Return to Transcripts main page


Portugal's finance minister says markets are over-reacting to Euro Zone deficits, and he has the authority to cut spending

Aired February 5, 2010 - 14:00:00   ET


RICHARD QUEST, CNN INT'L. ANCHOR, QUEST MEANS BUSINESS: I'll cut if I have to, Portugal's finance minister tells me he'll get tough on spending.

Stock markets continue to take a beating as more American jobs disappear.

Guilty, BAE is forced to pay up following corruption charges.

It maybe the end of the week, we have a busy time ahead. I'm Richard Quest. I mean business.

Good evening.

Investors on Wall Street and in Europe, desperately looking for a silver lining and finding they have been out of luck on Friday. The numbers on Wall Street make for some grim reading. The Dow Jones industrials down more than 100, down 150 points, actually, 1.5 percent. Now comfortably under the 10,000 level; 9,849. And that is the way the market has been trading for most of the day. We've been up a bit, we've been down a bit, but substantially, the mood has been grim from the moment things got underway.

It was rattled by the state of the U.S. economy and a growing debt crisis here Europe. Tonight, on QUEST MEANS BUSINESS, is panic returning to the market? The market numbers in Europe tell a sorry story of sell, sell, and if you had any doubt, sell a little bit more.

From Amsterdam to Zurich, all the main markets were deeply in the red. The London FTSE was off 1.5 percent. The largest losses down in Paris, with the CAC currant down 3.5. It was the financial sector that was badly hit here. AXA, the insurance company, down 6 percent. BNP Paribas, the whole lot of them.

In London, just let me refer once again, substantially, banks, insurance companies, anything that might have some linkage with the financial system, bore the brunt of a widespread sell off.

In Asia, it was a similar sort of story. Asia was down because they were reacting in Asia to the losses that had been seen on the previous session on Wall Street, when the Dow fell more than 2 percent. That was Thursday night. You and I talked about it last night. Seoul off 3 percent, Hong Kong's Hang Sang, the Chinese market with the Hang Sang did bear the brunt of the losses. Off very, very sharply, down 3.3.

Now, if Europe and Asia have given you a nasty bout of the collie- wobbles, then really the following numbers will give you a sorry state of indigestion.

We begin in Greece. Of all the countries Greece has been hammered hardest this week. The Composite index lost 8 percent; 3.7 percent of that was wiped off today. And this is despite the fact that the Greek government has won EU approval for its austerity plan. And the finance minister and the prime minister have repeatedly said there will be no bailout required. But, of course, there will be a strike. There is industrial action planned and that is the reaction.

Spain's IBEX was off 7.7 percent over the week. One of the things to note about the Spanish-we had the finance minister on the program last night, as you will recall. Again, no bailout or assistance envisaged, but the market Santander, absolutely hammered, as one of the banks.

Portugal, off 7.3 percent, the market, 7.4 percent. With all these three countries, whether it is Greece, Spain, or Portugal, what you see is an affect that is being felt into the euro markets. And the euro, against the dollar, now trading at 1.3627. You would have got a $1.50 for your euro, $1.50 for every euro, back in November. Now, of course, it has fallen quite sharply.

That is the markets, as they have traded. The fight for credibility within those countries, they are of course internal battles being fought between those who believe they have to cut now, and politicians who want to go on spending.

In Portugal lawmakers have passed a bill that would allow regional governments to get deeper into debt, despite warnings from the government that it would widen the budget gap and would put the credibility of the austerity package into question.

A short while ago I was joined on the line by the Portuguese Finance Minister Fernando Dos Santos. And I asked him whether or not this sort of battle between politicians was exactly what Portugal didn't need?


TEIXEIRA DOS SANTOS, FINANCE MINISTER, PORTUGAL: Yes, that is what I'm telling them. And yesterday I was very clear about that. And I told them that I will use special provisions on the law just to impeach the consequences on our budget of those decisions.

QUEST: You see, the problem is that this goes to the very heart of credibility, which is exactly what the markets are saying. The ministers and the government says, austerity, everybody else is off to the races with spending.

DOS SANTOS: Yes, that is my basic argument and-but what I want to make sure for markets is that, nonetheless, the minister has, according to law, power according to which we can prevent the negative consequences of such decisions. And I will use such powers to keep on track our budget consolidation and reduction of the deficit, until 2013.

QUEST: So, you are telling us clearly, tonight, that even though parliament spends, you are going to cut?

DOS SANTOS: Yes, I will cut. And I will use the powers that the law entrusts to the minister and to the government to control expenditure and to avoid excessive deficits, and that is our commitment.

QUEST: The markets are giving their own verdict. First Greece, now Portugal, Spain, and you are pretty fierce in your criticism about the markets, aren't you?

DOS SANTOS: Yes, I think the markets are overreacting because the Portuguese situation is quite different from the other countries. Portugal, of course, we have a high deficit as many other countries in Europe and all over the world due to the international crisis. But our deficits increased in line with EU average and the OECD (ph) average countries. Also, our public debt is below the Euro Zone average.

QUEST: Finally minister, tonight, this Friday night, can you say clearly and categorically that you do not imagine or envisage having to go either to the IMF or the European Commission, or to the European Union for any form of fiscal help?

DOS SANTOS: No, I think we are able to be in empowered in our responsibility and in our policies and no need for any kind of external assistance. We did that in past. We also did a historical consolidation between 2005 and 2007. We reduced the deficit one year earlier than expected. And I am convinced that we will be able to do it again. And this time we'll do it until 2013, as it is our commitment.


QUEST: The finance minister of Portugal reaffirming the country's commitment. Lars Thunell is the chief executive of the International Finance Corporation; it is the lending arm of the World Bank.

And it is worth pointing out that you are the bit of the World Bank that lends to private sector, as opposed to the bit that lends on major capital projects, to governments. But even so, whether it is public lending or private lending it is all lending at one level.

Southern Europe is in a heck of a mess tonight. What is going on? How dangerous? How dangerous to the whole structure, of the fragility, I mean?

LARS THUNELL, CEO, IFB: Well, I think we have to look at this in the context of the financial crisis that started on Wall Street. The reaction was all these governments would need stimulus packages getting their budgets out of control. And at the same time, unemployment is still continuing, what is what we are seeing today. We are seeing Southern Europe with the budget problems, and the credibility. And you are seeing the unemployment numbers. And this is going to take time to work out.

There is a credibility problem and you have seen, we have seen Ireland, who were actually able to get through, and take of their things. But the big question the market is asking now, will the politicians in these countries be able to cut those budget deficits?

QUEST: If they don't cut those budget deficits, firstly, would you lend to companies within those-I mean, although you're-it is not your bailiwick.

THUNELL: No, it is not our bailiwick, and we are also a development institution, so we are supposed to take bigger risks than the market does.

QUEST: Right, so you are taking bigger risks than demand (ph).

Let's just stick with is for one second, though, this credibility question, do you get the feeling that we are on the precipice of a European, Euro Zone crisis? Or are we already there?

THUNELL: I think we-I think the politicians and the finance ministers and the central bankers will work this out. I think there is some much invested in the euro, and the Euro Zone, and Europe, that it will not let this go.

QUEST: Turning to your own area, the IFC, when you are-particularly to the poorer countries and investing within private industry and private companies to the poorer countries. What are you looking for? Because the emerging markets are by and large performing better than others. There is the potential for growth there provided they have capital and at the moment the one thing that is not got a lot of is, capital.

THUNELL: No, I think, what we are, we are a development institution so we are looking at where we can invest. Obviously, we China and India is leading the recovery out, but Africa and the poorest countries haven't really seen that yet.

QUEST: Isn't that inevitable, though?

THUNELL: Well, there is-if you look at history, the investments in there, for example, Africa, hasn't been that great. But that is our job and that is where we invest. Last year we increased our investments in Africa, with 33 percent.

QUEST: So give me an example, of a perfect investment. Not necessarily a particular investment, but the sort of thing you particularly-is it job related? Economic growth related? Education related? What the systemically, economically growth.

THUNELL: If I pick Africa, first of all, in all the countries we work we lend to banks.


THUNELL: Who in turn, we invest equity in banks, who channel that money to SME sector, because that is very important to get the entrepreneurs going and get them to grow. Because that is how you get employment. In the developed country or in the developing country. The other thing for Africa is infrastructure projects being very, very important. That is missing in the whole continent and we are trying to develop infrastructure projects, whether it is ports, roads, railroads, power.

QUEST: Lars, come back again, please, when hopefully we won't be in the middle of a Euro Zone crisis and we can talk more about the various aspects of the IFC. Many thanks.

THUNELL: OK, thank you.

QUEST: Now, the news headlines and Becky Anderson, tonight, is at the CNN News Desk.


QUEST: We were hoping today would shed light on the U.S. jobs situation. Well, light, heat, or simply murkiness? Murky Maggie Lake is pouring the report and will be with me in a minute.


QUEST: Welcome back.

What to make of the latest U.S. jobs report? Now, are you a glass half full, or a glass half empty sort of person? Because depending on how the numbers were, well, there was plenty in it that could say, actually, there was a lot to be cheerful about. But there was also quite a lot that said, hmm, plenty more room to go.

It is the response of the markets that we are hearing loudest at the moment. And the markets are suggesting that the Dow Jones industrials is off more than 100 points. The headline numbers look like this: U.S. economy shed 20,000 jobs last month, which is worse than most economists had expected. Not a lot worse, not a lot worse.

Here is the twist, though, back to filling up the glass. The employment rates unexpectedly dropped from 10.9-sorry, from 10 percent to 9.7 percent. So, cheers to that.

Let's get a better sense of those seemingly conflicting numbers. Maggie Lake is in New York.

Maggie, my glass is half full and half empty. What's yours?

MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: I'm going to say half full, Richard, for a change. But the markets, definitely some skepticism although I will caution, I know Stephanie is going to talk a lot about this. It has a lot more to do with what is going on there in Europe and the dollar than it does the jobs. Definitely some disappointment but you know we did hear from President Obama commenting on it.

He is certainly trying to look at it with the glass half full. Have a listen.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Today we received additional news suggesting that we are climbing out of the huge hole what we found ourselves in. Last January, the month I took office, almost 800,000 Americans lost their jobs. Today we learned the job losses for this January were 20,000. The unemployment rate dropped below 10 percent for the first time since the summer. Now, these numbers, while positive are a cause for hope, but not celebration.


LAKE: Here is what economists are saying. The 20,000 drop, some of the downward revisions, that is all backward looking. But the forward- looking indicators were actually positive. The work week lengthened, temporary workers added, those tend to be leading indicators, the things companies do right before they hire permanent staff.

And the other big thing, and the thing that caused confusion, that unemployment rate dropping. It is a different survey they use to calculate that. People tend-economists tend not to look at it. But this time around some economists were saying when you are about to see a big turn in the economy, that household survey is better at picking up small business hiring. So, it may actually be a better leading indicator, again, than that payroll number.

So, some of the economists trying to see some of the positives here, but clearly, a long way to go, Richard.

QUEST: Maggie Lake, many thanks, indeed. Whether it is half full, or half empty, have a good weekend.

Stephanie Elam at the New York Stock Exchange, today.

Stephanie are you a half full, or a half empty sort of woman tonight?

STEPHANIE ELAM, CNN FINANCIAL CORRESPONDENT: You know, I'm going to go with half full on this one, Richard. Simply because there were a lot of good indicators in there and also if I were take a look at this jobs report, compared to a year ago, when we lost almost 800,000 jobs, then definitely losing about 20,000 is still a lot better.

Obviously, it is going to take some time, but we are moving in the right direction. And overall, obviously, this has not been taken well by the markets. The downward pressure has been there and then it has just increased as the day has gone on. It is especially painful after the sell off we saw yesterday. It was the worst day for the Dow since April.

The initial reaction to the unemployment number was positive. Investors liked the drop in the unemployment rate. But as the report gets digested, many point out the fact that the people are just giving up on the job hunt. So that is part of issue here.

On top of that, debt concerns in Europe, really not helping out the markets here at all, either, Richard.

QUEST: So, if we factor in a Thursday and a Friday, both of which have been pretty awful on the market, and-one bit of analysis I read today, from David Buik, in the U.K., suggests that this is the correction that we didn't get at the end of last year.

ELAM: Right.

QUEST: This was the fourth quarter drop that perhaps is just delayed. Do you give that much credence, do you think?

ELAM: I think there are a lot of people who are saying the C word now. A lot of people point to the fact that everyone said things were moving too quickly from March of last year, all the way through the end of last year. And saying this cannot keep going, especially since the fundamentals aren't there to support it. So a lot of people do believe that this is the correction.

I mean, in the last three weeks, all of the earnings that were coming in were positive. They were starting to come in. We also had other factors that put downward pressure on the market. Between President Obama putting pressure on the banks, then you had the Senate threatening not to confirm Ben Bernanke, back as Fed chief, and then the concerns that we have seen this week, coming from overseas. All of that has gotten into the market and a lot of people say this is the correction that we knew was going to happen. It is not like we were going to take off and go back to, you know, the 14,000 numbers.

But can I-if I could just show you, since January 19, what exactly has happened on the Dow. It is down nearly 7 percent or more than 800 points from its peak, of this go round, of 10,725. In that time we have had eight triple-digit moves on the Dow. Five of those to the downside, three of which were declines of more than 200 points. And then, yesterday, we saw the worst of it with that 268 point drop, the worst since April. So, obviously the C word, I don't think you can get-you can run away from it, Richard.

QUEST: No, and we have still, according to an official definition, or the technical definition of a correction, we still have another 3 percent to go.

Stephanie Elam, keep the glass half full, anyway, as you have a drink over the weekend.

When we come back, in just a moment, so it is the apology and the aftermath, Toyota's top exec finally faced the media. Running a multinational company has rarely seemed less fun.


QUEST: "Sorry about all the faulty cars, but please don't stop driving," the words of the president of Toyota as he made his first official statement on the epidemic of defects that is gripping his company.

And the first thing he did was to apologize. Akio Toyoda, also told a news conference in Japan, it is safe to drive a Toyota.


AKIO TOYODA, PRESIDENT TOYOTA (through translator): The current problem is a huge problem and it is a critical situation. We as a company must unite and work hard to regain the trust from our customers and I believe that is also my responsibility.


QUEST: One thing he did not do was to recall anymore cars, despite the problems with the brake systems of the 2010 Prius, which Toyota says it has traced to a software glitch. Toyota said an investigation on that issue is underway. A decision on whether it needs to be recalled, the Prius, will be announced as soon as possible.

You will know the past word-the past year has been, to paraphrase Queen Elizabeth, annus horribilis, for Toyota. When you add it all up they have called more cars back for repair than they have actually sold.

The trouble started coming out in January of 2009. A recall of more than a million small cars, the Yaris, or the Vitz, as it is called in some countries, due to potentially dangerous faults with seat belts and exhaust.

Now, in May it reported its first ever annual loss, as if there were more hard times ahead, because of weak demand in its main markets. But by October, well, then you have the biggest recall so far. Four million owners in the U.S. told to get their cars fixed because the floor mats could get tangled with the accelerator pedal.

By November, a return to profit and the news that Toyota was pulling out of Formula One to save $300 million a year. And after two weeks of mounting problems, production lines being halted, and sales of models suspended, Toyota said lost sales would scale it back about $2 billion.

I spoke earlier to day to our correspondent in Japan, Kyung Lah. She was in Nagoya, where she had just attended that Toyota news conference. And I asked her whether it was too little, or too late, or a case of better late than never?


KYUNG LAH, CNN INT'L. CORRESPONDENT: Well, if you talk to any of the reporters in that room, who were in that news conference, Richard, a lot of reporters might say that at least they feel like this evening, and maybe a little more of a little more of too little too late. Just because there was some frustration with how this was organized.

There was a very hastily arranged news conference, after 5:00 o'clock, past a lot of reporters thought, OK, well, the week is going to end without hearing anything from Akio Toyoda, but then at 6:30, 6:45 the call started coming out that there would be a news conference in Nagoya; from Tokyo to Nagoya, about a two hour bullet train ride. The crews barely got here in time and so, as everyone was assembling and the news conference started, we heard-we saw Mr. Toyoda come out, and then the reporters started to vent some of their frustration.

In the room, what we got was something that a little unusual for Japan. Some rather direct questions to the head of the CEO, asking what is your management style? Is this what you consider leadership? Have you been hiding, Mr. Toyoda? And that question, have you been hiding, the response was he was not. What he was thinking is that Toyota as a management team, one speaks for another and that his vice presidents were trying to deal with the issues as they were coming up.

So, what he is interpreting, everything that is swirling around him as, is a measure, dispassionate response to what is happening.

QUEST: It is fascinating. It is almost as if today's agendas require the chief exec to be out there perhaps more so, publically, than simply dealing with the crisis. I suspect he saying he was dealing with the crisis?

LAH: Yes, he was saying that he was trying to figure out exactly what is going on. And if there was a time lag it was not intentional and there was no intent to cause customers alarm. But you are absolutely right. In today's business world, especially if you have something as intimate as, maybe your accelerator is sticking, or maybe your braking system isn't as efficient as should be, what that consumer wants is to try to put the face of a company, and the reassurance of that company head, saying your car is going to be OK. And that has not happened here.

QUEST: Is there any anger yet within Japan at the way the rest of the world is beating up on one of Japan's greatest names, and greatest exports?

LAH: Well, if you look at the blogosphere in Japan, you definitely get the sense, is this a case of Japan bashing? Is the United States and American customers going, Oh, finally, the company that really became the world's number one automaker, a Japanese automaker, is this now some glee of the Americans now saying, ah, we are about to take over what Japan took. There is that sense in the blogosphere about whether or not this is the case.

But when I spoke to an analyst about this, he said, OK, well, maybe that may be an undercurrent here. But the fact of the matter is, is that Toyota made some sort of mistake here, to its customers by not keeping up that promise and the promise here by Toyota was that it is quality and safety record should have been there for its customers when they get behind the wheel of a Toyota vehicle.

QUEST: Kyung Lah, in Nagoya. Many thanks, indeed.


QUEST: Europe's biggest weapons manufacturer has been waging its own private battle behind closed doors with the long arm of the law. BEA Systems said today it came to an agreement with the authorities. And I suspect amicable is not the word.


QUEST: Good evening.


This is CNN, where one of our major stories tonight, Europe's biggest defense contractor is paying nearly $450 million at the end of a long running corruption case. BAE Systems has pleaded guilty to conspiring to make false statements to the U.S. Government in connection with regulatory filings. It also admits not keeping proper records of payments. It will pay fines on both sides of the Atlantic.

The settlement means the company avoids having to answer further questions over allegations involving Saudi Arabian contracts -- the subject of much controversy in the U.K.

BAE Systems says it accepts responsibility for its shortcomings. It's drawing a line under the issue. The company's shares gained more than 1.5 percent in London.

Jim Boulden joins me now -- Jim, this is very complicated.


What -- what -- the word you didn't use was bribery. This is about bribery. This is about allegations against BAE Systems' former management bribing countries for years and years and years -- way back from the '80s all the way up until about 2000.

So what they've pled guilty to is filings and things like that.

QUEST: Right. Now, is this -- is this our old friend, mail fraud, you know, where...

BOULDEN: Well...

QUEST: ...where you can't get somebody for the actual main offense, whatever, so you pled guilty to putting a false declaration in the post or (INAUDIBLE) but actually...


QUEST: ...they couldn't get them on bribery, they've gone for this instead?

BOULDEN: Well, they could have taken them to court...

QUEST: Right.

BOULDEN: ...which we didn't get. We didn't get that far. It's been going on for negotiations for years. We've (INAUDIBLE)...

QUEST: But it's (INAUDIBLE)...

BOULDEN: ...and changed CEOs. The current management of BAE Systems has even respected -- accepted full responsibility for what happened way back when with all of these contracts.

The bottom line is that BAE Systems hasn't been convicted of any criminal convictions and they would have lost all kinds of contracts with the U.S. Government and with the European Union.

So there had to be a deal arranged, unless you want to spend a lot of money in court.

QUEST: How embarrassing is this for BAE Systems?

BOULDEN: Well, it -- the embarrassments have already come and gone, to be honest with you. I think that's why we saw the share price reacting. It's been -- it has been an open secret for a very long time that this was a problem dogging BAE's former management. So they had to clean house, come in and try to settle this.

QUEST: The refusal of the British government to allow this to go ahead, do the British now look rather well -- would the word be cowardly, whatever you want to say?

BOULDEN: Well, let's remember, former Prime Minister Tony Blair stopped the investigation...

QUEST: Right.

BOULDEN: the Serious Fraud Office...


BOULDEN: ...into the Saudi Arabia part of this story.


BOULDEN: He said there were secrets, it was too sensitive to actually look to see if a British company was bribing people.

QUEST: Right.

And the Americans go on and...


QUEST: that group and did the (INAUDIBLE)...

BOULDEN: And they investigated it anyway.

QUEST: So now the British look silly.

BOULDEN: Well, the new head of the Serious Fraud Office says he came in in October last year and said I'm going to look at this again. And they looked at other parts. The -- the conviction is part of a deal with Tanzania, not Saudi Arabia, as far as the U.K. goes. But the SFO says they're going to up the -- the ability to prosecute companies, not just individuals. They want to strengthen the law here in the U.K. so they don't go through this again.

QUEST: Well, all right. I'm confused -- well, I mean not by your explanation, but by the whole -- the whole situation.

Fundamentally, is this now over?

BOULDEN: Yes. It's a global settlement. BAE has paid the fine. The U.S. will drop charges. The U.K. will not be investigating anymore and that's it.

QUEST: I can file it away.

BOULDEN: In there.

QUEST: Have a good weekend.

BOULDEN: Thank you. Yes.

QUEST: I'll bet you're glad, as well.

BOULDEN: It's been a heck of a week. A heck of a week.

QUEST: It has been.

BOULDEN: Extraordinary.

QUEST: Extraordinary. I'm not sure which of the whole week, you know, one picks up as being the key moment.

BOULDEN: Toyota most interesting, the bond markets the most serious.

QUEST: That's perfectly put it -- Toyota the most interesting, the bond markets the most serious.

When we come back in just a moment, the master chef who is cooking up a surprise for food fans -- he is closing. It'll mean even more gourmet treats on the way.


QUEST: It is said to be the best restaurant on the planet. Hmmm. Spain's El Bulli is run by a chef with three Michelin stars. It's the ultimate accolade for any professional chef. But Ferran Adria has disappointed gourmets everywhere by saying he is closing.

Al Goodman now went to find out why this chef is being the best isn't simply good enough.


AL GOODMAN, CNN CORRESPONDENT (voice-over): He's a man in search of creation -- food creation. And he's suddenly decided to change his path, even while staying close to the essentials of cooking at his neighborhood market.

For several years, a lot of publications have called him the best chef in the world, declaring his restaurant number one.

North of Barcelona, El Bulli, where food is transformed into the unimaginable. A 30 course meal plus wine costs about $400 and the restaurant says a million gourmets compete for just 6,700 reservations a year.

But now, it's even harder to get a table -- he's just announced it's closing for two years starting in 2012.

FERRAN ADRIA, RESTAURATEUR (through translator): As the years pass, it gets more difficult to create, because so much has already been created. So I decided we needed to do something radical.

GOODMAN: While the restaurant will close, his secluded Barcelona workshop won't. The next food revolution, he hopes, will start here.

(on camera): Ferran Adria is at the top of his game. But the nagging question he keeps asking himself is, what else can he do with food and his creative energy?

ADRIA (through translator): Our challenge is can we go further?

What's the limit?

That's our work. But sometimes going further involves very simple things.

GOODMAN: It doesn't look simple as they tinker with the next menu for the restaurant, which opens from June to December this year and next before the big shutdown. Exploring food tastes, textures and cooking techniques - - dozens of ideas tested every day. Like this potato starch transparent crepe from Japan.


GOODMAN: But they would use it to wrap a sublime concoction. Just an idea. The restaurant, even with three prestigious Michelin stars, loses money. But Adria's decade as a celebrity chef has spawned a business empire. He's made deals on olive oil and on the designs of plates and silverware. He's written numerous cookbooks. At his main business office, he discusses a planned book about a century of culinary arts.

Adria says he isn't sure what will be served or how at this restaurant when it reopens in 2014.

ADRIA (through translator): I'm not afraid of anything. What is needed is pressure. Without pressure, there is no creativity.

GOODMAN: Al Goodman, CNN, Barcelona.


QUEST: Gastronomies around the world, weep and wait.

You'll be waiting a very long time if you're hoping to fly to Washington, D.C. in the U.S. Delta Airlines, for example, is not flying there at the moment. And I suspect nobody else will be getting in or out tomorrow because pretty appalling weather.

Guillermo is at the World Weather Center.

GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes. We have a lot of snow, Richard, and, actually, it's going to continue. Tomorrow is going to be the problem, Saturday. On Sunday, in Washington, DC, Baltimore, Philly, we will get in better shape.

Let's show our viewers what's going on. The first shot, that's the Capitol, of course. You don't see so much snow right now, but you will see more tomorrow. Let's transition to the White House now. This is a very specific shot that I chose because you can see how much snow is falling right now.

So, is -- is that the only place in the United States where we have snow?

No. I've got my map here. Anywhere from the Dakotas all the way into the Mid-Atlantic states. New York is going to be affected by this. And the rain in the south.

Interestingly enough, Richard, now Atlanta is posing delays because of winds and not Washington. It is not. The problem will be tomorrow. Then let me tell you again -- Delta Airlines has canceled all flights in and out of DC, Baltimore and Philadelphia on Saturday -- that is tomorrow. So if you're flying into -- or you're planning to fly there, remember, when it comes to weather issues, they don't give you any accommodation or any other plans. You have to take your sleeping bag there to the airport and wait until the weather improves.

Blizzard like conditions all over. It takes us all the way to Pennsylvania, too. Accumulation, 30 centimeters, 35 centimeters. You see Philadelphia. A friend of mine flew into Philly last night and I said perfect timing, because now it will be impossible on the weekend. So remember that.

Sunday it gets better. It all started with this low bringing the heavy rain here and now a perfect concoction of weather conditions to see half a meter of snow all the way into the Northeast.

Atlanta -- whoo. The -- the computer is saying some snow showers -- I don't know about that. Chicago with some snow showers. And then con -- conditions on the western side of the country getting better.

Budapest will continue to have the same forecast. Maybe you see some snow showers tomorrow. But compared to the States, this is not looking bad at all. The snow stays in the Alpine Region. The Balkan Peninsula, the same thing. And it gradually go -- temperatures are going up a little bit.

So here you have it. In Austria, also, lots of snow. This is the overall look at Europe. We are going to see some snow showers in southern parts of France, as well, maybe, into the Alpine Region, of course. Zurich, Vienna, then Frankfurt, Munich, windy here; Barcelona, Rome, remember, I was talking about Vilamoura in Portugal, all those golfers. Well, the winds are in the Alpine Region and in Barcelona now -- Richard, have a nice time in Budapest.

QUEST: We thank you for that, Guillermo.

I'll have a report when I come back.

And that is QUEST MEANS BUSINESS for this week.

I'm Richard Quest.

I do thank you for your joining me this week.

Whatever you're up to in the hours ahead, I do hope it's profitable.