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A Show Of Confidence As Lenders Line Up To Help Greece Pay Its Bills. Life Is Tweet, But Profits Even Tweeter

Aired April 13, 2010 - 14:00:00   ET


ADRIAN FINIGHAN, CNN INT'L. ANCHOR, QUEST MEANS BUSINESS: A show of confidence lenders line up to help Greece pay its bills.

Life is Tweet, but profits even Tweeter. Getting down to business with Twitter.

And Beijing says that any changes to its exchange rate will be when it is right for China and not before.

Hello, I'm Adrian Finighan in for Richard Quest. This is QUEST MEANS BUSINESS.

Life is Tweet. I love that headline.

Good evening.

Greece is battling on alone, determined to resist to be hooked up to economic life support. The Greek government successfully raised cash from international investors on Tuesday meaning it won't have to ask the Euro Zone or the IMF for a financial lifeline, just yet. Here's what happened. It raised more than $2 billion today through the sale of short-term debt. That's bonds to expire in six months to a year's time. The sale was heavily oversubscribed now that is a pretty good sign, but the interest rate, the yield was more than double the rate it was at in January, 4.55 for six months bonds and 4.85 percent for 12-month paper. That shows that investors still don' t have complete faith that Greece will repay its loans.

Greece, of course, needs to raise $11.5 billion in May and it hopes to do all of that on the open market. It has a back up plan, $61 billion in assistance. That rescue package we were talking about yesterday from the Euro Zone and the IMF. Greece, of course, trying to hold out for as long as possible without having to use that assistance. Greece, of course, is pressing on with efforts to fix its economy. It is doing that right now, as we speak politicians are debating new laws against tax evasion.

Now, Simon Johnson is a former chief economist at the IMF. He's now a professor at MIT's Sloan School of Management. Earlier I asked him whether Greece was out of the woods or just postponing the inevitable?


SIMON JOHNSON, SLOAN SCHOOL OF MANAGEMENT: Well, it certainly postponed the resolution of the problems. Obviously, they might get lucky. You could have much more global growth than we are currently expecting. And that could help Greece to exit without a default. But honestly, the terms of this package are very weak. There is little incentive for the Greeks to put their house in order and I'm not optimistic about what the future holds.

FINIGHAN: All right. So, what's the worst case scenario, then? You mentioned the best case scenario. Then if there is a strong economic recovery and the Greek economy itself kick starts enough to pull the deficit down, what's the worst case?

JOHNSON: Well, the short-term worst case scenario is actually more pressure on Portugal. Clearly what we've learned is that the Euro Zone will hang back until your bond yields go up to 7.5 pushing, 8 percent. Then they'll come in with an overly generous unconditional package. And I think you'll see market pressure on Portugal on that basis. Just specifically on the Greek situation, the question is how quickly they run through the money. And you know, we've seen this many times in the past with the IMF packages, for example, on Russia or on Argentina, when people start to see the end game more clearly. Then things unravel. It could take six months, could take nine months, but I think we're headed there.

FINIGHAN: So, all right, you say we have, more or less, just staved off the inevitable for now. What should have happened here then? Should this EU aid, this assistance package and the IMF, should it come with stiff conditions. What should Greece do now to put its house in order to make it attractive to private debt holders?

JOHNSON: Well, the program of support should definitely have come with strings attached. That is how you turn these situations around. The Euro Zone should have let the IMF take the lead on designing those. And it is a very interesting question, how much austerity should be in that design. Personally, I would argue for more debt restructuring up front. I think it is very hard to make the Greek numbers work at any reasonable interest rate on external financing.

And now would be a good time to talk about which creditors are going to take what kind of losses. But that apparently is off the table. The Euro Zone wanted to move before the IMF, so the IMF's hands are rather tied here, and as a result I really doubt that you'll get meaningful change out of this in terms of sustainability of the Greek position.

FINIGHAN: All right. You mentioned Portugal and the Euro Zone showing its willingness to step in, in the Greek case. If the same thing happens with Portugal then the IMF should be involved earlier, you think, and there should be stiffer conditions?

JOHNSON: Well, the stiffness of the conditions depends on what you are trying to achieve. And personally I'm not in favor of the kind of austerity the Irish have adopted, for example. I think the Irish should have restructured some of the debt of the private banks that got themselves into trouble. So, you know, you can take a variety of views, a range, you can have a range of views on how much austerity versus how much debt restructuring. But certainly the IMF should have come in earlier in the Greek situation. Three months, basically, was wasted and presumably if Portugal is to come under pressure the IMF should be involved there soon. The point is you put in place a pre-emptive package the conditions wouldn't have to be so tough. People don't get as scared and it is easier to find your way out of the problems.

FINIGHAN: Is there a danger we-all right, we've seen Greece. That's come to a head. You mentioned that Portugal could be next. Could we be on the brink of lurching in Europe, from crisis to economic crisis? Ireland could be next, couldn't it?

JOHNSON: Well, there are certainly various bad scenarios that you can envisage. I think, though, mostly what you are going to get in Europe is austerity. I think the weaker countries have been scared by what happened in Greece. They will cut back. The stronger countries also favoring austerity I think the Germans will capture the European Central Bank quite effectively. And mostly what you are going to see is slow growth, struggle to recover and a gradual deterioration of the fiscal situation around Europe. I don't think we're in a rapid collapse, dominoes scenario, although, I do worry about Portugal.


FINIGHAN: Really interesting point of view there, Simon Johnson. I don't know whether to be optimistic about what he has to say or depressed, actually. Austerity is the way forward he says. Now, stock markets in Europe slipped on Tuesday. Investors focusing on disappointing numbers from the U.S. aluminum producer ALCOA. Lower prices for metal and oil did nothing to help the situation. Mining companies tumbled here in London. Shares in Kazak (ph) losing more than 3 percent. Longman (ph) was off by 2.5 percent. Banks also weak here. Lloyds, Barclays and RBS all went backward today.

In Frankfurt engineering companies Siemens lead the losses. VW also down today, a drop of around 1 percent. And over in Paris the big oil and energy companies lost ground. Totale and GDF Sewers (ph) among the stocks in the minus column today.

Now, two former executives of Britain's Northern Rock are facing more losses two and a half years on from the banks collapse. The financial services authority is fining the men nearly $1 million between them for concealing the extent of the trouble at the bank. The pair gave analysts and stakeholders misleading numbers, making it appear that the mortgage book was in better shape than it really was. They hid data on nearly 2,000 customers reducing the apparent number of bad loans by about a third. The mortgages in question were all in arrears by at least 90 days.

Northern Rock, you'll remember collapsed in September 2007, after thousands of depositors tried to withdraw their savings; the first run on a British bank in 100 years. The credit crunch exposed Northern Rock's over reliance on short-term borrowings, leaving it unable to continue raising finance.

Right, let's get you up to date with what is happening in the wider world now. Errol Barnett joins us live with the news headlines.

ERROL BARNETT, CNN NEWS ANCHOR: That's right, Adrian. We are following a developing story at this moment out of Israel, where the government has issued a urgent warning to its citizens. They are being told to leave Egypt's Sinai Peninsula immediately. Our Paula Hancocks has been following the story since it broke. She joins me now, live from Jerusalem with more.

Paula, what do we know about what caused this very unique evacuation order?

PAULA HANCOCKS, CNN INT'L. CORRESPONDENT: Well, Errol, this came within the last hour and a half. And as you say, it is fairly unique. It is a very sudden warning to tell all Israelis to leave the Sinai Peninsula immediately. And what we are hearing from Israel's counter-terrorism bureau is that they believe they have concrete evidence that there is what they call a terrorist group that is attempting to try and kidnap Israeli residents-sorry-Israeli citizens. So, certainly we've seen in the past many travel warnings that Israelis shouldn't go to certain areas. We've seen the travel warnings that Israelis shouldn't go to the Sinai Peninsula, but certainly many still do go. It is a very big tourist resort for them.

And this is certainly more urgent and more immediate than what we have been hearing in the past. And also something I haven't seen previously is the counter-terrorism bureau asking any Israeli residents here in Israel that know some of their parts of-some of their family that is actually in the Sinai, they are asking them to call them immediately, tell them what is going on and tell them to get out, Errol

BARNETT: Paula, how many people does this impact? How popular a place is this region for Israeli residents?

HANCOCKS: It is very popular. The Sinai Peninsula, you have areas like Taiba (ph), which is incredibly popular with Israelis, and of course, has been targeted in the past. Back in 2004 there was a bomb attack, there which was targeting Israelis and also Westerners. Now, we do know that there was a travel warning in place for the Sinai Peninsula. But this isn't unusual. Ever since two years ago the Hezbollah chief in Magda Munia (ph), was assassinated in Damascus Hezbollah blames Israel. Israel didn't confirm or deny, but they have said that they are trying actively to kidnap Israeli residents.

And according to Israeli media even with this travel advisory and warning against the Sinai, some 20,000 people from Israel went to the area over Passover. Now, Passover, the Jewish holiday did actually end last week. But it is always a popular area with Israelis, Errol.

BARNETT: Paula Hancocks, live report there from Jerusalem with the evacuation order for Israeli citizens on Egypt's Sinai Peninsula. Thanks for that.

Now to some other headlines we're tracking right now.


FINIGHAN: This next story on QUEST MEANS BUSINESS, right up your street actually, Errol. It is a problem that confounds many social media sites. How on earth do you make money from content? Now, Twitter says it thinks it has found a way, in 160 characters or less, and we'll explain how it works and how it could impact your Twitter experience. When we come back in just a moment.


FINIGHAN: Hello, again, if Tweets were currency Twitter would already be a multi-billion dollar business. But it is only now that the social media phenomenon is trying to turn popularity into profit. The web site has rolled out a new advertising service. It calls it promoted Tweets. Companies will be able to pay to have their message displayed on Twitter search res-results pages-you try saying that quickly. Twitter says that if users don't like them they will be taken down. CNN's Jim Boulden has been taking a closer look. And he joins us now in the studio.

It is a difficult thing to do, isn't it, Jim? Monetized social media, your social media experience.

JIM BOULDEN, CNN INT'L. CORRESPONDENT: Yes, everyone wants to know how you can make billions out of these things.

Well, let's look at Twitter for a moment. According to its web site, it gets 50 million Tweets per day. That is as of February 2010. My guess is that we have seen a lot more since then. And that is around 600 per second. In 2009 the number of Tweets grew 1,400 percent. Hard to believe it was only founded in 2006. But how do you monetize popularity? These promoted Tweets are designed to fit into "value over profit motto", that's what they say they want value, of course, before they see profit.

Now, let's not forget, though, the big boy on the block is Facebook; 400 million active user according to the web site. And Facebook says 50 percent of those log on, on any given day. That compares to Twitter, a report in March estimated that only 73 percent of Twitter users have Tweeted less than 10 times. I'm one of those, I have to admit. Facebook already has sophisticated advertising platform. Businesses can design their own pages and gather data on Facebook users and their relevant activity. Co-founder Mark Zuckerberg predicts the company will be, quote, "cash flow positive" in 2010. Of course, that doesn't mean profitable.

Now, those are the two ones that are booming. We can remember a few others of course, MySpace, still 110 million users, was the first one really that everyone started talking about. That one is still very popular for many people. It is part of News International, so we know a little bit more about MySpace because News International is publicly traded. You will remember it was bought a few years ago for around $500 million.

But this is the one that is causing trouble right now for AOL. AOL announced plans to sell or shut down Bebo because business is declining. AOL bought Bebo, believe it or not, for $850 million in 2008. And I looked up some numbers and Bebo, at that time, had about 40 million active users, now it seems to have around 13 million active users, Adrian.

FINIGHAN: Jim, you said that you have had a go at FaceBook, but it is not really the kind of thing that you actively do a lot of. I mean, we've both got kids.


FINIGHAN: Our kids are on this sort of thing all the time.

BOULDEN: Absolutely.

FINIGHAN: They've grown up with it this social media. Club Penguin, for the little ones at the moment is an enormous success. As far as Twitter is concern you have to admire the way in which they have done this. They are saying all along, we don't want pop ups, we don't want great bit ads on the screen, that are going to interfere with people's Twitter experience. It is going to fit in with what happens, isn't it? It is going to come up targeted social interactive Tweets.

BOULDEN: The one thing I remember about Facebook, and I remember with eBay as well is that they are the ones doing these things first. They don't know if they are going to get it right and they admit that.


BOULDEN: They are going to test, they are going to try, they are going to see how it works with companies like Virgin, with companies like Dell. To see what works and what doesn't. Facebook gets criticized a lot doesn't it?


BOULDEN: For mistakes that it makes about privacy settings and other things. And they tried different things, but you know to their credit they change again. And according to Bebo, they have been testing things internally for the last couple of months to see what will work and what doesn't work. Obviously, you get to a point if you want to go public, if you want to start selling shares. If you want a value this thing as something?


BOULDEN: People say between $7 and $11 billion, who knows? But how do you do that if you are not making money. You have got to find a way somehow to monetize this.

FINIGHAN: Yes, the stakes are pretty high there. If they get this wrong, if it doesn't work. I mean, you know, you talked about Bebo and MySpace. I mean, you know, Twitter is in vogue this year, as is Facebook. What's going to come along next year? Are we going to see Twitter go the way of Bebo, do you think?

BOULDEN: The thing about Bebo is AOL paid that $850 million for it, had active users, especially in the U.K. and Ireland. And they thought, wow, we're go to build on this. They didn't invest in the technology to keep it going. Facebook has been able to invest and invest and invest. Twitter, doesn't have a lot of employees.


BOULDEN: It has a very simple procedure. Now, I'm not saying it is not complicated behind the scenes.


BOULDEN: But the system itself is very simple. But how do you translate that into money. We're going to have to see if they can do it.

FINIGHAN: Jim many thanks indeed. Well, a lot of trending Tweets today on Twitter have been discussing the attempts to monetize Twitter in the future. And reaction has not been at all good. Less than enthusiastic, I'd say that Twitter users have been-Alan Colmes is one, he was asking today, "Is this the end of Twitter?"

Another user, calling themselves Digital Dentist, chimed in, "Twitter now offering ads, called promoted Tweets, huh, just want I wanted-not!"

And Macke40 takes it one step further, saying, "Finally, I have justification for my moral opposition to Tweeting." And yet, there he was Tweeting today.

It is a debate that is set to run and run, I'm sure. We wish them the best of luck.

Now, if you are looking for a new job in Europe, at the moment. You need to stick around. Up next on QUEST MEANS BUSINESS, there may be some extra opportunities online. We'll hear what the experts have to say about that, right after this short break. See you in a moment.


FINIGHAN: Well, if you are surfing the net to look for your next career move you could find your prospects are looking up. The jobs web site Monster says that its Europe-wide online employment index has hit its highest level since May last year. The index reached 104 in March, just two months after sinking to 93, it's lowest point in more than a year.

Now, the strongest area for growth in job opportunities seems to be the auto sector. In several countries car makers have had help from governments of course offering incentives for new car buyers. And looking country by country, the biggest improvement from one year ago was in the U.K., but it is Sweden which has improved the most in the past three months. It is something of an improvement but the index still shows that the recruitment in Europe is someway below levels that we saw back in 2008. Earlier today I asked Alan Townsend from Monster Europe what the figures tell us about the real state of our economy.


ALAN TOWNSEND, EU OPERATIONS DIRECTOR, MONSTER: It seems that what is happening I think from a European point of view is that we are now seeing a gradual improvement. I think it is very hard to say how fast the improvement is going to be. But this time around the Monster employment index is recorded its level since May 2009. So, I think we have come out of a reasonably quite winter period. And although there is some seasonality with some of the tourism areas and hospitality starting to ramp up. I think some of the countries in Europe are starting to see a more positive outlook.

FINIGHAN: But year on the year, the indicator is still showing a negative, isn't it?

TOWNSEND: Yes, we are still about 7 points below last year. But we are probably at out lowest level a year on year decline that we have been seeing, really, over the last two our three years. But again, it is a more positive picture?

FINIGHAN: Yes, employment is a famously lagging indicator anyway, so perhaps the underlying picture that this is painting is one that is reasonably positive?

TOWNSEND: Yes, I think it is. I think what is probably interesting is that employers tend to look almost only as far they can see, which in this kind of situation isn't very far. They are not thinking about 2011 yet. They are thinking about what they see in the next three to four months, which is probably still the cautious optimism that I think everybody shares.

FINIGHAN: So, what for you, were the highlights of the survey. Let's just pick on some individual countries.


FINIGHAN: Some are lower year on year, down by 7 percent, as you said. Some countries are bucking the trend aren't they?

TOWNSEND: Yes, I think pulling a strange one out is Sweden, which is an interesting country for us, because it tends to move quite quickly either in terms of either a decline or an increase. It is very interesting to see quite a significant increase there, in the month. In an area like research and development and engineering are areas where people would have to start to invest significantly if they can see something in the way of an upturn coming. So I think that is a positive one. And also some of the service sectors, particularly in Germany, we are seeing some more hiring and professional services as we are in the U.K., which are areas which have suffered a great deal over the last two years.

FINIGHAN: And Europe-wide, leading the uptick was the automotive industry. I mean, that was hit particularly hard, of course, during the recession.

TOWNSEND: Yes, I think it is interesting that the numbers of scrappage (ph) schemes perhaps that have been in place across Europe, virtually in every country. How are all coming to an end, but it does seem that demand or restocking maybe is starting to take place in those, in that industry. So the actual numbers there are very high compared to what they have been.

FINIGHAN: As you said, employers not yet thinking about 2011 yet. So what can we take from this survey. Apart from, you know, on the surface the good news. I suppose that business confidence is gaining, it is getting better?

TOWNSEND: I think it is mirroring other surveys that have been shown over the last month that business overall is more confident. But it is that cautious optimism that really we have seen for the last six months. Nobody I think can see a double dip, but nobody can see the kind of bounce I think they expected at the beginning of this recession. And it is really and indicator that is what we are going to see in the rest of 2000 and it is probably steady, stead growth, but there will still the odd setback. But it will-we are going in the right direction.


FINIGHAN: That was Alan Townsend of, the job site.

Let's take a look at look at what is happening on U.S. markets. We haven't done that in the show so far, Stephanie Elam, standing by in New York.

Stephanie, this time yesterday we had hit that the psychological 11,000 mark, again. I mean, we have hit it several times before. And it is still hovering around that mark today. Can't make up its mind whether to break through it or to retreat?

STEPHANIE ELAM, CNN FINANCIAL CORRESPONDENT: Yes, Adrian, I don't know if you and I have spoke about the flat line dance? But that is what I refer to when it does this sort of behavior, when it is a little above, a little below, where we started the day. And that has been the case today. The Dow just doesn't seem to want to make up its mind. So we are kind of all over the place.

Right now we are above 11,000 but as you can see we spent some time below it here. The blue chips have been down by as many as 58 points, but they really managed to claw their way back here. Investors showed their disappointment over ALCOA's weaker than expected first quarter earnings. The Dow component, the first company to usually report in any earnings season, but optimism about the rest of earnings season has actually brought us back above the flat line for right now. It took an impressive but sneaky rally to get the Dow back to 11,000 for the first time in 18 months and the Dow has finished higher in 23 of the last 30 sessions, but only one of those was because of a triple digit gain. So, you can show this has really been the turtle rally, slow and steady, for sure, Adrian.

FINIGHAN: The turtle rally, I like it. We have never discussed the flat line dance before. We had talked about the stealth rally, though. And there was some concern going into today after those disappointing results from ALCOA that well be in for a dive we get more of the same, once earnings season really gets going. Are those fears valid, do you think?

ELAM: Well, it seems some of those fears may be-have been arrested for right now. But there are some fears out there that there maybe too much of a happy expectation for those earnings period. So there are a lot of people looking at ALCOA, though, thinking hopefully this is just an aberration on the screen. For one thing ALCOA's bottom line is highly dependent on the price of aluminum. That is just always going to be part of their issue.

And as the week goes on, we have more big companies that are going to weigh in from the tech sector and the financial sector and we are expecting a very different picture there. The financial sector expected to do really well, especially compared to last year. Even today we have more positive signs, one coming from Talbots, which is a pretty small women's clothing retailer, but the company did swing to a profit in the first three months of the year, thanks to steadily rising sales. And the results more than tripled Wall Street expectation.

These are the kinds of numbers that the Street is expecting to see as earning season moves ahead. And think about it, the comparisons to last year, Adrian, are really almost easy. Because you think about how rough things were when we hit the low in March of 2009 for the markets. So, overall their comparisons are easy and so because of that that is why there is some hope out there that things won't go the way of ALCOA.

FINIGHAN: Yes, fingers crossed. Stephanie, always great to talk to you. Many thanks, indeed, Stephanie Elam, live in New York.

Now, will China let the yuan take off on a long march? And should it? As the presidents talk currencies in Washington we'll hear from the U.S. Chamber of Commerce. That is next.


FINIGHAN: Welcome back, live from London, this is QUEST MEANS BUSINESS from CNN. I'm Adrian Finighan.

Now China's president says that his country is on its way to reforming its exchange rate regime but it won't be hurried by U.S. pressure. Hu Jintao has been discussing the issue with America's President Obama in Washington. It is after the dispute threatened trade relations. CNN's Asia Business Editor Eunice Yoon gets to the heart of the matter right now on a factory floor in China.


EUNICE YOON, CNN ASIA BUSINESS EDITOR: This is a Chinese yuan. It has become a major source of conflict between American and China. Some U.S. politicians and economists say that this currency is being kept artificially cheap by the Chinese government. And that hurts American business and the U.S. economy.

China controls the mechanics of the currency. Unlike the U.S. dollar, the yuan doesn't trade freely on the international market. And the argument is that these controls make goods produced here and sold at retailers like Walmart really, really inexpensive. The manufacturer told us that these shirts would cost him three times as much to make in the USA.

Many in the U.S. say that China's currency rate is the key reason for the US' sizeable trade deficit with China. What Washington wants now is for Beijing to push for a currency that moves more freely.

But the Chinese say their currency is not cut rate. They say their exports are competitive for other reasons, as well, like lower costs. For example, wages. Every person here earns only $1 an hour.

The Chinese argue that they need a stable currency so that factories like this one can thrive. There are tens of thousands of factories across the country. So with so much at stake, the concern is that the spat over the currency could escalate into a broader conflict between the U.S. and China. And that could have serious repercussions for everybody, from the American consumer to the Chinese worker on the factory floor.

Eunice Yoon, CNN, Pyongyang (ph), China. (ph)


FINIGHAN: Well, Myron Brilliant is the head of the international division of the U.S. Chamber of Commerce.

He joins us now live from Washington.

I think we got it there, Myron, from Eunice's report.

But tell us once again, very briefly, why it's so important for China to devalue its currency. I mean, surely, as consumers, we all benefit from China -- cheap Chinese goods.

MYRON BRILLIANT, U.S. CHAMBER OF COMMERCE: Well, I think it's important for China to act in its self-interests here. They've got to be worried about inflationary pressures. They want to bring down the price of imports. They want to encourage domestic consumption. They want to bring money to the consumers in China.

I think it's in their self-interests. And I'm glad that -- that we're starting to see some positive noises out of the president in this regard.

FINIGHAN: Yes, all right, we're starting to see positive noises, but he says we're -- we're not going to be harried about this.

What more can the U.S. do to bring -- to bring pressure to bear on -- on Hu Jintao without stoking further tensions and without making it even more difficult for U.S. businesses trying to get a toehold in China?

BRILLIANT: Well, I was there 10 days ago in China. All I can tell you, I'm encouraged by what I hear. I think there has been constructive dialogue between our leadership in the United States and China's leadership. Clearly, the two presidents -- President Obama and President Hu Jintao -- talked about this yesterday. The secretary of the Treasury, Tim Geithner, was there in China last week talking to Vice Premier -- Vice Premier Wang.

I think these are very positive signals that China is, indeed, going to act. Now, the other day, they're not going to act because of political pressure from the international community. They're going to act because it's in their self-interests. But I think they are going to act and the time is for them to move to a market-based currency regime.

They've got to widen the band. They've got to appreciate the currency. They've got to act in their self-interests and be responsible as a global player.

FINIGHAN: What -- what do you make of the way that -- that China is - - is doing things amount?

Are we seeing a -- a new start, do you think, from the Chinese government?

Is it becoming more economically assertive?

This isn't the -- I mean the currency issue is not the only Chinese policy that -- that's rattling U.S. business amount, is it?

BRILLIANT: Well, that's right. I mean currency is just one of many issues that we have in our US-China commercial relationship that we have to deal with. There are still a number of market access concerns, concerns over intellectual property theft and, of course, the whole area of innovation -- indigenous innovation and China's development of new regulations and guidelines that could favor domestic enterprises over foreign investors.

So we have a range of issues to deal with. Currency is important. Even in the capital market area, we've got a whole range of issues that we really are trying to address in our relationship in a constructive fashion.

But China has to act responsibly. And I think the dialogue between the two governments is a good start, but we need the results.

FINIGHAN: Myron, as you said, China is going to act in its -- in its own self-interests. You've just returned, as you said, from China.

Do you get a -- a sense that -- that the Chinese understand the -- the impact that their intervention in -- in the currency markets there -- their arti -- artificial -- artificially holding the yuan back -- the impact that that has on -- on other economies and on other people's lives, the fact that, you know, it leads to, you know, to tougher economic conditions for - - for workers elsewhere, people lose their jobs, that sort of thing?

BRILLIANT: Well, I think they do. There isn't one voice in China. I met with the ministry of commerce and, of course, they're worried about exporters and the impact on exporters. But then you get signals out from the governor of the Bank of China, Governor Zhou, who clearly says we need to appreciate the yuan, we need to widen the band.

So you have different voices in China. I was encouraged, frankly, by the leaders -- the business leaders in China. The Chinese business leaders now saying it's time to appreciate the currency, it's time to widen the band, it's time to move to a market-based currency regime. I'm very encouraged by those voices that would not have been there five, seven years ago.

China is more muscular in its policies. It feels more confident. It came out of the financial crisis very strong. They still have the worry about asset bubbles and inflationary pressures. But it is a confident China that we're dealing with and it's a country that demands a different relationship with the United States. And, frankly, we are -- we're -- we're balancing this relationship. And it's going to have some friction and some challenges and some bumps in the road. But we're going to get to it because our two countries are tied economically together. And politically, we have a lot at stake in this relationship.

FINIGHAN: And one -- one final question. And I need to ask you to be brief, if you can.

Do you think China is trying to edge out foreign investors?

BRILLIANT: Well, I think in some areas, China is focusing on how they can develop their own enterprises. And they're -- those enterprises are designed to compete with foreign investors.

I think it would be a shame if they tried to edge out foreign investors, because we bring technology, market know-how and, frankly, collaboration in areas like the environment, in science is very helpful for both sides.

FINIGHAN: Myron, it's been great to talk to you.


FINIGHAN: I really appreciate you -- you coming on to share your point of view. It's -- it's good to hear.

Many thanks, indeed.

Myron Brilliant.

BRILLIANT: Thank you.

FINIGHAN: If you're having trouble wrapping your brain around all this currency and trade talk, well, here's a little help.

CNN's Stan Grant visited a shopping center with a difference in the United Arab Emirates.


STAN GRANT, CNN CORRESPONDENT: Well, if you can't get to China, this is where China comes to you. This is Dragon Mart, an absolutely massive complex. This is the biggest retail outlet of Chinese goods outside of the China mainland. It's more than one kilometer long. In fact, it's almost a mile long -- 150,000 square meters.

There are 4,000 different outlets. And you can buy anything here. You want to get a mobile phone, you can get it here. If you want to get handbags, if you want to get makeup, you will get it; running shoes. You can even find a kitchen sink. I guarantee you, we'll find a kitchen sink before we're out of here.

China BlackBerry.

Very similar, right?

This is my BlackBerry. This is the -- this is the China BlackBerry.

How much is this one?


GRANT: 350 dirham. So 350 dirham, that's not even $100 U.S. You walk away with a BlackBerry. It says BlackBerry. It does what a BlackBerry is meant to do.

You can connect to the Internet, right?


GRANT: Internet, wi-fi, make your calls, camera. So it basically does what most things -- a BlackBerry can do and you're getting it for $100.

This is basically what China is about. China is able to manufacture so cheaply, it is able to export so cheaply for a couple of reasons. One, it has a captive and very low paid workforce. And it has a very low currency. According to some economists, the Chinese yuan, the REM.NV is up to 40 percent below its value.

Well, here's something that my boys have been absolutely desperate to get their hands on for some time now. These are quad bikes. You can take these out into the desert and so on and ride around to your heart's content.

Let's price -- let's get a price on these.


How are you?


GRANT: How much -- how much are these quad bikes going for?

UNIDENTIFIED MALE: Those are 1,400, 1,300.

GRANT: 1,400 dirham?


GRANT: So 1,400 dirham is about $300 -- $350 U.S.

Well, I told you I'd find you a kitchen sink and here it is. This really does prove that Dragon Mart has everything.

This is a testament to what China has been able to do -- flood the world with its products and flood the world cheaply with its products.

The big question is just how long is that going to be able to continue?

We know the United States and other countries are putting pressure on China to increase its currency. And there are good reasons for China to do that itself, as well.

Inflation is rising. A higher currency would help with that battle. There is great demand from its own population. And it wants to increase its population's ability to purchase more.

The big balancing act for China is that it's been on a good thing, by keeping its currency low, by being able to employ its people, it lifts many people out of poverty.

What China does not want to do is flush its own economy down the drain.


FINIGHAN: Fantastic.

Stan Grant reporting from a shopping paradise.

Now, as you know, preparations are in full swing for the football World Cup in South Africa. But the economic benefits will be felt all over the world, including here in Pakistan. We'll take a look at the business side of the beautiful game, next on QUEST MEANS BUSINESS.


FINIGHAN: Now, Pakistan isn't exactly known for its footballing prowess. But the country does boast a wealth of ball skills, at least when it comes to making them.

CNN's Paula Newton visits an industry that Pakistan has all stitched up.


PAULA NEWTON, CNN INTERNATIONAL SECURITY CORRESPONDENT (voice-over): So suspected disbelief for a minute and start here, the Sialkot in Eastern Pakistan. Through choking traffic and crude streets, pastoral scenes and fields of wheat and follow an unlikely journey into the heart of Punjab and the soul of the beautiful game.

(on camera): This is rural Pakistan. People here are incredibly poor. They live on what they can grow, except for this. Come with me and I'll show you the stitching hall, where they make one of the most sought after footballs in the world.

(voice-over): A country some have come to see as a leading exporter of terror has, for decades now, been a leading exporter of these hand stitched gems.

UNIDENTIFIED MALE (through translator): A good player will play with this ball. It makes me feel good. It brightens our country's reputation and it makes me feel proud.

NEWTON: This is no cottage industry. Hundreds of these stitching halls are scattered across the region in Eastern Pakistan.

(on camera): Twenty-five thousand balls...


NEWTON: Per day?


UNIDENTIFIED MALE: That's a lot of balls.

NEWTON (voice-over): Khawaja Masood Akhtar is the owner of the aptly named Forward Sports. For almost two decades, he has won big name contracts against the odds. Binding the tradition of craftsmanship to the demand of R&D.

Balls are poked, pressed to test water resistance, heat tested, header (ph) tested and shot tested in that shooter machine, more than 3,500 times -- all to keep Chinese manufacturers from dominating the game.

KHAWAJA MASOOD AKHTAR, FORWARD SPORTS: Now to competing with China, nobody can stand nowadays in the industry. I think those things are very simple. You have to, you know, exactly do what your customer needs.

NEWTON: You know, the World Cup ball will come from China this year.


NEWTON: Does that -- does that bother you?

AKHTAR: I can say a little bit, yes. Yes.

NEWTON (voice-over): China is the threat here, not the Taliban. And the stigma of terror is one more thing to overcome.

(on camera): This whole reputation of terror and the Taliban, how has it hurt?

AKHTAR: It hurts in a big way, because it stops a lot of people coming from abroad, especially from U.S. The people don't want to travel here. Many big brands have the travel bans.

NEWTON (voice-over): But Pakistan is still in the game, competing against lower prices and working to meet tougher standards and eradicate child labor. Most workers here make at least minimum wage, anywhere from $5 to $10 a day. A stable job that defies Pakistani stereotypes.

UNIDENTIFIED MALE (through translator): We are not as kind to people. We are honest. (INAUDIBLE) our product. We make (INAUDIBLE).

NEWTON: There's no pretending the game itself sparks a lot of passion here. That's reserved for cricket.

But take one look -- it's the business of the game here that gets all the glory.

Paula Newton, CNN, Sialkot, Pakistan.


FINIGHAN: Fantastic.

All right. Let's take a look at what the weather is doing in your part of the world.

Guillermo is with us from the CNN International Weather Center.

We've been talking a lot about Twitter on the show today. And I don't follow many people on Twitter, but I do follow you.


FINIGHAN: Yes, well, but I -- I don't understand what you're saying, because most of the time it's in Spanish. And I -- I don't speak Spanish.

ARDUINO: Because I do a show in CNN Spanish, as well. And so I have to keep my viewers informed about it.

FINIGHAN: I know. I know. That's OK. But it just -- I -- I look at these Tweets and think oh, I wish -- I wish I understood what Guillermo was saying that's right there.

ARDUINO: Do you know what it is?

Yesterday, I interviewed a 13-year-old boy from Miami, Peruvian origin, his parents are.


ARDUINO: Who actually came up with applications that he sold to Apple for iPhones and for the iPad.


ARDUINO: And he's making a lot of money. He's 13 years old. So I was excited about that.

FINIGHAN: It makes -- it makes sense. Now, I got that evento aps para iPhone -- iPad.


FINIGHAN: (INAUDIBLE) iPadoa (ph) iPhone here and -- and Apple lapajar port (ph) el la...

ARDUINO: They paid...


ARDUINO: -- they paid for this creation. That's the idea. So I was asking my viewers to follow that...


ARDUINO: -- interview tonight, 7:30 Eastern time.

All right, let's talk about the weather.

FINIGHAN: Weather.

ARDUINO: Now, my other job. And I'll tell you what's going on in here.

I was looking at Europe overall and I see, believe it or not, still some snow. I'm not talking about the alps only. Ramstein in Central Germany is an Air Force base. It's reporting some snow showers.

But that's the only place.

To the south, we see rain into Munich; also, Mannheim, Innsbruck and Salzburg here in Austria. Remember I told you, especially toward the east in Niederosterreich is where we were going to see some bad weather. And we got it. And we got it in other parts of Austria, as well.

Geneva, this corner of Switzerland, next to France, is where we see, also, some rain.

Apart from that, I must say that Britain looks fine. Britain looks great. We are going to see some clouds. The odd rain showers, especially toward the north. Elsewhere, conditions are going to be fine. Sometimes, like at night, we see some clouds -- dark clouds, then it gets better. Mostly sunshine.

But the problems are basically with this low pressure center here in Italy and also into Croatia, we're seeing some bad weather.

Now, this is going to rise a little bit and bring the bad weather into the Czech Republic, into Slovakia and also into Hungary, where we'll see that. But overall, it's not going to be that terrible compared to what we see in Paris, maybe, some rain showers, and that's about it. We're not even anticipating delays at the airports.

Dublin and Northern Ireland, at times, will get some more rain than the rest of England, Britain, in this case. We are going to see some, but not that bad, either.

Temps are rebounding in Sweden, at the same time. So we see how we finally are warming up nicely in many parts. No delays at the airports across Europe, so I'm happy to report that. Only that low here in Italy and the Balkan Peninsula.

Double digits everywhere for tomorrow. And. You're going to see single digits at night, especially in London, about 14, 15 degrees.

Talking about snow, we got very heavy snow into Havre in the northeastern parts of China. That is moving now into the Russian Maritimes, into Sakhalin Island here, north of Japan. What happens is this low is picking up a lot of moisture here that we have in the Sea of Japan, with the cold air coming from the northern parts of Asia. And that is going to clear very soon and it's going to go into the Sea of Okhotsk.

Now, elsewhere, Hong Kong into Taiwan, we'll see more heavy rain. And that will linger throughout the week. Guangzhou and all the way into southern parts of Shanghai.

So that's -- that's about it -- Adrian, back to you.

FINIGHAN: Gracias, Guillermo.

ARDUINO: De nada.

FINIGHAN: Adios, madrigo (ph).


FINIGHAN: Now, tourism, as I'm sure you know, is very important to Thailand. Now, political problems are threatening to spill over to the economy and drive free spending holiday makers away. We'll have a report from Thailand in just a moment.


FINIGHAN: Political tensions in Thailand continue to escalate. The government is blaming former Thaksin Shinawatra for soaking (ph) the violence that left 21 people dead at the weekend. It's even calling him a terrorist.

Now, supporters of the ousted leader are demanding that the government step down and hold new elections.

It's all taking its toll on the economy. Bangkok has lowered its 2010 growth forecast, as we were telling you yesterday, saying that tourists will be scared off by the violence.

As CNN's John Vause reports, there's no immediate end in sight to the crisis.


JOHN VAUSE, CNN SENIOR INTERNATIONAL CORRESPONDENT: (voice-over): Through Bangkok's busy streets, a parade of the dead by anti-government demonstrators. Empty coffins to symbolize those who died during weekend clashes with the Thai Army. The protesters want this man to resign -- Prime Minister Abhisit. In a televised address, he blamed a group of unknown terrorists for the weekend violence. He's refusing to step down, but did say he's working on a political solution. And that may involve early elections.

(on camera): These protesters now believe they have the upper hand in their month-long campaign against the government and soon, they must decide if these demonstrations will continue. To do so will do further harm to the Thai economy. And that could cost them in both support and moment.

(voice-over): The first trading day after the bloodshed and Thailand's main stock index was down more than 3 percent. And in some tourist areas, scene of the recent violence, many shops were quiet, others were closed. More than 40 countries have warned about traveling to Thailand. Tourism is a major employer here and was already hurting because of the global downturn.

SHANARONG PISWONGKWAN, TOUR OPERATOR: But I think some of the tourists still, they have to stay here (INAUDIBLE) because they don't know what's going to happen again.

VAUSE: (on camera): This is one of the main tourist areas of Bangkok. But as you can see right now, it's actually pretty quiet, even though this is peak season. Some tour operators tell us that many visitors to Bangkok have actually left the city for other parts of the country.

(voice-over): Those still in Bangkok say they feel safe because foreigners are not being targeted.

UNIDENTIFIED MALE: I hate to see any violence anywhere. But it is an internal matter. I mean that's -- but...

UNIDENTIFIED FEMALE: Yes, we were quite afraid of what we were going to see here. But it looks quite calm.

VAUSE: Years of political turmoil here have been ignored by tourists and investors. The protest has mostly been peaceful, but not now. With 21 people dead, this nation seems more divided than ever and many fear more bloodshed to come.

John Vause, CNN, Bangkok.


FINIGHAN: It's not looking good for business as far as Thailand is concerned at the moment.

Across the wider Asian region, stocks were mostly lower this Tuesday. The Nikkei in Tokyo closed down .8 of 1 percent today. The Hang Seng in Hong Kong finished just in the red, after starting the session higher on Tuesday.

Shanghai's Composite Index bucked the trend, though. It gained more than 1 percent today.

And in Sydney, the ASX 200 dropped by two thirds of 1 percent.

If -- if you're wondering where Richard is, by the way, of course the guy who would normally be sitting in this chair right now, Richard is in the States as we speak, filming. And he will be presenting the show live at the end of the week from the U.S. So don't miss QUEST MEANS BUSINESS on Thursday and Friday with Richard live in the United States.

Next, though, on QUEST MEANS BUSINESS, the show that bears his name, we'll take a look at one -- what is happening on stock markets right now in the U.S. Dow Street, of course -- Wall Street, rather -- the Dow hovering around 11000. And we'll also show you what happened today in Europe.

We're back -- we're back in just a moment.

Stay with us.


FINIGHAN: All right, let's show you what's happening right now in the U.S. on -- what do they call it?

Dow Street -- if you noticed, Wall Street, I meant. The Dow Jones has been hovering around the 11000 mark all day. There had been some fears that disappointing numbers from Alcoa might interrupt the so-called stealth rally. No indications of -- of that at the moment. The Dow up by just about 11 points.

European markets slipped back on Tuesday's session. Mining and energy companies taking a big hit today following those disappointing numbers from Alcoa, the American aluminum giant.

In London, we saw miners like Lonmin and Rio Tinto losing ground.

Over in Frankfurt, engineering company Siemens, one of the worst performers today in particular. As you can see, the Xietra (ph) DAX was down by almost a third of 1 percent.

And in Paris, shares in Total and GDF Suez were in retreat in the Tuesday session.

That is for QUEST MEANS BUSINESS on Tuesday.

I'm Adrian Finighan in London.

As Richard would say if he was here, whatever you're up to in the hours ahead, I do hope it's profitable.

Christiane Amanpour coming up next on CNN, right after the news headlines now from Errol Barnett.