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QUEST MEANS BUSINESS
Greek Workers Take to Streets; ECB, Bank of England Leaves Rates on Hold
Aired March 4, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ADRIAN FINIGHAN, HOST, QUEST MEANS BUSINESS: Greece goes to the markets as its workers take to the streets. We're live in Athens.
The ECB and the Bank of England leave rates on hold. We'll look at where investors can get more bang for their buck.
And the oil company, the Kremlin, and one almighty tax bill. As Yukos has its day in court we'll be speaking with a former CFO.
Hello, I'm Adrian Finighan in for Richard Quest. This is QUEST MEANS BUSINESS.
Greece returned to the bond markets today in a make or break bid to remain solvent. It was looking to borrow more than $6.5 billion to refinance its heavy debt. This was the first major test of confidence in Greece since it announced a fresh round of austerity measures this week. Well, investors may have been pleased, but it was a different story out on the streets of Athens. Outraged Greek unions gathered to protest once again today, hundreds of demonstrators occupied the finance ministry, in the capital, over some of the most severe austerity measures ever proposed by a Euro Zone country. The demonstrations came as the Greek government launched its 10-year bond sale. It was designed to raise funds to roll over billions of dollars of Greek debt.
The sale, as we said, went down well with investors. Demand was pretty strong. CNN's Jim Boulden will break all of that down for us in just a moment. But Greece is getting some extra advice, it seems, from two political allies of the German Chancellor Angela Merkel. Two MPs told the newspaper "Bild" daily that the Greek state should sell some of its islands to cut its debt. Yep, like you can see that happening.
Let's get the very latest now on the demonstrations in Athens. For that we are joined by journalist Nicole Itano, who joins us live from the capital.
So, this demonstration at the finance ministry building today and the march, later in the day, I mean how would you describe the mood of the protestors?
NICOLE ITANO, JOURNALIST: Well, I mean, the response of unions was immediate. Really the first thing that Greeks saw when they woke up this morning was the occupation of the finance ministry. There was a giant banner hanging out side calling people to the streets.
I was just over there a few minutes ago and they were just taking down the banner now.
The protestors who were out there were adamant that they would not accept these austerity measures. That the poor, the ordinary worker should not pay. But we really didn't see a sort of mass uprising. The numbers were still pretty small. The real test will be tomorrow when the two main unions, both the civil servants union, and the sort of umbrella union of Greece. When they hold work stoppages for several hours, we're going to see disruptions in the trains, in the airports, but the test will be how many people, tomorrow come out into the streets and how many people stay home from work.
FINIGHAN: As you say, it is going to be a big test tomorrow. Is it possible at this early stage to gauge just how much public sympathy the unions have? How much support they have for their protests?
ITANO: Well, polls have consistently said that the majority of Greeks to recognize that Greece is in dire straits and they do support the prime minister. They recognize that sacrifices need to be made. But those polls all really have been taken before people's pocketbooks have begun to be hit. And I think Greeks are really, now, for the first time waking up to what the reality of what these austerity measures are going mean for them.
You know, the talk on the local news today was all about how much fuel prices have gone up, how much ordinary families are going to be hit with hits extra month's salary that is going to-the extra two month's salary of 30 percent is going to be cut. It doesn't sound like a lot to outsiders. But this is the money the Greeks use to go on vacations, to pay off their debts, and really for all those extra luxuries. So the worry here is that this is going to tip the country deeper into recession. And already that recession pain is being felt pretty hard.
FINIGHAN: As you said, the Greek teaching federation strikes tomorrow, along with other civil servants. Is this perhaps the beginning? Or is it just too early to say, the beginning of a period of industrial unrest, do you think, in Greece, as people-as these austerity measures begin to bite home?
ITANO: Well, I certainly think we are going to see a lot of protests and strikes and coming weeks, maybe even in coming months. I mean, Greeks do have a culture of protest. The question really is whether those protests will gain the wide support. And whether they will turn violent, like we saw the riots in 2008, in December, after the killing of a 15-year- old boy, by police. So, that is really what the government is worried about, is the level of violence and how widespread these protests become. But I think it is a little bit too early to see how exactly that is going to play out.
FINIGHAN: All right. Nicole, great to talk to you. Many thanks, indeed, to Nicole Itano reporting live there from Athens.
Well, despite the protests on the street today, Greece's new bond issue received a positive response on the trading floors. For more on why this is important-so important-to Greece, let's turn now to Jim Boulden.
JIM BOULDEN, CNN INT'L. CORRESPONDENT: Thanks, Adrian.
Yes, we thought this bond issue might happen last week but they did put it off until today. Just to remind you, bonds are used for governments to bridge the gap between how much they can get from revenue, taxes, etc cetera, and how much they wish to spend. So, it is critical that this bond issue would be very successful. We have been waiting weeks to see how the markets react and it was heavy demand. Very successful, with orders reaching $9.5 billion. Talk in the market said it was two or three times oversubscribed.
But here is the point, though, the bond had a 6.3 percent yield. That means the government of Greece has to spend a lot more money to attract investors to these bonds. It is way too high. That is why Greece is still looking for help from the European Union. They bring that yield down, that helps how much they have to pay over the long term.
Now, why they needed this sale? Well, Greece needs to refinance over $20 billion of debt, that will be maturing in April and May. Don't forget, of course, this is debt. They are paying off the debt with more debt. So, it isn't raising money any other way than paying debt by raising more debt. And this year, Greece hopes to be able to raise some $60 billion within the markets.
Now, how is the reaction to this? Well, the Athens stock market closed up 1.67. So, you can see, Adrian, success in the bond markets, and for those people who have been suffering in the Greek stock markets lately, some positive news out of there as well.
FINIGHAN: Absolutely. Jim, the ECB today announced that it was bringing to an end more of the emergency measures that it put into place to fight the financial crisis. There is no doubt that Greece has been a bump in the road.
FINIGHAN: As it tries to remove those stimulus measures. What does Jean-Claude Trichet have to say about the plight that Greece finds itself?
BOULDEN: Yes, the first question that he was asked, Adrian, was-will Greece leave the euro? And, of course, he says ridiculous. A lot of people are saying this is a ridiculous thing. But he also said that the measures that Greece had been taking-and announced, more of course, announced yesterday-were important. And he did think that Greece is making some positive steps. Let's hear what he had to say.
(BEGIN VIDEO CLIP)
JEAN-CLAUDE TRICHET, PRESIDENT, EUROPEAN CENTRAL BANK: I have absolutely no doubt that all things being nice and appropriately computed, Greece today is in a much better state, taking into account its own activity, it's own output, than it was before, for us, for the commission, for the peers, there is no doubt on that.
(END VIDEO CLIP)
BOULDEN: Now, it is important, Adrian, to note that Mr. Trichet said that he did not think that IMF money would be, quote, "appropriate". Greece still saying, look, at least the IMF is offering us money. All that the European Union is offering us is support.
FINIGHAN: It is going to be interesting to see how it plays out. Jim, many thanks, indeed. We'll see you again a little later in the show. But right now let's take a look at how the major European markets faired this session.
Despite an early boost from improving sentiment over Greece, they ended slightly lower, dented by disappointing U.S. housing numbers. Now investors are also focusing on the latest interest rate decisions from the Bank of England and the European Central Bank. What we heard today, and there were no surprises from either central bank.
The Bank of England kept rates at a record low of 0.5 of a percent for the 12th month in a row. There was no extension of the quantity of the easing program that is printing money to you and me. That was pretty much expected.
The ECB also kept its key rate on hold at 1 percent for the 10th month in a row. Well, taking a wider view, let's check where interest rates stand right across the world right now. And in the U.S. the Fed's key interest rate is at 0.25 percent. The next meeting of Ben Bernanke and company is on March 16. Now, for its part, the Bank of Japan had held rates at 0.1 percent since December 2008. The Bank of Sweden checks in with 0.25 percent. And look for a rate of 7 percent at the South African Reserve Bank.
Perhaps we should be switching our money there. If that is we are savers. With many rates, of course, at historic lows savers have a lot to consider just right now. Such as when you can save, where you should put it? That is something we should put to "Money" magazine's senior writer, Donna Rosato, who joins us now, live from New York.
I mean, money is pretty tight at the moment for a lot of people, Donna, there is not much left at the end of the month. We know we should be saving for the future. We should be building up some kind of emergency fund. What would you advise us to do? We're not getting very good interest rates from our banks.
DONNA ROSATO, SR. WRITER, "MONEY" MAGAZINE: Well, that's right, Adrian. People have been pretty frustrated. Interest rates are so dismal right now. It has been great if you have been a borrower and you are trying to borrow money, or refinance a home, but if you have been a saver things have been pretty tough. But the good news is you don't have to settle for the less than 1 percent, even half a percent that most major banks are offering.
My first piece of advice is really to stay nimble. You don't want to lock yourself into a certificate of deposit, or anything like that, that is offering a slightly higher rate than your bank these days. Because you know what, the economies are getting slightly better. We are starting to see interest rates starting to go up, as economies improve, banks-and there is more demand for deposits-banks are going to start offering higher yields. So, don't lock yourself in to things like certificates of deposits. If you want to put money in a CD stick with low, short-terms, like less than six months.
FINIGHAN: All right. So, I've been with my bank for what-just trying to think now-25, 26 years. You are saying that these days loyalty counts for nothing. I should switch?
ROSATO: That's right, Adrian, you have to shop around these days, unfortunately, the major banks probably are not going to be offering you the best rates. It really does pay to shop around when you are looking for a place to put your savings. A really great place to put liquid savings are online savings accounts. And those are-many big banks offer them, but there are online savings accounts which have a lower overhead cost and they offer rates of 1, 1.5, to 1.75 percent, which isn't so bad when you consider the regular big banks are offering half a percent. And inflation is so low, so you really come out ahead. There are places like HSBC Direct, ING, that offer those kinds of higher rates. So, you might want to consider shopping around a little bit yourself.
FINIGHAN: What about those of us lucky enough to have some sort of investment portfolio, be it a retirement fund, whatever. Should we be looking to get better value for money from that income, perhaps?
ROSATO: Yes, that is a good idea. If you have got your emergency fund all set, you have paid down your high interest rate debt and you've got some money for investments, think about dividend paying stocks. Dividend paying stocks generally don't pay as much as sort of these fast growing stocks, but they are considered a little bit more stable. And dividend paying stocks can really add some nice extra income for yourself.
And here is something to keep in mind, if you want to invest in dividend paying stocks, think about it through a global mutual fund. European stocks tend to offer richer dividends than other countries in the U.S. and Asia. So think about a global dividend fund that has a big concentration of European dividend paying stocks.
FINIGHAN: Donna, great to talk to you. Thanks for the advice. I'm sure many people will be pleased for that. Donna Rosato, senior writer at "Money" magazine.
Right. Let's get you up to date with what else is making news around the world right now. Fionnuala Sweeney joins us live from the London newsroom.
FINIGHAN: Now despite a fall in profits, Africa's largest bank predicts a return to form. We'll ask the CEO of Standard Bank about his strategy. We'll be right back.
FINIGHAN: Now Africa's largest bank says that its on track to see its earnings recover to 2008 levels. Standard Bank announced its outlook after saying net profit fell by 20 percent, due to bad loans. The Johannesburg- based lender said that its customers battled to repay loans amid South Africa's economic slump. Net income fell to $1.47 billion, down from $1.85 billion a year earlier. Standard Bank sees its key markets stabilizing as it is also targeting growth in China, Africa, Russia, and Latin America.
Well, let's go behind the numbers now. We are joined by the chief executive of Standard Bank, Jacko Maree, who joins us live from Johannesburg.
Mr. Maree, it is great to have you on QUEST MEANS BUSINESS. Thanks for being with us. So, it was a tough 2009. As we said net profit down 21 percent, but you're pretty upbeat, aren't you on the outlook for earnings. But at the same time, you don't think we've quite seen the peak yet in these non-performing loans?
JACKO MAREE, CEO, STANDARD BANK: Well, it is never fun to report earnings down. It is now something that Standard Bank has had a long history of doing. So, yes, it-but I suppose on any relative measure, Standard Bank is performing reasonably well, you know, you take any long term view. So we are down but we are still quite close our all-time highs in terms of earnings. So, tough times at the moment, but we really think that the year ahead we should be able to recover to the levels of 2008.
South Africa, our home base, which still makes up a big proportion f the earnings, has really handled the global downturn pretty well and we are on track for sort of 2.5 percent growth in the current year. And then I- and we feel we are pretty well positioned on the bad debt funds. So, I think we-you know, going into 2010 in a pretty strong position, capital ratio is very strong.
FINIGHAN: OK, let's talk more about Standard Bank, then, which under your stewardship has become much more than just an African bank, hasn't it? It is an emerging markets leader right now. It is 20 percent owned by China's ICBC. Tell me about that-that China link. What advantages does Standard gain by being part owned by a Chinese bank?
MAREE: Well, it is a very deliberate strategy of ours to link up with a Chinese bank a couple of years ago. They paid 5.5 billion to buy 20 percent of Standard Bank. The very high level logic was the biggest bank in China-well, it is now the biggest bank in the world-and the biggest bank in Africa teaming up to look at opportunities between China and Africa. And because we also have links to a number of the other key emerging markets, Russia, Brazil, and so forth, to really form a bigger network of developing markets with a link between ICBC and Standard Bank. And of course, we all know about China's huge interest Africa.
FINIGHAN: Yes, and you are obviously a man who thrives on a challenge. What has it been like to be at the helm of a bank over the last 18 months? I mean, were there times when you knuckles turned white?
MAREE: We have had a few-a few long nights, of course, as any bankers have. And we operate in the emerging markets, developing countries, some markets that people would regard as scary. Some people regard Nigeria as scary. The Democratic Republic of the Congo, countries like that. So, we are a pioneer in many ways. But you know, that is where the trade flows are. The increasing interactions between developing markets is something that really excites us.
FINIGHAN: Yes, and you talked about South Africa and its economy, of course, and pulling out of recession, but what about the outlook for Southern African economies as a whole? I mean, President Zuma, in London today, has been talking about Zimbabwe. What is the outlook, as South Africa pulls out of recession, can it pull the rest of the region out of recession, too?
MAREE: Well Africa, in total, is actually likely to grow over the next few years at sort of 4 to 5 percent, in our view. So, we are coming off, as a continent, off a relatively low base, and so therefore the growth rates going forward actually should be quite attractive, because of commodities and the demand from China and India, and so forth.
South Africa, of course, is a much more developed economy, a little bit more connected to the rest of the world, so we did have a setback in the last year, but nothing major, no banking crisis. And steady as she goes, I'd say. The next year looks like 2.5 percent growth, or thereabouts, and increasing slightly from there. So, pretty good shape I'd say.
FINIGHAN: All right. Mr. Maree, it is great to talk to you. Many thanks, indeed for being with us on QUEST MEANS BUSINESS. I hope you will come back again in the not-too-distant future and give us an update. Many thanks, indeed, Jacko Maree.
Now, for most companies reputation is everything. "Fortune" magazine has just revealed the top 50 companies that you admire the most. We'll tell you which one took the top spot for the third year in a row. I wonder if you can guess. We'll be right back.
FINIGHAN: Now, "Fortune" magazine has just released its list of most admired companies. Computer and technology giant, APPLE, came in first. Now, there is a surprise. It is the third year in a row that APPLE has taken the top spot.
Internet tycoon Google climbed into the No. 2 slot this year. Google continues to be the top search engine on the web. No. 3, Warrant Buffet's company, Berkshire Hathaway; would you believe the huge firm includes holdings in insurance, retail and energy. And some other notable companies in the top 10, Johnson & Johnson, the retail giant, Wal-Mart, and controversially, Toyota. Well, as for Toyota, "Fortune" says its surveys were completed in the fall and the winter before the gas pedal crisis came to public attention. It would be interesting to see if that survey were conducted today, whether it would still be in the top 10.
And those companies not only among the most admired they are some of the best performing stocks, too. For instance, APPLE, its stock up 130 percent for 2009-there it is. I was going to the wrong end-up 130 percent.
Google, it is shares up 74 percent over the last 52 weeks, despite its dispute with China don't forget. And Berkshire Hathaway, the other one we were talking about, Warren Buffet's company, its share have risen by almost 66 percent.
No, that's APPLE. Hang on, where has Warren Buffet gone? Anyway, take it from me. It costs more than $124, 000, by the way to buy a single share in Berkshire Hathaway.
So, you've seen how they stock up and how well some of them have performed. But how on Earth were they rated? Leigh Gallagher joins us now live from New York. She is the assistant managing editor of "Fortune" magazine.
It is a bit like the Oscars this, isn't it? For brands?
LEIGH GALLAGHER, ASST. MANAGING EDITOR, "FORTUNE": Yes. No, it is. You know, we do this survey, we have partners who help us the Hay Group, a management consulting firm. And you know, we basically polled for our top 50 list, which is the list of the companies that are most admired, overall. We polled this year, more than 4,000 executives, directors, analysts. And we just said, across any industry, in other words, not in you own industry, but across all of business who do you admire most.
So, it is really a survey of what corporate America thinks, and who corporate America admires. It is not exactly who the consumer admires, which is slightly different. Which is why some of the investment banks, for example, did really well this year, while the public, at least here in the U.S., doesn't admire them so much anymore. Among business and CEO they are actually highly admired for the way they handled the financial crisis- some of the banks.
FINIGHAN: Although, I should imagine the public would agree with you on many of the choices that are there. So this is business people choosing the companies that they most admire. And it is not just limited to American companies, as we saw on the list, Toyota was in there.
GALLAGHER: Exactly, exactly. And as you point out, I mean, Toyota is there today because of the timing of our list. The real question will be where it ends up next year. If you look at what happened-years ago we had Merck on the list, and they had problems with one of their drugs, Vioxx. And they were, in fact, not on the list the next year. But Toyota has, as we know, it is a very, very-it was-a very highly esteemed company. And highly regarded company, so it can withstand a lot of things. The question is, can it withstand this? So, we'll know that next year.
FINIGHAN: All right. So, Leigh, why is it important to compile a list like this? Isn't it anything more than just a lot of corporate backslapping going on here?
GALLAGHER: Well, to a-to a degree. I mean, but you know, we find it really interesting to see who business admires. And again, looking outside people's own industries. This is a scientific survey. Alongside with this top 50 list we do an industry-by-industry ranking where it, you know, you are really being ranked by your peers.
But you know, when you talk about corporate reputation, it is actually a pretty big deal. And the companies that are on this list tend to stay there. The turn over this year was about 10 percent, which is about what we see every year. Even though we have seen such highs and lows, and swings, in terms of company's corporate reputations in general, so, it is a pretty interesting indicator.
FINIGHAN: I'll tell you what I like most about it, is when you ask the big personalities, in business, who they most admire, personally, as well. You know the leaders that they most admire. And that turns out some pretty interesting results.
GALLAGHER: It is. We had to sort of filter through, because everyone wants to name some one on their board. But the answers we have in the magazine are actually genuinely who they really admire. So, it is always fun to see what big CEOs think about other big CEOs. Because, you know, they're competing most of the time.
FINIGHAN: All right. Leigh, it's great to talk to you. Many thanks, indeed. Leigh Gallagher, live in New York.
GALLAGHER: Thank you.
FINIGHAN: From "Fortune" magazine.
Now, once a wealthy oil company, Yukos was ruined by a massive tax bill. Shareholders blame Moscow, and they go to Europe's top court to get their money back. The latest from the courtroom, in just a moment.
FINIGHAN: Welcome back. Live from London, this is QUEST MEANS BUSINESS on CNN. I'm Adrian Finighan.
Now lawyers for a former oil giant say the Russian government sought to destroy it. Yukos has been making its case against the Russian Federation, in the European Court of Human Rights, after years of waiting.
Representatives of the bankrupt company wanted billions of dollars in compensation from the Russian government after it was driven into bankruptcy by a multi-billion dollar back tax claim. Now it is the first time in more than six years that the two sides have come face-to-face. Let's get the latest on the hearings. CNN's Matthew Chance is covering events from Moscow.
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, after years of legal wrangling, lawyers representing the defunct oil company Yukos and the Russian government faced off Thursday, both sides summing up their cases to a bench of seven judges at the European Court of Human Rights. Shareholders of Yukos, which was dismembered by Russia's tax authorities, arguing that they should receive $98 billion in compensation from the Russian state.
The former boss of Yukos, Mikhail Khodorkovsky, once Russia's richest man, has been languishing I jail since 2003 on fraud and tax evasion convictions.
The main Yukos oil prediction -- production assets were later seized by the Russian state and essentially absorbed by government-controlled oil corporations in what critics say was a politically motivated attack on the company.
But Russia's government says the breakup of Yukos and the selling up of its assets was entirely legal.
We're not expecting any immediate decision by the court. The judges are considering their ruling. That could take weeks, or even months.
But if the court does rule against Russia, it will be a major, and, of course, an expensive embarrassment for the Kremlin.
Matthew Chance, CNN, Moscow.
(END VIDEO TAPE)
FINIGHAN: Well, the former CFO of Yukos Oil, Bruce Misamore, joins us now live from Houston.
Bruce, thanks -- thanks for being with us on -- on QUEST MEANS BUSINESS.
You waited a long time for this hearing. As we say, the case itself was filed five years ago.
Why aren't you in Strasbourg?
You're in Houston.
BRUCE MISAMORE, FORMER CFO, YUKOS OIL: Well, I'm really unable to travel. I'm under criminal investigation by the Russian authorities who tried to intimidate me with respect to this suit. And so despite please to the European Court of Human Rights and the French government for safe passage -- laissez-passer, as they call it in France, I was denied that. So I was not willing to take the risk to -- to travel to Strasbourg for the hearing, unfortunately.
FINIGHAN: I understand. So you -- so you're staying in port rather than risk a -- arrest and extradition.
So Moscow has denied any wrongdoing here. Its ambassador to the Council of Europe has accused the Court of Human Rights of playing politics by even agreeing to hear this case. And its lawyer told the court today that Moscow had every right to claim unpaid taxes, that numerous previous trials showed that Yukos had illegally concealed its profits and defrauded the state.
You've lost five different legal cases before, before different judiciary.
MISAMORE: Well, assuming you consider the Russian judiciary to be judiciary, there really isn't a rule of law in Russia. Even that statement acknowledged by President Medvedev in comments this week in Paris, that there's a lack of an independent judiciary and the rule of law.
We don't believe that the taxes were assessed properly at all -- and we're talking about over $30 billion in taxes, enough to destroy virtually any company. And, you know, we think that the -- the court rulings were controlled by the Kremlin and this was a -- very much a -- an expropriation of Russia's largest oil company.
FINIGHAN: Of course, while -- while this hearing gets under -- underway in Europe, in Moscow, Mikhail Khodorkovsky, the man who founded Yukos, is on -- is on trial again.
I mean did -- how much contact do you -- do you have with him?
Do you know how he is?
MISAMORE: Well, unfortunately, I can't have verbal contact with him. The only contact that I do have with him is written through his attorney. And -- and that's not very regular. I have submitted a lengthy affidavit in his trial and I'll do everything I can to support him. He's a good friend. He is -- he is one of the -- the brightest, most visionary people I've ever met in my life.
FINIGHAN: So what happens next?
How -- how optimistic are you?
The record for plaintiffs in -- in property cases under the -- the European Convention on Human Rights, as I understand it, at least, isn't that good.
MISAMORE: Well, we think that the case is -- is pretty clear-cut. The fact that the European Court decided to accept the case in January of 2009 is very positive. Generally, when the court accepts a case -- and it only accepts about 5 percent of the cases that are presented to it -- it means that it's thoroughly studied that case. And now we've submitted extensive further pleadings in writing. And then today, of course, in Strasbourg, this verbal pleading.
And we are quite optimistic that this is such a clear cut case of expropriation that we will win. Whether or not there will be any financial satisfaction from that remains to be seen.
FINIGHAN: So how -- how long before you know?
How long is the case likely to last?
MISAMORE: Well, I would hope that we're going to get some kind of a verdict. In fact, of course, the court is debating it today, immediately after the pleadings, they go into session and they debate it.
But it's highly likely that it will take months for the court to issue a verdict. And then we're quite hopeful that that verdict will be favorable for all of the innocent victims of the expropriation.
FINIGHAN: All right, Bruce. It's great to talk to you.
Many thanks, indeed, for being with us on QUEST MEANS BUSINESS.
That's Bruce Misamore, the former CFO of Yukos Oil, speaking via broadband from Houston. So many apologies for the -- the slightly iffy sound on that interview.
Now, Wall Street traders are cautious ahead of Friday's key U.S. jobs report. We'll take a look at how the Dow is faring next on QUEST MEANS BUSINESS.
FINIGHAN: Hello again.
Now, the U.S. Economy is showing sings of stabilizing, but questions remain about the massive bank bailout that was put into place during the darkest days of the financial meltdown.
Former Treasury secretary, Hank Paulson, says that he felt like he was literally trying to save the world as he scrambled to keep things together during the waning days of the Bush administration.
CNN Money's Poppy Harlow has more.
POPPY HARLOW, ANCHOR, CNNMONEY.COM: Well, Adrian, former U.S. Treasury Secretary Hank Paulson speaking out really candidly about the financial meltdown, saying that, at points, he felt as though he was trying to save the world from an economic Armageddon.
Now, Paulson said he was extremely concerned if there was another big bank failure after Lehman Brothers, we would fall into another great depression with extremely high unemployment in this country. And he said that is what he and fellow regulators were trying to save the American people from.
He said, however, he and other regulators made one grave mistake in that bank bailout.
Take a listen.
(BEGIN VIDEO CLIP)
HENRY PAULSON, FORMER TREASURY SECRETARY: One of the things they missed was the anger in the American public that -- that -- that all of us missed, because we never made the connection between Wall Street and Main Street.
I was never able to communicate that I certainly didn't go with this. I wasn't trying to bail out any bank or -- or an investment bank. The reason we did this was because the American people were going to pay the price if the system collapsed. And that wasn't -- that point wasn't made.
(END VIDEO CLIP)
HARLOW: And, of course, a continuing point of outrage in this country has been compensation and big bonuses for bankers. Now, Paulson said -- this was very interesting, I thought -- that compensation has, quote, "always been out of whack" on Wall Street.
And President Obama, we heard earlier this year, calling some bankers "fat cats."
So you see this current administration trying to make the case that banking reform is what will really help Main Street, what will really help the general public. And I want to point out just one more thing that I thought was of particular interest and that is Paulson discussing the need, still, for a complete overhaul of the regulatory system of banks in this country, saying during the crisis and right now, the regulatory system that we have is both arcane and outdated. And he said if it's not changed, then he said, quote, "Heaven help this country."
So some very interesting points there from the former Treasury secretary.
You can see much more of his interview. It's all right here and it's only on CNNMoney.com.
Back to you -- Adrian.
FINIGHAN: Poppy, many thanks.
Now, investors on Wall Street are gearing up for the February jobs report, which is due out tomorrow, Friday.
Stephanie Elam is in New York with a look at what stocks are doing ahead of those numbers.
I have a feeling you're going to say, Stephanie, the last time I looked, they were, anyway, just treading water.
STEPHANIE ELAM, CNN CORRESPONDENT: And tread they still do, Adrian, at this point. We're seeing lots of hesitation. It's really all about tomorrow. In fact, this whole week is about tomorrow.
We saw stocks posting gains right out of the starting gate, following some encouraging news about the labor market. But we haven't been able to see that momentum continuing into the second half of the day and it's not too surprising.
Weekless -- weekly jobless claims, they fell by 29,000 last week, this after two weeks of sharp increases. And continuing claims fell to their lowest level in more than a year. We have had some really, really awful weather this winter here in the Northeast. And it's being blamed for the spike in claims the week before that.
And many analysts expect the weather is also going to lead to a grim monthly jobs report on Friday. The forecast is that the unemployment rate edged higher, to 9.8 percent last month and that the U.S. economy shed 20,000 jobs.
And we're not done with the weather yet. It also seems to have taken its affect on pending home sales. The National Association of Realtors reports that sales were down more than 7.5 percent in January, compared to December. And although sales are much better than they were in the same month one year ago, the reading less than expected there.
So just to give you an idea what the markets look like right now, the Dow up 27, 10423. The NASDAQ better by 5, 2286. And the S&P 500 also up fractionally at this time -- Adrian.
FINIGHAN: You know, you'd think that -- that the weather might have an impact on -- on retail sales. Certainly re -- the weather is being blamed for -- for -- for poor retail sales on this side of the Atlantic.
But I -- I saw something earlier that ind -- that might indicate that consumers are actually beginning to spend again.
ELAM: Yes. Well, I guess if you have three feet of snow outside your door, maybe you just do some retail therapy online, Adrian. I think that's what a lot of people did because the retail numbers did beat expectations.
If you can't get outside, how are you buying?
But anyway, department store operator Macy's reported a rise in sales of more than 3.5 percent in what is known as its same store sales. It's really a key measure of how we -- how we take a look at the how retail stores are doing.
Macy's said that the bad weather that hit the Northeast did slightly dent its numbers, but it looks like the online shopping really did make a difference for Macy's and Bloomingdale's. They were up nearly 40 percent last month. Then Limited Brands, they reported a rise of 10 percent. And that was a little bit better than what Wall Street was looking for. Gap, JC Penney, Target and Kohl's, they all reported a rise in sales, as well.
So when there's nothing else to be done, apparently, Adrian, there's always shopping.
Love it, don't we?
Stephanie, many thanks, indeed.
ELAM: Oh, yes.
FINIGHAN: We'll keep the weather theme going by bringing in Guillermo Arduino, who no doubt does a bit of online shopping, as well, from time to time.
FINIGHAN: But he can tell us what the weather is doing right now, as opposed to what it's done over the past weeks and months and its effect on -- on retail sales figures.
ELAM: Do you mean in the -- in the States?
FINIGHAN: Yes. Well, they're all over the world.
ELAM: Oh. OK.
FINIGHAN: But, look -- look, I'm just -- look -- look at you, effortlessly cool, you know?
You and I must go shopping. It's a shame you're on the other side of the Atlantic. I need some...
ARDUINO: Can I...
FINIGHAN: -- fresh tips from you.
ARDUINO: Can I tell you...
ARDUINO: -- what I thought when I first saw you?
First of all, I -- I got very happy when I saw you. It's great to see you back.
And, also, I said, he's got more hair.
FINIGHAN: No, honestly. No, no, no, no. No. This -- do you know, I -- I wasn't expecting to be sitting in Richard's chair tonight and I -- when I -- when I got up this morning, I was just -- it was au natural.
ARDUINO: It looks good.
FINIGHAN: I haven't done anything with it.
ARDUINO: It looks very good.
Let me tell you what's going to happen and then you'll be protected, because it's cooling down. So, you know, when -- when hair it's blowing away like mine, you know, flying away, then it's cold outside. You need to wear a hat.
Not your problem, because temps are -- temps are going to go down in here, especially. And it's going to affect Europe across the board.
But we have two major systems. One, Xynthia, with an X, that actually is leaving. And it's leaving some cold conditions in the Baltics.
And then Zana, with a Z, one after the other, X, Z, alphabetically ordered.
And this is the one that has brought so much intense winds here in the south. And it's bringing the snow into the Balkan Peninsula and the Alpine Region.
So, here we have it. I have checked out what's going on in terms of alerts. And we see that it's going to be extremely windy, especially from Marca here in Italy, there, all the way down into Cicely.
And then this is going to bring intense snow storms all the way into the Carpathian Mountains and the Balkan Peninsula even into Croatia, as you see over there.
So it's going to be snow. It's going to be cold. Cold air is filtering in from the north. So Poland is going to see very cold conditions. Germany -- you're going to get a fair share of snow again, all the way into the Alpine Region, and the Balka -- the Balkans, of course, getting more snow.
The west appears to be OK. But look at Spain and also let me tell you, it's snowing and Helsinki right now and in Harbin in China. I don't see any more significant snow -- well, in Northern Japan.
But it is going -- it is going to change very soon. I'm sorry.
We'll see winds and London, Charles de Gaulle, Amsterdam. We may see delays, but it's not going to be that bad. Rome, also, and then the snow in Germany, you see all the way to Munich, from Berlin to Munich and into the Alpine Region, as well.
Well, apart from that, this system will continue to bring clouds and winds all the way into Turkey. So Turkey is going to be a little bit tough in terms of weather conditions. I see some alerts posted, also, into northern parts of Spain over here, in Lugo, A Coruna, those areas in the north are going to see high seas.
Well, there are alerts across the board in Europe. But not as severely as in those two countries that I just mentioned.
In China, we will see some more snowy conditions in the northeast, more snow into Hokkaido, those areas in Northern Japan. Getting better in Central Japan. And the rain may become very heavy, especially in the central to southern portions of China into Sunday.
So we have to take a look at the this system closely because it may bring about some problems. It's one degree right now in Beijing, 26 in Hong Kong and 0 in Sapporo. And in those areas we see snow.
Hong Kong with winds. I think this is the last graphic that I'm going to show you, right, Mark (ph)?
Then Sydney with some rain showers. What we'll see in Queensland is actually more rain. We have gotten significant precipitation. We'll see some floods in the area. So we are concerned about that. We will continue to focus into those areas.
I'm just coming back from San Francisco. I flew yesterday into Atlanta. And the weather is improving over there, as well, even though we had very nice weather, but some rain showers.
The weather is improving in the northeast, as well. You see, as I said, lingering snow showers in the New England states. All across the board in the States, things are getting better. We were very paranoid with all the airport activity into Charlotte and also Atlanta and the Northeast with all the snow storms that we got here at the beginning of the week. Well, that's over.
So if you're coming into the United States, things are getting better. Temperature wise, it is gradually more normal. You see 11 degrees in Atlanta now, a big airport; New York, 6 degrees. Of course, Canada will have to wait a little bit for this.
This has been an El Nino year. So we got a lot of rain in many parts of the world and at the same time, much colder conditions. But that El Nino event is coming to an end -- weeks from now, so we have to be patient.
Don't go anywhere, because we have more after the break.
Adrian is back on QUEST MEANS BUSINESS.
FINIGHAN: Now, when you think of Ferrari, you think of red, right?
Well, take a look at this. Straight from the Geneva Motor Show, the world's first ever green Ferrari. Not only that, this car is really green. It's a hybrid. It uses a variation of the Formula 1 curse system, capturing braking energy to charge a lithium ion battery.
You want one?
Sorry, it's a prototype and it isn't for sale.
Well, that hybrid Ferrari 599 is producing its share of buzz, but there are other stars of the show, as well.
CNN's Jim Boulden that's a look at what's new at this year's Geneva Motor Show.
JIM BOULDEN, CNN CORRESPONDENT: The auto industry always has to think long-term. So even during this very nasty recession, the high performance car makers were always thinking about developing bigger and faster.
HANS VAN RENNES, SPYKER: We at Spyker are in a niche. There is nobody that is even close to what we're doing. You know, everything is handmade, the best leather, you name it, it's in there. You know, we -- we first decided this has got to be a cockpit of a plane on the road, you know, everything that is (INAUDIBLE).
VAN RENNES: And -- and that is exactly -- we've set that -- that road in 2000 and we've never changed it.
BOULDEN: These are Morgans -- very British roadsters. In fact, these are the last cars made by a British family in the U.K. And, yes, these cars are still made with a wooden frame -- ash, in fact. This one starts at a price of around $60,000. But you can have one that's a lot more expensive.
This is the Arrow SuperSports, unveiled here at the Geneva Motor Show for the first time. It runs about $200,000. This has come out of the new lifeblood of Morgan, which is racing.
CHARLES MORGAN, M.D. MORGAN MOTOR COMPANY: What's important about racing is the heritage and also, of course, it makes you make a car that's really fun to drive, you know?
And the thing is that cars have to be fun to drive. We have to still have a car that's balanced, that's lightweight, that shrinks around you, that you can really enjoy driving, you know, like a favorite mountain bike or a favorite pair of running shoes.
BOULDEN: There are, of course, other auto manufacturers here at the Geneva Motor Show who are known for racing. But you may not know that Ferrari also wants to be known for its plans for a hybrid car.
AMEDEO FELISA, CEO, FERRARI: This is not a real product. This is a laboratory car. To understand how we can use and utilize on that kind of technology. So what -- what we are looking to -- to that solution is how we can implement the hybrid technology on the Ferrari cars without affecting in a negative way the performances of our product, but, of course, adding new characteristics, positive characteristic (INAUDIBLE).
(END VIDEO TAPE)
BOULDEN: Now, Adrian, it's interesting to note about what Ferrari is saying there. They're not -- they haven't cracked this hybrid thing yet. It's -- it's a concept. But he's pretty confident that it's going to happen, but we shouldn't say that it's -- you know, it's not a Prius. So they're not there yet.
FINIGHAN: I -- I -- I just can't -- I can't get my head wrapped around Ferrari hybrid. It just -- it -- I was watching that and the -- isn't television wonderful?
One minute you're in Geneva, the next minute you're here in London with me?
But I -- I'm sure I saw a -- a Spyker in there, too.
BOULDEN: Yes, you know...
FINIGHAN: Didn't they just buy Saab?
BOULDEN: They did. The car show just officially opens today. So people will be rushing in there. One of the ones they're going to want to look at is -- is Spyker. They only make, what, 40, 50 cars a year.
BOULDEN: And yet they bought Saab, which makes, you know, 90,000 cars and hasn't made a dime for General Motors. And then General Motors, you know, after all that, finally got rid of it.
But what's interesting is Spyker, I -- I -- I've done this where I've been sitting here with Richard trying to explain to people why Spyker would buy Saab.
So I asked Hans, who you saw in that piece. And I said, why did you want to buy Saab?
And this is what he had to say.
(BEGIN VIDEO CLIP)
VAN RENNES: For a small company as Spyker, we can use a lot of their technology, etc. Their wind tunnel, crash tests -- all these things that you have to farm out at a small company are now within the umbrella of the larger company.
So all in all, it will be good for both of us, absolutely.
(END VIDEO CLIP)
BOULDEN: So it's about the wind tunnel, it's about the engineers and, you know, that does now make more sense when you think about it.
FINIGHAN: Yes. And they -- and they call this work?
I want your job. Imagine getting -- being paid to go to -- to go to the motor show.
And you even got a -- did you get to sit in those Morgans?
I -- I can't remember whether you were sitting in one or just -- or just looking lovingly at -- at that.
BOULDEN: Well, you can sit in almost every car there. And I was -- you know, I did get to go around with Charles Morgan. And, of course, it's a company started by his grandfather.
So to see him with his Morgans, you know, the last -- I think we can say safely, the last real British car company...
BOULDEN: -- like made -- cars made here in British by Britons.
FINIGHAN: Yes, absolutely.
Jim, many thanks, indeed.
CNN's Jim Boulden back from the Geneva Motor Show, a man who loves his job.
This is QUEST MEANS BUSINESS.
We'll be back right after the break.
FINIGHAN: Let's take a final check on what's happening on U.S. markets this hour.
Shares more or less treading water, as Stephanie was telling us a little earlier, ahead of tomorrow's jobs report. Improving retail sales and the stronger dollar are helping the Dow Jones up by 31 points now.
And looking at what happened on the European markets on Thursday, despite an early boost from improving sentiment over Greece, they all ended slightly lower, dented by disappointing U.S. housing numbers. Investors also focusing on the latest interest rate decisions today from the Bank of England and the European Central Bank.
And the ASE Composite finished up over 1.5 percent after the Greek government launched its 10-year bond sale, which went down well with investors.
That's it for QUEST MEANS BUSINESS.
In London, I'm Adrian Finighan.
Whatever you're up to in the hours ahead, as Richard would say, I do hope it's profitable.
"AMANPOUR" is next, right after the news headlines.