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QUEST MEANS BUSINESS
German Market Drops 5 Percent; Technology Used to Fight Human Trafficking
Aired September 5, 2011 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN ANCHOR, QUEST MEANS BUSINESS: It is a case of the DAX in distress. The German market has dropped 5 percent.
There are labor pains on Labor Day in Detroit. Obama's focus is on jobs and Internet freedom, and CNN's Freedom Project. How technology can be used to fight human trafficking.
I'm Richard Quest. I mean business.
September has barely begun and already on this first full week of the month trading is off to a dreadful start. European debt panic we saw in August has well and truly spilled across the calendar page and has prompted traders to send the DAX to its lowest level in more than two years.
Come across to the super screen and you will see what I mean. This is the way the numbers closed. Start with the FTSE, which closed down 3.5 percent, 3.5 percent. And if you look at the way the day moved you will see time and again throughout the day we have this interesting fall, late in the session, which I'll explain in just a moment. That was the FTSE, but the DAX, of course, down 5.28 percent. Now it is the largest point fall, pretty much, we think, since roughly 2008. Again, if we look at this, we have a dramatic fall just around lunchtime. And that fall really doesn't recover. We see a recovery in the market, in the CAC and it may have been in Milan, but not in the German market.
Now the Deutsche Bank Chief Exec Josef Ackermann said today's current market conditions, in his words, are reminiscent of 2008, which is not surprising when you look at that point's fall. And he also warned that many European banks could not survive write downs on sovereign debt. The CAC was down sharply, off 4, nearly 5 percent, as indeed was the Zurich SMI. And the sell off stretched across all sectors, financial sectors, with financial shares were particularly badly hit. Look at these numbers: RBS was off 12 percent, Soc Gen, 8.5 percent, Deutsche Bank, nearly 9 percent, Credit Suisse, 9 percent; 13 other big banks are being sued by the U.S. federal housing agency saying they misrepresented-misrepresented sub- prime loans.
One of the reasons for what we saw today and that fall that I was referring to a moment ago was suspicions and rumors that there was to be a downgrade of Italy. It didn't really affect the Italian market.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Ugly.
QUEST: Well, I assume you are talking about the markets.
BOULDEN: An ugly day.
QUEST: An ugly day. But what was the reason? Because why on a random Monday in September do we see these sorts of horrible numbers?
BOULDEN: I'll start with the U.S. being closed, so you didn't have the U.S. to follow, either way, good or bad. You had a toxic mix, really, I think, of legal, economic and political news that conspired against these markets today. You know as the market goes, so goes the euro, the euro was very poor, very hit hard today. Yo had poor economic numbers out of the Eurozone, poor economic numbers out of the U.K. And that is reminding investors that Europe is not growing. Just like we learned last week that the U.S. is not growing, also, as Richard said those banks were hit hard, because of the potential lawsuit and the U.S. mortgage meltdown.
Now let's look at Germany. You know, we heard some of the reasons behind it, but let's remember, Chancellor Merkel lost another regional election over the weekend. Now, why does this matter? It could be, just could be, that she will not have the political might to push through the necessary legislation that they need to pass in order to bail out Greece and any other Eurozone economies.
QUEST: And I'm waiting for you over here.
BOULDEN: Of course, the old chestnut.
QUEST: I'm waiting.
BOULDEN: Here we go, the ol' chestnut.
QUEST: I mean-
BOULDEN: We know-look, on Friday?
BOULDEN: In Greece.
BOULDEN: Talks break down.
QUEST: Troika is gone.
BOULDEN: They've gone. They are going to come back in six or seven days now.
BOULDEN: Greece has got to get a 2012 budget together that allows them to get the next bailout, without having more riots in the streets. A lot of people say they cannot go for more cuts, not more austerity than they already have.
Italy, backtracking on the austerity that it has promised, tomorrow we have discussions in parliament.
BOULDEN: And we had general strikes.
QUEST: All right. Many thanks.
BOULDEN: Pick your poison.
QUEST: Pick me points. I don't need to pick the points, Holger Schmieding is with me, chief economist for Berenberg Bank, Germany's oldest private bank.
You have heard the reasons, which one do you like?
HOLGER SCHMIEDING, CHIEF ECONOMIST, BERENBERG BANK: I actually think this is mostly fear feeding on fear. There are a few tricks-
QUEST: Fear of what!
SCHMIEDING: Fear of global economic calamity, fear of Lehman II, but basically it is really fear. There are smaller things that trigger the fear, and when it gets going, as some people see, there is just-other people selling, herd behavior, they sell as well. Germany happens to be a highly cyclical economy, it happens to have a lot of banks in its equity index. And as you can't really short banks in some other places in Europe at the moment, sort of shorting German banks may be a proxy for it.
QUEST: All right, shorting the banks, but as I looked at the German market today, it was ThyssenKrupp, it was Daimler, it was BMW, it was all- it was the industrials that were down as well. Now, I suspect-people shorting the whole market-if it-if the ship's going down?
SCHMIEDING: Well, that is, to some extent the cyclical element.
SCHMIEDING: If investors are afraid that the global economy is heading for recession, which I don't think it will, but there is fear and the fear is not totally unfounded, then of course, the Germany cyclicals are one of the sectors that suffer.
QUEST: How damaging was Chancellor Merkel's defeat in her own state, in that sense? It is the worst since the democracy, the way I read it this morning. But also-but also, does it weaken her in her determination or ability to get ESFS through?
SCHMIEDING: I don't think it will affect very much her ability to get the next euro package through parliament. But it has reminded, of course, people that there is residual risk. She remains pretty likely to get it through, but you can't take it for granted. And political news like that are a reminder to people, that actually, almost everything in Europe hinges, of course, on the German, the biggest potential paymaster. So, September 29, the German vote in parliament is a key issue and we need to be aware of that.
QUEST: And we have the German constitutional court deciding this week, or announcing its decision on whether bailouts are legal. I mean, with the best will in the world, they tortured the Maastricht Treaty and the other treaties to get these bailouts through.
SCHMIEDING: It is definitely not foreseen in the Maastricht Treaty.
QUEST: Quiet the opposite in some ways.
SCHMIEDING: In some ways, yes.
SCHMIEDING: Life changes. We now, after Lehman, live in a world where contagion is a major issue. The Maastricht Treaty didn't take account of contagion. So now where everybody, including the Germany constitution, quote, knows about contagion, they will probably come up with a wise verdict.
QUEST: You have faith in the wise judges?
SCHMIEDING: 90 percent faith, yes, that is quite a lot.
QUEST: Absolutely. All right, finally, to Italy. Rumors of a downgrade, and we saw what happened with the German market. There is no evidence of it. Does Italy go the way of Portugal, Greece, and Ireland? How close are we to it?
SCHMIEDING: We are not quite at the point. A, the Italian fiscal data are much better. B, and that is a very obviously point. Italy is too big to be actually rescued by this EFSF. Italy has to be rescued by itself, and ECB support. That means Berlusconi getting his act together, doing the austerity and the ECB backing him up.
QUEST: Final, and you have got good faith in judges and let's have your faith in-
SCHMIEDING: I keep my fingers crossed, I tell you.
QUEST: Is it going to be a difficult September?
SCHMIEDING: It is clearly going to be a difficult September. The big German political decision is at the end of the month.
SCHMIEDING: We have a lot to go until then. So this could remain very choppy markets for awhile.
QUEST: Many thanks, indeed. Holder Schmieding joins us, talking markets for a while.
Coming up next, the world of technology and the role it can play in fighting human slavery and trafficking. It is the CNN Freedom Project, on QUEST MEANS BUSINESS.
QUEST: This week on QUEST MEANS BUSINESS we are shining a spotlight on the human trafficking in the digital age. It is part of our CNN Freedom Project, working to fight modern slavery.
Technology is a double-edged sword and we're going to look at it, right now. The Internet is increasingly being used as a tool for trafficking. Organized crime rings, chat rooms, e-mails, text messages, got'em all! Descriptions of trafficked people can be distributed, human beings can be sold to the highest bidder, logistics can be arranged through the information super highway. It makes it easier to coordinate the crimes globally.
Now, as well as facilitating trafficking, technology can be used to fight it. It is the opposite side of the same coin. Naming and shaming, criminals can be identified, online photographs. It can be used to embarrass companies who turn a turn a blind eye to slave labor. Even relatively low technology schemes can help. SMS messages, alerts, they can all empower those who seemingly are powerless and at risk.
In the United States, U.S. Secretary of State Hillary Clinton has come up with an idea called 21 Century Statecraft, to harness the power of new technologies to connect governments to people, people to people, and to governments. It is an idea that has gained momentum following social media's role in the Arab Spring.
So, Alec Ross, is senior advisor for innovation to the Secretary of State Hillary Clinton. He told John Defterios that there are already ways for you at home to use technology to take that important stand against modern slavery.
ALEC ROSS, SENIOR INNOVATION ADVISER TO U.S. SECRETARY OF STATE: Two mobile applications that have been developed that I think are really smart. One is called "Demand the Brand". And this is basically to empower people who are walking into stores who would rather buy products that haven't had slaves in the supply chain for developing the product. And in this case you can literally just point your mobile phone to a product, take its picture, and you can find out whether that is a slave-free product or not.
Another one goes to measuring your slavery footprint. Now I know that sounds absolutely morbid, but those of us who go to stores and buy everything from bubblegum to hedge trimmers, to whatever else, there is a distinct possibility that slave were used in the developing of that product. And by taking a little five-minute survey, you can get a sense of the products that you are using, as an individual, that have people who have been trafficked, for labor, in the production of that good or service. So this is all about putting tools and information into the hands of people so that then can drive their consumer behavior, which in turn, drives $100s of millions.
JOHN DEFTERIOS, CNN HOST: Right now it seems to be primarily, at least worldwide, the best application is SMS, simple messages. But can we go beyond the SMS and the mobile phone to have a better tracking of the forced labor.
ROSS: I do. You know the reason why SMS is popular is because a lot of the trafficking takes place in some of the poorest, poorest parts of the world, where sophisticated wireless 3G and 4G mobile broadband networks just don't exist. That is why SMS has been largely used to this point. But your question is the right one. Are we using more sophisticated technologies? So, first, yes; there are sort of three Ps in keeping people safe, prevention, protection and prosecution.
In the area of protection, in the area of prevention and protection, part of what we are doing is bringing increasingly sophisticated cutting edge technologies to bring some transparency to the supply chain and transportation of people who are being trafficked. There is no better disinfectant than sunlight. So, in this case, what we are doing is principally on the law enforcement and with NGOs trying to figure out how we can use technology and innovation as a way of getting a fighting advantage over slave traders.
And I think it is worth saying slave traders are they themselves incredibly sophisticated. Last year, in 2010, slave traders made more money, they made more than Google, Nike and Starbucks, combined. And when you are talking about that much money, you are talking about organizations with enormous capabilities and we have to use really high-end technology to fight it.
DEFTERIOS: Can you really get into the name and shame game, where you name companies or individuals that are involved in trafficking? From the developing country, they can do this at the very front end of the human cycle?
ROSS: Yes. I mean, just to be blunt, yes. I mean, this is one of the advantages of increasingly ubiquitous and powerful information networks and things like social media. If someone is able to get an image of these people they more likely than not can be named. And, look, if everybody even in the lowest income barrios and cities in South America have got a photo-enabled cell phone, if people are able to document who is really undertaking these activities, then that is a good thing. It is a way of taking law enforcement and amplifying it wildly.
So, yes, let's take advantage of the fact that while there are pluses and minuses to people being able to sort of capture our images the world around. Let's take advantage of it for the purposes of human trafficking.
DEFTERIOS: Alec, would you say you learned from the Arab Spring? Did you take something from the social media applications that can be applied to human trafficking, concretely?
ROSS: If social media, and if technology is enough to really, really damage and push to the ropes regimes like the Mubarak regime in Egypt and the Ben Ali regime in Tunisia, the so too can it be applied in countries in Southeast Asia, in the Caucuses and elsewhere, where big strong cartels can be taken down a notch or two, or more, by citizens empowered with these tools.
QUEST: Alec Ross, the senior adviser for innovation to the U.S. Secretary of State Hillary Clinton.
In case you are wondering, the combined full-year net profits for Starbucks, Google, and Nike is more than $11.5 billion. Now, tomorrow we will be speaking to the owner of Not For Sale, the organization that is- looks for innovative solutions to combat modern-day slavery. It includes this Web site which aims to score companies on their supply chain record and let us know the story behind the products that they produce, Free to Work. You can learn more about CNN's year-long Freedom Project on our Web site, which is CNN.com/freedom. Where you will find out about the facts on modern-day slavery and what people around the world are doing to fight it. There are also resources on what you can do to help, CNN.com/freedom.
Coming up, it is a trip to Chicago.
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QUEST: What a beautiful city. Almost picture postcard perfect. The architecture behind this "Future City" of Chicago, after the break.
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QUEST: Never mind New York, and forget San Francisco. Chicago's skyline, these days, as it has indeed for many years, turned the heads of the world of architecture.
Look at it. The tall one there, of course, that is the Willis Tower, used to be the Sears Tower. And then the new Trump Tower, which is not far behind. It is a skyline that is famous and instantly recognizable. What the height of the skyscrapers barely scrapes is what surface of architecture means to the Windy City. Tonight, as indeed throughout the month of September, it is Chicago that is our Future City.
QUEST (voice over): The skyline of Chicago, immediately identifiable, totally unforgettable. It's stunning structures reaching to the sky, beckoning a future of even bigger, better buildings.
JEANNE GANG, ARCHITECTURE: Well, architecture in Chicago is really well-known. It is kind of the identity of the city. But it is an identity of strong structures, industrial infrastructure, bridges, tall buildings.
QUEST: Chicago grew up in the Midwest, forming around Lake Michigan, as America continued to stretch west it became the halfway point of the country; acting as a transportation hub, drawing in an industrious labor force that gave this city a backbone based on hard work. The city today is a reflection of that work. It's amazing feats of engineering, whether the skyscrapers, the bridges, the river, or the railways, make Chicago a classic.
The renamed Willis Tower, the CNA, the diamond-shaped Smurfit-Stone, the new Trump, Prudential, the Aon, and the Hancock.
(On camera): Today Chicago's skyline seems determined to remain at the forefront of groundbreaking skyscrapers.
(Voice over): With every new brick laid, Chicago continued its tradition of original groundbreaking architecture. In this city the buildings are a point of pride and are expected to make people stop and stare. Jeanne Gang is one of the latest architects to take on this challenge with her new building. It is the talk of the town. It is Aqua.
GANG: One building kind of contributes to the skyline, and it has almost creates a dialogue with the other structures that are around it. Aqua kind of, in a way it is a continuity with them in that it is made out of concrete and glass. It is curva-lineal (ph) lines in the way that you perceive aqua from an oblique angle, it makes it just really come alive in three dimensions.
QUEST: The legacy of architecture here is actually something that grew out of tragedy.
(On camera): In 1871 the Great Fire destroyed much of Chicago. This water tower is one of the few buildings that survived. The fire gave the city a chance to rebuild from the ground up. The plan was, create something bigger and better.
(Voice over): With Chicago now a blank canvas, young architects like Frank Lloyd Wright flocked here, knowing it could be their chance to make their mark.
(On camera): This is the studio where Wright did the designs for the Prairie Style for which he became so famous. Wright recognized the relationship between Chicago and architecture, saying that eventually, I think, Chicago will be the most beautiful, great city left in the world.
(Voice over): More than 100 of Wright's houses are still around Chicago. His most famous, the Robie House, exists as a reminder of not only of what Chicago has accomplished, but of what is yet to come.
(On camera): How important is Wright in cementing Chicago's position in architectural development?
DAVID BAGNALL, FRANK LLOYD WRIGHT PRESERVATION TRUST: Absolutely. Well, the Prairie Style is the first truly American architectural style. And to give you and idea of the significance of Robie House, it was the first building in the United States to be declare a national historic landmark, based purely on architectural merit, rather than the significance of what happened here or who lived at the site.
QUEST (voice over): Chicago has always been an architectural lab. The first steel-frame skyscraper was born here, in 1884. The evolution continued with buildings that set the tone around the world.
To see this at full-throttle, Tim Samuelson is giving me a history lesson.
TIM SAMUELSON, CHICAGO CULTURAL HISTORIAN: That was what was built after the Chicago fire.
QUEST: And showing me the scale of Chicago's influence.
SAMUELSON: The Monadnock is an interesting part of the history of the skyscraper. It is one of the early generation of high-rise skyscrapers that really set the stage for the introduction of the skyscraper to the world.
QUEST (on camera): So, we have these glassed, the fully glassed, the partially glassed, and what you say is where it all started. Tell me about that one?
SAMUELSON: That is the ancestor of all of those. This is the pioneering glass skyscraper, the granddaddy of the glass skyscraper you see around the world. It is really a building where they had the guts to make more window than wall.
QUEST: You were saying about when architects design, even today, in Chicago.
SAMUELSON: They need to be on their best behavior. After all, Chicago is noted for its architecture, kind of a dynamic, unconventional, buildings that don't always follow the rules. So, you really have to kind of watch what you do. Not only you have the city's reputation at stake, but you have your own reputation as an architect as well.
QUEST: Is that still as true today, do you think?
SAMUELSON: Oh, I think, absolutely. Chicago really pays attention to its architecture, the people who kind of look at the preliminary plans, they look at it as well. Even if you know nothing about architecture engineering, you somehow feel the buildings that there is something here.
QUEST: Relying on its foundation of innovation, infrastructure, engineering, and the overall desire to be the workhorse America and the world needs is what ultimately led Chicago in its architectural future.
QUEST: Throughout the month of September we are in Chicago, which has to be, A, one of my favorite cities. And, B, one of the most spectacular cities, as you saw from that report and from the architecture.
When we come back in just a moment, we are staying in the United States, where it is Labor Day. And President Obama is marking the holiday celebrating the working man and woman. We'll be talking to the head of the world's second largest recruitment firm about the state of the global labor market. QUEST MEANS BUSINESS, good evening.
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QUEST: Hello. I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And on this network, the news always comes first.
The European stock markets took a terrible nose dive on Monday. The worries about the Eurozone debt crisis pushed the major indices deep into the red. The German DAX fell the most, more than 5 percent. The continent's biggest banks led the decline. Shares in the lenders off by 8 percent in some cases. Five European banks are facing multi-billion dollar lawsuits in the U.S. over allegedly missold mortgage investments.
China is denying a report that it offered to sell at least $200 million worth of weapons to the Libyan leader Moammar Gadhafi toward the end of his rule. But a senior member of Libya's transitional government says the documents are the real deal. They were obtained and published by a Canadian newspaper. The alleged sale would have violated a euro treaty banning such transactions.
The U.N. now says the famine in Somalia has spread to a sixth region and that the crisis there could grow even worse. Officials say a record four million people in Somalia need humanitarian aid. Seven hundred and fifty thousand people are in danger of imminent starvation.
A French court will continue and proceed with the trial of Jacques Chirac, even though the 78 -year-old former French president won't be attending. A medical report says he's too sick. Former President Chirac is accused of paying members of his party for non-existent jobs in Paris when he was mayor of the city.
Today is Labor Day in the United States, which is traditionally a time for speeches that celebrate the American worker and the labor movement.
Is there anything to celebrate in 2011, with so many people out of work and seemingly so little job creation?
President Obama is in Detroit, where he's speaking at a union rally marking the holiday. Recent polls have shown voters are increasingly concerned about the economy and Obama's handling of it. Today's speech comes ahead of an address on jobs that the president gives to both houses of Congress.
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BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The time for Washington games is over. The time for action is now. No more manufactured crises, no more games. Now is not the time for the people you sent to Washington to worry about their jobs, now is the time for them to worry about your jobs.
(END VIDEO CLIP)
QUEST: Now, there was some very bad news on the jobs front for the president on Friday, when, of course, no new jobs were added to the U.S. economy last month, zero jobs. And the unemployment rate remained stable.
Jessica Yellin is in Detroit with the president -- good afternoon to you, Jessica.
Look, a very simple question. The president is running out of time because of the lag that it takes to get these numbers moving in the right direction.
JESSICA YELLIN, CNN NATIONAL POLITICAL CORRESPONDENT: He's running one of them. He knows that, Richard. At this point, it's about proposing to the American people -- proving to the American people that he at least has a plan to do something, which means right now, Richard, it's about politics.
As you know, he's delivering a speech Thursday night where he will lay out that plan. And today, he was essentially test driving a message that says I'm laying out my plan, if there is no action, blame the other side, blame the Republicans for not getting it done in time to get jobs by next year.
QUEST: Where at the moment -- your gut feeling, Jessica. You study this morning, noon and night. Where, at the moment, do the American people blame for the lack of jobs, a president of three years or a Congress that's just changed hands?
YELLIN: You know, the -- I can tell you that the polling actually shows that there is a considerable amount of blame still on the Bush administration, believe it or not. So that Americans do see that there was a -- excessive -- they were spending on multiple wars, on the tax cuts, etc.
But there's, beyond that, a general disgust with Washington that goes beyond Democrat, Republican, Congress, president.
It's just the shrugging of shoulders, why can't these people get anything done?
We go to work every day or try to find a job and they're fighting, which is not good for either party because it means people either don't go to the polls and they don't vote or they're just simply so disgusted that their vibe is throw out the incumbents, whichever party it is, I'll vote for somebody of the other party to try for a change, which bodes ill for anyone who is currently an office holder -- Richard.
QUEST: You and I we'll talk much more about that, not only this which, but in the weeks ahead.
Have a good trip back to Washington, Jessica, who -- Yellin, who is in Detroit tonight.
Unemployment in the U.S. is running at just over 9 percent. In the eurozone, it's even worse, 10 percent. Now, for a look at the global loan market, I'm joined by Ben Noteboom, the chief executive for Randslad, the world's second-largest recruitment company.
You were trying to tell me before we started that things may be bad, but they're not that bad.
BEN NOTEBOOM, CEO, RANDSLAD: Yes, first, if you look at the U.S. numbers, indeed, the stable unemployment is at least not deteriorating.
NOTEBOOM: If you look one level down, it could be. If you look one level down, then you see that 550,000 government jobs have disappeared. And they have obviously been replaced by jobs in the private sector. So that at least is a positive development.
But of the risk, obviously, I agree, but the risk is more in the financial system, I'd say, than in the real economy today, because we still see, in all markets -- and we are present all over the world -- that most economies are doing reasonably -- even very well.
QUEST: But those who are looking for jobs are not only fighting the unemployed -- the other unemployed, the underemployed, as well, which you will be familiar with. And we're not yet seeing companies dramatically or systematic -- systemically increasing hours worked, increasing average hourly wages. There is a small uptick, but not the sort that you do have to get before they then feel they've got to bring on new workers.
NOTEBOOM: Now, again, we're talking only the U.S. now, I guess, because if you look across the globe, then you'll see different pictures per country. And, yes, we do see (INAUDIBLE) that in -- in certain segments of the market, there is growth. For example, health care, IT is growing. Automotive has been growing.
So for sure, there have been sectors that have been doing very well and also -- are still doing reasonably well.
So I'm a little bit less pessimistic. The way we think, again, is -- is if the financial system would -- would collapse, then, indeed, we have a huge problem.
QUEST: So when you hear me tonight reporting that the DAX is off 5 percent and we don't know what's going to happen when the New York market opens tomorrow, that's the sort of news that influences people, CEOs, hiring managers, when they're talking to you and they tell you.
NOTEBOOM: They get worried about it, about all the -- all the bad news about Greece, about California, about Spain, etc. Etc. So that's what makes people worried. And we've had this -- this news now for a long time. Now we have these endless discussions, for example, in the U.S., between the Republicans and the Democrats.
That sort of uncertainty is bad for the market and in the end, will become self-fulfilling prophecy.
QUEST: Well, let's look at Europe. And we're talking about bad news and self-fulfilling prophecies. Ten percent unemployment, a sovereign debt crisis, certain countries with and will be in recession for most of 2011, possibly, Greece, certainly, for one. And no seeming end.
Ben, you can't surely be optimistic for the European job creation machine?
NOTEBOOM: I'm worried about the fact that the politicians, obviously, have to make clear and transparent what's going to happen fast. And we should stop arguing about this party and the next election, etc. I think there's -- there's -- there's a bigger interest here that needs to be -- that needs to be taken care of. And there's developing of the economy and the euro.
We see, of course, also, in Europe, that we have very prosperous areas...
QUEST: But they could be taken down.
That's the problem, isn't it?
I mean we do -- you're right. The northern countries, the Nordic, the Scandinavian, many other country -- Germany is the one, for example. But the -- the risk seems to be on the down side.
NOTEBOOM: Yes, today, because of all the bad news, indeed, and the uncertainty.
QUEST: Yes, right.
NOTEBOOM: It might be on the down side. Again, in the real economy, we don't see it happening yet. We had five consecutive quarters of double digit growth. We shared with the market of July, we saw this entrance. And I still didn't get any profit (INAUDIBLE). So obviously we're still trending about the same.
So if you look at -- at the labor market in general, lots of things are happening. But if you look at the news, indeed, you might get very worried.
QUEST: So what you're telling me -- and -- and I don't want to misrepresent the views or -- or at least paint a picture that's (INAUDIBLE)...
NOTEBOOM: You would never do that.
QUEST: Right. You know what I mean.
NOTEBOOM: I do.
QUEST: But what you're telling me is there are jobs there. There are jobs there and the situation is not as awful as -- as it might seem at first glance.
NOTEBOOM: Originally -- of course, it is bad. And certain parts of Spain, the southern part, unemployment is very high. Youth unemployment is extremely -- is extremely high. And the high, around Munich, unemployment is down to 3 percent again. So they are desperate for people and can't find them and have to go abroad, stretching to the east.
So there's two sides of the equation. And in general, on average, it's more positive than negative, again, assuming that we don't have a system problem, because that's something that, of course, no business can control.
QUEST: You have -- you're a glass half full man tonight.
NOTEBOOM: Yes. Always.
QUEST: Many thanks, indeed, sir.
NOTEBOOM: Thank you.
QUEST: Now, when we come back, the prime minister says gas could be a game-changer for Lebanon.
But will political instability derail plans to rejuvenate the economy?
Najib Mikati after the break, the prime minister of Lebanon.
QUEST: Lebanon has complained to the United Nations about Israel's border plans in the Eastern Mediterranean. The area could be rich with oil and gas reserves. It gives a new meaning to there's oil in them there hills. In this case, it's under the water.
Lebanon says the Israeli plans could threaten peace in the region. Oil and gas could potentially transform Lebanon's economy. It could transform all actors in the region.
I spoke to the country's prime minister about this a few weeks ago when I was there for Future Cities.
I began by asking the prime minister if political instability in Lebanon, never mind oil and gas, political instability was already doing economic damage.
NAJIB MIKATI, LEBANESE PRIME MINISTER: I believe people, they get use for this. And this, let's say this chaos in politics -- and always, we are talking about dialogue, political disputes and so on. But also, we have to see the normal citizens, the average citizen, they need to live. And we -- we -- all the statistics showed from the day we formed this government up to date we have more tourists, we have -- we are 10 percent more passengers in the Middle East Airlines than last year, from (INAUDIBLE) to the last year, what the -- the develop -- becoming a kind of a supply in the market. And we have a balance between our foreign currency and the local currency demand.
The last issue of (INAUDIBLE) brings it was the surplus in the demand for Treasury bills that's -- all this is an indication that we are on the right track.
QUEST: But there is a crisis or there is a question of confidence that -- that goes to the core of political instability.
MIKATI: Definitely, it exists. I cannot deny it or say it doesn't exist. But -- but as a role today, the most important is to create stability in the country. If we have this level of confidence, of a method of different opinions, it is the right freedom of -- of opinions and freedom of speech. I don't mind at all.
But the most important that this will stay inside the institutions, inside the parliament, inside the government so -- inside the political parties, not in the street. And this is very important.
QUEST: All the countries of this region, your southern neighbor, yourselves, Cypriot, you all have the potential now, with gas deposits, for quite a -- a shift, frankly, in economic realities, providing you don't get it wrong, providing you manage to make the most of it.
MIKATI: Well, we do. And definitely we are going to manage it very well. And for this reason, we are trying to create this economic zone properly. And as to respect the others and as a condition the others will respect our zone and will respect us from south, north and east.
QUEST: So -- so you accept, then, there is going to have to be through the United Nations process?
And I know there are two -- there are the Arab plans and the Israeli plans on the table. You put your own plans forward.
But you accept this is going to have to be settled through a negotiation and not, as was quoted, by -- by some -- some members of parliament who say that the Israelis will not be able to dig a meter deep?
MIKATI: What we are trying to do, what -- whatever in a diplomatic way, we have to do it. We are going to do it properly. First, we have to finish our negotiation with this Cypriot -- the Cypriot government. And then that we complete this what -- whatever is our duty and whatever is our borders.
(END VIDEO TAPE)
QUEST: The prime minister of Lebanon, talking to me earlier in the summer. now, on this program tonight, we've looked at how Lebanon and Chicago are rebuilding.
What about an island with a difference that's also doing the same?
A little island, well, Coney Island. The famous New York fun fare is in need of an upgrade.
We're off to the fair ground. All aboard, after the break.
QUEST: The fair ground, the fun, of course, the hot dogs, the countless childhood memories that can all be traced back to Coney Island in New York. But after a century of business, not to mention a hurricane, the glamour is starting to fade.
Some people say Coney Island is very down at heel.
Well, it can't be that down at heel. You can never get Felicia Taylor going somewhere like that.
No, we sent Felicia to Coney Island to see how the good times are just around the corner and will roll for another hundred years.
UNIDENTIFIED CHILD: Right in the beginning, it's like it just stops and then just like speeds up. And you feel like your stomach is about to fly out of your body. It was really fun.
FELICIA TAYLOR, CNN CORRESPONDENT (voice-over): The historic Cyclone and the Wonder Wheel aren't the only game in town at Coney Island anymore. A new generation of gut-wrenching rides are now getting rave recovers.
(on camera): This is the Scream Zone. And all these new rides are part of a multi-year redevelopment project of Coney Island. The city of New York is putting more than $150 million into this project, hoping that it will generate thousands of jobs and billions of dollars in new economic activity.
I understand that there's about 400,000 to 450,000 people that come to the Coney Island Amusement Park.
Where would you like to see those numbers go, ideally?
FERNANDO VELASQUEZ, GENERAL MANAGER, SCREAM ZONE: Oh, our expectation is to grow at least 30 percent every year. It's audacious, but we are here to make it happen.
TAYLOR: So here I am with, as he likes to be referred to, the permanently unelected mayor of Coney Island, otherwise known as the unofficial mayor.
Mr. Mayor, you're going to take me through a little bit of the history of what this island really is all about.
DICK ZIGUN, "UNOFFICIAL" MAYOR OF CONEY ISLAND: Delighted to.
This is a photographer of Luna Park when it opened in 1903. In a day and age when people had not seen a light bulb before, this was magic.
TAYLOR: There's a lot of actual construction happening right now in Coney Island. I mean things are really beginning to change in this neighborhood.
ZIGUN: Radical change and rapid change. Right across the street, this Coney Island Furniture building, next year will be an Italian restaurant. Government stimulus works.
TAYLOR: So we're taking the past and bringing it into the future and redefining Coney Island.
ZIGUN: And doing a great job of it.
TAYLOR: And that's going to be an entertainment complex?
ZIGUN: Well, it's now zoned for a two story entertainment complex -- movie theaters, bowling alleys, nightclubs, bars, restaurants.
TAYLOR (voice-over): But changes do have a down side.
VELASQUEZ: Well, I've been here at this particular place 42 years. It looks like this is the end.
TAYLOR: In the heart of the boardwalk, redevelopment is forcing the shutdown of vulnerable small businesses.
(on camera): Tell me about that photograph up there.
VELASQUEZ: It tells you how it used to be, you know.
TAYLOR: The good old days.
VELASQUEZ: The good old days is right.
ZIGUN: So I'm going to miss some of my friends and great families that have run small businesses. Cha-Cha's Bar, I will miss the old...
TAYLOR (on camera): But what will say to you...
ZIGUN: I'm going to miss the old businesses, but I'm going to be thrilled with the new ones.
TAYLOR: Coney Island may be going through a state of renovation and certainly there are plenty of projects happening next to us. But there's one thing that hasn't changed since 1916 and certainly attracts a lot of customers and that's the Nathan's Hot Dogs. I got the original.
(voice-over): Nathan's is part of Coney Island's past, but the new rides are part of the future.
What's your favorite ride?
TAYLOR: Let's go. Got to do it.
TAYLOR: Oh my god, I can't believe what you're going to do to me.
Did I mention that I have a fear of heights?
I'm not kidding, I'm really trembling. I'm so glad you're not afraid -- ah!
Oh my god.
VELASQUEZ: This is (INAUDIBLE).
TAYLOR: No. No.
VELASQUEZ: How are you?
Are your knees shaking, trembling?
TAYLOR: Completely. I don't know if I can walk.
ZIGUN: And these new rides are exciting. I'm optimistic. And I just want to keep building, building, building.
TAYLOR (voice-over): Hope, you could say, is soaring on the boardwalk.
Felicia Taylor, Brooklyn, New York.
(END VIDEO TAPE)
QUEST: She actually went on that ride after having a hot dog. Well, I can only imagine what was going to happen when the cameras stopped rolling.
The weather forecast now.
Jenny Harrison at the World Weather Center -- I -- I'm more of a dodge 'ems car person than those things that wheel around and run off on there, yes.
JENNY HARRISON, CNN METEOROLOGIST: Yes, I know, I've seen you driving. I can well imagine why...
HARRISON: Yes, I have. Yes, yes, I know about your driving. And I have to say, I was assuming that Felicia had the hot dog after that ride, which, Richard, because otherwise, yes, it wouldn't...
HARRISON: -- it wouldn't have been a pretty sight.
At least, I'm going to start with weather in the U.S., because, of course, we're talking about the remnants of what was Tropical Storm Lee. And this has been such a slow-moving storm. It came onshore finally on Saturday. And all of this rain has to do with it. And you can see these red boxes. That is because we have got some tornado watches in place. There have been some tornadoes reported.
But really, it's the rain that's coming down with this storm system.
So since Friday, these are the totals that have accumulated across the South, New Orleans there at close to 300 millimeters in the red -- (INAUDIBLE) the red. The yellow figures you can see. That is exactly what has been forecast.
So, in some cases, a little bit more than that, because, as I say, it's such a slow-moving system. It's going to work its way through the Southeast, but very, very slowly. And, really, by Tuesday, it will have only just got up into Tennessee, as you can see there. And, of course, some very heavy amounts of rain because of just how slow-moving it is. All the moisture coming up from the Gulf of Mexico.
So there are some warnings in place, for more strong wind at times, but mostly very heavy rain. And, of course, it could, again, at times, actually form a -- form these tornadoes, as well. But the flood warnings are extensive, pushing all the way up into the Northeast.
Of course, the ground here is still saturated from just last weekend. And then the storm, as I say, is so very slow-moving.
But the rain that's coming in over the next 48 hours, it will work its way through the Southeast. By the time it gets up toward the Northeast, it won't actually be quite as heavy, which is a very good thing.
Then we're still monitoring very closely the system out in the Atlantic, way out there, but it is now, of course, a hurricane, Hurricane Katia. This has got winds right now about 176 kilometers an hour.
We could see some more strengthening. You can see the general direction. It's heading up toward the northwest, but moving quite well, at about 20 kilometers an hour. And this is all the different confusion models showing the forecast track. So kind of curving in between Bermuda and the East Coast of the US. But you know that it's several days away and these forecast tracks can, indeed, change. So we'll just monitor this very, very closely to see exactly where it does get the closer to the land it gets.
Now in the wake of all that rain across the South, which I have to say, much needed, this rain, across the Southeast of the US. Temperatures and a little bit lower, so 27 in Atlanta, 22 there in New York and just a degree lower in Chicago.
Now, talking of low temperatures, there have been lots of complaints about the lack of summer across much of Europe. There's some more rain coming in, some heavy rain at times and thunderstorms. These are the red and yellow areas.
And, again, Germany is seeing quite a few scattered thunderstorms, as well.
But the winds are on the increase, pushing in from the northwest. Those are the current speeds, getting on for 40 kilometers an hour.
So this is where -- it's the next system, windy and wet. And it will also be cooler, as well. You can see that the shading of the green. So definitely feeling like autumn.
But just in case, Richard, you were perhaps thinking it's been very, very cool throughout the summer months, well, June to August, the U.K. met off, as you can see, how far below average, though Scotland had been seeing pretty chilly, but really not that bad elsewhere, as you can see. Just a couple of degrees, at worst, below average.
QUEST: Far worse.
All right. Many thanks, miss. Harrison.
We appreciate that.
Jenny Harrison at the World Weather Center.
I'll speak to you tomorrow.
Let me remind you quickly of the markets and how they traded. A pretty awful day on the markets. The worst losses in Europe today. The DAX, which was off more than 5 percent. The FTSE down sharply, as well. It was bank stocks that got absolutely creamed. RBS down 12 percent; Deutsche down 7 or 8 percent. Wherever you look, it was a grim day.
When we come back in just a moment, it's a Profitable Moment on what comes next.
QUEST: Tonight's Profitable Moment.
It was a horrible day on the European markets. The DAX off 5 percent. Banking shares, like RBS, down 12 percent. SocGen in Paris off 8 percent.
Wherever we looked, whatever you saw, there was gloom.
Wolfgang Munchau, writing in today's "F.T." Says, "When we talk about Europe, the worst of the euro crisis is yet to come." and what's even worse, nor is there much consensus on what needs to be done. Christine Lagarde at the IMF is calling for more stimulus, or, in her language, growth intensive measures. Yet the German finance minister, Schaeuble, believes quite the opposite, saying: "Government need not just to commit to fiscal consolidation, they need to start delivering now."
So, when even the captains of the good ship global economy don't agree, no wonder the markets are going down. And some say the worst is yet to come.
And that is QUEST MEANS BUSINESS for tonight.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I hope it's profitable.
"PIERS MORGAN TONIGHT" is next after the headlines.