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QUEST MEANS BUSINESS
Nokia Replaces CEO; No More Austerity for Spain
Aired September 10, 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: An emergency call, Nokia ditches its chief exec and brings in a new head.
No more austerity. Spain says it has done enough.
And Manolo Blahnik tells us that customers still want luxury, even if they aren't feeling so well heeled.
I'm Richard Quest. It may be the end of the week. But I still mean business.
Good evening to you.
Drastic times, they call for drastic measures. And now Nokia has ushered in a big change in a bid to change and secure its fortunes. It may be the world's biggest mobile phone operator. But profit warnings of falling share price and product delays have taken their toll. Nokia has picked its new leader. The company is struggling under fierce competition from smart phone rivals. And Nokia's board of directors has now decided that Microsoft's man, Stephen Elop will get Nokia back on top.
If you join me over in the library, you'll see what I'm talking about. Stephen Elop, that is the man, he is the incoming chief exec. He comes from Microsoft's business division, the Office Suite, which as you may be well aware is extremely profitable. One of the core parts of the Microsoft empire. Adobe, Macromedia, were some of his other jobs, where he's been senior executive C Suite management. He is a Canadian, by birth, and he will be the first non-Finish CEO of Nokia, which actually was a rubber tire company in its very, very, very original days. And Nokia, it is, that is- not Stephen Elop.
He says he sees big opportunities for Nokia in emerging markets in Canada and in growth.
(BEGIN VIDEO CLIP)
STEPHEN ELOP, CEO-DESIGNATE, NOKIA: North America is a critically market. If you think about the history of mobile handsets, in many respects there was a time when Asia and then Europe all lead North America. And now at this time the balance has shifted a little bit, as we see the work of various companies and strategies in North America develop. And so you see tremendous, tremendous strength from Nokia in many parts of the world and yet a huge opportunity in North America.
(END VIDEO CLIP)
QUEST: And this is the man who he is taking over from. Olli-Pekka Kallasvuo, otherwise known in Nokia just as OPK. Now, OPK had been at Nokia for the best part of three decades. He had worked his way up through the company. The board announcing that he was leaving, thanked him for his decades of support and work for Nokia.
The reality is the man from within was not able to take Nokia to the places it needs to, to beat the competition in the smart phone rival's warehouse. Now you are talking about Google. You are talking about Android. Android, of course, is the largest selling operating system for mobile phones in the world. Nokia's Symbian system is now languishing far behind. Look at the way it goes: Symbian, 40 points, BlackBerry, 17.9. Android is growing but this is early days. The Apple Operating System, Windows Mobile, others like the PALM Pre-Web OS.
But that gives you an idea and the thing to bear in mind. Nokia may have the lion's share at the moment. But these others are catching up fast. And if the trend was to continue it wouldn't be long before Nokia would be seriously behind the others. Not surprisingly, Nokia's share price got a sharp boost.
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Having been and suffered in recent times. Look at the way the share prices dropped over the last say two to three years. It is now down at 7.87. But, of course, it did get just a slight, little rise as a result today. The bear-by and large the markets liked the announcement. It will, of course, be some time before it is up and clear whether or not Nokia's move will prove successful. To discuss this more, I was joined by Doug Dawson. He is the head of corporate communications at Nokia. And the first and blunt question, was Mr. Kallasvuo, was OPK, fired?
DOUG DAWSON, DIR., CORPORATE COMMUNICATIONS, NOKIA: We owe, after 30 years of service to Nokia, we owe Mr. Kallasvuo, Olli-Pekka, OPK as we call him, a great debt of gratitude. The brand, the company, is what it is today thanks to his tireless work over the past 30 years.
Moving forward, and we're looking towards the future, we have asked Stephen Elop to join our organization. We believe he is an excellent choice with his background and his competencies, which we think will complement with our own (UNINTELLIGIBLE).
QUEST: The gap that he is aiming to fill, in terms of the Nokia product range. It is very much on the software isn't it? The smart phone, the new ways of the-to beat the Android and the Apple operating systems?
DAWSON: Well, certainly Mr. Elop has been tasked with accelerating this transformation, as Nokia evolves from a hardware manufacturer, to much more of a mobile services, mobile experiences player. Software is a key component of that. I think the skills that Mr. Elop brings from his background. Strong strength in complicated software projects, he certainly has a proven track record and management skills.
QUEST: One hesitates to be mealy-mouthed on a day of a major announcement like that. But there are a lot of critics out there who are saying is Stephen Elop the right man? He is an organizer. He knows how to run a company or big divisions. But is he the visionary in terms of what is necessary?
DAWSON: We believe that Stephen Elop is an excellent choice. Is THE choice for Nokia, due to his background, due to his competencies. He has a solid reputation as an excellent and inspirational leader. He is well- recognized in the industry for his experience in the software industry, and managing complicated and changed management issues. And he's also well recognized as a brilliant communicator.
QUEST: Is Nokia, the company, ready for a different management style. A more, if you like, an Anglo Saxon robust CEO as opposed to, say, the more consensus environment of the Finnish business environment?
DAWSON: Well, I think today's appointment of Mr. Elop does not denote in anyway a change in our culture. And in hi comments at our press conference today he talked about the importance of Finnish culture. But I think it is important that Stephen will bring new ways of looking at problems. A fresh pair of eyes and ears, an individual with new and proven skills is a welcome addition to the core competencies that already exist at Nokia.
QUEST: Dawson, of Nokia, on the phone earlier. Jim Boulden is with me now, with a fine selection of diddly-dee-dee, diddly-dee-dee, diddly-de- deeee.
JIM BOULDEN, CNN FINANCIAL CORRESPONDENT: Hopefully it won't do that while we're on the air.
QUEST: Go on, tell me about them.
BOULDEN: Look, I mean, Nokia, you cannot deny the success they have had when the cornered the market in the phones and when they started becoming successful.
QUEST: Strong, robust.
QUEST: Phones like this.
BOULDEN: Yes, and a lot of us in the media still have one because it- they don't break. You can drop them. I mean, they'll break eventually, but you know, I just find them extremely reliable. And they do the business of making phone calls and texting. But of course that is not what people want anymore, is it?
BOULDEN: They want stuff that does the cool things. So we had the Nokia M90 come out. You know, it had a very nice camera, video, very good smart phone. But of course this came out, two years later the iPhone came out, and the rest is history.
Now, you know, Apple still have just a very small part of the market. We can't deny that. But the make amazing profits on each phone they sell.
QUEST: Who, Apple?
QUEST: Now, Nokia's challenge is not only to come out with a sexy smart phone, but to be able to sell without a massive subsidy.
BOULDEN: Yes, and these things are all heavily subsidized. People should not miss the fact that just because you have market share, it doesn't mean you have profit.
QUEST: OK, but when I hear that Android is now the dom-or is growing and the largest-
BOULDEN: Second largest, yes.
QUEST: OS, in the United States?
BOULDEN: Yes. Well, in smart phone, absolutely, very fast growing and that can be used in a Samsung phone, that can be used in other people's phones as well. And people seem to love the fact. And then you have the Microsoft/Windows, Phone 7.
QUEST: Windows Mobile, I mean-
QUEST: Look, I use a PALM Pro with Windows Mobile 7.
BOULDEN: Yes. Well, the new one comes out by Christmas, so they have that to contend with, as well. Microsoft has not been good in this market. This guy comes over from the office business side of Microsoft. Doesn't have any phone experience, to go into Nokia. And that will be very interesting to see if he can, you know, rise to the challenge.
QUEST: The unspoken in all of this-and let's call a spade a shovel here. The unspoken in-to use that quaint phrase. The unspoken in all of this is are we looking at a company, Nokia, that in years to come will be a textbook business class case, in business schools, for how they disappeared?
BOULDEN: The problem with Nokia, and I'll be very blunt about this. Is that it is stuck itself in Finland, with Finnish management for so long-
QUEST: Oh, oooh, oooh!
BOULDEN: It is not because they are Finnish, but they didn't go out side the box when they needed to, to bring in a lot of other people.
QUEST: Are they toast?
BOULDEN: No. They're not. The chairman has tried to bring outside people over the years. And they have now brought in this chap, he is Canadian, he worked at Microsoft. He now brings in a lot of different experiences. But somebody said today that Nokia is like the old Soviet Union. There is a huge bureaucracy. Very hard to change the culture, there, in Finland. And so he is going to have to work on that. And that is going to be extremely challenging.
QUEST: Which phone would you keep if you could have any one of those phones?
BOULDEN: That is my old favorite right there.
QUEST: Aah, black. Many thanks indeed.
Now, Jim Boulden there.
As we talk about this, fascinating article, it comes actually from Britain's "Daily Telegraph" which sums up very nicely the issues. You can read about it on my Twitter page. I have given you easy access to that. Twitter.com/RichardQuest, where, of course, I hope that if you visit it, you will also become a follower and a friend.
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In a moment, optimism in tough times. The U.S. and Spain see slow but steady progress. The former chief economist of the IMF and a good friend of this program, Ken Rogoff, joins me after the break.
QUEST: No more planned austerity cuts. Those are the words of Spain's Prime Minister Jose Luis Rodriguez Zapatero. He is seeking to reassure his country. But a general strike in Spain is looming. CNN's Madrid Bureau Chief Al Goodman is with me now.
Al, when he said-I mean, Spain we know has very high unemployment. There is an austerity measure in play. So why the decision to reassure when many are still saying more needs to be done?
AL GOODMAN, CNN MADRID BUREAU CHIEF: Hi, Richard.
Well, because after that lull in August for the vacations, this strike is right on top of the country. So the prime minister, this day, taking the offensive. Giving one of his first interviews in months to a leading radio station here and telling them no more austerity measures. He's trying to get his message out. Here is how he put it. Let's have a listen.
(BEGIN VIDEO CLIP)
JOSE LUIS RODRIGUEZ ZAPATERO, PRIME MINISTER OF SPAIN (through translator): We do not plan any additional cuts. There is no need to as of today. The pace of deficit reduction has been met and we need to continue with the reforms.
(END VIDEO CLIP)
GOODMAN: Now, Richard, there is two things going on. The austerity measures, 15 billion euros, about $18 billion in cuts. That included reduction in salary for government workers, a freeze on that next year for government workers. All of that is going on.
But what has got the unions in enraged is the labor reform package that just finally went through parliament, Thursday. And that is going to significantly make it easier for companies to fire workers, make it a lot cheaper. And that is why the unions are going on strike.
So, you have all of this going on. That is why he decided to get out there today, Richard.
QUEST: Right, but he does say there, Al, the deficit reduction program is on schedule. And of course, there are huge amounts of politics involved in this. He is now probably the most unpopular prime minister in decades?
GOODMAN: Indeed, but you know, I was with a senior official of his administration, Thursday night at an event, and he said right now their main concern is getting the next year's budget passed. Because if they don't get that past the government would fall. But this officials says they are confident they are going to get it passed. Now, there are signs, outside of what the prime minister is saying, and outside of what the unions are saying, that the economy is revitalizing a little bit. The banks, in late summer, the big banks here issued 9 billion euros, over $10 billion in all sorts of debt instruments. And they have buyers for it.
So that is a sign that there is some confidence from outside of Spain, for the economy that is recovering. And the government did a bond sale in June, 3 billion euros. And they also had buyers. So there are some signs that this deep, long process that if the prime minister doesn't try to hide, he is claiming that it is slowly moving in the right direction, Richard.
QUEST: Al Goodman, in Madrid, for us tonight. Other economic news, the economy was the focus of President Obama's first news conference in some four months. And many on Wall Street were looking for signs that the president would soften his stance on tax breaks for the wealthy. It is a key issue with investors. Maggie Lake is in New York, as always.
Maggie, the-look, there are a variety of ways that further stimulus can be dressed up. Whether it is tax breaks, whether it is job breaks, whatever it is. But it does seem as if the president is moving to pour more into the economy.
MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: Absolutely. I mean, you could really see that today, Richard. This is a president that is on the offensive when it comes to the economy. He has to be. They are facing a bitter mid-term election. The Democrats are behind in the polls. And people don't feel like the economy is improving fast enough. So, the president really this week the tone shifting, going on the offensive, in fact, in this press conference, he took an almost seven minutes to answer the first question on the economy. During which he directly swiped at the Republicans saying that they're holding the middle class hostage. Have a listen.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: My position is, let's get done what we all agree on. What they have said is that they agree that the middle class tax cuts should be made permanent. Let's work on that. Let's do it. We can have a further conversation about how they want to spend an additional $700 billion to give an average of $100, 000 to millionaires. That, I think, is a bad idea.
(END VIDEO CLIP)
LAKE: Ah, the battle lines are drawn. The Republicans coming out in response, as you can imagine. Saying that half-hearted policies and political attacks aren't going to resolve the uncertainty. This is a very, very bitter fight that is shaping up. But even the president, remember, all of this is aimed at trying to make sure the recovery stays on track. The president admitting that the work is not done. They need more-more needs to be done to help, especially the middle class. He recognizes the frustration with the voters, says he's frustrated. But right now he is locked in with the Republicans and it is not clear anything is going to be done.
And, Richard, when you talk to money managers, investors, and business owners, they are absolutely fixated on this tax issue. And say that until there is clarity they find it hard to make decisions about their money or their business.
QUEST: Maggie Lake, who is in New York. Have a good weekend. See you next week.
Now, the U.S. and Spain say they are turning the corner, but that times are tough. The corner turning is slow. The former chief economist of the IMF and the Harvard Professor Ken Rogoff joins me from New York now.
And it is always good to have Ken.
And look, Ken, you have written extensively about the necessity or the unease of further stimulus that it would do it any good whatsoever. The question is, are you now saying, don't bother, we have just got to ride this out?
KEN ROGOFF, ECONOMICS PROFESSOR, HARVARD UNIV.: I wouldn't say that at all. I think the right policies to gradually bring deficits into line with income growth over several years. Which is what the plan is, you know, frankly that is $50 billion that President Obama proposed. He won't call it stimulus, but it is. It is nothing compared to the $800 billion that he put before it.
We are going to end up with more than that, somehow. I think the Republicans would like to hold out for tax cuts.
QUEST: But in terms of assuring the survivability of the recovery. Do you believe much more needs to be done? Because at the moment, you know, the Fed says it is only going to do more QE if there is an appreciable deterioration, or significant deterioration. The numbers on unemployment remain stubbornly high in the U.S. So, I'm wondering at what point does more need to be done?
ROGOFF: Well, I think, we are actually at the point where more needs to be done on monetary policy. I would favor having the Fed more aggressively try to prevent prices from falling, to get them rising a bit. But they are reluctant because their forecasts, you know, suggest that things are normalizing, that it is a bad patch, but next year might be OK. So they don't want to rush ahead. But I think that we'll end up meeting something. I think the fiscal stimulus, the spending, the tax hikes is much more controversial. I'm not sure what we'll see.
You mentioned Spain, Richard. I mean, I think things are very slow so there are a lot of risks ahead. If Europe doesn't grow quickly, if Europe grows slowly, a lot of these festering problems, the austerity, the banking problems, still lie ahead.
QUEST: And on that point, I mean, we saw today numbers saying that Greeks-the Greek deficit reduction is behind-it's-it's behind track, 32 percent where it should be 39 or 38 percent by now. Spain has put austerity on hold. The U.K. has its spending review next month. What is your serious big concern that happens in the European Union?
ROGOFF: Well, I think, if Europe grows quickly, and starts getting a big bounce out of this slow growth period, a lot of problems will be behind. Although, I still think we will see a couple of smaller sovereign defaults, Eastern Europe, especially. But-and Greece still quite possibly. But if things go slow Greece is going to run into trouble. And Europe is going to have to decide where to draw the line.
France, Germany, doing OK. The larger countries, but how are they doing to try to hold the line and not have a broader crisis. That's a challenge. I think it is manageable, but definitely not out of the words.
QUEST: You see, finally, Ken, what it all really comes to is what you wrote in an article earlier in the summer. Which is that whichever say we look at this, at the moment. We are resigned to quite a long period ahead, of subpar growth where things will not feel much better?
ROGOFF: That is exactly right, Richard. And how will the public handle it? Will they go on strike and turn things from bad to worse. Will they be patient, or will policy makers have panicked reaction, giant fiscal stimulus like some people have been advocating, which really could just dig the hole deeper.
It is important that politicians, policy makers, get us out of this slowly and steady. Will people be patient? In some places, yes? In Most places yes. In some places I don't think they will. And there will be problems.
QUEST: And as you, as we tackle those problems, that might be the issue that hopefully you and I will talk about in the future. Ken, as always, have a good weekend. And many thanks for being with us this evening.
ROGOFF: Thank you, Richard.
ROGOFF: Ken Rogoff, joining us from New York.
Bianca Jagger wore a pair when she rode a horse into a New York nightclub. And Carrie on "Sex and the City" was mugged for hers. They are the Manolo Blahnik, shoes that are must haves for the well heeled. But will customers flock to his largest footwear venture, in a moment.
QUEST: Dedicated followers of fashion are flocking to London's West End, in fact, just across the road from the studio where I'm sitting. They are not here to see me, but rather the designer to the stars, Manolo Blahnik.
He's launching a pop-up store in one of the capital's most famous shops. Up until this point, you couldn't buy shoes at any other retail store. So, why now extend the franchise, and buy his shoes, anywhere. Ayesha Durgahee reports.
AYESHA DURGAHEE, CNN CORRESPONDENT (voice over): Women dream of owning a pair. And those who already do, cherish them, shoes by Manolo Blahnik.
So when the designer himself launched a pop up store, in Liberty of London, hundreds of women queued to meet the man. Have his bags and books signed, even their Manolos. This is the first time the designer has launched a joint venture.
MANOLO BLAHNIK, SHOE DESIGNER: It is a huge surprise. I still don't believe that I'm doing this, because I never-I always refused to do this kind of collaboration.
But it is exciting to just challenge yourself, whether you reach a certain time in your career and you age. So it is good. If it is visual, I do it. And this is the proof of everything I loved since I was a boy, so that is the reason I did it.
DURGAHEE: Despite the global recession, for Manolo it is no surprised that people are still lining up to buy his shoes.
BLAHNIK: I think people tend to be cautious now, when they buy, but they buy well. They choose well. They choose a shoe that you can wear it many times, and it lasts a long time. It looks like a (UNINTELLIGIBLE), but it is absolutely what I think.
DURGAHEE: And he doesn't disagree that with more and more collaborations, it is perhaps a sign of the times, that brands need each other.
BLAHNIK: I think it is very healthy to do it, but without being forced to do it. I'd like to choose to whom I do it. And this wasn't the idea here. I think it is a great question that you say it. I think it is very important in fact to collaborate with a lot of people now, because you know, it is going to be tough times.
DURGAHEE: And for those of us who can't fork out for a pair of Manolos just yet, our luck may be about to change.
BLAHNIK: In the future, I intend to do a line of things, which is going to be for somebody, they need to wear my shoes, younger in public, who do not have that means-my customers down. But I would not intend t do that. It is sad.
Ayesha Durgahee, CNN, London.
QUEST: She was so disappointed. She came back empty-handed, but is now hobbling off in her sneakers, home. Ayesha Durgahee reporting there.
In a moment, Deutsche Bank is planning an $11 billion cash call. Well, that's the report that's unsettled the markets. The share price had a certain shock and the banking regulator power, in just a moment.
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And here, the news always comes first.
The Florida pastor, Terry Jones, says his planned Koran burning is on hold for the time being. But Pastor Jones is giving the backer of a controversial planned Islamic center near Ground Zero in New York roughly an hour from now to decide whether the center will be moved. The imam behind the center said he has no plans to move it. It's not clear what will happen if and when the deadline is not met.
At least four people were killed, 38 homes were destroyed when a gas main ruptured and caught fire in San Bruno in California. Firefighters say the blaze is now just about under control. The gas company said it's working with authorities to investigate the accident.
Hope for the boys -- that's what one woman called Plan C, the third drilling operation to rescue 33 trapped Chilean miners. A large oil drilling platform for the operation has now arrived at the mine. Officials say they hope it will take faster than the two others being used. But they say the miners might still not be freed until December.
The eyes of the banking world will be on the Swiss city of Basel this weekend, as regulators from 27 countries, including the U.S., sign off -- or will sign off on new global capital standards -- the Basel 3 Accords. This to prevent a recurrence of the financial meltdown. Basel 3, as the new policy will be known, will be enforced by bank watchdogs like the Federal Reserve.
We've seen this before. The guidelines of Basel 2 were created only a few years ago. It had a three pillar rule which didn't work very well. So, now we need to look at the new pillars of Basel 3.
Come and join me over in our very own ancient library today. The pillars, tier one, capital ratios. This is the hallmark of Basel 3. It is the amount of capital, whether it be share equity, whether it be assets, all sorts of things -- the amount that the banks need to hold against a rainy day.
Now, in future, tier one capital will need to be around 6 to 7 percent. On top of that, there will need to be buffer zones and there will have to be other -- other versions of capital within it.
But agreeing what is capital is part of the issue and the problem. Too big to fail -- one of the big issues about banking regulation and capital ratios is the surcharge necessary -- that buffer for rainy days or, in the case of a tsunami of banking problems.
Some believe that it has to be maybe 3, 4, 5 percent. The Germans aren't necessarily against such a high level, but that's one for negotiation.
The third -- the final one pillar, boom time top-up. Banks may be forced to hold capital -- more capital during economic boom times for those inevitable busts. We know that the business cycle has not been repealed, therefore boom to bust -- that is expected to be set at 2 to 3 percent.
So, as you see, the various different pillars at Basel will be negotiated this weekend and signed off. And now one bank might be getting ahead of the Basel game already. Deutsche Bank in Germany is considering a share sale that could raise up to $11 billion, according to reports. The sale would help the bank meet these stricter capital rules and could allow the company to increase its stake in Deutsche Postbank.
The news gave its share price a shock, down nearly 5 percent at the close in Frankfurt. And what was happening with Deutsche and with Basel was the talk of the market.
I was joined by fiscal analyst, Todd Benjamin.
And I asked him why markets were so jittery over Basel.
TODD BENJAMIN, FINANCIAL ANALYST: What it tells us is, the reason they're so interested is because what happened in the financial crisis. You know, banks got in trouble because they had lent irresponsibly and a lot of what they had on their books went bad, in terms of, also, what they held for their own accounts and what they passed on. And as a result, they didn't have enough money set aside to cover all those losses. And, therefore, we got into this huge mess. And what they're trying to do with this Basel Accord, with these new requirements, is to try and make sure that the banks have a cushion so if there's another financial crisis, we won't get into the same mess we're in now.
QUEST: Why is there such disagreement?
I mean, surely, a safety net against a bad fall is a good idea.
BENJAMIN: Yes, I don't think it's so much the -- the amounts they want in terms of the percentages. It's when this has to be implemented, all right?
For instance, the -- the Germans reportedly, they want 10 years before it's implement. And that 10 year period would start after 2013, when this would take effect.
The Americans say, come on, now, that is just way too long. Let's have a five year period. Because on -- the German banks, unlike a lot of American banks, they need to raise capital
QUEST: But what...
BENJAMIN: -- as much as 105 billion euros.
QUEST: But what's wrong with having to raise capital?
Many banks, particularly the big U.S. banks, many of the U.K. banks, have been to market in the last two years and raised capital.
BENJAMIN: Well, I don't have a problem with it and apparently Deutsche Bank doesn't have a problem with it easy -- either, because, you know...
BENJAMIN: -- they've come out this week and said they could raise as much as nine billion euros in capital.
You know, does it dilute earnings?
OK. It does, in the short-term. But on the other hand, it's better than the alternative.
QUEST: I mean that's the point, isn't it?
QUEST: And then we've got the minutiae of what can now be part -- counted as capital, what the ratios are.
Is this important stuff?
BENJAMIN: Yes, I do think it's very important stuff, because, again, what they're trying to do is create a buffer that would help mitigate any further crisis. And furthermore, if banks don't meet the -- the requirements that they're talking about, you know, they could be penalized where, for instance, they wouldn't be able to offer dividends or have share buyback programs. And I guarantee you, any bank that's not able to offer dividends, they're not going to do very well in terms of their share price.
QUEST: Let's finally look at economies generally. We are now into the downward slope for the rest of the year. Corporate earnings have remained strong. Companies have got cash. They're doing deals.
Why are we not seeing that translated into general economic activity?
BENJAMIN: Very simply because I think they're certainly wanting to be cautious and retain cash, because they're not sure what's going to happen down the road. And that's why I'm so pessimistic. You know, there's not a lot of hiring going on right now. And I do think the unemployment rate in -- in the U.S. could easily go to 10 percent. And I think the -- the malaise that we're in could last several years.
QUEST: That's several years of sub-par growth?
BENJAMIN: Several years of sub-par growth with high unemployment. Eight million jobs were lost during this recession. They're not coming back any time soon. In fact, most of those jobs, I think, won't come back.
(END VIDEO TAPE)
QUEST: And, indeed, of course, that largely follows on from what Ken Rappaport has said -- several years of sub-par growth.
The weather forecast -- what we can look forward to this weekend, in a moment.
QUEST: Heavy rains and flash floods have caused major problems in parts of Southwest Italy. In fact, across the continent, things seem to have taken a rather -- a rather nasty turn.
Meteorologist Pedram is with us at the CNN World Weather Center -- what's going on?
PEDRAM JAVAHERI, CNN METEOROLOGIST: Yes, we've had a lot of rainfall across Southern and Southwestern Italy, radical. And the problem here, when you get flash flooding, we always talk about it -- how much rainfall did you get, how quickly did this rainfall come down and what's the topography like?
And Italy really fits the mold for what happened here in the last 24 hours around the portions there in Southwestern Italy near the Gulf of Naples there out toward, say, the Amalfi Coast and Atrani. And the rainfall totals were on the order of, say, 120 plus millimeters in just 12 hours. That kind of a rainfall, even around Amalfi, right next door, in Southwestern Italy, that will cause some problems.
And take a look at some video coming out of Italy here showing just the devastation of what that much rain can do in that much time in Atrani. And you can see this gentleman here was able to get the video, standing in a safe area looking down and cars just being washed up like they're toys left and right, as these cars are coming down here. And it doesn't take much water in an area that has the geographical conditions set up for it to get all this damage to happen.
And I just want to go back to Google Earth imagery here on the maps to show you exactly what we're talking about for that area of the world and Southwestern Italy. So you've got to talk about steep topography. You want to get the landscape to be very much on the sharp side. It fits the mold perfectly when you talk about a beautiful city around Atrani there. And, again, there is the town right there, there in the hills in what we call an alluvial sand kind of a setup here. When you get significant rainfall, gravity will always win out. And the gravity here brings the water down to the lowest areas. And, of course, the cars get taken over and work their way through all these trees and the neighborhoods. And that's what we saw out there with this rainfall.
And fortunately now, the moisture flying, only pushing out of here, out toward portions of Greece. We think the showers will begin to taper off, some recovery efforts possible here in the next couple of hours.
But another system moving across Scandinavia here inside this weekend. So if your travel plans are taking you out and about, here's what you should expect. Everyone to the north right now, looking rather fine around Rome. Breezy conditions, but still no travel delays. And around the radar perspective, you can see some showers here beginning to work their way in toward the western edge of the U.K. there, getting some rain showers around Nottingham, perhaps, inside the next few hours. But that, again, will begin to move out of here.
And around the south, as we talked about, some severe storms possible. Isolated thunderstorms in their forecast. The travel delays, again, minimal at this point. Some showers expected around London and also Dublin getting some morning showers there on Saturday -- Richard, let's send it back to you.
QUEST: We thank you for that.
The seasons have certainly changed in the Northern Hemisphere.
QUEST: We thank you.
QUEST: All right, QUEST MEANS BUSINESS, that is it for this week.
I'm Richard Quest.
My thanks to Max for earlier in this week.
Whatever you're up to in the hours ahead, please do come back to us on Monday.
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