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QUEST MEANS BUSINESS
Urgent Conference Call Between Merkel, Sarkozy, Papandreou Meant To Calm Market Fears In The Eurozone; Sir Martin Sorrell Discusses China's Continued Growth Trajectory, Doubts A Renewed Recession In U.S.; Geithner on Europe; U.S. Stocks Sharply Higher; Athens Taxi Strike; Patterns and Profits; Europe's Biggest Shopping Mall
Aired September 14, 2011 - 14:00:00 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: Three leaders, one phone call, what did they decide?
The Chinese premier tells Europe put your own house in order.
And cutting where it hurts. Societe Generale and Credit Agricole, downgraded.
We're all about Europe tonight, and Eurozone crisis. I'm Richard Quest. I mean business.
Good evening.
Let us begin tonight with pointing out to you and reminding you where we stand just two days before a crucial meeting of finance ministers in Poland. Before we bring you the detailed coverage of what is taking place, here is what you need to know about the day's developments.
German Chancellor Angela Merkel, French President Nicolas Sarkozy, the Greek Prime Minister George Papandreou, have just completed their conference call on Greeks' deepening debt crisis. Contagion is seeping further into France. Moody's has downgraded SocGen and Credit Agricole on their Greek exposure to debt. And political leaders inside, and outside, the Eurozone have been trying publically to boost confidence. Those are the developments today.
Let's begin straight away with the call between the three leaders. Angela Merkel, Nicolas Sarkozy, and the Greek Prime Minister George Papandreou.
Diana Magnay is in Berlin for us tonight.
Do we know-I'm starting to see the first reports on the wires, Diana. What is your understanding in Berlin of what took place on this call?
DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT: Hi, Richard. Well, I've actually just got the press release from the chancellor's spokesman, which gives a summary of what they spoke about. First of all, the French president and the German chancellor apparently said it was a more than ever, imperative to make sure that everything that was agreed on by EU heads of state, on the 21st of July, should be put into practice.
Also that Greece must put into action and complete on the promises that it had made to Eurozone members and to the IMF to get the next traunch of funds, if it doesn't complete-carry out on those promises, complete on those promises, it won't be getting any more funds. And apparently the Greek Prime Minister George Papandreou said that his government was absolutely committed to continuing with those reforms, to enable more funds to come through.
And then finally, the last thing that they said is that Greece must and will stay within the Eurozone; that the stability of the Eurozone is dependent upon Greece remaining a part of it. So that is the summary of the telephone call which has just been completed, between the French and the German heads of state, and the Greek prime minister, Richard.
QUEST: As I am just reading the various wire copies now, of that report, which is-which pretty much will say just what you have reported- Diana, how important, at least from Germany's point of view, will these fairly anodyne statements, like convinced Greece belongs in the euro, remaining a part of the Eurozone, will commit to the July decisions. What will they make of that in Germany?
MAGNAY: Well, right now the chancellor is trying to basically give reassuring signals to the markets because in the past week even members of her own coalition, the junior coalition partner, the FDP, having been coming out with statements suggesting that Germany is busily preparing for the possibility of a Greek bankruptcy or a Greek default. And so the Germans chancellor has been doing her utmost to really kind of do damage control on that. And to say this is simply not the case, we will continue to pressure Greece to make sure that it carries out these reforms.
So, I don't think you were ever going to be expecting the German chancellor, the French president, to come out with anything particularly dramatic as a result of that phone call. Because they know that any drama is only going to antagonize and roil the markets yet further. And that is exactly what they are trying to avoid at the moment.
QUEST: Diana Magnay, with the very latest in Berlin for us tonight. So what has happened during the course of the day that lead up to this call? As the paint cracks on the picture of a united Europe, key players have been speaking in dire terms about what the situation is. It has been 18 months since the start of this crisis of debt. There has been a lot of talk but not a huge amount of action.
If you'll join me in the library, you'll see what I mean. Let's start with the Europeans. What did they speak? President Barroso, the president of the commission; he was speaking at the parliament in Strasburg. He said that the European Commission will soon reveal options on how to introduce Euro bonds. You'll remember this is where they collectively all guarantee the bonds. Some of said that is the end of the process, not the beginning. But continuing that theme, he said tighter integration was the future.
(BEGIN VIDEO CLIP)
JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: We are confronted with the most serious challenge of a generation. This is a fight for the jobs and prosperities of families in all our member states. It is the fight for the economic and political future of Europe. This is a fight for what Europe represents in the world. This is a fight for European integration, itself.
(END VIDEO CLIP)
QUEST: If it was just a matter of Europe it would be serious but not catastrophic. But the one thing we have learned from 2008 is the transmission mechanism of global risk. Which is why today Tim Geithner, the U.S. Treasury secretary attending-announced that they would attend the EU financial ministers, Fin Min ECOFIN (ph), on Friday, in Poland. And in a speech today, on-told CNBC television, that frankly, the Europeans must try harder to contain the crisis.
(BEGIN VIDEO CLIP)
TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: There is no chance that the major countries of Europe, will let their institutions be at risk in the eyes of the market. There is not a chance.
UNIDENTIFIED MALE: Take off the table, Lehman (ph)?
GEITHNER: Of course not. There is not a chance. In fact, I remember, the chancellor of Germany saying to the president of the United States, repeatedly, in private meetings, but she said this in public. She said, we are not going to have a Lehman Brothers. We are not going to do it. And obviously, I think, she recognizes that they have to do some work to make sure that they make that commitment credible to the world.
(END VIDEO CLIP)
QUEST: The U.S., the Europeans, now China, too, also getting involved today. Wen Jiabao opened the World Economic Forum in Dalian, in China, and expressed concern over Europe. Keeping keen to invest, although one has to say a lot of talk about investing, but where is the money? However, Wen Jiabao says Europe only gets the money-and it has to-following on the theme, "get your house in order".
(BEGIN VIDEOTAPE)
WEN JIABAO, CHINESE PREMIER (through translator): We need to boost confidence, strengthen cooperation, and live up to our responsibility. We should strengthen dialogue and coordination on macro-economic policy and accelerate the building of a just, equitable, sound and stable new world economic order. Governments should fulfill their responsibilities and put their own house in order. And major developed economies should adopt responsible and effective fiscal and monetary policies and properly handle debt issues.
(END VIDEO CLIP)
QUEST: So, those are the major speakers in the financial world and what they have to say. We saw a prime example of how Greece's financial problems bubble over into the wider economy. Moody's downgraded two major French banks, Credit Agricole and BNP Paribas, because of their debt. Credit Agricole's long-term debt rating was down one notch, to AA2. And Moody's says the new rating is more in line with the sizable exposure to Greek economy.
Societe Generale was reduced also. Long-term ratings as you can see there. Shares fell, didn't wipe out the huge gains they made on Tuesday. Soc Gen down 2.8 percent, Credit Agricole down 3.9 percent.
Jim Boulden, it's exhausting.
JIM BOULDEN, CNN BUSINESS CORRESPONDENT: It is. It is. You know, we have been waiting to hear, we knew this was coming, the bank downgrades.
QUEST: Right.
BOULDEN: We were warned about that in July. It wasn't actually as bad as some people thought. And it only takes them down to Deutsche Bank. So that is not so bad necessarily.
QUEST: Let's got through some of these.
BOULDEN: Hmmm?
QUEST: Despite recent reports, all agreed, on this conference call, that Greece will remain part of the Eurozone.
BOULDEN: I think we didn't hear anything new, but what we needed to hear was that nothing had changed in the minds of the politicians. They are still sticking to the guns that the euro will survive. That Greece will meet its obligations. That Germany and France will do whatever it takes to keep the Eurozone together and to keep Greece from defaulting. That is how I read the statement.
QUEST: Papandreou, Merkel, Sarkozy, fully behind July summit decisions.
BOULDEN: Yes, I remember that summit very well. You and I were on air for hours, weren't we?
QUEST: Absolutely.
BOULDEN: We talked for time and time, for hours about-what Greece was able-
QUEST: It's talk, Jim. It's talk.
BOULDEN: Of course it's talk. We knew-I was surprised there was even a statement. I thought an hour ago there wasn't going to be a statement. So they told the markets that we are not entering a new phase. So, we'll have to see how the markets digest that. But at least it means that they are talking and they said to each other, let's keep the course that we're going on now. Let's get the-all the implementation, everything we're promising implemented, and let's keep moving forward.
QUEST: Proving this is not only live television but this story is moving fast and furious.
(DESK BELL CHIMES)
Let's look at the Dow Jones, if we can. The Dow Jones is up 149. A gain of 1.3 percent. Significant part here, we can't see the graph of the day, or the hours. But you would see, if we could show that later in the program. You will see it is only in the last hour or so that the Dow has rocketed up more than $100 points.
BOULDEN: Aren't we looking at-what, possibly three days in a row of seeing markets in positive territory. I'm not sure if that is the Dow, or Europe, or both?
QUEST: And there we are. You can see on the screen now.
BOULDEN: Yeah.
QUEST: That very sharp gain in the last hour, as the news is coming out from Greece-uh, from this call-with a feeling that things are going- something is getting done. Is this a false-
BOULDEN: I don't know that anything is getting done. I think what people-what Merkel and Sarkozy continually are saying is we are on top of this. The markets don't believe them.
QUEST: Well, they clearly do believe it.
BOULDEN: Well, OK.
QUEST: Today, they do.
BOULDEN: But are they on top of it?
QUEST: Ah!
(LAUGHTER)
QUEST: That is a different dimension. One other thing, I'm just throwing this stuff at Jim. He's got no idea what is about to come his way. Reuters news agency, tonight, reporting-(DESK BELL CHIMES)-"Italian parliament gives final approval to austerity package".
BOULDEN: Yes, that is the kind of things the markets need to see. Is the promises made on July 21, the promises made by Berlusconi, and then backtracked, and then pushed again into it, that the governments are passing these austerity measures. Now we need each of the parliaments to agree to expanding this euro debt, bailout fund, as we have been talking about. And we need to see Germany do that in the next coming weeks. And we need to see more positive words out of Poland on Friday when all those finance ministers get together with Mr. Geithner, to say that we are not going to allow Greece to go into default.
QUEST: Jim, we'll leave it there for the moment.
BOULDEN: Yes.
QUEST: There is only so much that we can take in one go.
(LAUGHTER)
All our Christmases at once, the markets are up.
The crisis has snowballed. And for months, years, why are things finally coming to a head today? The question comes next to a former central bank governor. In a moment.
(DESK BELL CHIMES)
QUEST: As you can tell tonight the sense of urgency is palpable. The whole Eurozone is looking to Friday's meeting in Poland. The Euro's very future, well, it is certainly, if not exactly in question. There are worries about the strength of a currency being used by more than 200 million people.
Professor Charles Goodhart is a former member of the Bank of England's Monetary Policy Committee. I asked him what had happened to make Europe's alarm bells ring that much louder.
(BEGIN VIDEO CLIP)
CHARLES GOODHART, FMR. MEMBER, BANK OF ENGLAND MPC: It has actually been getting worse since July. The thing that really triggered it was when Berlusconi appeared to tell Tremonte that he wasn't going to go through with the austerity in Italy. And then suddenly the market turned on Italy and Spain. And that was the major change.
Since then the only thing one can say like most of the rest of this crisis it has been getting steadily worse a bit at a time. And what has got worse most recently is that the crisis has moved from countries like Italy and Spain to France and the French banks.
QUEST: What's the fear? If every Greek bond went south, it is still less than 5 percent of the total Eurozone GDP. It is still manageable for the banks with recapitalization from national support. So what is the fuss?
GOODHART: The fear is contagion. The fear is that the crisis goes from the Greek sovereign, to the Greek banks. That there would be difficulties in keeping the Greek banks afloat under these circumstances. And people might get fearful about their deposits, not only in Greece, but in other countries under pressure.
QUEST: We know that Greece is going to have a selective default under the July 21st agreement. That much we already know. So, default per se is already on the table. What are we really frightened of where that is concerned?
GOODHART: Well, it is a question of how far the default will go and whether it is an orderly default, disorderly default. We really don't know how this is going to play out. And, in particular, we don't know how this is going to affect the Greek banks.
QUEST: So when we hear President Barroso, saying today, enough time of words, time now for action. And we hear Angela Merkel saying, we must all be very careful with our words. What does-what's got to be done? Because we have been at this now for nearly two years; what do they need to do?
GOODHART: Well, one of the problems is there are different views about what the ultimate development in Europe ought to be. Martin Wolf has got an excellent column in the "Financial Times" today. It says that there are at least two views about where Europe ought to go. One view, is that the Eurozone, the single monetary union, ought to be restricted to a much smaller group of northern countries. And that the southern countries ought, actually, to be encouraged to pick up their bags and leave gently. Another view is that the present existing euro ought to be protected. And if that involves more inflationary measures, or greater monetary expansion, so be it.
QUEST: On the question of what happens to the Eurozone and the Euroland, what do you think should happen?
GOODHART: I think it is going to be quite difficult to see the Eurozone continuing in exactly its present form. Now what form it will be taking over the next few years, I don't exactly know. There will be a Eurozone, but it won't necessarily be exactly the same Eurozone as it is now.
QUEST: But you would accept it is just about-it is theoretically possible for Greece to leave the Eurozone. As it is, indeed, for any country, theoretically; but the practicalities make it just about impossible. And all these people who talk about Greece should leave the euro, have got no idea of actually it would come about.
GOODHART: Yes, but the practicalities of trying to rescue Greece, within the Eurozone, without imposing an unacceptable burden on the German taxpayer are also equally difficult to imagine that they will come about. I mean, everything, whichever way you look at it, it is almost impossible. That is why it is such a difficult crisis.
(END VIDEOTAPE)
QUEST: Professor Goodhart, talking to me earlier on the question of the Greek crisis. I'll update you with the latest developments on that in the headlines, just about 10 minutes from now.
Is the world relying too much on China? After the break.
(COMMERCIAL BREAK)
QUEST: Now, let's look at China, which is saying it will invest more in Europe for a price. As we touched on earlier when we said Win Jiabao wants to help prevent the further spread of the European sovereign debt crisis. In return, he said he'd like Europe and the World Trade Organization to afford China market status. That is a technical phrase, which implies trade benefits; market economy status, sooner rather than later.
At the super screen, you can see what we are talking about. When we look at Europe, for example. On Europe, he said countries must first put their own houses in order. Well, we are all aware of what he said and how he meant it. China has said it will assist in bailing out the European debt crisis, it has said it would make investments in Greece and elsewhere. So far one has to say the talk has been there, the promise, not necessarily. On the United States, he talked about hope. He said the U.S. economy, it can recover its strength-which I suppose is a good thing since they've got $2 trillion in U.S. government bonds. But he says he's hoping for sound economic policies. Nothing like sticking the boot in when you want to.
How about China itself? China's own story, GDP, will be up 9 percent plus, in 2011, with an inflation rate of some 6.2 percent. So that is China. Europe, the U.S., China, as for the global economy, this is perhaps the most sobering thought, "Arduous and complex". Putting it into those scenario, you start to see why China is now playing this major role.
One man who has long seen the potential of the Chinese market the WPP Chief Exec Sir Martin Sorrell, good friend of this program. "WORLD BUSINESS TODAY" Andrew Stevens asked the advertising boss whether the nation can maintain its impressive growth.
(BEGIN VIDEOTAPE)
MARTIN SORRELL, CHIEF EXECUTIVE, WPP: It is early days, but if you look at the 12th five-year plan, remarkable difference to the 11th five- year plan. I think it was 7.5 (UNINTELLIGIBLE) growth overlooking the 4 in the 11th plan. And they did about 11, 11.5. And the 12th plan they have gone down to 7. So they usually out perform their plan. They like to look good against plans, just like a company likes to outperform their budget. So, I think they'll do better than that but it is really lower growth rate, more balance, more social harmony, emphasis on social harmony, more emphasis on consumption. So, I think it is early days to see whether we have seen the change yet, but it will come and we will see greater consumption.
ANDREW STEVENS, CNN CORRESPONDENT: Do you see the Chinese policymakers are actually serious, though, about this rebalancing, about getting more domestic demand?
SORRELL: Yes, I think they definitely are. I think you see in the plans and the plans are always very detailed. I mean, you heard from the premier's plan, that he gave out here in the summer, at Davos. I mean, it is a tour de raison that covers every possible aspect of Chinese economic and social policy. And the unnerving thing about these speeches is they cover everything and then they go about actually implementing what they talk about, which is very rare amongst politicians in the West.
STEVENS: Do you think the world, generally, is putting too much hope, emphasis on the Chinese consumer rescuing the global economy?
SORRELL: Well, it is not just that the Chinese-well, we certainly-if I talk from the WPP perspective, we are certainly putting out a lot of hope and a lot of investment, a lot of faith in the ability of the BRICS in the next 11, to continue to grow. To make up for the lack of growth that we see in the Western economies, in the United States and Western Europe. I mean, I'm a great believer in long-term economic swings. This is just a replay of what we saw in the 19th century. This is back to the future stuff. China and India are going to be 40 percent of worldwide GNP, with the BRICS the next 11, 15 percent. This is where we were in the early 19th century, so-
STEVENS: And when will we be at that level do you think?
SORRELL: Well, Goldman talked about 2013, `14, `15, and in that range.
STEVENS: From your perspective, and you would deal, WPP would be very much a leading indicator of the global economic condition.
SORRELL: Right.
STEVENS: Do you expect or are you now seeing signs of recession in the big-in the European, in the U.S. markets?
SORRELL: Nothing yet. I mean, the amazing thing is we have seen our August numbers and-now. And they are just as strong as the first seven months of the year. So for the first two thirds of the year no sign of any wobble. Of course, what has been going on from a psychological impact must have an impact.
STEVENS: The odd now, of a recession, particularly in the U.S.?
SORRELL: Well, defining a recession is two quarters of negative GDP growth. I still think that is highly unlikely. Or unlikely, but it is a foolish thing to try predict it one way or another. It is-my view? It's a slog.
(END VIDEOTAPE)
QUEST: Sir Martin Sorrell, in China.
There will be an extra ingredient in Friday's Eco Fin meeting. The U.S. Treasury secretary will be there. No, he's not jumped ship and decided to become a eurocrat in stead of the U.S. Treas sec, but we will explain why he's going to be there after the break.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS in a moment.
First, this is CNN. And here, the news always comes first.
European leaders are scrambling to keep the debt crisis from engulfing the entire Eurozone. The heads of France, Germany and Greece discussed the issue on a telephone conference call. France and Germany are insisting Greece will keep the euro. Economists are worrying a Greek default is inevitable.
The U.S. ambassador to Afghanistan is downplaying the severity of the militants' attack against the U.S. Embassy and NATO headquarters in Kabul, calling it harassment rather than direct attack. Others are questioning Afghanistan's ability to take over its own security.
Libya's National Transitional Council has given civilians in the besieged city of Bani Walid 48 hours to leave. Officials are sending in reinforcements in the final assault on the city and other remaining strongholds of Gadhafi loyalists.
In Pakistan, disaster management teams are struggling against a rainy weather forecast, with heavy flooding already killing more than 230 people and damaging 80 percent of crops. The U.S., Iran, Japan and China have all promised help.
BP, Transocean and Halliburton all, in their words, violated a number of federal offshore safety regulations, which led to last year's Gulf spill in the Gulf of Mexico. That's the conclusion of the final U.S. government report on the disaster. The rig explosion killed 11 people, while the resulting leak sent nearly five million barrels of oil into the Gulf.
The U.S. Treasury secretary, Timothy Geithner, says there's no chance Europe will let its banks go the way of Lehman Brothers. Tim Geithner is taking a special interest in European affairs at the moment. He's making two visits to Europe in as many weeks -- in fact, in the same week.
Maggie Lake is at CNN in New York -- Maggie, what's Geithner interfering for?
(LAUGHTER)
MAGGIE LAKE, CNN CORRESPONDENT: Yes, because he has to, Richard. He knows -- and you can see it playing out in the markets, that what's happening in Europe is undermining confidence and global growth everywhere. We know we are interconnected. You can tell the level of worry based on the assurances that the U.S. Treasury secretary felt he had to try to give investors today, as you mentioned, talking -- taking a Lehman like scenario off the table, saying not a chance, the Europeans are not going to let it happen.
And also trying to reassure investors over here that Europe has the financial wherewithal to deal with this problem.
Have a listen.
(BEGIN VIDEO CLIP COURTESY CNBC)
TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: They are absolutely committed and they have the financial capacity and the economic capacity to do what it takes to hold this thing together. I think they recognize that they're going to have to do more. They recognize they've been behind the curve. They recognize it's going to take more -- more force behind their commitments.
(END VIDEO CLIP)
LAKE: More force -- really important here, Richard, he -- he's sounding confident and supportive, but making it very clear, the time to act is not and urging the Europeans to use overwhelming force. They have to get in front of the markets and they're still behind.
Now, clearly, looking at the stock reaction today, investors taking some comfort from -- from the statement that Greece will stay in the Eurozone. But it's only a matter of time before they put the pressure on again and force the Europeans to show their hand.
What are they ultimately going to do...
QUEST: All right.
LAKE: -- there's still...
QUEST: -- oh, right...
LAKE: -- a lot of skepticism over here.
QUEST: Ah, save the air fare of the private jet, Maggie.
He saw this...
(LAUGHTER)
QUEST: No, come on.
He saw this lot at the G-7 and the G-8 in Marseilles. He's seen them at G-20. He sees them at the IMF.
What good does it do to make -- other than symbolism?
LAKE: Well, but you can argue, though, that symbolism is important. You have to be -- it's a -- it's a united problem that affects everyone around the world. Leaders have to act in coordination. We saw that.
Maybe it doesn't seem like it and it seems like a European problem now. But the minute you start to get liquidity freezing up, Richard, both you and I know that it's not just going to be a euro problem -- a European problem. Tim Geithner knows that. And a lot easier to apply pressure and have frank discussions face-to-face rather than doing it over the airways. I suppose that is worth the plane fare.
QUEST: All right.
Maggie Lake defending the U.S. Treasury secretary coming to (INAUDIBLE) again on Friday.
We'll talk more about this in a moment.
Alison Kosik is at the New York Stock Exchange -- Alison, are you going to defend the investors today?
I mean as I look at the -- look at the way the day traded, down at the beginning and in the middle...
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Yes.
QUEST: And it suddenly roared up because three European leaders had a phone call.
KOSIK: Yes. You know what, a lot of -- a lot of what you see happen in the markets these days, Richard, is truly headline driven. You know, and we've seen the markets really trade in a very narrow trading range, going up and down and up and down in one session. And we're seeing more of the same today, though it looks like these gains may stick to the close.
Look, the reality is Europe is still a mess financially. But what you're seeing play out in the markets today is there's optimism that steps are being taken to improve the situation. You forget about that talk that Europe may issue common bonds for the Eurozone. It shows that something positive is being thrown in the mix.
You know, traders that I'm talking to, Richard, they believe that the thinking that Europe is too big to fail, that that is really the -- the...
QUEST: Oh, my.
KOSIK: -- the overall thinking here, that eventually something will get done to keep things from unraveling. So it's that positive energy, that optimism coming from leaders that is pushing the markets higher today.
QUEST: An inch thick and a mile wide. There's no depth to this optimism, though.
KOSIK: No. No and there -- there isn't. And, you know, you can see that even in the volume of the trading today. Volume was very light today. You know, it's questionable whether there's any conviction in this rally that we're seeing. Tomorrow is a new day, a new headline could come out that's more pessimistic than what we're seeing today.
QUEST: Right.
KOSIK: And we could see stocks take a plunge tomorrow. So it's very headline driven -- Richard.
QUEST: All right. Alison Kosik.
Many thanks, Alison, in New York.
I'm starting to feel like I'm a bit of the old Grinch here, trying to pour water. Everybody is trying to put out the fire and all I am is misery guts (ph).
But here's a little bit of news to bring you. The U.S. government has released its final report into the Gulf of Mexico oil spill. Not surprisingly, there's plenty of blame to go around.
Three companies -- BP, Transocean, Halliburton -- were found to have violated safety regulations. The report says that BP was ultimately responsible because -- at the Deepwater Horizon site. It says part of the reason may have been BP cutting corners and failing to spot safety risks.
However, BP says it agrees with the report's core conclusion, the accident was the result of multiple causes involving multiple partnies -- parties.
Now, that, I think, is quite important, that phrase, "multiple parties," because that is the bit that they're going to use to try and make sure everybody else gets roped in, in paying some of the damages.
One of those multiple parties, Transocean, the rig's owner, the report said when it came to controlling the Macondo well, a communication breakdown between Transocean and BP may have led to the blowout. They are currently suing each other. It will be interesting to see if BP, which has received some contributions from others, actually gets a penny farthing from Transocean.
As the economy twists in the wind, the anger in Athens keeps growing. One crucial thing to remember, there are real people, real lives and real hardships behind this crisis. And we'll be looking at the affects of austerity, after the break.
(COMMERCIAL BREAK)
QUEST: The economic unrest in Greece is leading to more social unrest for the people of Athens. Life at the epicenter of Europe's debt crisis is now punctuated with a different set of strikes each day.
Taxi drivers are the latest group to cause a revolt.
Linda Labropoulou spoke to some of them.
(BEGIN VIDEO TAPE)
GIORGOS LOUKOPOULOS, TAXI OWNER: We will protest, not only taxi drivers, everybody. Everybody has to go on strike. We need a general strike in Greece. They always say that's all we have done, we'll take no more measures. But every two or three months, they get more and more and more measures. This has to stop. This has to end.
KIKI PATRA, TAXI OWNER: I think they're fighting the wrong people, that's what they're doing. They're not fighting where they should be fighting. They're looking to get money from where they should be getting money. They're looking down on the middle class, the lower class society. And I don't think that's correct.
That's why we're here today, to fight for our families. That's what people have to understand. We're not here fighting the government. We're fighting for our homes. I'm hoping the government will give in. I'm hoping that they will understand that this is far beyond striking. We are fighting for our lives.
MARIA LADIKOU, ATHENS RESIDENT & POLITICAL SCIENTIST: Certainly, I would have thought that the government, the Greek government would have been much more intelligent and brave to face the difficulties. All the countries, they have been under pressure, especially France. They have been in the edge of bankruptcy. They didn't take financial decisions, but they took political decisions.
DIMITRIS GIATAGANAS, TAXI OWNER: This government, they're going to sell everything. It's a (INAUDIBLE). We will not stop again. This lot get it back from the government, because it's another reason that there will be unemployed people. (INAUDIBLE) already exist.
LINDA LABROPOULOU, CNN CORRESPONDENT: Do you want to see Greece leave the euro?
GIATAGANAS: No, I don't want that. But this is not my job. That's the politics. And that same guy that he wants his job, nothing else./
(END VIDEO TAPE)
QUEST: What's happening in Greece.
Now, let's turn to the influential Tweets that have been whizzing around the blogosphere today -- 140 character messages that really make up our Top Tweets of the Day.
The EU commissioner for employment, Laszlo Andor, has been critical of "The New York Times" article by their columnist, Paul Krugman, talking, of course, what Krugman was saying about deficits, he says: "Moralizing does not help resolving euro crisis. ECB's mission is too narrowly defined."
I suspect that's a reference to only having price stability and not having an employment aspect to it, as the Fed does in its own dual mandate.
The president of The European Council, Herman Van Rompuy, has been Tweeting largely on the question of why he is perhaps not so in front making the large statements and the loud noise: "I do not practice megaphone diplomacy via the media. I prefer quiet diplomacy. It is more discrete, but also more efficient."
Some might argue that there's a fine line between the two.
Finland's minister for foreign trade and Europe, the -- Alexander Stubb has Tweeted: "Wonderful. A day of national budget negotiations. A difficult day for many of my colleagues, but easier for me because I have virtually no budget."
Well, thankfully, he does have enough budget to fly to the U.K., because Alexander Stubb will be my guest on this low program tomorrow. Until I talk to him, I'll be talking to you. And join me now at Twitter.com/richardquest. That's how you can join in our debate.
A model business plan -- we're crunching the numbers on the catwalk in New York. Fashion Week, in a moment.
(COMMERCIAL BREAK)
QUEST: Michael Kors is amongst the designers in the spotlight this afternoon at New York Fashion Week. The event finishes tomorrow and as the designers head home and the catwalks are packed away, out comes the calculators.
A new study has revealed just how much it's worth to the city.
As CNN's Felicia Taylor found out, the business of fashion isn't just about frills and frops (ph).
(BEGIN VIDEOTAPE)
FELICIA TAYLOR, CNN CORRESPONDENT: We're under the tent at Fashion Week. And, as you can see by the crowds beside me, there's plenty of attention and excitement. Magazine editors are clamoring to get in to see the collection. Socialites and celebrities are in the front row, hoping to have their picture taken. And industry insiders say that translates into profits.
(voice-over): And, of course that doesn't include all the potential profits for the designers. I'm back stage at the Badgley Mischka show, where all the models are getting made up. The designers are putting the last minute touches on their designs. Everything has to be perfect before their collection is launched, because these shows can cost hundreds of thousands of dollars to produce.
Hi. Nice to see you.
How are you?
MARK BADGLEY, DESIGNER: Good to see you.
TAYLOR: Good to see you.
I want to bring you over to your -- your collection...
BADGLEY: OK.
TAYLOR: -- so we can talk a little bit more about it.
Does it actually translate into sales?
I mean can you -- do you notice that you have added customers and also does it make a difference with a department stores?
BADGLEY: It makes a huge difference.
UNIDENTIFIED MALE: Right.
BADGLEY: Yes. You do. If you're a player, you've got -- you need to do a runway show. And you know right after the show, you know all your key pieces. You know where the response is.
UNIDENTIFIED MALE: (INAUDIBLE).
JAMES FALLON, "WOMEN'S WEAR DAILY": For the designers, it's a major marketing exercise that gets their name out there in the public domain and builds their brand awareness.
ZANG TOI, DESIGNER: At least I can speak for myself. When my ladies show up, they get so excited from the -- they get so caught up in the moment of the beautiful runway show, they start imagining themselves in all those beautiful clothes. It really helps the sales. It really does.
TAYLOR: When it comes to dollars and cents, Mercedes Benz is just one of the many sponsors that have spent money to be here at Fashion Week. A new study commissioned by the city of New York has also shown that there's a total economic impact for the city of New York annually of about $500 million. And that's because people are out shopping, going to restaurants and possibly staying in hotels, amongst other things. And that's why they say fashion makes sense.
PETER LEVY, IMG: IMG is involved in businesses where, like in fashion, we don't actually make the clothes, walk the runway or take the pictures. But we provide opportunities. And as an organizer, really look to create value for companies because our whole, really, goal is the art needs to be supported by commerce.
TAYLOR: And we can't forget about the Internet's effect on Fashion Week. The shows provide instant content for the Web, bloggers and streaming video just right after the models have walked the catwalk.
There are almost 100 shows at Fashion Week and rarely does a seat ever go empty. There are just a couple of days left during this Fashion Week, but clearly, the business of fashion will continue.
Felicia Taylor, CNN, New York.
(END VIDEO TAPE)
QUEST: Another fashionable entrance to bring to your attention. The grand goods and services gateway is next year's London Olympics. Westfield has opened on the site of the games at Stratford. And when completed, it will be Europe's biggest urban shopping center.
Given the flagging European economy, one does wonder whether opening such a mega mall is very wise at this time.
Jim Boulden went and took a walk through the brand new building at Westfield.
(BEGIN VIDEO TAPE)
STEVEN LOWY, CO-CEO, WESTFIELD GROUP: Well, I think it's clearly a unique proposition. It's not every day you get the opportunity to build on such a wonderful site...
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Yes.
LOWY: -- which will have such a global impact. Clearly, what the Olympics does for us is that it fast tracks all of the infrastructure to be built around what you see. You see the stadium. You've got housing behind. You've got this massive transport infrastructure that's been built.
And that fast tracks it. And it -- and it gets buildings like this up much, much quicker than they ordinarily will occur.
BOULDEN: There's nothing like a moveable deadline. Because the one unmovable deadline is the Olympics, unlike any other project.
LOWY: No, that's true. And, in fact, that challenged all of us because that deadline was set when the Olympics was announced here.
BOULDEN: Yes.
LOWY: And then in the middle, you had a global financial crisis, which was making everybody question their whole investment strategy. But we kept on going here and clearly the outcome is fantastic.
London itself, London is a very special city that has proved to be very resilient. During -- through the whole global financial crisis, one we do have expected London to be in real trouble, particularly because it's got a major service and banking industry behind it.
BOULDEN: Yes.
LOWY: But it hasn't. It's proved to be this very special city. We see it as a confluence of -- of many different countries, Russian influenced, European influenced, Asian influenced, U.S. influenced. It's a very special place. And it's -- and it's given us -- I know that we've performed very well in London, through the GFC, London itself has. And I think that gave the retailers the confidence, also to come here.
BOULDEN: Do these retailers get a special break to open up in the middle of, what in all intents and purposes, is a recession and also to come to such a prestigious new mall, but in a part of London?
LOWY: Yes, I think you -- we need to consider the part of London as his -- as yesterday's game, not tomorrow's game.
BOULDEN: Right.
LOWY: The East Side of London has had a gross lack of infrastructure built over a long period of time. And it's -- it's an event like the Olympics that can bring enormous infrastructure.
We didn't build this for the Olympics.
BOULDEN: No.
LOWY: There are four million people that live here in the Triad area. And they're here every day. But they've just had such a poor product right now or they have to travel a long way to the west side of London, to get a -- to get decent retailing. And now they won't have to do that.
We've now built Westfield London further on the west side. And we now see this building as on the east side of London.
So these two buildings, Westfield London in Shepherd's Bush and Westfield Stratford City here, we're expecting to do around two billion pounds of sales and have 50 million customers here. So these numbers are really at the top of the tree in our business.
And I'm not that worried about cycles or volatility. Now, much of what I've been asked today is about how can you open a shopping center in today's (INAUDIBLE) environment.
BOULDEN: Yes. Sure.
LOWY: Well, you can never pick the day you start or the day you finish. You can pick the day you start a building. You can't pick the day you open it, because what the environment is, it is.
BOULDEN: Yes.
LOWY: You build it for the long-term.
BOULDEN: So do you keep an eye on what's happening with the economic crisis...
LOWY: Oh, absolutely.
BOULDEN: -- with the euro on Europe?
LOWY: Absolutely.
BOULDEN: I mean do you have to -- I mean there's not much you can do about it. Whatever happens, happens.
LOWY: No, it can -- it can influence your long-term investment decisions.
BOULDEN: OK.
LOWY: Once you make the investment, you deal with it. We're really excited about this.
(END VIDEO TAPE)
QUEST: The chief executive of Westfield in his big shopping mall.
After a sunny and mild start to the week, parts of Europe are bracing for a shot of -- well, not exactly winter, but certainly the fall.
Pedram is at the World Weather Center for us this evening.
PEDRAM JAVAHERI, CNN METEOROLOGIST: Yes, hi, Richard.
Follow the air for some across the western portions of Europe, especially when you head toward the north. You take a look at your calendar. We're counting toward eight days remaining now toward the fall season. And the satellite imagery, we just want to show you how clear it is across, really, a vast expanse of Europe there, with the exception of a few thunderstorms that have popped up around Slovakia, working their way toward Austria, getting a few reports of heavy rainfall.
But besides that, high pressure sits in place. And we always talk about this big bloom. It causes the air to sink. It compresses that air. Anytime you compress air, you're going to warm it up. You're going to keep it nice and clear. That's what a high pressure has done here for the last couple of days. And it's actually going to shift a little to the northern and also to the east and kind of set up shop around portions of -- areas of Eastern Europe there over the next couple of days.
So the weather pattern generally pretty nice. Travel delays, a little bit expected there, associated with some gusts tomorrow afternoon and tomorrow evening. Breezy conditions around Copenhagen. So give yourself some 45 to 60 minutes extra time there.
But you take a look at the temperature pattern. Temperatures at about 16 degrees in London. That is what it is outside right now. Glasgow at 10 degrees across that part of the world.
But you factor in the wind chill, the breeze in the air there, cooling off to about nine degrees in Glasgow. London not much of a wind so we keep your temperature right around 16.
But the pattern right now, we're looking at a storm system coming in off the west there. And as it comes in, say Friday afternoon to Friday evening, portions of Ireland and also the U.K. there are going to get some moderate rainfall in their forecasts as the temperature is going to gradually cool off.
Speaking of rainfall, take a look at this. The monsoon floods across portions of Pakistan that have continued. We've talked about this and how 5.3 million have been displaced and affected, I should say, by this. And now you take a look, one million or so homes have been damaged. About 220,000 of those folks are now within shelters, so certainly a need for food, shelter and water concerns out there.
And you take a look at the satellite imagery, this was area of concern. This is Sichuan Province. This is where we had really the majority of the issues with heavy rainfall the past couple of days. The energy right now is actually depleted in this area, but we are getting around the Punjab Province some very heavy rainfall in the past couple of hours.
And, again, you've got to keep in mind, with this area, the Indus River being the lifeblood of this country, as water falls here to the north, within a couple of days, that's going to cause problems to the south. So although it is quieting down in the areas that have been hardest hit, this is going to be a story that's going to linger at least, now, Richard, for -- for the next couple of weeks, at least, in that part of the world.
QUEST: Pedram, many thanks, indeed..
Pedram at the World Weather Center.
Thank you for that.
And now an apology for a silly mistake that I made earlier in reporting that BNP Paribas had been downgraded. It was on the graphic in the wall behind me. We'll, just to be clear, it was Societe Generale and Credit Agricole that were downgraded by Moody's. BNP Paribas is on review. And we apologize that we seem to have got them momentarily confused.
I'll have a Profitable Moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment.
The European debt crisis has taken on a new and worrying twist. The talk is of Greek default. And with worries that some European banks couldn't withstand the losses. The fact is, it's not true that a Greek default will collapse the banks, assuming they've been transparent with the numbers in the first place.
Societe Generale's exposure to Greek sovereign debt is 7 percent of the bank's core tier capital. Default would be painful, which is why today Moody's downgraded -- took French bank shares sharply off.
But it's not catastrophic. What we really have here is a crisis of confidence around contagion from bank to bank, country to country. It can be summed up in a simple sentence -- fear of what comes next.
Which is why, frankly, it will take more than today's phone call from three European leaders to put this right.
And that is QUEST MEANS BUSINESS for tonight.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I do hope it's profitable.
The news is next.
END
