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Interview With Nouriel Roubini; U.S. Senate Passes Banking Reform

Aired May 21, 2010 - 14:00:00   ET


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Steady as we go. Markets are sailing into calmer waters, as you can see from the Dow.

A thumping loss, there is a strike on the way. But BA's chief exec keeps his chin up.

And spyglass and binoculars at the ready, on this program tonight we go plane spotting.

I'm Richard Quest. It is the end of the week and I still mean business.

Good evening.

After a week of upsets, whew, it's Friday. And it has brought some calm. But don't get too relaxed. Tonight on the program we're going to have a word of warning from Nouriel Roubini that perhaps we are in stage two of the economic crisis. And an interview with him will be coming up in just a moment.

It is the end of a bruising week for stocks in Europe, where worries over sovereign and austerity measures have continued to unnerve investors. Today we have had tough talk from the German Chancellor Angela Merkel, who vowed to defend the single currency from its very survival. Still there it anxiety that regional leaders cannot work together to contain the crisis, and another recession might just be around the corner.


Before we go any further, let's just look and see what the Dow Jones is doing at the moment. Bearing in mind we lost more than 300 just yesterday. To be up 95 now is quite an achievement. But we do need to talk about the euro bourses.

Join me, as always, in the library where we see European stock markets for the week had some thumping great big losses, all down more than 3 percent over the week. London is now at a three-month low. Other markets are almost at the low spot for the entire year. At one point London today actually fell below the 5,000 mark. But as you can see those losses were tempered as the day went on and by the time things closed we were little changed.

Mining and banks did quite well in London. It is-you can't extrapolate too much about any one particular sector. Sometimes everything falls for no reason like we saw with gold and other commodities yesterday. Other times we are seeing, for example, banks were strong. Financial shares were amongst the best performers in the Xetra DAX.

This is what the real talking point in Europe was all about. The German parliament giving its approval to Germany's participation in the bailout or the massive $1 trillion bailout. Germany's element of that is well over $100 billion. But remember that is guarantees. It doesn't necessarily mean that the money will be called upon. It is $184.7 billion for Angela Merkel. The voting was interesting. There was no way near-I mean, there was a majority but a lot of members of the parliament abstained. Some voted against, but she did-the chancellor did manage to get a majority.

Now, this of course was all extremely significant as you'll hear now. Because earlier I was joined by Nouriel Roubini. He is the economist who famously warned investors about the crisis that was going to happen a couple of years ago. We now know that he was correct. Now he's saying that the sort of losses we have seen in the market, so far, at about 10 percent, may be more than just a correction. They maybe the start of another bear market and that could also lead to a double-dip recession.


NOURIEL ROUBINI, AUTHOR, CRISIS ECONOMICS: I've just published this new book called, "Crisis Economics", and we are looking at the history of financial crisis for 100s of years at typical part of it is in the first stage of a financial crisis is driven by excessive risk taking, debt and leverage in the private sector, households, financial institutions, corporations, that is what happened in the last two or three years.

But now there is this massive re-leveraging of the public sector with budget deficit on the order of 10 percent of GDP, and public debt expected to double to an average of over 100 percent of GDP in advanced economies. And this re-leveraging of the public sector is due to two things. First of all, countries' cyclical fiscal policies, we stimulated fiscal policy by cutting taxes and raising spending during the crisis to avoid the great recession from turning to a great depression. And secondly, we socialize some of the private losses of the financial system. The housing sector, we put them on the balance sheet of the government. So the worrisome thing is that now our sovereign debt problems.

QUEST: Is it inevitable that this second stage of the crisis leads to catastrophe, or are there ways we can indeed avoid and circumnavigate it?

ROUBINI: No, it is not inevitable. There is a way of addressing this fiscal problem gradually over time cut government spending and raise revenues in a variety of ways to reduce these budget deficits and make it more sustainable so that the build up of public debt or the temptation monetize it is reduced. But of course, while this fiscal austerity is necessary, today in Greece, in Spain, in Portugal, in Ireland, soon enough it is going to be necessary in the U.K., in Japan, United States. In the short run, cutting government spending and raising revenue causes a reduction in aggregate demand. It may lead to slower growth or continuation of a recession.

QUEST: Right.

ROUBINI: So in some sense damned if you do, and damned if you don't. If you do a fiscal austerity too soon, you end up back into recession and deflation. If you wait too long, you have run away fiscal deficits and you monetize them, you are a fiscal train wreck over the medium term, leading to default or deflation. That is why the policy choices that are being faced by policymakers are extremely tough.

QUEST: If you had to choose between the devil and the deep blue sea, by risking the bond market vigilantes, by continuing the high deficits spending, or the double-dip recession scenario by cutting back now. Which would you go for?

ROUBINI: Well, the bond market vigilantes, as you pointed out, they have already woken up in Greece, in Portugal, in Spain, soon enough in U.K., certainly they have done in Ireland and Iceland, and therefore the markets are telling you, we don't care whether there is a recession or not, either you are going to control this fiscal spending or the sovereign spreads are going to go through the roof. And it is going to be a financial disaster and a double-dip recession. So, in those countries the market is already telling the policymakers you have to do the fiscal adjustments soon, because you have lost your policy credibility.

In the U.K., in Japan, in U.S., who are not yet there, but I would say we have to start thinking about fiscal austerity because if we don't do it, what's happening right now in Greece could happen in U.K. and Japan, and the United States sometime next year.

QUEST: Are we naive to think that you can let the pressure out of the pressure cooker, or the air out of the balloon, by lowering deficits slowly, which is very much what the U.K., hopes to do and the U.S. hopes to do. Or is it-is it going to be a rush to the door the moment you start cutting these deficits?

ROUBINI: Well, you have to at least credibly and in a committed way to say you have a plan for raising revenue gradually over time, in the next few years, and cutting government spending, especially the type of spending like unfunded Social Security plans, or health care plans. If you do that, and there is path (ph), then the market knows that over time you deficit is going to be smaller and therefore in the short run it will need more of stimulus to stimulate the economy when private demand has not recovered, the market is not going to punish you.

But if you don't have a plan in a credible, committed way, to cut the deficit over time, then the markets eventually are going to loose confidence in you and that is what is happening in Greece and it is happening in the rest of the Euro Zone.


QUEST: Nouriel Roubini from New York talking to me. Actually, he was in Los Angeles, but always makes sense. In this case, of course, a fairly somber perspective on what we might face in the financial world.

On Wall Street banks are facing the biggest clamp down since the Great Depression, after the U.S. Senate passed Barack Obama's reform bill. There are now two bills that have been passed, one by the House, one by the Senate. They both have to be reconciled. Maggie Lake is live.


Joins me tonight from a vista on Wall Street.

But, Maggie, look, there is no-the way "The New York Times" put it this morning there is not one part of the U.S. financial industry that will not be affected by this bill.

MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: That is true, Richard. It is pretty sweeping in its scope. And it includes what really was sort of the hope after a year of deep negotiations and oftentimes bitter wrangling between the Republicans and the Democrats. And that is some sort of protection for the consumer.


The feeling was really-as I compete with New York's Finest-the feeling is that the consumer really bore the brunt of the global meltdown, right? So this bill passed by the Senate is going to include a consumer protection agency, create a new agency to really look after the little guy. It is going to curb what they consider unfair mortgages and credit cards. And it is going to create this oversight board, what some people are calling a council of regulators to sort of try to spot the systemic risk in the regulatory system, before it creates a meltdown. It was a long time in getting here, but Senator Chris Dodd, who was at the charge of this, and put it to the (UNINTELLIGIBLE)


Sorry about that.

He said that he-who thought could compete with my talking?


Only the New York Fire Department.



LAKE: We need a sort of ringing to end this week, don't we?

In any case, Chris Dodd certainly claiming victory in an attempt to try to prevent something like the crisis from happening again. Have a listen.


SEN. CHRIS DODD, CHAIRMAN, SENATE BANKING CMTE.: I believe that the public is correct in insisting that we not leave the vulnerable to the exactly the same kinds of problems that they witnessed over the last several years. The too big to fail, too many jobs lost, too many homes lost, retirement incomes evaporating, home values declining by 30 percent or more. And to give this country once again a sense of confidence and optimism about their financial institutions and the financial structures of our country.


LAKE: Now, Richard, very important here though, we have some clarity, this bill is sweeping, but there are two specific areas that are not resolved yet. They are very important, derivatives and proprietary trading. That is going to have to be worked out in this conference when you try to reconcile the Senate bill, which is unusually tougher than the House bill. That is not usually the case. And the House bill, Wall Street hoping that whatever happens it is going to be a little bit more mild than what we are seeing right now. They have clarity and a little bit relief that it is not going to be any worse than what we already know. That is why you are seeing bank stocks rally today. And that really helped lift the overall market.

QUEST: Maggie Lake, in New York. Maggie, go and find out who the driver of that fire truck was and let me buy him a drink.


QUEST: We finally found a somebody-an argument that even you couldn't disagree with. All right, many thanks, Maggie Lake, who is on Wall Street where it is a delightful hot sunny day.

Now, in a moment, BA's balance sheet, British Airways it has taken a bruising. The airline is counting the cost of a strike action. It has posted its biggest annual loss ever. The Chief Executive Willie Walsh has some strong views on what is coming next, in a moment.


QUEST: Welcome back. Two days before its cabin crew are due to go out on strike, British Airways is showing the world just how much damage has been done to the airline. Not only by the first set of strikes, but also by the enormous nature of the recession. BA reported a full year loss of $613 million. That is an extraordinarily large amount of money.

Interestingly, for this amount of money, for BA, what you notice when you look at it, is that the airline managed to cut costs-well, revenue was down 10 percent, by roughly a billion pounds. But costs were also down by roughly the same amount. So, net-net, the airline has come out just about where it is. Don't be too alarmed, though, other airlines like AirFrance, KLM, also announced record losses.

Now, one of the things that you do need to remember is this thing, of course, E-15. Now the number up here, the $613 million doesn't include the five or six days of flying, and the one day last week, that it wasn't able to fly because of E-15, the Icelandic volcano. So those numbers will be go into next year's and will show pretty damning figures. We have already had capacity numbers for April, from BA, which I saw earlier in the week. And those cap numbers show a 20 percent reduction in capacity revenue and passenger numbers.

Not surprisingly, BA's share price hit the doldrums back in June of last year. But up in April of this year we were back up to 255. Now the share price has drifted down again. This is industrial action, this is recession, this volcanic activity, the feeling is that BA's share price here, the risk is still probably on the downside, if for no other reason that we've still got issues of industrial action.

Let's just talk about that industrial action. The workers are due to start 15 of intermittent strikes, by the cabin crew. I asked Willie Walsh, the chief executive of BA, that although there had been reports of talks between the two sides, was it still possible that Monday's strike could be called off?


WILLIE WALSH, CEO, BRITISH AIRWAYS: There is always a chance, Richard. There is always reason to be optimistic, but it is important to point out, it is not just about two minor points, as the trade union would like to present. And I think that must be clear to everybody. And we have made a genuine effort to resolve this issue. I think the problem behind the scenes in the trade union are now coming into the fore. And I think people are beginning to recognize and talk publicly about something that has been talked about privately for some time.

QUEST: But just as much as you are accused of having-of wanting to break the union-do you believe that there maybe a division within the union that wants to break the airline?

WALSH: There is no question that there are people within the union who publicly stated that they would not be sad to see British Airways fail.

QUEST: If we look, though, at the last two supposed items, giving seniority back on the perks, and the disciplinary action. On the seniority question, you could have given them their seniority back, and just been done with it.

WALSH: Well, we already compromised on that, because if you remember I publicly stated I would not give the travel concessions back at all. In response to a request from the TUC I agreed to a framework with the TUC where cabin crew could get their travel concession back and I think that recognizes that we are able to compromise, that recognizes that we are prepared to move, and are prepared to make significant moves.

QUEST: But why give them a cudgel to beat you over the head backwards. Why not just simply say, yeah, that one, you can have back.

WALSH: I think it is important that there is a recognized and real sanction. And that has been accepted by Tony Whatley, and the conversations that I've had with Tony, in fact, he agrees with me. He says you are right, you should sanction people. And he accepts that it is a responsible and reasonable thing to do.

QUEST: Your passengers, frankly, have had enough. They are saying, what on earth is going on at British Airways? And they will soon start voting with their feet.

WALSH: No, I think some people are saying that and I can understand. And clearly I'm bitterly disappointed that any of my customers should suffer a disruption as a result of this unjustified industrial action. I think customers are getting great confidence out of the fact that we were able to operate. The vast majority of our flights through the last period of industrial action, and we will do so again through this period of industrial action. And we will build up our contingency and eventually, in due course, and not too distant future get to a point where we can operate a full schedule in the face of industrial action. And that is what will give people confidence.

QUEST: We have an airline in British Airways that has these very disparate aspects to it now. On the plus side you've got the Iberia deal. You've got ATI coming down the road. You got your call space. But on the downside, you've got this industrial dispute. You've got volcanic ash. And you've got a taxation issue. With the U.K. government and how would you sum up the British Airways of today?

WALSH: I think the British Airways of today is in much better shape than we were. I think the challenges we face can all be overcome. I think we've made good progress in dealing with our call space. This is a business that has been shrinking to stay alive. You cannot do that forever. So, what we need to do is get a more competitive call space, one that will allow us to grow the business. And we're getting there.

In fact, we've demonstrated from the results that we've produced today that we made very significant progress in relation to that. And we will resolve any industrial relations issues. Or you know, we will eliminate the impact that those issues can have on our business and our customers. And we will ultimately get to a sensible regime in relation to dealing with the strike (ph) or volcanic ash. And I recognize that volcanic ash can represent a risk to aviation, but not on the scale that we've seen resulting in the closure of airspace and widespread airspace over Europe in particularly over the United Kingdom.

I don't have confidence in the use of these charts which are charts that show the predicted dispersion of volcanic ash. I don't have confidence in them. I don't believe they accurately reflect the existence of volcanic ash in the air. And I think we need to move very quickly to a much more sensible regime. I don't think a computer model that estimates some of the key variables in this is a relevant way to determine the safety of air travel.

QUEST: Are you hopeful that you'll get some compensation from the British government for that?

WALSH: There is a strong case to be made because of the cost we incurred through the application of EC261. That directly cost us 25 million pounds.

QUEST: This is the duty of care legislation?

WALSH: Yes, because I don't think anybody ever anticipated an event like we witnessed during the middle of April. I don't think that was in anybody's mind when that regulation was passed.


QUEST: The chief executive of British Airways, Willie Walsh, taking to me earlier.

Now, if you are a regular follower of the program-of course you are- you'll know that I'm rather fond of planes. I have nothing on the real hardcore plane spotters. Their knowledge, and their plane passion, we will show you what that is involved in a moment. QUEST MEANS BUSINESS (INAUDIBLE).


QUEST: Welcome back. Londoners are enjoying a glorious day of summer sunshine. It is perfect for a bit of plane spotting. And when it comes to aircraft I like to think my knowledge is perhaps-well, a little on the good side. How wrong I was. There are people who just-well, I don't even come to the starting gate. Ayesha Durgahee went to meet some plane fanatics who really know their stuff. And of course, they were at Heathrow Airport, London.



AYESHA DURGAHEE, CNN INT'L. CORRESPONDENT (voice over): Serious passion about planes. At an aviation enthusiasts fair you really have to peruse with patience to find the photos to complete collections of aircraft fleets.

It started from childhood, really. And it is an interest that continues through to adult life where we live our second childhoods.

UNIDENTIFIED FEMALE: I like the Concorde (ph), (UNINTELLIGIBLE) quite a bit in that.

DURGAHEE (On camera): Are you a father and son (INAUDIBLE).


DURGAHEE: It's a family affair.


DURGAHEE: This is a plane spotter's paradise. You've got everything here for the aviation enthusiast, from photographs to model aircraft, from color slides to books. And even the crockery onboard.

(voice over): Aviation enthusiast fairs are popular all over Europe, but the largest one, Airliners International, is in New York, in August.

For the smaller fairs like the one here in Kempton, a close-knit community exists among spotters.

PETER ASBRIDGE, AVIATION ENTHUSIAST: The camaraderie is incredible between all the enthusiasts. Everybody knows everybody else. I love aircraft. I love the commercial side of the aviation world. I love the different types of airliner. There are some beautiful aircraft out there, there really is. They are very nice, I like them.

DURGAHEE: Pater Asbridge has been a plan spotter since the 1960s and has a prized collection.


ASBRIDE: Oh, 114,000 color slides, going back to the early `60s. Right back to the early `60s. And then a vast amount of color photographs.

DURGAHEE: Peter, at the aviation fair?


DURGAHEE: Who is the one to beat when it comes to planes.

ASBRIDGE: There is a gentleman sitting down there, Tom?


ASBRIDGE: He knows a great deal about airliners. He knows almost as much as I do.

DURGAHEE: And then who else?

ASBRIDGE: And there is a gentleman sitting there. He just stood up. With the white cap on.

DURGAHEE (On camera): Yes.

ASBRIDGE: He is a gentleman who travels all over the world, looking at aircraft.

DURGAHEE: Tom Singfield plane spots for fun, but collects color slides of aircraft through the decades. It is the aviation history that excites him.

There is actually the joy of actually owning this piece of, you know this piece of, you know, this lovely color slide that was taken in 1965, perhaps. You can pay mega bucks, perhaps even $400 for one slide. So, some big money out there, but it has to be something very special.

DURGAHEE: Time for some spotting practice with Kevin.

(On camera): Not sure what this is. This is something like a Bombardier.

UNIDENTIFIED MALE: Only one exists today.

DURGAHEE: That is a 5000.

UNIDENTIFIED MALE: No, it is a 330.

DURGAHEE: OK, a Delta 767?

UNIDENTIFIED MALE: That's correct.

DURGAHEE: The wrong point.


DURGAHEE: That's the 737, 880?

UNIDENTIFIED MALE: No, that's the 700. No it is 700, it has one single draw. For $800, I got two center doors. (ph). OK, here, try to quiet down?

DURGAHEE: With my new binoculars I am a happy plane geek. My first aviation enthusiasts fair. I share their love of aircraft, but not the need to collect models and memorabilia.


QUEST: She's talking nonsense. You should see her desk. It is awash, if I had known that that was going-Ayesha, joins me now.


QUEST: You didn't do terribly well?

DURGAHEE: All right. No, a bit shocking. But, Richard, seeing that you are a fellow plane spotter, I think it is only fair that we have a go at how good your recognition skills are. So, nice and easy ones, first one. Don't worry about the airline-

QUEST: Wind Air (ph).

DURGAHEE: Yes, that is a model aircraft.

QUEST: Of course, from the Budapest, Warsaw, Krakow, that simple. It is an Airbus, it's an A320.

DURGAHEE: OK, onto the next one. How about this one?

QUEST: It is a United Airlines, obviously, it is a Triple.


QUEST: It is a 76.


QUEST: I should have know that.

DURGAHEE: Let me just point that out, he got one wrong.

QUEST: I thought-it could have been a 7-the wings are on the-all right, next one?

DURGAHEE: I knew I'd get you.

QUEST: Yeah, right.

DURGAHEE: And the third one.

QUEST: Ah, please! Are you serious?


QUEST: You are seriously asking me what that is?


QUEST: I'm not even going to answer it. 3-9er.


QUEST: 350!

DURGAHEE: Wrong! Wrong!

QUEST: 350.

DURGAHEE: It's the A350. So, Richard has got-


QUEST: That's all.

DURGAHEE: Dreamliner. But if I organized it, would you be up for coming down to the Northern Runway at Heathrow for a real spot off with some of the friend from the fair, that I went to? You up for the challenge?

QUEST: Are we having a challenge?


QUEST: You and I are having a challenge?

DURGAHEE: Yes, a spot off challenge.

QUEST: Who can recognize?

DURGAHEE: Yes. Just the aircraft models.

QUEST: The real things.

DURGAHEE: Yes. I'll bring my binoculars.

QUEST: It's on. When we come back, the Champions League takes place. It is in Madrid (inaudible) best of the best, two high-profile teams. We're going to talk about what's at stake in just a moment. That wasn't fair.


QUEST: Hello.


This is CNN, where the news always comes first.

Genetic code under control and scientists say a remarkable breakthrough in the United States may be the first step toward the literal creation of life. Genome mapper Craig Venter says his research team has successfully placed computer aided -- computer generated DNA inside the cell, setting new life in motion.

BP says if all goes well, the massive oil spill in the wets -- in the Gulf of Mexico could be over next week. The company's managing director says BP will pump fluids into the damaged well this weekend. If the process is a success, the leak could be closed off within days. At least six million gallons of oil have gushed into the Gulf over the last month.

Russian authorities have declared a state of emergency for a remote Siberian region devastated by floods. Rescue crews are evacuating residents from eight villages after ice jams clogged a river and caused it to overflow. Authorities have brought in 90 tons of explosives to break up the ice, hoping to prevent further flooding.

The Champions League final is tomorrow. It's one of the most lucrative competitions in an already wealthy sport. MasterCard is the official sponsor. It says the big game could mean a $62 million windfall for the host city, Madrid. The wider European economy could also benefit by as much as half a billion dollars.

Alex Thomas is in the Spanish capital -- Alex, I am -- I suspect the people there are more interested in the football than the finance. But as you're aware, we prefer the filthy money.

ALEX THOMAS, CNN SPORTS CORRESPONDENT: Absolutely, Richard. You're right, the fans will be more worried about the football. But, you know, it's another of the tournament's sponsors, Heineken, who have also been crunching their numbers ahead of this big match, Richard. And Hans Erik, one of their top marketing men, has joined us now, as you can see, outside the Bernabeu. Glorious in the sunshine here.

You're looking forward to a good weekend. A bit of a sporting double for Heineken, Hans Erik.

HANS ERIK TUIJT, GLOBAL MANAGER, HEINEKEN ACTIVATION: It's quite a unique day for us, because we have the -- the Heineken Cup final tomorrow in Paris, where the best voted players of the Europe are coming together at 6:00.

THOMAS: That's rugby union.

TUIJT: rugby union. Straight after that, when it's finished, off here to Madrid to see the best football. And it's quite unique that we've been involved in two tournaments, final on the same day.

THOMAS: And two very different sports. I mean, when you think about Heineken, they are in football. It seems a natural fit.

TUIJT: I like rugby or football, quite as well. So I think with rugby, we've been involved -- we're actually (INAUDIBLE) of the Heineken Cup. And we've been involved with the Heineken and with the Champions League already for -- for -- since 1984.

THOMAS: Now, you're predicting a combined global TV audience for these two events of around 175 million people. That's far more than, say, the Super Bowl, which always used to be the biggest watched single sports event.


THOMAS: But tell us specifically with the Champions League, why such -- such a strong brand is something you want to be involved with.

TUIJT: The Champions League, for us, is actually, it proves that Heineken believes in the future. We are broadcasting around to 250 countries. Heineken, as the international premium beer, is available everywhere. And already we are advertising and building the brand awareness for Heineken in all these countries.

THOMAS: We've got Intermayan (ph) and Bayern Munich playing. The teams from different countries can play for some of the sides that have competed in this recently -- Italian and German fans in South America, for example.

So you must be pleased with the new markets it's reaching.

TUIJT: Yes, so we just recently had the acquisition of Penzal (ph), huge potential in Mexico and Brazil, where the Champions League is well established. And the brand awareness of Heineken due to the Champions League is already quite impressive.

THOMAS: And is there anything extra special about (INAUDIBLE) for Champions League or is it football in general?

We've seen it bucking the global economic recession.

Why do you think that is?

TUIJT: Listen, you have to give credit. It is a fantastic tournament. The best players around the world are there. It is the European pinnacle of sports. And with that, you know, it's attracts more and more attention. And I think with a brand like Heineken, you get induced (ph) and creative. And we do so many great things around the world. We activate the Champions League in over 100 countries. And viewers can buy and get in touch with the Champions League.

THOMAS: Hans Erik from Heineken.

Thank you very much for joining us on QUEST MEANS BUSINESS -- back to you, Richard.

As you're going to hear, not just the lead-up for them, they're thinking about all that lovely money, too.


A quick question can you put on my behalf, please?

What does he estimate the total cost of the sponsorship, the advertising, the marketing that Heineken has to put into as part of the Champions League sponsorship?

THOMAS: That was Richard Quest, our presenter, asking a question he wants me to put to you Hans Erik.


THOMAS: As always, getting to the numbers, what's the total cost for you?

What do you have to put into it?

TUIJT: It's -- it's what you -- you buy, of course, the rights. And the nice is, first, more (INAUDIBLE)...

THOMAS: But how much?

What's the figure?


TUIJT: We don't give the figure. But for tens of millions of viewers, we activate and we bring it to life for (INAUDIBLE).

THOMAS: It's worth it, though?

TUIJT: Oh, yes. It's definitely worth it.

QUEST: Hey...

THOMAS: And not a small -- a small amount, I should think, Richard.

QUEST: Do you know, I was going to have a bet whether we'd get an answer on that. And I think you were just good for trying.

Many thanks, Alex Thomas.

And tell him to give you a pint on me.

Many thanks, indeed.

Alex Thomas in Madrid.


QUEST: All right. Absolutely.

And I can tell you, the normal ratio that they work on is something like 200 or 300 percent extra that you have to spend.

We'll be back with more in just a minute.


Good evening to you.


QUEST: Welcome back.


It's a Friday. It is the weekend. My favorite human being this evening, Guillermo, as you know, at the CNN World Weather Center, if for no other -- Guillermo, you know why you're in my good books this weekend, don't you?


Where are you going this weekend?

QUEST: No, no. I'm just staying at home.

But, hey, what have you brought us this weekend?

ARDUINO: OK, again, I want to start with good news. And it's concerning the ash cloud. It's getting better, all that. Also, I don't think you're going to encounter awful weather in London. We are going to see some clouds, as we see right now in the northern parts here in Scotland.

And also the bad weather continues in the east.

Remember the floods in Poland, in Slovakia?

Now we see some more bad weather into Greece and Turkey. But the west is fine.

Also, watching the (INAUDIBLE) here in Madrid. The weather looks fantastic. There's a little bit of a change for Sunday in terms of jet stream. But it's going to turn a western -- a west-easterly direction now. And we may see, then, a change toward Monday and Tuesday in terms of the ash cloud. So far, it is pushed -- it's being pushed northwards. So everybody in Europe is clear.

And then, when I turn this into Saturday, you see a little bit here. But it's not densely concentrated, so it's not bad for Scandinavia.

Then, we're going to see the same that we see here in Scandinavia into Scotland on Monday and Tuesday. So we may start to see a little bit of a problem. But we have time to prepare, so midweek next week we have -- you have to constantly monitor what's going on with the ash cloud.

So, nice weather across, except for the east and the south. The West Med looking fine. The jet is deciding this. We're going to see this weekend the same pattern that we have seen so far -- clear and mild to the west, some scattered showers in the east. The -- the flooded area, you know, it's getting some more rain, but it's not significant rain. But we will see some.

And then along this what I usually call highway, because the -- the storms sit on this highway and then they produce bad weather all over -- these are the areas where you are likely to see some bad weather. You were reporting on the -- the floods in Russia, where we see the unstable weather conditions, especially along that jet.

Now, time to talk about Britain. As I said, Scotland, you know, bad weather there. But you see high pressure all the way into London. So things are fine.

Ireland, it's fine, too. Happy to report that we are not going to see lots of problems at airports because the weather is behaving itself, especially on the west.

Vienna maybe some rain showers. That's about it.

Rome, the same thing along that jet that is bringing the bad weather. Temperature-wise, it's looking fine. So this weekend, this is what you're going to see.

OK, how does at 23 in London, at 20 in Berlin sound?

It sounds really good. Twenty-eight in Madrid for Alex. Twenty-one in Istanbul. So it looks nice, but with the bad weather I was talking about, the Greek isles in here, all those cruise ships taking advantage now of the economic downfall in Greece.

We are going to see some bad weather over there. It's all part of the same system.

And before I go, the two cyclones that we have in here, I would pay more attention to the one in India here, producing some rain, moving through Calcutta very soon and then into Bangladesh and Myanmar. A low pressure center, some stormy there -- and some stormy weather there. And that's about it -- Richard, nice weekend.

QUEST: Thank you very much.

Wonderful weather in London.

We thank you for that.

Guillermo, have a lovely weekend yourself.

We're going to leave you with a look at the markets tonight.

We're giving back gains on the Dow Jones. It is down some -- it's like up just 32 points. It has been up considerably more earlier in the session, just a gain of that.

But over at the -- in the library, you'll see the week's movements on the European stock markets. The FTSE, the CAC, the DAX, all down more than 3 percent. It was a difficult week, all things considered. Next week, well, of course, another chance to put things right. We'll see what happens with markets, currencies.

But that is QUEST MEANS BUSINESS for tonight.

I'm Richard Quest.

I thank you for your company this week.

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

"MARKETPLACE MIDDLE EAST" is next and I'll see you on Monday.