Return to Transcripts main page


Interview With European Commission President; Bob Diamond Becomes Barclays CEO

Aired September 7, 2010 - 14:00:00   ET


MAX FOSTER, HOST, QUEST MEANS BUSINESS: Tonight the president of the European Commission tells this program how he thinks high unemployment can be reduced.

A big day for British banking, Bob Diamond becomes the next CEO of Barclays.

And protestors in France raise the roof over plans to raise the retirement age.

I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS.

Good evening.

The president of the European Commission says Europe's recovery is gathering pace. In Strasbourg, France, Jose Manuel Barroso delivered his upbeat outlook in the Europe's first State of the Union address. The format copied from the United States, of course.

He says the determined action of member states has improved the bloc's economic outlook. Barroso's says that GDP growth this year will now come in higher than forecast. He warns that the recovery is uneven, though, some states not taking part.

And he says that Europe should accelerate financial reforms in order to have sustainable growth. On the subject of immigration Mr. Barroso said that governments must respect human rights. And I asked him if that statement was related to France and its stance on the deportation of Roma people.


JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: It is a statement of principle for all governments of Europe. Governments must respect human rights. And the citizens, also, must respect the rule of law in the different member states. There is now, as you know, a very political science debate in France. I do not want to interfere in that debate, but I want to say that the European Commission working with the French authorities is now making its independent assessment about the way the European resolution (ph) is being implemented.

And in Europe there is no room for discrimination. We are by far the most advanced system of verification of respect of those guarantees and rights. And that is what we are going to make this independent assessment, with the French authorities, and with the other countries, because in fact the Roma issue is a general problem. And we have to be sure that European directives are properly transposed and implemented in all the European member states.

FOSTER: OK. I want to ask you a couple of other economic proposals you suggested today. First of all you mentioned a European Union bond. Can you just explain what that is? How that would work?

BARROSO: This is something we have been working with the European investment banks. These are bonds for concrete projects for infrastructure for instance. So some of the projects, instead of being financed directly from the budget could be financed with obligations or bonds that are made especially for that project. This is our proposal.

FOSTER: OK. And the European vacancy monitor. What's that? Is that some sort of system to deal with unemployment across the union?

BARROSO: What happens in Europe is that we have, of course, a very important number of people unemployed. But at the same time we have a very important number of vacancies, more than 4 million vacancies. Because there is a mismatch between unemployment and those who are offering jobs. So what we are proposing is a very simple system of monitoring the vacancies so that we can make them available to all European citizens, they know where their skills are needed.

FOSTER: We were talking about immigration just a moment ago. You're lighting a political bonfire, aren't you? Suggesting you're promoting jobs across the Union -- aren't you suggesting that people should be moving across the Union to where all these jobs are?

BARROSO: But immigration is positive. We are not against immigration. We are in favor of legal immigration. First of all, in Europe, there's is a freedom of circulation. Someone from one country can go to the other country without restrictions.

FOSTER: But you know there's a growing resistance to that right now?

BARROSO: There are some problems in some specific situations. Also, there is on the way things are being dealt in terms of security. But generally speaking there are no problems. In Europe you can travel in all parts of Europe and you can establish yourself if you're a citizen of the European Union without discrimination.

What we are seeing now in one specific country was that there were some concerns about the egress of some citizens of a specific community. But this is not the rule in Europe. In Europe the principle is of freedom of circulation. So a French worker in Germany, or a German worker in France -- they have exactly the same rights, and this is the way that is normally the case implemented in Europe.

FOSTER: So if you proposal is approved, I'll be able to log into a system, will I, to see where jobs are currently across the Union? If there's a job in France, for example, I'm interested in, I can find out about that?

BARROSO: But this-I mean, but this already happened. This is nothing new. In Europe we have millions-millions-

FOSTER: What's the proposal then? What is the proposal then it if is not--?

BARROSO: The proposal is to publish the vacancies.


BARROSO: Now we don't have a system in Europe where people know -- for instance, in Portugal, people do not know exactly what are the vacancies of jobs in Germany, and the opposite is true, as well. This is a question of administration, of information. But already today we have millions of millions of citizens of European countries working in other European countries. This is the overall rule in Europe. This is, of course, very good for Europe. And not only of European citizens but we are receiving non-European citizens in the European Union. And we are in favor of legal immigration.

European Union's latest statistics shows that we are now more than 500 million people in Europe and this increase was due to migration. It was not because of more births but because of migration. So the question is to have legal migration, at the same time fight illegal migration because as we know, sometimes illegal immigration is associated also with crime. This is the balance that we are trying to find and to promote, of course, in good cooperation with our member states.


FOSTER: And we'll have more from President Barroso later in the show. He'll give us his thoughts on the strength of Europe's economic recovery and why he thinks it is not out of the woods just yet.

Well, France has more to worry about than just a telling off from the European Commission president. Hundreds of thousands of workers staged a strike this Tuesday to protest against plans to raise the country's retirement age. CNN's Jim Bittermann joins us now, live, from Paris.

Jim, did they get their message across?

JIM BITTERMANN, CNN INT'L. CORRESPONDENT: Oh, I think they did, Max. There certainly were a lot in the streets today. The unions like to think it was somewhere over 2 million in the streets. The government says it is nowhere near that, about 1.1 million. Nonetheless, a lot of people in the streets protesting, basically, over this government plan to raise the retirement from age 60 to 62 here; the requirement at which a worker can collect their full pension. Already, though, when you are-it is interesting listening to you and the interview that you just had. The fact is that across Europe the pension plans vary widely and the French benefit from one of the earliest retirements you'll find anywhere in Europe, Max.

FOSTER: I was going to say, are they aware that foreigners watching this will think 62 is perfectly reasonable?

BITTERMANN: Exactly. And I think they are aware of that. They are certainly not ashamed of it however, this is what they call here, a "droit de qui" (ph), a required right. And it began back in the `80s and from that time onward workers here have felt that 60 was the right age to retire. Now, the government is trying to convince them otherwise simply because there is such a deficit that is being run up by the pension fund, about 20 billion euros this year will be run up in deficits. And they are hoping that by just increasing the retirement age to-by two years, that in fact that will save about 70 billion euros over the next 20 years. Whether or not that happens or not is a different question.

In addition to the strikes that we saw, the disruptions that we saw in transportation today there were disruptions in France, as well, in the national assembly. Because when the government took the plan to the national assembly this afternoon, introduced it, introduced the legislation that is going to be necessary to enable it, in fact, the Communist members of the assembly descended from their seats high up in the chamber and confronted the prime minister and the labor minister directly with petitions that they said were signed by hundreds of people, who are opposed to the government plan.

FOSTER: Jim Bittermann, thank you very much indeed for joining us from Paris.

Now, one of Britain's most infamous bankers is taking the top job at Barclays. Before Bob Diamond steps up to become CEO we'll look at how he's already made a big impact on the world of finance.


FOSTER: Two of the U.K.'s biggest banks are making key personnel changes. HSBC Chairman Steven Green is leaving Europe's biggest bank to become a minister in the U.K. government. Green will be responsible for trade investment. He'll be in the new post by the end of the year.

And the man once dubbed the unacceptable face of banking by a British government official is expected to helm the country's third largest bank. Bob Diamond, who runs Barclay's fast growing investment bank will succeed the CEO John Varley. Does promoting an American mean Barclays will switch its focus? Here's Jim.


JIM BOULDEN, CNN FINANCIAL CORRESPONDENT: A top banking brain, or an unacceptable face of banking? American-born Bob Diamond was credited with keeping Barclays bank strong through the financial crisis. And fingered by one senior British politician as what is wrong about banks paying executives 10s of millions of dollars in salary and bonus.

SIMON MAUGHAN, FOSTER: GLOBAL: Bob Diamond has been the poster child for the investment banking industry, good and bad.

BOULDEN: Either way, 59-year-old Bob Diamond will move up from president of the investment banking arm to become the CEO of the global bank. And he'll have to leave New York.

MAUGHAN: He does have to relocate back to London. I understand one of the reasons he left was because he wasn't a great fan, shall we say, of the constant prying into his pay packet. I don't think anybody would be. So, clearly putting himself back into the full scrutiny of the U.K. media. That means he must really want this job.

BOULDEN: Barclays would not put any of its executives up for a television interview, but released this on camera statement.

BOB DIAMOND, BARCLAYS CEO-DESIGNATE: Barclays aims to be the most respected globally integrated, universal bank in the world. We want to have that respect from our key stakeholders, our clients, our employees, our shareholders, and all the communities that we work in.

BOULDEN: Diamond is credited with taking a staid British bank and attaching to it a highly profitable investment bank, based in New York. Much of this coming from his shrewd purchase of Lehman's bankrupt U.S. operations two years ago; a purchase criticized by some as having come too cheaply.

(On camera): Barclays is, of course, also a retail bank and credit card company. Barclays says by picking Diamond it doesn't mean the bank will focus more on the investment side than it will on the corporate and retail side. Barclays repeated Tuesday it wants to remain a universal bank even while the U.K. is debating whether the likes of Barclays and HSBC should broken up, splitting the investment bank from the more conservative retail banking. Just one of the challenges facing Mr. Diamond back here in the U.K.


FOSTER: All right. Jim is with us, here, now.

Jim, let's talk about the man, himself, a bit. He's talking, you were referring there to his pay packet.


FOSTER: It is interesting that he's going to take a pay cut, isn't he? Because he was effectively the most well paid banker in London before?

BOULDEN: Well, I've heard all these amazing numbers. I mean, even some people said he made up to like 63 million pounds, more than $100 million. And the bank disputed those numbers, heavily. So it is really difficult to understand how much money he actually made. But when he was part of the investment banking arm, you know, those guys make profits-make salaries and bonuses based on the profits. So when that bank generated an enormous amount of money he would get an enormous amount of money from that.


BOULDEN: And that is when he was, you know, not that he becomes the CEO of the bank he now has a set salary. He'll have a set bonus structure. It will be much more public how much money he makes.

FOSTER: So the base salary is likely to be higher, but bonuses will be less?

BOULDEN: And what the chairman said today was that he will-they will look at the salaries of other CEOs of big banks and his salary will be based on that. He hasn't taken his bonus in the last few years, as well. I mean he also made that very clear. That he wanted to make sure they understood that he wasn't just raking all this money in during the economic crisis. It was the time leading up to it.

FOSTER: And as I understand it. He was up for this top job in the past, but he missed out on that one at a quite fortunate time, wasn't it?

BOULDEN: Yes, I mean, he would have gotten the job back in 2004, or he could have gotten the job in 2004, when Varley got it. And the fact that he stuck around all this time is because he had an undeniably great gig. Based in New York, working for this investment arm, buying Lehman Brothers U.S. operations, which was a stroke of genius, frankly. Making an enormous amount of money and he became a very rich man. And he loves his sport, and Barclays has got deal with the Premier League, they have the Barclays Trophy here. And so he gets to do all of that as well. He even helped with the bikes that we see around London.

FOSTER: The bikes.

BOULDEN: The bikes, they all say Barclays on them.

FOSTER: You can hire from the-

BOULDEN: Exactly.


BOULDEN: So, he's done all these things because of his interest in sports as well.

FOSTER: OK, and what do you make of the fact that Barclays has promoted its investment banker to the top job.


FOSTER: And HSBC made do the same thing. I'm speculating, I know. But isn't that a sign of confidence in investment banking which causes all these problems.

BOULDEN: Well, some people would say it caused problems. Others would say that they were there to take advantage and Barclays certainly took advantage of the problems of other banks, when he did that. And because he's been so successful he certainly would have been-they would have had to look and pass him over for very good reason, because it was such an obvious choice.

Now they said in the interviews that they were doing today that they did look at a lot of candidates before they picked Diamond, but he was always, I think, going to be the one. He is the one we always see-

FOSTER: Not many left, are there, for top jobs?

BOULDEN: He is the one you always see, anyway. He is always president of Barclays, he is the one that does all the press conferences, he is the one that does the announcement. He's been on that screen a few times, no doubt. Because he's the face, he's been the face of Barclays for a number of years. Now he just gets that CEO title to go with it.

FOSTER: OK, Jim. Thank you very much indeed.

Now it is a dangerous job but for some mining runs in the veins. Next we'll meet two workers who are still digging for gold, despite their advancing years.


FOSTER: Seven hundred meters below the surface on northern Chile 33 miners wait to be rescued. CNN's Karl Penhaul visits two men who remain undaunted by the nightmare, dedicating their lives to mining despite the risks.


KARL PENHAUL, CNN CORRESPONDENT (voice over): Two old timers with mining in their veins. The tools have changed, once pick and shovel, now pneumatic drill.

But there is only one treasure, the glitter of gold. Both are called Manuel, one 68, the other 75. Down the decades they've had one another's backs, because they know wildcat mining can be deadly.

MANUEL VARGAS, MINER (through translator): Some have died. Some have been crushed by the mountain, or fallen down a mineshaft. But what can you do about it? That's just your luck.

PENHAUL: They found a mineshaft long abandoned, now with sky high gold prices they are hoping to strike a forgotten vein.


PENHAUL: If they're lucky they'll grind a few specs of gold from this bucket of rocks.

VARGAS (through translator): It's all a gamble. If I was a clairvoyant, then I would say here is the gold and we have to dig here. But sadly I can't do that.

PENHAUL (On camera): And you can see here, from this ladder that we've just come down, that there are no safety measures in mines like these, just a simple wooden ladder with a loose knot (ph) strung to the side of the mineshaft.

(Voice over): But the lure of gold weighs heavier than risks.

VARGAS (through translator): The idiot who falls down the hole just has to pick himself back up again.

PENHAUL: But one way or another the job they have lived for may kill them.

Just listen to Manuel wheeze. He calls it dirt in the lungs it is silicosis.

VARGAS (through translator): Eventually I won't be able to work anymore. You just get tired walking five or 10 yards.

PENHAUL: The Chilean government is trying to regulate wildcat mining but the two Manuels prefer to rely on instinct not official rules to escape a cave in.

VARGAS (through translator): If you are working hammering away and small stones begin falling. That is the mountain giving a warning it is about to collapse. So you have to get out of the mine and smoke a cigarette for a while.

PENHAUL: As afternoon fades it is time to mix the explosives, detonating cord, dynamite, and a dose of pink fertilizer. As the fuse fizzes down below, their legs are still strong enough to bring them scurrying to the surface. And their eyes still bright enough to spot the glitter of gold.


Karl Penhaul, CNN, Inca de Oro, Chile.


FOSTER: Now is Kabul bank getting a breather. Afghanistan's central banker has made reassuring comments about the beleaguered lender. The come amid allegations that the bank's ousted leaders had poured millions of dollars into high-risk property investments, would you believe? That sparked customer panic last week. And today I asked CNN's Atia Abawi to tell us the latest from Kabul.


ATIA ABAWI, CNN INT'L. CORRESPONDENT: Well, what is interesting today is that in fact the lines were actually shorter in the various branches, especially the main branch here in Shadanow (ph), the new city of Kabul. The lines were shorter. People were going in and they were actually able to take their money out. The scary part here is that everyone was taking their money out.

This comes a day after the governor of the Central Bank of Afghanistan said that there is nothing to worry about. That this private bank, Kabul Bank, is actually doing OK and that they don't need help from the Afghan government. But that is not stopping Afghans from going in and taking out their money because their trust has been shattered and they'd rather keep the money in their homes, possibly in a shoe box under their bed, rather than with a private bank, Max.

FOSTER: A big dent in the confidence, really, of the whole financial sector there in Afghanistan. Does this mean that other banks are also suffering if people stop putting money into banks, which in theory are OK?

ABAWI: Absolutely. Actually, just on Saturday Doctor Abdulla Abdulla, who many might remember as being the main challenger for President Hamid Karzai during last year's elections held a press conference. And he was pointing at corruption. Pointing at the corruption at Kabul Bank and saying that Kabul Bank is not alone. That the other banks in Afghanistan are also going through what Kabul Bank is going through. That the shareholders, the managers are taking advantage of the situation, using the hundreds of millions of dollars from middle class Afghans and investing it in areas that are outside of Afghanistan, they are putting in their own pockets.

So, obviously the confidence and the trust shattered among Afghans. In fact, even our own Afghan producer here has taken his money outside of the private bank, Kabul Bank, and is looking in ways of investing in international banks, which is going to be very devastating for an already very devastated economy. The banks in Afghanistan need the people to invest. They need to build up the economy, but because of this situation many of the Afghans here don't want to trust the private organizations, just as the don't want to trust their own government. They'd rather invest their money outside of Afghanistan and that is the last thing that this country needs.


FOSTER: Atia, there, in Kabul. Now we're going to bring you an update of the news headlines next. And we're going to hear more from the European Commissioner President Jose Manuel Barroso. Stay with us for his thoughts on Europe's uneven recovery.


FOSTER: Welcome back. I'm Max Foster in London. More QUEST MEANS BUSINESS in just a moment, but first are the main news headlines.


FOSTER: Now earlier in the show we heard from European Commission President Jose Manuel Barroso. We'll hear a bit more from him now. Today he gave Europe's first ever State of the Union Address. I asked him what he hopes it will achieve.


JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: First of all it's to present to the European Union in a way the European Commission, its executive arm, sees developments of the European Union.

And today I presented my assessment. I think we are now better than one year before. The forecasts for our growth are better now. But there are many uncertainties that remain. So the situation is still volatile. But I think that we should have no complacencies, but at the same time, we should keep our action. And it was, in large part, because of our decided action that we could see some improving -- improvement in the economic position of Europe.

FOSTER: It's a very positive view, which a lot of people -- in France today, for example, striking -- just won't recognize. They feel things are getting worse and worse in Europe.

BARROSO: Yes, it's true. I said that there are some problems and problems remain. And, in fact, there are now the consequences -- social consequences of some of the first impacts of the crisis.

But what I told you is that now the prospects for growth in Europe are better than some time ago. So we should keep that line. And of course I'm not pretending that they do not have still, in Europe, as in other parts of the world, very important challenges ahead.

FOSTER: Are countries like Greece out of the woods now?

Can Europe look ahead to a union which has strong members which aren't going to fail?

BARROSO: We cannot say that we are out of the woods. And there are, in fact, serious problems in some of our member states That is why we are making the case so strongly for fiscal consolidation. Fiscal consolidation is key because only with fiscal consolidation you can have confidence. And confidence can promote growth and jobs. And precisely those problems exist. But the overall outlook is, today, more positive than some time ago.

FOSTER: Fiscal consolidation doesn't promote jobs, though. It takes jobs away. It means public sector cuts. And the Americans are doing exactly the opposite from the Europeans. They're actually putting money into the system to promote jobs. They're building roads to promote jobs.

BARROSO: Look, it depends on the counties. Some countries, in fact, they have no room -- no room at all for a fiscal expansion. And, in fact, we have been keeping expansionary budgets. This was important for some period. This year was still a year of expansion in most of the European Union budgets. But now it is time to exit, because the problems of debt are extremely serious.

And we believe it is possible to have growth-friendly consolidation -- cutting some expenditures but not necessarily cutting all the investments. Some investment, targeted for competitiveness, is and remains essential.

FOSTER: What have you done which means we won't see another financial crisis that we've had in recent times, which caused so much misery to the whole world?

BARROSO: Look, we cannot rule out this problem as that situation remains volatile. Markets still are very nervous. But, in fact, we have seen an improvement of the growth prospects in Europe. The European Central Bank, with, also, most of our international institutions, are now predicting a growth higher than initially forecasted.

So I think we have to be prudent when it comes to the assessment. But I think, at the same time, that it is not with pessimism, it is not with discourses of Cassandra that we are going to bring the confidence of our markets to our investments. And this is why I insisted that we should keep the line for the economic recovery of Europe.


FOSTER: In the U.S., a different strategy, really. President Obama is pushing hundreds of billions of dollars in new tax cuts for businesses. They're aimed at propping up the still shaky U.S. economy. On Wednesday, he'll lay out a plan that would allow businesses to write off 100 percent of new investments in plants and equipment. That's a $200 billion proposal. He's also announcing a $100 billion business tax credit for research and development.

Now, yesterday, we told you about the $50 billion the president wants to spend on roads, train tracks and airport runways. All three plans still need to go before Congress for approval, though, so it will take a while to come through. And they'll all add up to $350 billion. But this isn't the first time Mr. Obama has given the economy a massive cash injection. In his first 100 days in office, he pushed through a $787 billion -- billion dollar stimulus plan.

Now, critics peg the new proposals as more wasteful spending, saying last year's stimulus didn't work. But the president says it's all in the name of boosting the economy and creating new jobs.

For more now, I'm joined by financial analyst, Jerry Wattenberg.

Thank you very much, indeed for joining us, because you understand all of these figures and we don't always.

Just explain, first of all, is all this new money we're hearing about this week actually new money or is it -- or it had been factored in?

JERRY WATTENBERG, JTW INTERNATIONAL: Well, it -- it's new in the sense that it started in specifically businesses this time. I think the main issue previously has been tax credits for, you know, home purchases, car purchases, for things like that, that directly affected the consumer -- an extension of employee benefits.

But what...

FOSTER: Which didn't work.

WATTENBERG: Which worked immediately but then it kind of -- it was a quick shot but it wasn't a sustainable rally, so to speak, in the economy. So now...

FOSTER: OK, so they're trying something different now.

WATTENBERG: Now they're going to the companies, which, you know, the real issue in the -- in the global corporate world is that there's a significant amount of cash on hand that they've been accumulating and have not been deploying -- not buying back shares, not increasing dividends, not really investing it, either, in their owners, in terms of shareholders, or into new plants and development.

And so this is something that's specifically targeting them, to say, look, you know, it's time to put that money to work and don't worry about investing, you know, for the future right now, because we're going to refund you, essentially, and make it that the government is going to subsidize your investments for the time being and I think he's trying to kind of nudge them to, you know, create more productivity and more economic stimulus from the corporate side.

FOSTER: And they're focusing on small businesses.

Is that, though, the way to go in terms of creating jobs?

WATTENBERG: Well, I think, you know, you start at all levels. So there's some large tax credits from the large multinationals, which are always going to be in place. And the there are some that are the small to medium sized companies, which, you know, really are the bedrock of growth. So if these kind of -- let's call it 50 to, you know, 500 person organizations can feel more confident in hiring that marginal extra worker, then you're going to have the ability to start to improve the unemployment picture because it has to start both from the top, the large companies, and also from the bottom, the kind of small to medium sized companies, as well.

FOSTER: And do you think all of this will also help the banks feel more confident in the businesses, which may encourage them to lend money?

WATTENBERG: Well, I think, you know, the banks are, you know, somewhat ready and willing to lend the money. They've got a lot of liquidity on their -- on their balance sheets. And I think, you know, they make money by lending money...

FOSTER: What you're saying there is they've got the cash.

WATTENBERG: There is...

FOSTER: They're just not lending it?

WATTENBERG: There's plenty of cash. There's plenty of cash in the corporate world. There's plenty of cash in, you know, in the banking system right now. I don't think there's any need for that.

But what you don't have is confidence to actually put it to work. And that's really what, you know, Obama is trying to do right now, is give companies confidence -- small and large -- to put the money in the work and then also using the government, again, this great works project, you know, to say, look, if you're not going to do it, we're going to put people to work building bridges and things like that and sending it from a central coordination approach, which is really what China had been doing. China started from the top down and saying we're going to make this massive effort in our stimulus plan. And the U.S. said we're going to do it bottom up, by focusing on the consumers.

And I think now you're seeing a little bit more top down driven approach in terms of we're going to create better roads, better infrastructure and now it's going to stimulate because the government is going to be -- you know, they are spending the money.

FOSTER: So more stimulus, more cash, effectively, from the U.S. government. Meanwhile in Europe, we had the -- the president of the European Commission telling me that actually the -- well, essentially, they should be doing more of the same that they're doing here, as in more cutbacks here. So they're both going in different directions, Europe and America.

WATTENBERG: Yes, I think -- I think you're finding that. And I think the difference is, is that, you know, it's the size and complexity of the E.U. that is the problem. You have some countries and economies like Germany that are benefiting from an export-led growth while you have peripheral countries like Ireland and Spain, for example, and Portugal, which are suffering.

And so it's very difficult to create a criticized approach that makes everybody happy, versus in the U.S., you have a big problem and a big economy and so you can throw big money at it, essentially, which is what they're going to continue to try and do.

The numbers in the U.S. weren't horrible last week, and so I think that's probably given a little bit of a breathing room to this whole thing. But nonetheless, I think you're still going to see, you know, the government try and bring out more weapons to increase, you know, the stimulus that they can to kind of get the companies moving and also improving the employment picture.

FOSTER: And the final point we should make is that it's political as much as anything in the U.S., isn't it?

There's elections coming up in November and none of this is going to happen before November. But the message is out there for Obama.

WATTENBERG: Well, I think it's -- it's critical. I mean you can't deny that the poll ratings have probably pushed, you know, forward a little bit more aggressively the kind of -- the kind of, you know, stimulus packages that would have been done. So, yes, you're exactly right on that point.

FOSTER: Jerry Wattenberg, thank you very much, indeed for joining us.

Now, the economic downturn has some deadly consequences. Poverty is killing more African children before their fifth birthday now. World leaders will be in New York later this month, pushing to meet their pledge to wipe out extreme poverty. We'll talk with UNICEF's chief about their life and struggle -- life and death struggle.


FOSTER: Now, global leaders are preparing to meet later this month and their task is to redouble their efforts toward achieving the millennium development goals. Recession has hit aid efforts very hard.

The U.N. is warning that G8 countries need to find another $35 billion to meet their $150 billion aid target this year. And there's the problem of unfair distribution. The U.N. says most of the increase in aid since 2000 has gone to a few post-conflict countries, like Iraq and Afghanistan.

Progress is being made, but there's still a long way to go. In a report released on Tuesday, the UN's -- the U.N. children's charity, UNICEF, says global child mortality is down by nearly a third since 1990. But take a closer look, sub-Saharan Africa accounted for half of all child deaths in 2008. That means children from the poorest families in the developing world are more than twice as likely to die before reaching their fifth birthday, as youngsters from the richest households. Another third of the total deaths were in South Asia.

Child survival is just one of the goals -- so how can we use aid money to target those who need it most?

UNICEF executive director, Anthony Lake, joins us live from the United Nations.

Thanks for joining us, Mr. Lake.

First of all, can you just give us a sense of how bad aid spending has been hit by the global downturn?

ANTHONY LAKE, EXECUTIVE DIRECTOR, UNICEF: Well, it has been hit, of course. And a number of governments are struggling to find the -- the resources to continue their overseas development assistance budgets.

What I find remarkable is how many are holding the line and are going to continue at the same levels or possibly even increase a little.

FOSTER: OK. Is that enough to make sure that the millennium goals will be met?

LAKE: Well, there are two issues here. One is how do we in -- increase the resources that -- that can be used in trying to reach the millennium development goals. And the other is how can we spend them the most effectively -- get the most value for the money that people are putting into this, because, of course, all nations -- all governments are having to deal with the effects of the financial crisis at home, as well.

FOSTER: But...

LAKE: And a new UNICEF study that we're putting out today has some surprising results.

FOSTER: Yes. It's interesting to read the study, because you actually point out, it's not just governments which are facing financial pressure, but also these -- a lot of these aid organizations also have finances behind them and they're under pressure, as well. So there's a double whammy here.

LAKE: Yes, there is. And if we are going to convince our publics that they should continue to support or even increase the resources for saving the lives of children and others around the world, then we have to show them that they are spending the money in an effective and efficient way. The study that we are releasing today, after exhaustive analyses and modeling, shows that the traditional wisdom about investing in the poorest children is wrong.

Traditionally, people have thought that it was too expensive and too difficult to get into the poorest communities and therefore that we should reach the most reachable. And that has contributed to the fact that in many countries, as they have made wonderful progress or, in some cases, not so wonderful progress, toward the millennium development goals, that the gaps between the poorest children and the richest children are growing.

That's just wrong. So we have been arguing that, in principle, we need to concentrate on those poorest communities. But our new study that our staff has carried out with many outside experts and have reviewed and re-reviewed shows that, in fact, it is more cost-effective, you get more benefits, biggest payoffs, by concentrating on the poorest communities rather than on reaching the most reachable.

FOSTER: But let's try and break that down...

LAKE: And the reason is...


LAKE: -- that it stands to reason...


LAKE: Sorry. I was just -- one last thing, I would point out that while you might say but it's too hard to reach them, the fact is that the needs are so much greater in those communities that the payoff is larger when you do get there, even if it's a little harder to reach them.

FOSTER: But is...

LAKE: If you are vaccinating a lot of children, the children with the most diseases in the poorest communities are going to benefit more than the children in the richer communities who are not suffering so much from those diseases.

So we hope that this will change some of the conventional thinking and people will realize that not only is it more cost-effective and a better investment, but we can move more quickly toward the NBGs if we concentrate on the poorest children.

FOSTER: OK. Anthony Lake, thank you very much, indeed, for joining us with that.

After the break, a look at the world weather forecast with our latest on that for you.


FOSTER: Now, sports stars aren't just (INAUDIBLE), they're also paid top dollar. But careers can be short and financial pitfalls can be enormous.

CNN's Ali Velshi reports on how one man tries to teach the stars the sound fundamentals of money management.



ED BUTOWSKY, FINANCIAL ADVISER: Keep your spending under control, you won't go broke.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT (voice-over): What if your entire professional career was five years or less, over by age 30, and every dollar you earned had to last you for the rest of your life?

WINFRED TUBBS, FORMER NFL PLAYER: Don't live like you're making $3 million or $4 million a year, live like you're making $150,000 a year.

VELSHI: Million dollar salaries are a reality for today's professional athletes, but that doesn't guarantee a secure financial future, as financial adviser Ed Butowsky knows too well.

BUTOWSKY: So what I did is I put together here just kind of a little summary of how and why athletes, you know, basically find themselves in financial distress.

VELSHI: Butowsky runs financial boot camps teaching the basics of money management to current and former athletes who may be good at Xs and Os, but not so good at dollar signs.

TONY BRACKENS, FORMER NFL PLAYERS: Most of the athletes are visual learners. You show it to me, OK, coach, I can do that.


So if you break it down into layman's terms, where we could really understand it -- hey, this is this, this is this. If you do it like this, then you will have this at the end, OK.

VELSHI: Ed compares a well balanced portfolio to a well balanced meal.

BUTOWSKY: We all have an entree with our meal. You should have 50 to 65 percent of your money in public securities.

VELSHI: Ed's ideal meal -- 10 to 20 percent of what he calls veggie investments, like hedge funds, precious metals and collectibles. Fruit, which equals real estate, 7 to 12 percent.

And who doesn't like dessert?

BUTOWSKY: It's OK to have some of the dessert. It's OK to have some private equity.

CLIFF FLOYD, FORMER MLB ALL-STAR: Not an entire cheesecake, though.

VELSHI: Former baseball All-Stars Cliff Floyd and Rondell White played a combined 32 years in the majors. They got paid to keep their eyes on the ball. They left keeping an eye on their money to the professionals.

FLOYD: Getting ready for the season, you have kids. You have so many distractions away from your finances.

RONDELL WHITE, FORMER MLB ALL-STAR: You're thinking about, I need to get two hits tomorrow or, you know, I struck out three times yesterday, so you're really concentrating on the game.

VELSHI: Sound fundamentals are important in sports and investing, whatever the size of your paycheck.

BUTOWSKY: Regardless of if you're a professional athlete or if you're a homemaker, if you're a factory worker, if you're a CEO of a company, everyone makes basically the same mistakes with their money.


FOSTER: Ali Velshi putting that report together for us.

Now, according to a list by "Sports Illustrated," basketball players make up most of the top 50 wealthiest American athletes. That's what's going to (INAUDIBLE).

We're going to check out some extreme weather now, because it's all going on in South America and in Asia.

Guillermo is going to tell us about that -- Guillermo.

GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes, we also have some issues in North America. And this has to especially with this cyclone, Hermino -- Hermine -- that actually made landfall in Texas. And it's bringing significant rain into Tamaulipas, too. So, of course, you know, if we have any people going into these areas, we have tropical storm force winds and we may see problems.

You know, it's not over Houston, but it has an indirect impact in here. The system will continue to weaken, then it's going to move into Oklahoma, Kansas and Nebraska as a mere tropical depression or even less than that.

But if you're coming here in the next two days, you know, Texas especially, here toward the coast, you are going to encounter some problems.

It is going to get better in Tamaulipas. But we had some significant accumulations in Matamoros, right there on the border; Brownsville on the side of Texas. And then the winds, also, quite intense. We have intense rain.

Another look at it here from another perspective. You see the Gulf of Mexico. Whenever we have a cyclone in the Gulf of Mexico, we get nervous because we think of all the oil rigs in there. But it's long gone from that area, so things are going to be fine. There was no stoppage of any kind of operations in the area. But just bear in mind that we are under hurricane season and this is the time of the year when we see most of the activity. September 10th is the peak. And we're not on September 10th yet.

Also, the Korean Peninsula getting better. Japan about to get impacted by this other cyclone, Malou, that we have about to make landfall into Honjur (ph). The rain is also very significant if you're traveling there, especially in Japan. You're going to encounter some problems, maybe, because of the winds and the rain.

And in Europe, Southern France -- that is the main issue. We were reporting on England yesterday and the storms that we saw over there. But look at what's going on here in the south. The sever storm also here into the northwest of France. We have severe storms, maybe some flash flooding we're talking about in these areas. We were talking about a tropical cyclone with 120 millimeters of rain.

What about this -- 335 in Concurdia and Cavignon (ph), 207 millimeters. So you see, it is a very significant storm. We still have the chance of bad weather into the Alpine Region. But remember this, on the French side of the mountains we may see more rain than on the Italian side of the mountains, because the system is going to sort of dry out a little bit as it goes through the mountains. But in Slovenia, parts of Italy into Croatia, we may see more rain. We will see, also, some problems as we move to the north.

Temperature wise, we are warm in the south. If you are in the central east or west Med, you're fine. You're totally fine.

Nineteen in London; 20 in Paris. Gradually we see how it's cooling down, right?

Even in the south. You know, Rome at 25. And Madrid in the 20s. So it is changing. The weather is gradually changing. September 21st is when we move into the other season.

You see the heat continues. On Monday, we had these temps in the Middle East. Also, I was looking at what was going on there into Pakistan and India. And we see that there is a lot of moisture, especially in India; not so much in Pakistan. Unfortunately, we do not have moisture in these areas where we do need a little bit of moisture to mitigate, you know, the situation that we have in here with the heat -- Max. So we hope you have a nice day.

FOSTER: OK. Good stuff.

Thank you very much, Guillermo.

ARDUINO: Thank you.

FOSTER: We're going to update you on a developing story coming to us from the United States right now, because the computer giant, Hewlett Packard, has announced just a short time ago that it is taking legal action to prevent its former CEO from taking a senior position at Oracle. If you remember, Mark Hurd announced his resignation from the CEO spot at H.P. last month amid a sexual harassment and expense report scandal. Oracle's CEO, Larry Ellison, blasted H.P. for letting Hurd go at the time. And over the holiday weekend in the States, Oracle announced that it was hiring Hurd n placing him in the role of co-president.

But once again, H.P. announced a short time ago that it is taking legal action to prevent Hurd from taking that position.

Well, we will bring you an update of the stock market after this short break.


FOSTER: Let's find out what's going on on Wall Street and the Dow in particular, because the markets were down a little earlier and they're still down more than 1 percent. One of the big concerns in the U.S. is actually Europe and the debt crisis. So let's have a look at those European stocks. Retreating, of course, from a four week high. In fact, bank shares were among the big decliners, hit by worries that the financial industry might hold back the global recovery. A "Wall Street Journal" report says recent stress tests may have understated some lenders' holdings of potential risky government bond. That, of course, having a knock-on effect on the U.S., as well.

The picture was pretty mixed in Asian stock markets a little earlier on. In Japanese, shares in major car makers came under pressure from a rising yen. Nissan and Honda both lost more than 1 percent. Australia's main index slipped below the red line after news that Julia Gillard and the Labour Party will remain in power, concern probably being that it's a -- it's a very small majority.

Central banks in Japan and Australia kept interest rates unchanged. The markets here in -- the markets in Hong Kong and Shanghai were the only winners, with steel makers leading the gains there.


I'm Max Foster in London.

"WORLD ONE" starts right now.