUEST: ...to put that element into the show?
KNELL: Well, I think, you know, financial literacy is -- is maybe what you're talking about, Richard. And, you know, this is a critically important tool for people in the U.S. and around the world to know. You know, I actually believe the U.S. wouldn't have gotten into some of the mess that it got into with its economy had people been more financially literate. And I think this has to start, really, with our youngest kids. It's not teaching them about derivatives and how to invest in mutual funds, but it's talking about the basics, the building blocks of learning that your parents go and have a job, that they make money, that that money pays for a toy or learning the lesson that you can't always get what you want, you need to save up for things and be patient.
These are important messages. If you instill it in a young child, you can build upon that so when they get to be adults, they won't fall in, hopefully, to that credit card problem that they -- so many Americans have gotten caught up in.
(END VIDEO TAPE)
QUEST: Now, you have to admit when a business show like QUEST MEANS BUSINESS starts talking about "Sesame Street" and we start -- and you start hearing why "Sesame Street" is quite so relevant, then it all becomes quite clear -- start them young then they'll learn how to do it the proper way.
We need to remind you that there is serious stuff taking place in Fort Hood in Texas, where the memorial service for the 13 people -- 13 soldiers -- U.S. soldiers who were killed is taking place.
That is General George Casey, the chief of the U.S. Defense -- Army. And he -- the chief of staff of the U.S. Army, I beg your pardon. And he is speaking just ahead of President Barak Obama.
The moment the president speaks, we will be going and bringing that to you.
This was a major event in American public and military life and you will want to hear what Mr. Obama has to say.
We need to remind you on markets, while we await these events. Let's turn to Wall Street, where the Dow Jones Industrials has been -- it's gaining a little bit, not much, after the 200 point rise which took it to a year long high. And now we are sort of taking a pause for a bleth (ph), a bit of a breather, just up 12 points, still over 10000. And that seems to be the way we're going to go with just about an hour and 10 minutes to trade.
The European bourses require our attention, where the main markets all closed flat or lower. Telecom stocks were much in the news. Don't forget, those banking stocks in the UK, where we had an up for HSBC, a down for Barclay's, RBS and Lloyd's going nowhere. Vodafone said it needed to make cuts worth an additional $1.16 billion.
The new Consumer Confidence Investment Sentiment Index in Germany took its toll on that particular market. But, as you can see, the losses were generally rather small overall.
You're up to date with the way the markets have traded and are (INAUDIBLE) before, of course, New York will close.
We will be back in just a moment. If President Obama is speaking, we will bring that to you. Otherwise, QUEST MEANS BUSINESS continues.
QUEST: And now let's go back to Fort Hood in Texas.
The president of the United States speaking at the memorial service.