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QUEST MEANS BUSINESS
British Conservatives Partner with Lib Dems; Wall Street Under the Microscope
Aired May 12, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Two men, two parties, one government, Britain turns its attention to the economy.
A dramatic U-turn in Madrid, Spain fights to avoid the Greek contagion.
And Wall Street under the microscope; tonight, is Morgan Stanley next for the Goldman Sachs treatment.
I'm Richard Quest. I mean business.
Britain today ushered in a huge shift in its political landscape. The Conservative Party is now allied with the Liberal Democrats. It is one government in coalition that stresses cooperation over confrontation.
(BEGIN VIDEO CLIP)
DAVID CAMERON, PRIME MINISTER, GREAT BRITAIN: We're not just announcing a new government, and new ministers, we are announcing a new politics.
(END VIDEO CLIP)
QUEST: Tonight, on QUEST MEANS BUSINESS what this new spirit of cooperation means for Britain's economy and some of the creakiest public finances in Europe. You are going to hear views on all sides. But we need to start by introducing you to the men who will take charge of getting Britain's economy back on its feet. For the past few weeks they've been locking horns on the campaign trail, where the sorry state of U.K. finances figure prominently. But how to put it right? How do deal with a budget deficit of more than $240 billion that yawns before them. It is more than 11 percent of GDP, and the biggest of any of the G7 countries.
So, the Prime Minister David Cameron must coordinate the attack on the deficit. His chancellor is George Osborne, a fellow Conservative who will draw up an emergency budget to be presented within the next 50 days. That was a manifesto pledge.
From the other side of the coalition is Vince Cable; a man who you have heard on this program many times. The new business secretary is a member of the Liberal Democrat Party. He'll be in charge of financial reform and he's widely regarded as one of the most respected in the financial world, especially since he is one of the few people who has largely believed to have forecast the great credit crunch and the recession that happened.
Now, they haven't said yet, exactly, how they're going to do it. But join me over in the library and you'll get an idea of exactly the sort of things-and we're going to try and make it clear who is one on what policy.
On the economy, the Tories had a very firm manifesto pledge to cut 6 billion pounds, around $9 billion, from the budget without delay. That has been largely accepted by the Liberal Democrats and it is now a question of implementing it and the way in which that can be done. So the core point of the program, the core point of deficit reduction has been accepted.
But on tax, both side now say they will stop Labour's planned increase in the national insurance tax on jobs. They will aim to raise the threshold, over time, not any time soon, but over time they will raise the threshold over when tax starts to be paid. That was a Liberal Democrat policy so that is one for the Lib-Dems. There will be no mansion tax for very expensive houses. That is one that the Tories got. And there will be no inheritance tax, it seems to be. So a true give and take on the part of the parties. An absolute true coalition when it comes to the tax policies that they are going to put in.
Where things get sticky, of course, is banking reform and the banking levy. Both parties accepted that there had to be action on unacceptable bonuses and unacceptable behavior. There will be more regulatory policies and more power for the Bank of England. And later we are going to examine what this all means.
Clearly, on this part of the equation, it is very much one of the gains for the Liberal Democrats. But that made no difference for David Cameron, as he put forward the grand coalition.
(BEGIN VIDEO CLIP)
CAMERON: We understand that we're not going to beat these problems overnight. And, in particular, no government in modern times has ever been left with such a terrible economic inheritance. Today's unemployment figures are another sign of the human cost of the economic mistakes of the past decade. So we know there will be difficult decisions ahead, but working together I know we can take the country through those difficult times to the better times that I believe lie ahead.
(END VIDEO CLIP)
QUEST: The Prime Minister David Cameron. Earlier I was joined by Richard Lambert, former editor of the "FT" and now director general of the Confederation of British Industry, the umbrella group representing U.K. PLC. I asked Mr. Lambert if he thinks things are now more stable bearing in mind this coalition now at the top of British politics.
(BEGIN VIDEO CLIP)
RICHARD LAMBERT, DR. GEN. CONFEDERATION OF BRITISH INDUSTRY: Well, I think in big picture terms we are a lot more stable than we have been in the last few days. We have a coalition made up of two parties with very, very strong interests in making it work. I mean, they both need this to work. Together they have a significant majority in the House of Commons. So they've got the votes they need to get legislation through and they have a shared commitment to getting the public finances back into shape. They've both made that clear, for weeks, that that is what they want to do. So, I think, you know, the business community, at any rate, welcomes what has happened over the last 24 hours.
QUEST: Does the business community, if one can talk about the business community as an entity, which I know you-
QUEST: -sometimes made that very point, that people want different things. But does the community believe that the tax policies that will be introduced, the cutting of spending now, the various changes that have been put forward, will be sufficient?
LAMBERT: No, I mean, not nearly enough has been set out yet about the program going forward. So, during the course of the election campaign here, all the political leaders steered very clear of actually giving the public the details about what's coming down the turnpike. So we don't know what their plans for cutting spending or for raising taxes. But we do know that we now have a coalition which recognizes it has a job.
We'll have a budget here in late June, July, which will set out the kind of spending envelope. And then later this year, in the autumn, the crunch will come because there will be a spending review, a comprehensive spending review and that is when it will be decided, you know, where things are going to get squeezed, where things are going to get chopped. That will be when the politics really get cranking.
QUEST: And on behalf of your members how-where do you think the balance lies in all of this, Richard. How worried are you that a very tight spending review, which is necessary for the fiscal consolidation, can of course have such a depressing effect on economic activity at a time when-I mean, it is the devil and the deep blue sea, really, isn't it?
LAMBERT: Yes, there are risks in both directions, but we think the risks of not getting a grip on the public finances-allowing public borrowing, which is already about the highest in the G20, when expressed as a share of the economy. Allowing that to rip (ph) would over time be much more risky than not taking firm action now. So we think that is the thing to do. We think that the government should be setting out a kind of program for the next five years, which would be credible and which would tell the markets that we are getting back to a safe place.
One good thing they are doing is they are setting up a new office, an independent office, whose job will be to measure the public finances, kind of audit the chancellor's promises, and if necessary hold his feet to the fire. So that will help credibility.
QUEST: If we look at the team that is being put in place, George Osborne as chancellor, many people had assumed-and commented-that he was perhaps the weakest of the potential candidates for that particular-for that particular post. But then you put Vince Cable as business and banks, or banks and bonuses, whichever way you want to look at it. Do you think that is a sufficiently strong enough team, with the right qualities?
LAMBERT: Well, I think it would be absolutely amazing if Mr. Osbourne hadn't become the chancellor. I mean, he's the prime minister's closest ally. He's been the shadow chancellor. He's actually brave in that job, from time to time, he in the Conservative conference last year kind of laid it on the line, that tough times were coming. Mr. Cable has a strong reputation. What we don't know yet-at least, I don't know-is how are kind of responsibilities for regulating the banking system will be shared, if they are to be shared, between the treasury, Mr. Osborne, and the Department of Business, with Mr. Cable. My guess is that the treasury will want to keep a pretty firm hand on the banking sector, because they have to write the checks.
QUEST: Richard Lambert of the CBI. The governor of the Bank of England, Mervin King, endorsed the new government's plans to cut Britain's budget deficit. He warned that the banking crisis of one or years ago have now turned into a sovereign debt crisis. So, let's put this in perspective. David Blanchflower is a former member of the interest rate- (UNINTELLIGIBLE) the MPC. He is also a professor of economics at Dartmouth College. David joins me as he does frequently on the line from Dartmouth.
DAVID BLANCHFLOWER, PROF. OF ECONOMICS, DARTMOUTH COLLEGE: Hello.
QUEST: All right, David. I'm going to allow you one, "I told you so", because the hung parliament has not been anything like as catastrophic as some thought.
QUEST: But are you happy with the way it is working out?
BLANCHFLOWER: Well, I'm actually very unhappy about the first thing that Cameron was to say was that we're going to cut, and that Cable, who opposed this, apparently, last week, went along with it on a day when the Bank of England produced forecasts that said growth is going to be-really there are increasing risks to the downside. So, actually the markets spoke. This new government had about 12 hours where the pound rose, and at 10 o'clock this morning, when growth forecasts appeared to be lower, the pound started to fall. So it seems to me that we are in dangerous territory here. Growth is what we need, not cuts. The Bank of England forecaster incredibly bullish, so if we don't get that kind of cut, that kind of growth, then, maybe we should cut 90 billion. And I wrote a story the other day what said, well, actually that is the entire education budget, so then that makes slower growth, and then you keep going. So the strategy, we need to cut, cut, cut and cut, is nuts.
QUEST: But David, you have never quite explained to me why the cut, when the Tory-when the prime minister, as you know, he says it is merely one pound in 100. It is a small amount of money. It is making a start on a process that will take some time.
BLANCHFLOWER: Well, it is making a start at a time when the economy is being propped up by the public sector stimulus, and what we are seeing is growth driven by that, when actually part of the Tory strategy is to have much higher cuts than the Bank of England built into its forecast. So that will generate much lower growth and there are very severe risks to that.
So what is happening at the moment is everything, in my view, pretty much is being driven by public stimulus. So, then you say let's take the public stimulus away and it is the only show in town. So then you get into cuts, and then you get into lower GDP, and then you have to cut all the education budget and all the health budget and everything else-this is-this is the death spiral. So my view, again, I did like some of the words-the one thing I did like. They were sort of mumbling words about this will be dependent on growth. That's the prime thing. We need growth. Everything must be driven by that. Then everything else follows. Not we start to cut and that will give us growth, because it won't.
QUEST: Let's just widen that, because we are going to talk about Spain in just a moment. Spain has started-
QUEST: a-you saw today, some extremely austere measures to cut debt. Greece has already done it. Isn't the reality of all of this that the markets do have a greater ability to withstand these shocks? Anatole Kaletsky writing in this morning's "London Times" makes exactly that point. That we've been too frightened by market panic.
BLANCHFLOWER: We've been too frightened by market panic. But, Richard, it is very strange for you to sort of even compare. Spain is not the U.K. Spain does not have an independent currency. Spain cannot-cannot allow it's currency to decline-doesn't have a central bank. And there are chances that it will default on that debt. We're not going to default on the debt. We have our own central bank. We can depreciate our currency. We're not Spain. The comparisons are not there. We have to establish growth and we can do so by our own independent actions. We should not rock the boat. We should calm nerves not worsen them.
QUEST: But, but-
BLANCHFLOWER: So, the pound today, all of a sudden, 12 hours in and the pound starts to fall.
QUEST: So-I-I-you're not being very generous to this new government, in the spirit of bon o' me (ph) of Downing Street, in the Garden of Downing Street, today, David.
BLANCHFLOWER: Well, I gave them 12 hours and then I looked at the market. I had the pound sterling in front of me. Started to fall from 10:00 o'clock this morning. It was at buck, 50.5 now it is at a buck 48. Didn't last long, so the markets started to see that cuts at the time when all of a sudden that the Bank of England announces that growth is to the downside. But nobody believes their growth forecast because it is too strong. So that takes cuts off the table, right now.
QUEST: David, lovely-
BLANCHFLOWER: That's what the market is saying.
QUEST: Lovely to talk to you as always. Many thanks indeed.
BLANCHFLOWER: Good to see you.
QUEST: A robust discussion, from Dartmouth, many thanks.
QUEST: David Blanchflower, joining me.
Right, been a very busy day. Extraordinarily busy and quite exhausting all things considered. Becky Anderson is at the CNN News Desk.
QUEST: It was a U-turn for Spain. Well, you turn if you want to, it is one of the countries most frequently named when economists say the debt crisis could be contagious. It explains why they are suddenly becoming more health conscious. We'll report from Madrid after this.
QUEST: Now look at this. This is the situation that we're currently seeing in Spain on a day when the Spanish prime minister outlined plans to tackle his country's bloated budget deficit. It was a sight of seeing Greece, with its deficit soaring, and its-its bonds being trashed in the market, that really put pressure on the Spanish to actually get their act together. Even though proposals have been on the table for sometime, now the government, Prime Minister Zapatero has got to grips and also helped by a phone call from President Barack Obama, who pointed out the importance of this.
The spending discipline comes from Mr. Zapatero and the core of this is a 5 percent cut in pay for civil servants. It will freeze their pay until 2011 and up to 18,000 civil servants' jobs will go. So that is a massive restriction and contraction of the public sector, designed to reduce the deficit. It will raise-at least it will cut, around 6 billion this year, but over the course of the parliament and the plan, $19 billion is expected to be stripped out of the country. Balancing, or rebalancing the budget is designed to be done by a target of 2011.
A deficit target of 6 percent of GDP, now-I mean, the target is 11.2 percent, or the current number is 11.2 percent in '09, and it will be about 10 to 11 percent this year. So to get this down by 2011, to just 6 percent of GDP, you are talking about stripping 4 percent out of that at a time when the country has only just returned to growth. And, of course, I would be remiss if I didn't remind you that Spain has an unemployment rate of 20 percent. And that shoots up into the high 30s if you add in those, in just in their 20s and their early 30s.
All right. So, if it is all so bad, I hear you say, Richard, why did the market rise by nearly 1 percent, the IBEX 35? The reason is actually very simple. It is all because these measures are seen to be essential if Spain is going to return to economic stability. That is the theory, at least.
The Prime Minister Jose Luis Rodrigo Zapatero was re-elected in '08, he promised tax cuts and more benefits for voters facing rising unemployment. But the state of the Spanish government has forced him to give up those policies of trying to avoid messages and measures. We need to report from Madrid, from Ivan Watson.
IVAN WATSON, CNN INT'L. CORRESPONDENT (voice over): Elisa Goni turned 24 this week and she is about to graduate from university. But away from the birthday dinner with her parents, she says she does not feel much like celebrating.
ELISA GONI, UNIVERSITY GRADUATE: I feel like I'm going backwards, yes. Like instead of jumping steps up, I'm going down.
WATSON: Three years ago Alisa made enough money as a freelance English interpreter to rent her own small apartment, where she lived with her boyfriend. But in 2007 an economic crisis hit Spain. Freelance work dried up. Alisa's boyfriend lost his job, and Alisa had to make a tough decision.
(On camera): You had to move back in with your parents?
GONI: Yes, because I couldn't earn enough money to live on my own.
WATSON: How did that feel, coming back to Mom and Dad's house?
GONI: It's tough because, you know, like, my dream was to be able to live on my own and have my own money and pay my own things.
WATSON (voice over): Spain has the highest unemployment rate in Western Europe. It is even higher among Spanish youth.
DANIEL LOSTAO, PRESIDENT, SPANISH YOUTH COUNCIL: Young people between 18 or 30 years old, present rate for unemployment is more or less 40 percent.
WATSON (on camera): That's terrible.
LOSTAO: It's very terrible. It's very hard for young people.
WATSON (voice over): At this international youth conference, activists passionately debate ways to generate new jobs. The economic crisis is a constant topic of conversation and worry in Spanish society. And some of the country's most talented young citizens no long see a future in the short-term here in Spain.
GONI: If I don't get a job here in Spain in six months I will go to another country in Europe just to find a job.
WATSON: Elisa and the family dog walk past recently constructed towers, shining symbols of the economic boom Spain enjoyed up until just a few years ago. After 18 months of deep recession, the Spanish economy has started to show the first small signs of recovery.
But for now, millions of young Spaniards like Elisa, still have to rely on the generosity of Mom, Dad and the increasingly indebted Spanish welfare state, to make ends meet. Ivan Watson, CNN, Madrid.
QUEST: Let's stay with the economy of the Euro Zone, where we got numbers today that showed it grew very modestly in Q1 of this year. Output was up by just 0.02 of 1 percent. Now bear in mind in Q4 of last year it was unchanged. So this was extremely disappointing numbers indeed. The economic recovery now is really pretty much confirmed as slow. The markets had showed the tensions perhaps of the risk of deepening sovereign debt crisis, the Spain's cost-cutting provided some reassurance. Financials were strong as were insurance companies, particularly insurance Alliance and ING. In Frankfurt the DAX showed the best gains and there it was banks, and it was industrials, Germany's own growth figures turned out to be a little better than expected.
The euro-well, if you thought the euro had recovered after we had got that announcement of the bailout from the Euro Zone countries, I'm afraid to say that we're pretty much-David Blanchflower would probably be saying I told you so. But we're back pretty much to where we were. The euro is at $1.2626, despite all the issues and the problems and all the solutions.
And one final note, just allow me quickly to tell you, Estonia today received permission that it will be allowed to join the euro in 2011. Many people are wondering-why?
(DESK BELL CHIMES)
It could be time to give your office an overhaul, at least where the software is concerned. Microsoft Office 2010, is this just another way for Microsoft to take money from our pockets? Or is there actually something behind it? In a moment.
QUEST: Microsoft has launched a new version of its office software package. It is called office 2010. The company says 90 million business customers will eventually upgrade to Office 2010. Now, of course, in this new environment of open source software, and with cloud computing, one wonders what role Office 2010 has? I spoke to Jean-Claude (sic) Courtois, who is president of Microsoft International, and I asked him why customers should bother?
JEAN PHILIPPE COURTOIS, PRESIDENT, MICROSOFT INT'L.: This is about providing the best creativity experience across the PC, the browser, and the phone. And when you think about companies today, in the world, 87 percent of the employees are actually working remotely, somewhere, different locations, sometimes at home. And Office 2010 is all about providing great technologies, not just on your PC, but actually on the phone, using as an example your Outlook mobile, and a browser to synchronize and collaborate together.
QUEST: Isn't one of the real problems you now have, though, with the Office 2010, indeed the whole range of Microsoft products is the variety of different systems, operating systems now means that we may use a phone that uses Android. We may use a computer that uses-that's a PC. And have an iPad that runs on Apple.
COURTOIS: Well, the reality, you are right, people are using a broad set of smart devices. And today we are expanding Office 2010 with what we call the Web Apps. With the Web Apps, you can actually use the browser. So, if you are an employee, as an example, in a retail location, or maybe a postman (ph), and want get access, you can do that. You can actually also annotate and collaborate on a document on different space. And as a matter of fact, whatever device you use, you are going to be able to get that through Office 2010.
QUEST: Are you seeing companies being prepared to go back in and start spending on IT and start spending on software, upgrading? Because we do know that in the last few quarters there has been a reluctance for that.
COURTOIS: Yes, you know, Office, in the world, we have 90 million business users. And right now I can tell you, in particular in Europe, here, where I am right now, given the economy challenges businesses are looking at flexible options. With the cloud, and Microsoft is leading with the cloud, we are providing a service where people can actually access, not just Office but exchange the e-mail system doing also some collaboration, Share Point (ph) 2010. And because of that they are going to cut their capital expenditure and get actually that, as a service with a few euros, per employee, per month.
QUEST: The president of Microsoft International.
In just a moment I'm going to bring you two stories from the United States. The first is a monstrously large budget deficit for the U.S. government. And the second, shares of the banking giant Morgan Stanley take a hit after reports that it maybe the latest target of Wall Street watchdogs, in a moment.
I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN.
And the markets in New York have had two pieces of news to digest -- well, three, actually, if you included the trade deficit, which was at a 15 month high on the back of oil -- rising oil prices.
The big board, well, it's already there, as you can see, up 138, up 1.3 percent, despite the fact that the U.S. Treasury says the April deficit has just come through -- April, April alone was $82.7 billion. It's the largest imbalance for that month ever on record. That, of course, was an extraordinarily large number, because apparently revenues were much lower.
The other piece of information out of the States today, Goldman Sachs was first. Now there are reports that another Wall Street firm is under the government microscope. Notwithstanding that, the market is holding its own.
Maggie Lake is in New York -- Maggie, which -- what's the firm and what are they said to have done?
MAGGIE LAKE, CNN CORRESPONDENT: Well, we're sort of waiting to see who is next. And in "The Wall Street Journal," it appears federal prosecutors are looking into whether Morgan Stanley misled investors about the nature of some of its complex mortgage derivatives that it helped design or exactly what they were doing with those.
Now, those investments, Richard, date back to 2006, we should point out, which was, as you'll remember, way before the top of the housing market. Still, they're looking into it. Morgan Stanley coming out quite strongly, saying: "We have no reason -- and I'm quoting here -- "no reason to believe there is any substance behind any supposed investigation."
That appeared in "The Wall Street Journal".
The supposed is because Morgan Stanley says it hasn't even received a weld (ph) notice. And -- and what that means is that this is very preliminary. Of course, a weld notice (ph) is that formal -- formal notice to the firm that there are going to be enforcements recommended -- recommendations. Not that they'll be followed through, but recommendations.
They're not even at that stage yet. So this is very, very early on. Any decision to, ultimately to proceed with something is obviously going to depend on what kind of proof there is about whether these firms misrepretend -- represented information to clients.
Of course, the SEC not commenting the DOJ...
QUEST: Well, who...
LAKE: -- not commenting. We don't know, but no doubt they're all sifting through the e-mails as we speak.
QUEST: Maggie, the market's up 138. So even if it's true, the market's taking it in its stride. Morgan Stanley, of course, share price might be somewhat -- or Morgan Stanley's position, I should say, might be somewhat different.
But doesn't it all depend on what people -- what -- whether the government has a strong case in this way?
LAKE: Absolutely, Richard. And -- and it's true. The market is trading higher. They're sort of looking aside from this right now. But Morgan Stanley's stock down 2 percent. It was down about 4 percent earlier. And this is on a day where everything else is going gang busters.
so this is an issue for investors. But they're not selling Morgan Stanley's stock because they think the government has a really strong case and they're going to win. Most people generally believe these cases are hard to prosecute and we don't even know whether they're going to.
Instead, there are two other things that are really bothering investors. One is that there is more evidence that there is a new activism at the SEC. You know, they're -- they're taking a harder look at things. They're going to be tougher in general.
The second thing is there's a feeling that there's an indication that maybe there's a shifting when it comes to disclosure. It used to be that...
LAKE: -- firms like Goldman and Morgan didn't have to tell professional clients as much as they had to tell regular folks like you and me. There's a feeling now that maybe that's changing, but it's unclear. And that's an uncertainty that's sort of hanging over the sector and -- and the banking -- investors and banks themselves are very uncomfortable with that.
QUEST: Regular folks like Maggie Lake in New York.
Many thanks indeed.
The market up 135, just over, oh, I don't know, an hour and change before we -- before it closes.
Don't do any damage.
We'll be back with more and the rising price of gold, in just a moment.
QUEST: And $48, $58 an ounce -- the precious metal is up some 20 percent since February. If there was ever any sign that the actual crisis in sovereign debt is bubbling up and has not been put to rest by the Eurozone action, that price of gold, at 1248, shows there's still some serious worries out there.
Oil fell today, as well, incidentally.
Greek unions have called a new general strike for next week. They're going to protest against the pension reforms of the Papandreou government. The stoppage will target transportation. It's also expected to disrupt hospitals and other public services. The millions of Greeks who depend on overseas visitors may be fearing the worst. Tourism accounts for 18 percent of the GDP.
And as our correspondent, Diana Magnay, tells us from Greece, the sector is struggling.
DIANA MAGNAY, CNN CORRESPONDENT (on camera): Taxi!
We came into the port of Piraeus, please?
UNIDENTIFIED MALE: Yes, madam.
MAGNAY (voice-over): Piraeus is the place where you catch a ferry to the Greek Islands. Dock workers have gone on strike twice since the end of April, leaving hundreds of tourists stranded.
UNIDENTIFIED MALE: It's the hub of Greece.
MAGNAY (on camera): There's a strike?
UNIDENTIFIED MALE: Yes.
MAGNAY: How much warning do they give when they strike?
How -- how -- how many days do you get?
UNIDENTIFIED MALE: Two -- two or three days.
MAGNAY (voice-over): We're braving the travel warnings and spending the day sightseeing. It's half an hour to the nearest island -- an easy daytrip if you want a break from the capital.
(on camera): Do you have many tourists this year?
VASILIS LAIS, AEGEAN FLYING DOLPHINS: No. This year, everything is empty.
MAGNAY: Vasilis was just telling me that there are only about 25 people on this boat, but normally at this time of year, there are around 100 at least. And that's why we're going a bit slower now, because the captain is trying to save on costs. Twenty-five people doesn't bring the money in that 100 does.
(voice-over): Aegina is picture perfect. It served briefly as the capital of Greece in the 19th century, before Athens took over. Many Athenians have a second home here. The seafood is fresh. So is the local specialty, the sasha nut (ph).
UNIDENTIFIED MALE: Good (INAUDIBLE) 30.
MAGNAY: Take a trip up into the hills and the views are fantastic -- worth making the trip all the way from Charlotte, North Carolina.
EARNEST RAMSAY, TOURIST: I say come on down. I don't have a problem.
If I don't have a problem, they shouldn't have a problem, you know?
It's nice here.
MAGNAY: But streets filled with souvenir shops are empty of tourists.
(on camera): How much of a reduction in tourists do you think you're going to be seeing this year?
UNIDENTIFIED MALE: Well, I would say a number of maybe 15 percent.
(voice-over): Last year, income from tourism in Greece dropped 17 percent as the global financial crisis kicked in. The latest figures suggest the number of bookings from Britain and German tourists have dropped since the unrest on Athens' streets.
But I am surely not alone in thinking that Greece and its ancient splendors have lost none of their appeal, despite a less than flattering modern backdrop -- the best view in Athens.
Diana Magnay, CNN, Athens.
(END VIDEO TAPE)
QUEST: We're looking to take a very close look at her expenses when she gets back to base.
The weather forecast now.
Lola Martinez at the World Weather Center.
LOLA MARTINEZ, CNN METEOROLOGIST: Hi there to you, Richard.
Well, lots going on, as you know, around the world, starting off the Europe. It is quite interesting, this contrast of weather to the north and the south. We'll see much cooler, drier weather. Actually, enjoy it, because it does feel rather pleasant across parts of the U.K. into the northern regions and into Scandinavia.
It is the south, though, where that warmer and unsettled conditions that we're a little bit concerned about risk one weather for central parts of Italy, all the way across into the Balkans, we could see a risk there for some thunderstorms into the region.
Let's check in some airports right now. Delays at Berlin, Hamburg, Lisbon and Madrid. For tomorrow, the winds could be picking up a little bit there into Barcelona. We're really seeing green boxes, so I don't think it's going to be a massive impact for your travel, though.
Dublin, just a few spotty showers there, so nothing really big.
Where we could see some major delays is across central parts of the United States -- another round of bad weather. That means hail, tornadoes. Again, we are reporting across the Northeast, LaGuardia, JFK, Newark, Philadelphia International and Chicago's O'Hare over two hour delays. So do check those airports before heading out -- and, Richard, back to you.
QUEST: Many thanks.
Lola Martinez at the World Weather Center.
Finally, tonight's Profitable Moment.
And allow me an indulgence.
Watching the transition of power and democracy remained, for me, one of the most awe-inspiring sights. It is the majesty of the process, as power and patronage shift peacefully from the vanquished to the victor. And despite the worst forecasts, the U.K. markets held their nerve. Sterling sort of behaved itself. The trains and the buses are still running. People went to work. Life went on.
And now, Britain has a new government, represented by these two gentlemen. Even other mature democracies in Europe and the United States find the lack of chaos remarkable. All the more so when you remember in Britain, all this transition of power is done within hours after the prime minister's resignation. Let alone the fact that this result has taken Britain's politics into uncharted territory.
You know, looking at those two, it's easy to be cynical about the way politics is played or to take the system for granted when it works. But I hope I never lose that child like wonderment when I really see the people's voice at work.
As Winston Churchill put it, democracy may be the worst form of government, but it's the best form that we've got. And I'm paraphrasing a bit.
And this is QUEST MEANS BUSINESS.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead...
QUEST: -- I do hope it's profitable.
"MARKETPLACE AFRICA" is next.