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QUEST MEANS BUSINESS
Euro Zone Considers Additional Help for Greece; U.S.: China Needs New Domestic Growth Model
Aired May 9, 2011 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, HOST, QUEST MEANS BUSINESS: It's Greece, the sequel. The Euro Zone considers digging deep again to help its weakest member.
A change begins at home. The U.S. tells China it needs a new domestic growth model.
And time on their side, Samoa sees an economic opportunity as this day will become tomorrow.
I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS.
Well, confidence in the euro is ebbing away amidst secret meetings and dark mutterings about debt and default. And Europe's original Achilles' heel, Greece, is once more at the heart of the crisis. Standard & Poor's is twisting the knife. The agency cut the Greek credit rating to B from Double B minus. Moody's is putting Greece's rating under review. Warning a multi-notch downgrade is possible. If Greece were to go to the open market to funds it would find it even harder to borrow. Not that it can with rates like these, anyway, with 10-year bonds Greece faces paying rates at close to 16 percent. It is completely unsustainable.
Greece relies on its life line of funds from the EU and the IMF, which come at relatively lower rates, at 5 percent. Even so, officials now say they need to look again at the deal because even on those easier terms Greece can't manage it. And it is not the only one. Ireland is also seeking more favorable terms for its bailout.
Right now the euro is loosing more than half a percent against the dollar. One euro is worth just about $1.43.
European stocks ended the day firmly down. Banks were amongst the worst hit shares. The cost of insuring Greek debt is now at a record.
Some analysts say disorderly restructuring or default by Greece could trigger a fresh banking crisis. Earlier I spoke to the former Greek finance minister, Yannos Papantoniou; he helped take Greece into the euro. I asked him if Greece is about to go bankrupt?
(BEGIN VIDEO CLIP)
YANNOS PAPANTONIOU, FMR. GREEK FINANCE MINISTER: Not at all, because as you know, the loan we got from the so-called troika, that is the EU, the ECB, and the IMF, lasts until the middle of 2013. So, until that time we do not necessarily need new funds. Perhaps at the end of 2012 we should go back to the private markets. But still we have ample time to live on the loans we get from the troika. So there is not particular urgency in promoting such a policy package.
What is urgent is to reform the economy and establish the conditions for growth. This is the key thing. And this is the key thing for confidence and credibility.
FOSTER: But we do understand that there is a consideration in Athens, right now, to exit the euro, make a fresh start. And that is a pretty attractive option for many people in Greece, right now, isn't it?
PAPANTONIOU: Not at all, I think, it is the absolute opposite for many reasons. First of all, if that happens then of course, the new currency is devalued. The Greek debt will reach more than 200 percent of GDP. So it will be absolutely unsustainable. And no country or international organization will be willing to help us repay this debt.
Secondly, as you may very well understand, despite being very early, very short, (UNINTELLIGIBLE) get in terms of competitiveness, inflation will catch up and devaluations will start to follow. And the economy will be fully destabilized, while the Greek banking system will be completely off the range. So, this is not a serious option. And moreover there is not legal way to do that. And moreover, what ever happens to Greece will have a contagion affect to the rest the Euro Zone, so if we talk about a country exiting the euro, this may well prove to be the stopping point for the dissolution for the Euro Zone.
FOSTER: (UNINTELLIGIBLE) managing that, as far as the markets are concerned, because today Standard & Poor's, the credit rating agency, is downgrading Greece again. So that is going to make the situation even more impossible, isn't it? In terms of servicing any sort of debt?
PAPANTONIOU: The key thing is to regain equilibrium (ph), because otherwise we shall be at the mercy of credit rating agencies, and the continuous pressure of the market. And whatever is done, say, in terms of restructuring, as you say, or whatever else, I'm sure that this respite (ph) will be just a few days and then the markets will attack again, speculators will be on us asking for more.
Another dimension of the problem is the failure of the Euro Zone governance system. The euro zone has not proved capable of dealing with crisis, because it is not a political union, because it is not essentially an economic union, it is not a fiscal union. It lacks the instruments and the culture to resolve crisis of that nature. And this is a lesson for everybody. And whatever Greece does, and however, well it does, its efforts must be complimented with a thorough reform of the Euro Zone governance system in the direction of fiscal unification. Of course, I know it is a dirty word in Germany, but still, you know, we should face reality.
FOSTER: Yannos Papantoniou speaking to me.
Now, a little more than a year now since Greece was handed a $146 billion worth of aid. Since then we've seen Ireland and now Portugal go down the same path, the credibility of the Euro Zone is at stake.
Jim is here to explain why, despite all of that help that the peripheral countries of Europe are still in trouble, Jim.
JIM BOULDEN, CNN FINANCIAL CORRESPONDENT: Like you said, Max, it has been a weekend of rumors and speculation and whispers. But let's start in Greece and remind everyone where we are.
Budget deficit in Greece, of 10.5 percent, in 2010. That missed the target that they promised to hit in order to get that loan last year. The public debt is 142 percent, heading to $150 percent. We're talking about $470 billion in debt that it needs to service. And of course, all this austerity that they have already promised to do, this is hitting growth, causing social unrest.
And of course, there is a lot of questions about the political will, not only in Greece, to take another step, but of course around all of the European Union. We're talking about strikes in Portugal later this week. More talks about strikes in Greece, the Greek government being accused of some of not making enough cuts. Certainly, most of the Greek citizens would not agree with that.
And if Greece does get a new deal, then of course Ireland will want another new deal as well. And there is 78 billion euros, a loan going to Portugal. And there is a lot of talk about what the Portuguese, what the measures that Portugal will have to take. How popular or unpopular those will be, of course.
A lot of this hitting the markets, of course; a lot of this hitting the bond markets. Let's show you what would happen now if these countries had actually go out into the markets and take money in the bond markets. You see here, Greece, as we heard a little bit earlier, 15.71 percent for the 10-year bond yield. Portugal, 9.6 percent, we were hearing a lot of course, if Portugal ever had to get more than-if it had the 7 percent or higher, it would be unsustainable. You see this is why, of course, Portugal needs to have that loan. Ireland, which got its bailout late last year, the 10-year bond yield, 10.6 percent, Max.
FOSTER: Jim, thank you very much, indeed.
Well, Vanessa Rossi is an associate fellow in international economics at Chatham House. She told me there is a sense, tonight, of history repeating itself.
VANESSA ROSSI, ASSOC. FELLOW, INT'L. ECONOMICS, CHATHAM HOUSE: Here we are back again discussing the same problem. In the meantime, we must remember, we have had Ireland come into the bailout, we have had Portugal as well. Just now signing up to a bailout program. And yet, here we are back again, with the original Greek problem. It is not too surprising. I think all markets, from the very beginning assessed the deals as only patching over the problem for Greece. There will have to be some kind of restructuring deal eventually because most of the consensus view is they can't possibly repay all this debt. And we're carrying on, lingering, with this difficulty, are they going to get more money to tide them over yet another year, or not?
Clearly markets, expecting there to have to be a restructuring if not now, at the end of the 2013 period for this bailout program, are not going to be easily willing to come back and finance Greek debt in this next year. And that inevitably means that Greece will need more money than was originally provisioned. Are they going to get it or not? Well, we should remember that the original bailout deals are still waiting the final ink on the paper to agree them. And yet, already we have this extension of these demands. And parts of Europe are beginning to say, it is not just that Greeks can't pay, but perhaps we won't pay.
FOSTER: The motivation, politically, and generally across Europe, isn't there for a big bailout of Greece, as it was a year ago. Is it? That is the truth, so any new deals are going to be completely different. How are they going to look?
ROSSI: I think this time last year, because of the way in which markets were caught because of the difficulties on the short-term, they was an almost immediate coming together to arrange a deal. Even the U.S., to some extent, put some pressure on Europe to arrange a deal, and get it over with. This time around those pressures have dissipated. There is a deal of some form, but there is clearly not progress on the parameters that Greece needed to attend to.
I remember this time last year, the EU teams that first went in were very confident with themselves at being able to manage this. We have just done Latvia, we can take on Greece. Well, of course, now there has been Ireland and Portugal, and we are back to Greece. And I think-I certainly hopes that that team has been very much beefed up from those original discussions.
FOSTER: What is going to happen? Is the European Union going to allow to go bankrupt? Is the IMF going to step in? What are the options?
ROSSI: Well, I think the euro has been taking, not exactly a beating, because it has been up and down. But it has been very volatile off the back of this news because people don't quite know where it is going to take us. It is not, in a sense, that leaving Greece-the Greeks leaving the euro may even be good for the Euro Zone in one sense. It is not that that is the issue. I think it is the confusion about all of these bailouts and what do they mean? Because we know that if Greece starts to renegotiate Ireland and possibly Portugal will also be in there, too.
FOSTER: So, they'll have to stop it here, don't they?
ROSSI: So, I think it is this wider problem. It is the debt problem that has to be tackled very quickly. We know that even euro exit, if it were to be possible, takes some time to arrange. And in any case it is not always clear that that will benefit the country exiting. In some ways it will make the short-term problems worse. But the debt difficulties have to be resolved very quickly, because otherwise the Greek public sector, it is not just the case of taking a pay cut. There will be no pay if the Greek government doesn't have money for financing.
FOSTER: Vanessa Rossi at Chatham House.
Now, while countries on Europe's periphery are struggling, Germany is powering ahead. German exports surged more than 7 percent in March, month on month. It could help boost the overall performance of the Euro Zone and mask weaknesses in nation's such as Greece, Ireland, and Portugal.
Now, up next, talks don't come much more top level than this. The world's two largest economies thrash it out in Washington. We'll take a look at the possible flash points, after the break.
FOSTER: China and the United States have begun their two days of top- level talks in Washington, whilst currency controversies will be a striking point. Again, U.S. debt problems are likely to be high on the agenda, as well. China says it is watching Washington's attempts to reduce the deficit, closely, as the U.S. heads towards its debt ceiling. Meanwhile U.S. Treasury Secretary Timothy Geithner will again push China to allow the yuan to appreciate. China's currency policies have been a regular complaint of the United States. And Geithner admitted that both the deficit and the yuan are major challenges for both countries.
(BEGIN VIDEO CLIP)
TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: Our challenges in the United States is to strengthen the foundations for future economic growth and this requires a sustained effort to improve education, to strengthen incentives for innovation and investment, even as we put in place the long- term fiscal reforms that will force us once again to live within our means as a nation.
In China, building on the remarkable reforms of the last 30 years, the challenge is to lay a foundation for a new growth model, driven more by domestic demand, with a flexible exchange rate that moves in response to market forces, with a more open market-based economy.
(END VIDEO CLIP)
FOSTER: So, even with new issues on the table those currency problems still persists. Here is how the yuan has faired against the dollar over the past few years. You can see how reforms in 2008 let it appreciate at the start, just here, before flat-lining for the next year and a half, on the bottom there. In the past year it has been on the rise again, but Maggie Lake has been following these talks for us in New York.
And, Maggie, basically the increase isn't enough for the U.S. is it?
MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: Yes, that is the problem, Max.
I mean, when you look at that graph, you can see why the Chinese are saying, hey, we are letting it move higher. And stretched out, indeed, they have. From the when they very first started doing it, even before we could see on the graph, a lot of noise during that flat line area there, between '08 and 2010, during the financial crisis. They had been moving it, letting it move, but it comes out to about 6 percent or so a year. It is very gradual and a lot of people here in the U.S. especially those manufacturers and lawmakers who represent them, want something more like 25 percent. So it is not happening fast enough.
Now, in the past, when U.S. officials, including Geithner and others talked about it, you would hear them say, listen, it is an unfair advantage, there are global imbalances. Now the song is getting a little different and they are saying, hey, this hurts us, but it hurts you, too. China is very worried about inflation, if you let your interest rates rise, and you let your currency appreciate, it is going to help you out, when you come to fighting inflation. Geithner has been very clear about this, saying, it gives Chinese leaders enhanced ability to deal with inflation. Now, inflation is a concern and the Chinese in fact, have been increasing interest rates and that is partly why you see that yuan moving higher. But still, when you talk to analysts they say it is not likely that you are, even after these talks, then going to see any kind of aggressive appreciation.
Max, the other interesting thing is you hear Geithner very calm in that speech. The U.S. is still sticking to diplomacy as the tool here. Even though a lot in Congress would like to see something more harsh, more aggressive policy. Geithner and the U.S. Treasury delayed their U.S. semi- annual currency report in which they would have had to say whether China is a currency manipulator, or not. They delayed that once again. So they are sticking with diplomacy, but clearly the two sides have a lot of differences.
FOSTER: I mean, it has to be very diplomatic and polite, don't they? Because China is crucial to America's economy, not just because of a trade relationship, but this massive amount of debt that China owes, U.S. debt.
LAKE: That is right. "Massive" is the word, some $1.5 trillion worth. China, by far the largest holder of Treasury debt. And, Max, let's remember this meeting, this summit here, comes about one week before the formal deadline for the debt ceiling. So, China has been very vocal about the fact that, hey, we don't like what is going on. We are watching your discussions with the Republicans very closely. This is a big asset for them.
The other important number to point out here, with the relationships between the two countries, is the $18-billion trade deficit the U.S. carries with China. Those two figures alone give you and idea about how integrally, intertwined, these two countries are with each other. They need each other even though they have these differences. So, you are likely to hear a lot of rhetoric about cooperation coming out from these talks, even though they have these differences. They need to resolve them and you know, they are making small progress and a lot of what we see goes on behind closed doors as opposed to being spoken.
But the administration, diplomacy, cooperation-Congress, a very different story, you continue to hear protectionist language coming out of them. So that is the tension we really watch over here, Max.
FOSTER: Maggie, thank you very much indeed for that.
Economist will be watching out very closely, of course, as a results come out. But at the moment it is politics. And with no economic reports coming out today, stock markets in the U.S. have been pretty much focusing on the Greek situation, unfurl, across the pond. It doesn't seem too concerned right now. Small gains of around 0.5 percent as you can see, up 60 points.
Rebounding oil prices have helped. The NYMEX crude is hovering above the $100 a barrel mark, a gain after plunging last week. And from currency concerns to booming Chinese cities.
(BEGIN VIDEO CLIP)
RICHARD QUEST, CNN ANCHOR, QUEST MEANS BUSINESS: After the break, it is urbanization on a grand scale, "Future Cities", I'm in Tianjin, in a moment.
FOSTER: China is a locomotive of growth, as we have been hearing in the show so far, country expanding at breakneck speed. But with this comes concerns over its urban landscape. Every year 20 new cities are built from scratch in China. By 2025 there will be 221 cities with more than a million people living within them.
So, how does a city accommodate such growth? Well, tonight, we are in Tianjin, it is a large industrial city in the northeastern part of China. A city of the future, no doubt, which is defining a new landscape for itself.
QUEST (voice over): All over China, there are places like this, Tianjin. They are not small cities. Over 11 million people live here and there are more people on the way.
(On camera): The trend is clear. And it is growing. By 2030 a billion Chinese people will be living in cities. That means more than 350 million people pouring into places like Tianjin. So, the urban landscape will change, it will move out and up.
(Voice over): The challenges facing urban centers like Tianjin are enormous.
(On camera): Its traffic,
EDE IJJASZ, WORLD BANK, CHINA: Every developing country has gone through a process of urbanization. Urbanization is important for economic development and for poverty reduction. China is just barely crossing the 50 percent urbanization rate. More people need to move to cities.
QUEST (on camera): Chinese cities like Tianjin are the ultimate future city. Those that are already built will have to expand. Those that are being built from scratch have the opportunity to set the standard and become models for urban planners. In fact, everyone is watching to see how China handles urbanization on a scale never seen before.
(Voice over): China needs this urbanization because people living in cities will help bring China the economic growth it seeks. The problem is where to put them. The answer, places like this. Eco City, part of the Sino-Singaporean project in Tianjin.
HO TON YEN, CEO, SSTEC: So we are building this on a 30-square kilometer eco city.
QUEST (on camera): But why such a big project?
HO: I suppose for it to work as a viable, demonstration project, it must be on a sizable scale. I mean, what we have in mind is not building a small, little eco village.
QUEST (voice over): This is a city for 350,000 people. The size of Canada's capital Ottawa, here on the outskirts of Tianjin, proper.
(On camera): Bridges, railways, parks, office, apartments, so far most of Eco City is but this model. And yet, bearing in mind the progress they have made to date. You have to assume that this will become a reality in our lifetime.
(Voice over): The environmental pledges are many, 20 percent of energy from renewable sources; 50 percent of water from non-traditional sources like rainwater and desalination. And an astonishing 90 percent of trips to be made on foot, by bike, with low-emission light rail systems.
SZE PANG CHEUNG, GREENPEACE EAST ASIA: Some of those partners are quite progressive on their own, but I think the key question is whether they will just be applicable to the Eco City in Tianjin, or they can live up to their (UNINTELLIGIBLE), being (UNINTELLIGIBLE) in other cities in China.
QUEST (On camera): So all this, has gone up in three years?
LIU XU, ENVIRONMENT BUREAU, SSTEC: Three years. The forest deserted them here, and the salty area in this part.
QUEST: But what is the purpose of it all?
LIU: It is our future. It is the future for Chinese cities, I think.
QUEST: This was started three years ago. The completion date is 2020. People will be living here as soon as next year.
UNIDENTIFIED MALE: (UNINTELLIGIBLE) Eco City, in China, and as pilots some flourish, some don't develop. And therefore there is like a 1,000 flowers blooming, trying to understand the lessons, and which one to go and which don't, and move forward.
UNIDENTIFIED MALE: There are lots of experiments going on, not just in the Econ cities, we shouldn't wait until those experiments finish. The urgency of the problems that China is facing requires urgent actions.
UNIDENTIFIED MALE: Will everything be achieved? Maybe, maybe not, but the learning that comes out of that, will define what is doable in other cities.
QUEST: As China prepares for its urban billion, it is cities like Tianjin and its satellites, which are striking out and trying to define the new urban landscape.
FOSTER: Now, they are the two tribes that dominate the business world. These days you are either a Google person or an Apple person, but which one is the bigger brand. Place your bets now. We'll tell you after the break.
And he is the star of the hit series, the West Wing, a former member of Hollywood's Brat Pack, and now an author. Rob Lowe talks about stardom, sobriety, and his new book, on "PIERS MORGAN TONIGHT". He also reveals details of his unknowing brush with a 9/11 terrorists and what he did when he did when he learned of bin Laden's death. That is around 30 minutes from now, right after QUEST MEANS BUSINESS.
FOSTER: Welcome back, I'm Max Foster in London. More QUEST MEANS BUSINESS in just a moment, but here are the headlines.
Pakistan's prime minister says an investigation has been ordered into how Osama bin Laden escaped notice in Pakistan for so long. But Yousuf Raza Gilani says Pakistan should not take all of the blame. At one point in a speech today, he suggested that Washington's actions led to the creation of al Qaeda.
Security forces look down from a rooftop. This video said to be from Daraa in Syria. Human rights organizations say hundreds of people are being held in makeshift prisons at soccer stadiums. A UN spokesman says a humanitarian assessment team hasn't been able to enter the country. The UN mission was supported -- it was supposed to visit Daraa.
Parts of Memphis in Tennessee in the US are under water as the Mississippi River nears a record level. The rising river is impacting eight states. Further south, engineers opened a spillway north of New Orleans in Louisiana in an effort to divert water away from the city.
Cuba may be considering a move that would lift travel restrictions for island residents. Havana said on Monday it will study ways to let Cubans travel abroad as tourists, but details are sketchy. Cubans aren't officially prohibited from traveling abroad, but bureaucratic hurdles prevent many of them from leaving.
Now, they are two of the biggest, most popular companies in the world. Now, Apple has beaten Google in their latest competition, being crowned the most valuable brand in the world in WPP's BrandZ survey. It's pretty well- respected. Apple has overtaken Google to take the top spot in the BrandZ Top 100. Google has been number one, incidentally, for the past four years, so this is quite a move.
But after a year, that included the release of the iPhone 4 and the iPad, Apple's brand -- brand value grew 84 percent to $153 billion. It's the first time that Apple has broken into the top five, even. And WPP's research unit, Millward Brown, says Apple's domination of the tablet market was the key factor in its growth.
Technology brands are clearly dominating the list altogether. Close behind Apple and Google is IBM at number three and Microsoft, number five. And the two fastest-growing brands were both social networks. Facebook joined the list for the first time, number 35, and its Chinese equivalent, Baidu, came in at number 29.
Overall, the brands on the list increase in value every sector through last year. That meant the top 100 brands saw 17 percent growth. They are now worth a combined $2.4 trillion. There's a lot of money in brands. us Now, if you're wondering how brands lists are compiled, Millward Brown uses three criteria. It counts only branded earnings or the money a company makes off the back of its brand. It researches brand contribution or how much of brand itself attracts and keeps its customers. And finally, it estimates a brand's growth potential.
The woman behind the formula is Millward Brown's CEO. She is Eileen Campbell, and I'm pleased to say that she can join us with CNN New York. Thank you so much for joining us.
It's still quite arbitrary, isn't it? A lot of it is very subjective, but I guess any company would come up with a similar set of brands at the top. So, what do you think is the key change over the last year?
EILEEN CAMPBELL, CEO, MILLWARD BROWN: Well, certainly it's the tale of the tablet, Max. Apple's value was wildly increased by the successful launch of the iPad.
But I do want to note that the valuation is actually not quite so subjective, because we do use consumer input. So, instead of using expert opinions, we're really asking the people who vote with their wallets about these brands.
FOSTER: And the brands are just so valuable, aren't they? They're increasing in value. Why are brands becoming more important on the face of it?
CAMPBELL: Well, I think that consumers need a real reason to believe, and we're all overwhelmed with massive numbers of choices in our lives. And a brand is really an indicator that helps us make choices more quickly, more efficiently. So, for corporations, growing and nurturing brands are great ways to create shareholder value.
FOSTER: And would you say Apple has overtaken Google because Google is well-known, but Apple has that loyalty that other brands don't seem to have?
CAMPBELL: You know, it's interesting. I think both Google and Apple benefit from incredible loyalty. Google has a -- what? -- 67, 68 percent share of the search market. So, consumers are incredibly loyal to Google.
I think with Google, they've just invested in the future a bit more in 2010, so they're spending on things that were sort of future-looking investments was bigger than it's been in the past. I think those investments will pay off for them in the long haul. Things like the Android system and mobility and some of the many other things that Google's betting on.
So, I wouldn't count out either brand. And, in fact, they have a pretty symbiotic relationship when it comes right down to it. Apple equipment is used to do a heck of a lot of Google searching, so it's really not an either/or. Both of them have a great shot at success.
FOSTER: And how long until a social network is number one, and which will it be?
CAMPBELL: Well, certainly Facebook's got the upper hand. You see real first-mover advantage with Facebook.
And it's interesting. You think about how would you have even described Facebook to somebody six years ago? It's changed the way we behave as consumers and even as human beings how we interact.
So, do I think Facebook will be number one in the near future? Maybe not, but I sure would be betting on a continued growth trajectory for the brand.
FOSTER: OK, Eileen Campbell, thank you very much, indeed. Fascinating study.
Now, everyone from Steve Jobs to the summer interns care about keeping Apple at the top. That's what the brands report said was the key to its success. But is it really true? It's also been known over the years as a very secretive company, but one former Apple engineer has given us an interesting insight into what it's really like to work for the world's biggest brand.
ANDERW BOROVSKY, FORMER APPLE ENGINEER: I came to Apple because I really wanted to ship something, I really wanted to build something that normal people would use.
TEXT: Andrew Borovsky worked for Apple as an engineer from 2007 to 2008.
BOROVSKY: There's a lot of -- immense satisfaction in having your family use something that you built. So, in a lot of ways, it's almost the main reason why you'd work there. You know that they ship products.
They don't build prototypes. They don't announce something and then talk about it for the next five years. There's a grand unveil, and it'll be a product that'll be in people's hands. It could be a bad product. It could have some flaws. But the bottom line is it's going to ship and it's going to get better.
I think everyone has an interesting in the company performing well and not leaking prototypes is part of it. I think the -- that culture of not pre-announcing was, I think, ushered in, actually, by Steve when he took over.
I think it was like a Mac World keynote in 97 or something where he talked about Apple having this huge leak at the top. They keep pre- announcing things and how it's going to be over. From now on, we're going to ship products when they're ready.
And in those early days, that was part of returning Apple to profitability. So, you had this culture where everyone said, "Hey guys, we've got to keep a lid on this because of the fact that our company's survival depends on this."
And I think nowadays, Apple's a little less worried about survival, but that's sort of still ingrained, this idea that, look, it's the best thing for the company, it's the best thing for this product. So you don't.
They're not a company that reacts to others. They're much forge their own path. So, I think they're not oblivious to understand the areas in which they compete with, say, Google or Facebook or somebody else. But they very much plot their own course. I don't know if they spend a ton of time worrying about that sort of thing.
It's a huge difference from a lot of what other companies worry about. Like I said, other companies worry about this, we have to be competitive. And in order to be competitive, we have to differentiate.
And again, a differentiation a lot of times comes at the expense of usability, and with gimmicks. And Apple doesn't do that. And I think that's what makes it really successful. They start with a blank slate, and they build the thing that they would want to use and their families would want to use.
STEVE JOBS, CEO, APPLE: We're not perfect. We know that, you know that.
BOROVSKY: It really is kind of a mecca. Most designers of products that I know started out one day when they were 12 saying, "I want to work for Apple. And when I work for Apple, that will be it. I will never want anything again." And it's true in a lot of ways.
So, it's difficult to think of, where would I go from Apple? You're not going to go from Apple to Samsung, necessarily.
Most people that leave Apple go to start their own things. I mean, a few friends of mine had a product idea, really wanted to dedicate some time to it, and the best way to do it was by leaving Apple for competitive reasons, et cetera.
So, it was definitely a very, very difficult decision because you don't know what's going to happen in the next couple of years, so there's this, "Are you sure you want to leave? There's some really exciting things just around the corner."
And you know they are exciting, but you just have to say "I'm OK with not knowing" and getting out from under that sort of -- the blanket of secrecy, which is so fun, that little curtain, and going off and doing your own thing.
FOSTER: Well, speaking of tech companies, Groupon is believed to be the fastest-growing start-up in history. After just three years, annual sales will reportedly topped $3 billion this year. But now comes phase two, or completely changing its business model.
Join us at facebook.com/CNNQuest for details on how Groupon is preparing to launch a mobile app connecting with coupons close to where you might be. That's at facebook.com/CNNQuest.
Now, instead of Made in China, how about Made in the Carolinas? Just ahead, we go live to North Carolina for a look at what some US businesses are doing to keep their jobs closer to home.
FOSTER: Well, commodities are making a recovery after last week's steep sell-off. A weaker dollar and bargain-hunters are helping give prices a boost. Let's take a look at how they're faring this hour, then.
Light sweet crude is up around $5 and just above $102 a barrel. Gold has jumped $17 an ounce to more than $1500. And silver is checking in at $37 an ounce, about a couple of dollars higher.
Cotton prices, meanwhile, have been falling since they hit a record of almost $2 in February of this year. After that, tough foreign competition in the economic picture begins to fray, but in North Carolina in the US, the looms are running again.
A group of businesses is building up the fabrics of their communities by making, selling, and growing t-shirts. Tom Foreman joins us, now, live from High Carolina -- High Point, North Carolina with more on that.
TOM FOREMAN, CNN CORRESPONDENT: Yes, it's really interesting here. The t-shirt crop is coming in very nicely. The truth is, cotton used to be a great big commodity all across the American South. Over time, China and India really took the lead in producing most of the world's cotton.
The United States is still number three, but a lot of growers and textile mills here, which were hurt very, very hard, have come together with an innovative idea to say to people, let's shop at home, let's support our home products. And that, they think, are bringing jobs back home.
FOREMAN (voice-over): Ronnie Burleson is laying in another crop of Carolina cotton just as his family has for years. But this is much more than a job these days.
RONNIE BURLESON, THURMAN, BURLESON & SONS FARM: It's a thrill.
FOREMAN: Because a portion of his crop is going to Cotton of the Carolinas. That's an innovative program to build up the hard-hit textile industry here by turning locally-grown cotton into locally-made clothing creating locally-needed jobs at places like TS Designs.
ERIC MICHEL, TS DESIGNS: Our shirts go from dirt to shirt in 700 miles or less.
FOREMAN: That matters because company officials like Eric Michel stress green production, using less fuel, which is difficult when cotton and cotton products are shipped back and forth to China, India, Pakistan.
MICHEL: TS Designs is a triple bottom line business. They also like to look after the three P's, people, planet, and profit.
FOREMAN: Of course, what crushed the textile industry was lower labor costs abroad, and these shirts still generally cost more than imports. But they have found fans in people who support local production and a competitive edge may be coming.
SAM MOORE, ADVISER, TS DESIGNS: Ultimately, when fuel costs and other things go way up, we're going to have a more sustainable supply chain and a consistent quality here that other people may not have.
FOREMAN: For Ronnie Burleson, it's simpler.
BURLESON: We're going to church with people that worked in the cotton mills all their lives, and all that industry's gone. I feel proud to be a part of what can try to bring back some of those jobs and help my neighbors.
FOREMAN: Building up the fabric of his hometown.
FOREMAN: They really have found a market here among people who are treating this very much the way they have treated the farm produce market, with local farmer's markets, where they say, let's buy locally-produced food.
People are buying into the idea and the result is, there are about 700 jobs in this state which are now relying on this program, and they think that number is growing. And again, if transportation costs continue to go up, they think that this will grow even more, providing more jobs in the very hard-hit textile industry here. Max?
FOSTER: OK, Tom, thank you very much. Very interesting.
Now, floodwaters in the US midwest have destroyed crops, led to hundreds of evacuations, and today the US took desperate measures to protect the city of New Orleans. Guillermo is at the CNN International Weather Center for us, looking at that. Guillermo?
GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes, we can fathom how big this story is in this case while thinking of the sheer size of it. The floods in the United States encompass something like 250,000 square kilometers, the size of Italy. And that gives you an idea.
Also, when we look at the counties that are with flash warnings, for example, from north to south, it tells you how big the situation is.
But we're wondering, if the weather is so nice and we don't see so much rain, what is going on? Well, we have all the snow that we got in the winter this year, which was really significant, and the Mississippi River is taking all that melted snow down into the Gulf of Mexico, and it's taking time.
So, these cities are taking precautions. As an example, we're going to show you what's going with these floodgates -- that's what they are, in essence -- that are bringing water from the Mississippi River into Lake Pontchartrain that around the lake we don't have a large amount -- a significant amount of people living there.
So, even though the lake is going to contain all the water, in case that it gets overloaded, the problem would not be that severe.
Let me tell you what's going on here with the dates, because as I said, we don't have bad weather. So far, we got a lot of rain, because we got 60 percent -- 600 percent more rain that we should have but, as you see, the water is taking time to go all the way into the exit, which is the Gulf of Mexico.
And here on this date, we're going to see the expected crest, which is significantly higher than the flood stage level that we usually see.
On top of that, it's quite warm, so if you're coming to the States, expect now temperatures to be kicking in warmer than what we see in other - - at this time of year in some spots. Charlotte, 26 degrees, Atlanta 29, Washington DC 22 degrees.
Well, let me show you a little bit what's going on in terms of delays. Fort Lauderdale is reporting 30 minutes or so. Any other airport, Atlanta, Chicago, Denver, Vegas, Phoenix, looking fine. San Fran looking OK.
But we have in Asia a tropical cyclone here that is leaving the Philippines, leaving a lot of rain there behind, and it's moving into Taiwan. It's going to brush Taiwan. We think that it's going to get closer to Japan, in fact, but it's going to be in the island with winds and also with rain. It's the first tropical storm of a very busy season that we are anticipating. Max?
FOSTER: Thank you very much, indeed.
Now, there are plenty of ways to drum up business, some more imaginative than others. But how about traveling through time? That's what one entire country is planning to do. It's true. We'll explain in just a minute.
FOSTER: It sounds like the plot from the TV show "Lost," an island that travels through time. But that's exactly what the island nation Samoa is doing in the name of business. The country's planning to switch time zones and jump forward an entire day in the process.
Samoa's currently on the east side of the International Date Line, and it's planning to switch in December and go west. That will bring Samoa's clocks nearer to its main trading partners in Australia and New Zealand.
And right now, it is 21 hours behind Sydney. Come December, it will be three hours ahead. One hundred and nineteen years ago, Samoa actually moved in the opposite direction west to east. Again, that was for business reasons. Back then, its main trade partners were in Europe.
But that's -- but a lot has changed, of course, since 1892, and today it is Australia and New Zealand who provide most of Samoa's economic value, and Samoa actually has a trade surplus with Australia, according to the Australian government. And Australia and New Zealand are the two countries from where Samoans send the most money home.
Just 130 kilometers east of Samoa is the US territory of American Samoa. Its time zone isn't changing, but it still could have just scored a unique tourist opportunity.
Joining us now from Washington is Eni Faleomavaega. He is the member of US Congress for American Samoa. Just to be clear, that's not the Samoa that is switching time zones. So, I just have to check with you, what do you think of your neighbors and what they're up to?
REP. ENI FALEOMAVAEGA (D), AMERICAN SAMOA: Well, first of all, I want to commend Prime Minister Tuilaepa for making this very important decision. I know it was not a rush decision, they must have studied the issue very thoroughly.
And I really think it's -- it would be a tremendous advantage to the Independent State of Samoa as far as having to do business transactions with our -- the rest of our Pacific and Asian countries. So, yes, I fully support Prime Minister Tuilaepa's efforts to do this.
FOSTER: And it's going to create this unique opportunity, isn't it? I presume you'll be sort of trading on this, to some extent, where someone can effectively fly to one end of the island and have a birthday and then have a half hour trip to the other end of the island and have another birthday because they're going to have two days the same. It's going to cause a real opportunity for you, isn't it?
FALEOMAVAEGA: Not only -- oh, very important, just as it's quite obvious, Samoa will lose -- usually loses two business days for the simple reason of them being on the west side of the International Date Line, so as far as conducting business transactions, I think this is an excellent move for our cousins there in the Independent State of Samoa.
And I guess you might say now we have a very unique feature where you can have two weddings, two anniversaries, two everything for our people who would like to pay visit to both Samoa as well as American Samoa.
FOSTER: So, why aren't you going to do the same? Because I presume you have more trade with the US, obviously. You are part of the US. But a lot of your trade is also going Asian, isn't it? From that -- those islands, at least?
FALEOMAVAEGA: Well, not really. But to the extent that I think is quite obvious because the Independent State of Samoa is associated with so many of the international community members, the United Nations, the forum organizations, and several other regional organizations.
And also, the conduct of their business dealing with many of the Asian countries. And, of course, for New Zealand and Australia.
So, it's an obvious move, and I really think this is good for Samoa, and I think it will also complement our needs, especially when it comes to traveling and maybe having call centers to the effect that it does have an economic bearing on how we do conduct business. So, I really think it's a great idea.
FOSTER: Well, good. Congressman, thank you very much, indeed. Go to the Samoas and travel in time. Interesting concept, isn't it?
Well, Samoa is not the first country to switch sides. Ayesha Durgahee looks at modern-day time travel.
AYESHA DURGAHEE, CNN CORRESPONDENT (voice-over): The International Date Line. A time travel concept that runs right through the Pacific Ocean. Cross it going towards Asia, and you lose 24 hours. Head back to the United States, and you gain a day.
It's a concept that even hardened travelers find difficult to understand. As far back as the 16th century, explorers like Magellan first noticed the problems of gaining and losing time. After going around the world, they were puzzled about how their ship logs were wrong when they got back home.
To fully understand how it came about, you have to travel literally halfway around the world to Greenwich, England, to the Prime Meridian, the home of time. Zero degrees longitude from where all other measurements are taken.
DAVID ROONEY, FORMER CURATOR OF TIME-KEEPING, THE ROYAL OBSERVATORY: Crossing the Date Line can be a very strange experience. As the earth rotates and as different times are held in different parts of the world, there is a point where the time is the same, but you have to change the day.
DURGAHEE: Unlike the Greenwich Meridian, there is no treaty setting out the rules for the Date Line, or even its existence. Everyone just simply accepts it has to be there to make timekeeping around the world work properly.
For the countries around the Pacific, the Date Line position has been moved time and time again because of politics and convenience.
ROONEY: If you look at the timeline -- or the Date Line, as the Date Line passes through the Pacific, it's not a straight line, because there are kinks to move it out of the way of the major land masses in the north, for instance, keeping Alaska and Russia one day apart.
And then, as you go through the island groups of the Pacific, you'll see that it's changed over time, that individual groups can choose to move from one day to the next.
DURGAHEE: Perhaps the most famous time change was in 1995, when the island of Kiribati, which was on both sides of the line, moved it so that time would be the same. It enabled Kiribati to enjoy brief fame on January 1st 2000 when the island was the first place on Earth to see the new millennium.
And now, at the end of this year, the Pacific island of Samoa will be the next in line to make time work for them. Ayesha Durgahee, CNN, London.
FOSTER: Ayesha with a brief history of time for you on the show.
Let's check on the Dow Jones, now, see how it's faring at the end of the program. It's up nearly half of one percent, nothing particularly driving the markets. European stock markets, though, started the week on a very bleak note because banks were big decliners, here. Officials have agreed to review the terms of Greece's bailout, reigniting concerns about the regions sovereign debt crisis.
That is QUEST MEANS BUSINESS. I'm Max Foster in London. "Piers Morgan Tonight" is just ahead. But before that, a check of the headlines for you.