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QUEST MEANS BUSINESS
Stock Markets Sharply Lower; David Cameron Addresses the U.N. General Assembly
Aired September 22, 2011 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, CNN ANCHOR, QUEST MEANS BUSINESS: A crisis of confidence. From the Dow to the Dax stock markets are sharply lower.
The head of the IMF says we are in a dangerous place and lays the blame with politicians.
And board games, at Hewlett-Packard Meg Whitman is expected to be name the next CEO.
I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS.
Spooked by the downside, now thrown by the wayside, markets across the globe are in a tailspin. Still reeling from the U.S. Fed's warning of significant dangers to the world's biggest economy. Right now losses are continuing on Wall Street. Asian stocks also plunged, but it is markets here in Europe that took the biggest hit today.
The Paris CAC 40 lost a massive 5.25 percent. Banks were the worst performers there. Societe Generale down 9.6, Credit Agricole down 9.5 percent. Today the chief executive of the world's largest bond investment fund, PIMCO, told the "Financial Times" that French banks could tip Europe into a full-blown banking crisis. Frankfurt's DAX, that lost nearly 5 percent. As you can see, it has now lost around half of the gains it made back after the collapse of Lehman Brother's three years ago. Deutsche Bank was the biggest loser there, down 8.4 percent.
In London it was mining shares really dragging things down. All down around 11 to 13 percent. In Zurich luxury goods, business company, Companion Facier (ph) Richemont (ph) led losses with 8.3, or 8.8 percent, I think it was, a fall.
Now Europe's escalating debt crisis is one factor that stock markets sold off on. Today the leaders of six G20 nations called for the Eurozone to swiftly to resolve the crisis and they are backing up a call from Nicolas Sarkozy for the G20 to make finding a path to global growth its main priority.
In this open letter, the French president to the leaders of Australia, Canada, Indonesia, Mexico, South Korea, and the United Kingdom, all say the world is still feeling the reverberations of the global financial crisis.
They warn that "global imbalances are rising again. External risks to the stability of our banks and our economies are reaching pre-crisis levels."
The letter also mentions the upcoming G20 meeting in Cannes that is in November. Saying, "The G20 showed at the height of the global financial crisis that we could work together to deal with global instability-the Cannes Summit is an opportunity for the leaders to prove this, arrest the slide in confidence, and strengthen the foundations for strong, sustainable, and balanced global growth for the future."
Well, Jim has been following all of this for us.
Jim, it seems very widespread, the sell off, today, was it truly global?
JIM BOULDEN, CNN BUSINESS CORRESPONDENT: It was not only global, where you saw shares in Brazil down 5 percent, the Heng Seng down 5 percent, in Hong Kong, but the breadth of it. As you said, mining shares, and Burberry down nearly 10 percent, luxury goods, to me it is always one to look at because that tells you investors are thinking ahead that China is going to slow down, that you could see recession. And then we saw commodities, really interesting, oil down 5 percent. Copper down again, 7 percent down today; five straight days copper falls. What is copper used for? Construction. That tells you what investors are thinking.
But really, also, silver down 8 percent as well. I'd like to look at those because they tell you that, in a day, if you have drops that far-much more than you saw in stock markets-then you see people heading to the dollar. And boy the dollar really took off today. The euro absolutely sank.
FOSTER: We were talking yesterday on the program about the Twist, in America, this new mechanism they are using to try and boost the economy somehow. It hasn't worked has it?
BOULDEN: Well, you could say the central banks shouldn't be worried about stock markets. So, what they were doing was to try to bring down long-term interest rates in the U.S. and bring down mortgage rates. We'll have to see if that will work. They are not there to boost confidence of investors. So it didn't work in the sense that it, if you are looking for boosting confidence? No.
FOSTER: We are going to cross to the United Nations now to hear the British prime minister speaking.
(BEGIN LIVE FEED IN PROGRESS)
DAVID CAMERON, PRIME MINISTER OF BRITAIN: United Nations General Assembly for the first time. And it is a particular honor to do so as such momentous events unfold in the Arab world. Last week I was in Tripoli and Benghazi. I saw the hunger of a people eager to get on with reclaiming their country, writing themselves a new chapter of freedom and democracy. This has been the most dramatic episode of what has been called the Arab Spring. My argument today is that Libya and the Arab Spring shows that the United Nations needs a new way of working. Because the Arab Spring is a massive opportunity to spread peace, prosperity, democracy and (UNINTELLIGIBLE) security, but only if we really seize the opportunity.
So the events of this year present a challenge to all of us. A challenge to Europe to show it can reform its aid and trade strategy to be truly progressive. A challenge to the African Union to meet the opportunities of this century with the same courage that won liberation in the last. A challenge to the Israelis and Palestinians to take the bold steps to come to the table and make lasting peace. A challenge to Iran and to Syria to give their people the freedoms they deserve.
And a challenge to the United Nations; you can sign every human rights declaration in the world, but if you stand by and watch people being slaughtered in their own country, when you could act, then what are those signatures really worth? The United Nations has to show that we can be not just united in condemnation, but united in action; acting in a way that lives up to the United Nations founding principles and meet the needs of people everywhere.
The people of the Arab world have made their aspirations clear. They want transparency and accountability of government, and end to corruption, the fair and consistent rule of law, the chance to get a job and to have a stake in how their country is run. The freedom to communicate and the chance to participate in shaping society as citizens with rights and responsibilities. No one says achieving these ambitions will be easy. There will be false starts and wrong turns along the way.
Not least where countries have inherited sectarian and regional divisions, weak political parties, state institutions that are enfeebled by misuse, and a politics distorted by the false choice between repression on the one hand, and Islamistic extremism on the other. The long process of developing new and accountable government is just beginning. And across the region we cannot guarantee that the process of reform is irreversible. But let's be clear. These developments present a great opportunity for many who have long been sold short by their governments.
And there is an opportunity and responsibility for all of us, too. Just as in after 1989, we helped those who tore down the Berlin Wall to build robust democracies and market economies, just as in 1994 we welcomed South Africa back into the commonwealth of nations, when it choose the path of reconciliation and democracy instead of racial conflict. So, now in 2011, as people in North Africa and the Middle East stand up and give voice to their hopes for more open and democratic societies, we have an opportunity, and I would say a responsibility, to help them.
Now the mistake we often make in the West is to think that because people in this region want democracy, they will want it in the same way and with the same outcomes that we do. We should not be trying to impose Western values or a single template on the region. Democracy is a process, not an event. Participatory government involves so much more than just the simple act of voting.
This assembly heard not long ago from President Ahmadinejad. He didn't remind us that he runs a country where they may have elections of a sort, but they also repress freedom of speech. They do everything they can to avoid the accountability of a free media. They violently prevent demonstrations. And, yes, they detain and torture those who argue for a better future. So we should never pretend that having elections is enough. The building blocks of democracy have to be patiently developed from the grassroots up. The process will be different in every country. And it is not for us to dictate how Arab nations should respond to those challenges, or to lecture them about how to do it. But there is an opportunity, and important opportunity, for us to help and we must seize it.
There are important lessons from what has happened in Libya. The Libyans liberated themselves. Ordinary Libyans, from all walks of life, came together and showed incredible resilience and bravery as they rose up and drove out Gadhafi. The people of Benghazi, the brave fighters of Misrata, the people of Zawiya, the warriors from the Nafusa (ph) Mountains, all of them showed incredible courage in liberating their country. The National Transitional Council, who demonstrated great leadership, not least as Tripoli fell, urged people to avoid reprisals and to look to the future. A message that still holds true today. This revolution truly belongs to the Libyan people.
The United Nations played a vital role, authorizing international action. But let's be clear. The United Nations is no more effective than the nation states that come together to enforce its will. And on this occasion a coalition of nations, across the Western and Arab world had the will to act, in doing so they stopped Benghazi from joining Srebrenica and Rwanda in history's painful role call of massacres that the world failed to prevent. Today, Tripoli and Benghazi are cities transformed. Where there was fear now there is hope, and an optimism and a belief that is truly inspiring.
But there are challenges ahead not just in Libya, but all across the region economies in the region have underperformed when compared with their peers. In 1960 Egypt's GDP per capita was comparable with Korea's. Today it has fallen to just around 1/5 of the size. Across the region some countries dependant on oil revenues, others held back by heavy state control, have failed to diversify and create jobs in productive new sectors and failed to connect themselves to the economies of the region and the wider world. Indeed, less than 4 percent of North African trade is within the region. Making it the least integrated neighborhood in our world.
And the promise of economic reform has not been fulfilled. Too often people were told economic reform would bring them market economies with greater freedom to start up businesses, to trade, to grow, to create wealth. But it didn't. It brought them corrupt and crony capitalism. Now the future is for the people of this region to determine, but I would urge them not to reject something they have never had; a genuine open, fair and transparent market economy which has proved the world over to be the best way to create jobs and wealth.
And the need for economic success is vital because this is a region where 60 percent of the population is under 25. And youth unemployment is nearly double the world average. It is a region that must create 50 million new jobs by 2020 just to keep pace with its population. That means 700,000 new jobs every year, in Egypt alone. And these jobs, they shouldn't just be for men. Let's be honest, it is not just the men of the region who want a job and a voice. The unemployment rate for Egyptian women is more than three times that of men. And it is not only the economy. They are denied a chance to play a fuller role in, it is a society and politics and culture, too.
But look at the crowds in Freedom Square and we see it is the women, too, finding their voices, showing clearly they want to play a part in building their future. So in this historic period, when the voice of this region is finally being heard, there is now a unique opportunity for women to fulfill their ambitions, too. This is not just in the interest of women. It is in the interest of those countries as a whole. Let us be clear. You cannot build strong economies, open societies and inclusive political systems if you lock out women. So the Arab Spring will not succeed if the opportunities that are opening up are denied to half of the population.
Now, of course, the actions we take to support the people in each country must be tailored to that country with respect for its particular culture, history and tradition. What is right for Libya will not necessarily be right for everywhere else. But the international community has found its voice in Libya and we must not now loose our nerve. We must have the confidence to speak out and act as necessary to support those who seek new freedoms. In the European Union it is time to ensure that the billions of euros that we spend in this region each year are used to support reform that will meet the aspirations of the people. And there should be no more excuses for denying the people of the region fair access to our markets including for agriculture.
Here at the U.N. we have a responsibility to stand up against regimes that persecute their people. We need to see reform in Yemen, and above all in Syria. It is time for the members of the Security Council to act. We must now adopt a credible resolution threatening tough sanctions. Of course, we should always act with care when it comes to the internal affairs of a sovereign state. But we cannot allow this to be an excuse for indifference, in the face of a regime that week after week arrests, intimidates, tortures and kills people who are peacefully trying to make their voices heard. The voice of the African Union is vital, too.
(END LIVE FEED, IN PROGRESS)
FOSTER: David Cameron, there, speaking to the United Nations. Talking about the Arab Spring, talking about the economic challenges which will follow the Arab Spring; and also talking about reform in Yemen. That is very much needed. And time for the Security Council, he says, to act on Syria. He wants to see tough actions.
And on Libya he talked about the liberation of Libya being done by the people of Libya not the coalition, although, the coalition, he said, did stop Benghazi becoming another Srebrenica or Rwanda.
We will come back to that a little bit later on and bring you updates on anything he may say about Palestinian statehood.
We are going to carry on QUEST MEANS BUSINESS because that sinking feeling is well and truly back on the stock markets. We'll check on the mood on Wall Street in just a moment for you.
FOSTER: Christine Lagarde has said the path to recovery is narrowing. At a news conference for the Fund's annual meeting in Washington, that is the IMF, of course, the IMF managing director talked about striking the balance between reducing deficits and maintain growth.
(BEGIN VIDEO CLIP)
CHRISTINE LAGARDE, MANAGING DIRECTOR, IMF: What needs to happen is that medium-term, long-term, solid well-anchored measures that will actually aim at restoring good public finances by reducing deficits, by stabilizing debt and gradually reducing it. It has to be first and at the forefront of any agenda in those economies. But having said that, as long as in the medium term and the long term this is well-anchored, some countries can accommodate growth in the short term.
And if you are asking me which country, clearly, the United States is one that comes to mind right away. But it is a questions-it's a balancing act once again. And there has to be parallel track of what can accommodate growth in the short term by slowing down the pace of consolidation and how strongly and definitely and well anchored are the measures that will deliver deficit reduction in the longer term.
(END VIDEO CLIP)
FOSTER: Well, Maggie Lake is outside IMF headquarters in Washington for us.
Maggie, Christine Lagarde flying into this job at an extremely difficult time.
MAGGIE LAKE, CNN BUSINESS CORRESPONDENT: She certainly is and all of the ministers and officials here are recognizing just how precarious the situation is; once again the IMF, the backdrop for a global crisis.
Max, attention here, very much today on the BRIC countries. They held a meeting to discuss possible aid to Europe. That meeting just broke up a short time ago and I spoke with the Russian Deputy Finance Minister Sergei Storchak, coming right out of that meeting. And he said that the BRIC countries agreed the best way to help Europe is through the framework of the IMF. They are the ones with the expertise. Have a listen.
(BEGIN VIDEO CLIP)
SERGEI STORCHAK, DEPUTY FINANCE MINISTER, RUSSIA: We understand that the situation is really very serious. In our final statement we are going to say it definitely. And we are going to say with clear signal, to simply signal to the market that the BRICS are going to-is going to work together within the group. Plus, the BRICS rely a lot on G20 as the cornerstone of our polices against outcomes of the recent developments on the markets and the economy at large.
(END VIDEO CLIP)
LAKE: Now, Max, they are going to work with the experts at the IMF. It doesn't preclude countries doing something on their own, direct foreign investment, but Russia played down the possibility of that. Saying, it is much more likely to happen through the IMF, only in Russia's case, very small measures would be done with individual independent countries. But he warned that this is going to take a while. First of all each of these countries, the emerging countries have legislation, that determines how they are able to use their funds that must be address.
Also, in order to do aid, a deep analysis has to happen. I said to him, listen, that takes time. And he said, yes, it does. And they recognize that that is an issue right now given the climate of markets. He also said, interestingly, that the volatility, that the extreme volatility that we have seen in markets make it very difficult to work. It is difficult to know what to do when you have no idea what is going to happen the next day. So a great deal of concern. He said they discussed the fact that there is a lot of concern among the countries, that this is moving from a sovereign crisis, to a banking crisis. They are very concerned about that. But, again, right now, they are deciding to do what they can do through the construct of the IMF, Max.
FOSTER: And Maggie, let's take you back the heart of Europe. I know you had a chance to speak to Lagarde's replacement, as well, at the French Finance Ministry.
LAKE: That's right. His first IMF meeting, an interesting time to be a finance minister. Even he admits, Francois Baroin, we sat down. I addressed with him, at the very start the issue, you said earlier in the show, PIMCO's El-Erian warning that there are serious signs of strain in the French banking system. The finance minister said to me, he expressed confidence in the measures already taken by the banks. He said French banks did not need new capital injection. And that is a liquidity issues, to any extent they existed, are being dealt with, have been dealt with, and are being dealt with by the central banks.
He reiterated that the French strategy is to stick with that, stay true to that July 21 agreement. That process needs to happen. There is an understanding that the markets want something faster, that they are looking for something else. But he said, listen, this is the democratic process. We need to go through that. That needs to happen. And solidarity is what works. Very interesting, Max, both from the Russian and the French finance minister, certainly and acknowledgement, certain ministers here have a sense of the seriousness of the issues. They understand markets are frustrated, but they also keep coming back to the fact that the processes have to take place. That they are slowly, they need to go through them. The question is, can they do anything on the leadership gap to try to bolster confidence?
FOSTER: (AUDIO GAP) finance minister a little bit later on. Maggie, thank you very much indeed for joining us.
Now, still spooked by the Fed's comments on Wednesday, Wall Street is deeply in the red. The Dow is down more than 400 points and not a single (AUDIO GAP) any gains. Alison joins us live from the New York Stock Exchange.
Another grim day, Alison?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Oh, you said it. Fears of a global recession are really taking hold of the markets today, Max. We are off our session lows, though. The Dow down 414 points. All signs are pointing to a slowing economy. More and more economists (AUDIO GAP) R word, "recession".
It started with the fed coming out yesterday giving a weak outlook for the U.S. You know, you hear analysts say, gosh if the Fed's worried, (AUDIO GAP) worried. Of course, we got those manufacturing numbers from China and from Europe. One analyst say those reports are really the strongest sign yet that Europe is close to a recession. Today's numbers on jobless claims, here in the U.S., not helping things either. They came in higher than expected. Layoffs still and issue. And they really speak to the same broader economic concerns that we are having here in the U.S., and that is, of course, millions of people who are out of work here in the U.S., Max.
FOSTER: Alison, thank you very much.
Well, let's take you back to the stock markets back here in Europe. Now, as we mentioned earlier, France's CAC 40 was the worst performer in the region. Banking shares took the heaviest losses. Societe Generale down 9.6 percent, Credit Agricole, down 9.5 percent. Apologies for a graphic earlier which showed them going up, although, I was saying at the time they were going down. In London, mining shares were at the bottom of the pile.
Jim Boulden joins me now.
I do want to bring a bit of a bright spot into this, Jim, because we are so depressed and gloomy about everything right now. But you have managed to find a bright spot in Europe?
BOULDEN: When I saw this hit this morning, I was quite surprised, when I saw Ireland, of course one of the first countries to suffer so badly. And the banking system collapsed. They went into deep recession. The government was thrown out of power. But they saw the second quarter GDP growth of 1.6 percent. Compared that to what is in Europe, it is 0.2 percent growth. So, this is really impressive by Ireland now. It is obviously a very small economy, but it could be seen as a lesson for other countries to do what you need to do, do it early, and often.
FOSTER: They took the medicine and it worked.
BOULDEN: Painful, do it early, and then maybe, just maybe, you'll be able to grow your way out of it. Now it is a very open economy and it is a very export led economy. So, it could suffer gain, if we go to this global recession.
FOSTER: But the situation didn't get as bad as it is now in Greece, did it? It didn't go as far. So, can Greece take anything from that?
BOULDEN: Well, what Ireland did, of course, is guarantee everything in the bank. So some people could say that is a lesson that maybe something the European Central Bank should do. Now that would be a hell of a risk. But, you know, Ireland did that. It also laid off people very early. Its unemployment rate ballooned. It did have to deal with pensions, and they had people in the streets-not like we saw in Greece, but people were very, very unhappy.
And then they had an election. A new government came in; didn't actually change a lot. That sometimes helps. You know the new government comes in and says, well, we're not gong to promise you a panacea. It is just that it feels different when it is another government from a different part of the political spectrum, also doing the same kind of pain. And we see the fruits, that 1.6 percent, second quarter growth. That is not bad in this time.
FOSTER: But just a quick word on people watching this. From a selfish perspective let's say, nothing wrong with that when you talk about business news. A lot of people very worried about looking at their pension pots right now, very concerned about what to do, where to put their money. How hard have people been hit by this, would you say, at this point in the process?
BOULDEN: Well, a lot of pension plans like to use bonds. So, a lot of pension plans will be in the bond markets. So, you are probably not doing so badly. But if you have put yourself in the higher risk, emerging markets, for instance, we don't necessarily look at it a lot. The emerging markets are not doing well, at all. You look at Brazil, for instance, you talk about Russia.
FOSTER: They're meant to be saving us, weren't they?
BOULDEN: Well, the shares aren't doing really well. And then if commodity prices are falling as much as we said at the top-if that continues to go, that is why everybody is worried about this global recession.
FOSTER: Good to end on a gloomy note.
BOULDEN: The fear of it, I should say.
FOSTER: Jim, thank you very much, indeed.
Well, if you notice your Facebook page changing lately, it's just the beginning. Mark Zuckerberg has been showing us the future of the social network. We'll explain what's in store after the break.
FOSTER: Welcome back.
I'm Max Foster.
These are the main news headlines for you.
The world's financial markets are deeply in the red. On Wall Street, stocks are suffering a second straight session of heavy losses. The Dow is now trading at its lowest level since September of last year. It follows an even heavier sell-off in Europe, where French banks pulled the Paris CAC 5 -- the Paris CAC 5.25 percent into the red.
U.N. delegates from several countries walked out of an address by Iranian president, Mahmoud Ahmadinejad on Thursday. They left after Mr. Ahmadinejad blamed the U.S. for a long list of global problems. He called the 9/11 attacks mysterious and a pretext for war.
A prominent figure from the Moammar Gadhafi regime has been detained in Tunisia. Tunisian officials say they have arrested former Prime Minister Al-Baghdadi al-Mahmoudi. They say he was taken into custody near Tunisia's border with Algeria after entering the country illegally.
Thousands of transit workers in Greece walked off the job today to protest against austerity measures. The strike comes a day after the government announced more budget cuts demanded by lenders before they give Greece more bailout money. It snarled morning traffic. More walkouts are planned.
Well, this latest market slide began almost as soon as the Fed unveiled Operation Twist on Wednesday.
Earlier I spoke to Jeremy Hale, who it Citigroup's global head of macro strategy.
And I asked him why investors have been so overwhelmed.
JEREMY HALE, HEAD OF GLOBAL MACRO STRATEGY, CITIGROUP: No, I mean, Operation Twist is a transference of sort of buying power by the Fed's balance sheet to the long end of the curve from the front end. So the yield curve is flattened, but it doesn't really have much economic impact. And, as such, markets are kind of disappointed.
It was pretty well broadcast that that was going to happen. And I guess there were people in the markets who were hoping for something more, more of a balance sheet expansionary stimulus to the economy and they didn't get it.
FOSTER: Are you saying that it doesn't have an economic benefit because it's not new money?
HALE: I'm saying that there's much more of a stimulus if the Fed expands its balance sheet and injects new cash into the economy, yes. I mean there might be some marginal benefit from lowering long-term interest rates. For example, mortgage rates might fall. You might get a re-fi wave, with some consumers doing a little bit better on cash flow. But it's going to be small beer (ph). It's not going to be like the first and second rounds of QE, which were helpful for the economy.
FOSTER: Would it have helped if more than $400 billion was shifted?
HALE: You know, $400 billion, $500 billion, it doesn't really -- it doesn't really make a huge amount of difference. I mean the -- the thing is that up until this point, I think it's been difficult, given a rather split FOMC, to inject new money. They're concerned about inflation. They're concerned about whether the policy works. A lot of people have criticized QE2 for doing more to raise commodity prices than to support the economy. And that sort of persistent core inflation in the U.S. is the reason why the Fed is reluctant -- or some people on the Fed are reluctant to add new money.
FOSTER: And everywhere you look it seems to be negative right now, because, obviously, the U.S. is negative for those reasons. And they've got the Eurozone in a bad place. Bad data, as well, coming through from Germany and China.
So is it a case that there is nothing positive to look to right now?
HALE: I think it's very hard. I mean the truth is, I think the biggest driver right now has nothing to do -- well, it's not nothing to do with the Eurozone crisis, but it's certainly a lot to do with lower growth expectations, lower growth forecasts. And we -- for example, if you take the U.S., growth forecasts have roughly halved since June. They've come down from over 3 to about 1.8 or so. If you take this year and next year, on average, I mean they're going to halve again. I think we are really in the process here of downgrading growth forecasts, earnings forecasts and so on. And that's why all risk assets are coming off. And, you know, the things that are really getting crushed in the last couple of days are the EM markets, particularly the EM currencies, things like the ruble, the Brazilian real, the Mexican peso and some of the Asian currencies are getting hurt.
When you talk about China, the Chinese renminbi now prices in depreciation against the dollar over a -- over a one year period. You know, as you know, many -- many investors would love the idea that the renminbi should appreciate. Now it's pricing depreciation.
FOSTER: And I was interested to see today that the gold price was actually falling, when normally in this situation, it would rise, as people put money into gold as a safe haven.
What's going on there?
HALE: Yes, I -- I don't know if that's going to last, to be honest. I think amongst the commodities, I think there's much more down side medium-term for things like oil and base metals, which do tend to do very badly when growth weakens.
Gold will be supported if we see these extended period of easy money. However, we know that there was a little bit of speculative profit in gold. We know positions were very, very high. And as those positions have unwound, we may see a little bit more of a short-term correction.
I -- I suspect what we're really getting here is a massive amount of liquidation of risk in general. And so whatever people own, they're selling. And, unfortunately for gold, that was gold.
FOSTER: Is there anything political or institutional leaders can say right now to encourage you?
We heard from Christine Lagarde today, of course, trying to add some confidence to the global economy.
Was she convincing in any way?
Or are of the policymakers or institutional leaders convincing you in any way?
HALE: Not really. I mean I have to say that I -- I don't necessarily think that policy is impotent at this point. I think there are lots more bullets that policymakers could fire.
The problem, if you like, maybe it's a good problem, but the problem is we live in democracies. And there are democratic groups that sort of oppose various policy measures.
For example, the U.S. could do a fiscal expansion, but it's opposed by part of the Republican Party. And Europe could do a fiscal transfer to solve a lot of the debt problems, but it's opposed by the rich nations who are the (INAUDIBLE) kind of better fiscal credits.
So in the absence of overcoming those democratic barriers, I think it's going to be quite hard for policymakers to come up with something convincing for financial markets.
(END VIDEO TAPE)
FOSTER: It doesn't give you much hope, does it, for the next few days?
Well, up next, an update on changes at Hewlett-Packard.
FOSTER: Hewlett-Packard's CEO may only have a few hours left in his job. Various reports say that Lou Apotheker will, indeed, be replaced by Meg Whitman as H.P.'s chief executive after the closing bell today. H.P.'s shares finished almost 7 percent higher on Wednesday, when rumors of his departure first emerged. Right now, they're off around 5 percent as investors cash in on that pop.
Now, since Apotheker joined as CEO, he's seen the share price fall close to 50 percent. All the while, he's taken several million dollars in salary and bonuses.
Reports say his replacement will be the former eBay CEO, Meg Whitman. She has twice been voted "Fortune" magazine's most powerful businesswoman.
Joining me now is Rupert Goodwins.
He's the editor of the tech Web sites, "ZDNet UK".
Thank you for joining us.
I mean it is still rumor at this point, but what are they saying about him going?
Or are they saying nothing and that's the point?
RUPERT GOODWINS, EDITOR, "ZDNET UK": Well, they're saying nothing. But the reports are extremely strong. No, they're...
FOSTER: -- saying?
GOODWINS: Absolutely. So by the close of trade, they'll probably announce he's gone and we'll know.
FOSTER: Is he going to go at this point because the markets are expecting it?
GOODWINS: I think so. The most dangerous thing for H.P. right now is the confusion at the top.
GOODWINS: You know, you've had some very odd decisions. Everyone knows that major shareholders are absolutely mad with -- at him for those things. And he has to go because nobody's got any faith in him anymore.
FOSTER: Most notably, the share price has crashed...
GOODWINS: Indeed, yes, indeed.
FOSTER: -- as tenure (ph).
FOSTER: And that's what defines a chief executive.
GOODWINS: Yes. It's pretty much what you have to live and die by.
OK, Meg Whitman, then, she had traditionally dealt very successfully with consumer businesses.
FOSTER: This is very different.
GOODWINS: It is. There's also a little sky off (ph). When she was at eBay, she grew it to 15,000 people. H.P. is 20 times that size. Now, that's a huge step up. And also, she's only dealt with stuff that sells to people or with people. H.P. sells stuff into companies, which is a very different market, indeed.
Now, that doesn't matter if the lieutenants, if the people running the divisions are smart, they can tell her what's going on and she can make the big strategic decisions. But this is the first time she'll have a company this big and in that market. So it will be quite a leap (INAUDIBLE).
FOSTER: And the markets, I presume, like her, because the mar -- the share price went up on the rumors that she was joining as much as he was going?
GOODWINS: Well, there aren't may alternatives. Not many of the names that have come up -- reportedly, it was very difficult to get -- get Apotheker in, because not many people wanted the job. So you look around for alternatives, there aren't many.
FOSTER: OK, Rupert Goodwins.
Thank you very much.
We'll wait for that news.
FOSTER: Hopefully after the bell, we'll have some sort of news so we can get rid of the mystery.
Right now, we're going to go to the United Nations, though.
Another world leader on the stage there, the Turkish prime minister.
RECEP TAYYIP ERDOGAN, TURKISH PRIME MINISTER (through translator): His Excellency, Mr. Abdulaziz Al-Nasser on his assumption of the presidency and also wish to extend my sincere appreciation to Mr. Joseph Deiss for his time as president of the General Assembly.
We are passing through a period when both the international community and the United Nations are tested in an unprecedented manner.
However, I feel obliged to state very frankly that today, the United Nations does not demonstrate the necessary -- leadership necessary to help mankind prevail over its fears for the future. Therefore, the United Nations has to reform itself and renew its vision, with a view to protecting the universal rights of humanity as a whole, rather than acting upon the interests and remaining under the guardianship of certain countries.
Last month in Somalia, for instance, I watched -- I witnessed in person how the U.N. and the international community remained helpless against the pressing problems of today. It's impossible for me to put into words the poverty and suffering I have seen in Somalia. this I speak about because I have had personal experience, I have personally seen this with my family, with my ministers. It's not something I heard, it's something I personally witnessed. And the tragedy of Somalia, where tens of thousands of children died due to the lack of even a piece of bread or a drop of water is a shame for the international community and it's not something that we can speak of only with just a few words. This is a shame for the international community.
And the civil war which has been ongoing for the last 20 years in Somalia has wiped out all the resources and livelihood of Somalia and the people of Somalia are gradually being dragged to this before the eyes of the world.
Today, the international community is watching the suffering in Somalia like as if it were a movie. However, we should urgently face this situation, which is a test to our humanity. And while doing so, we should not look only into the picture of today, but also to the shameful history that has led Somalia into the arms of this great tragedy.
Indeed, beneath the tip of this huge iceberg lie great crimes against humanity.
FOSTER: Turkish Prime Minister Erdogan speaking there at the United Nations General Assembly focusing right now on Somalia.
We'll bring you more updates on what he says throughout the evening.
CNN following everything you need to know at hunger (ph).
We'll be right back after the break.
FOSTER: Change is in the air. Elsewhere in the world of technology today, we've been talking about H.P., but Facebook founder and CEO, Mark Zuckerberg, has been showing off his plans to take his site to the next level, including another sweeping redesign.
Dan Simon is outside the Facebook Developer's Conference in San Francisco.
And this hasn't been popular with all the users, but explain what's happened -- Dan.
DAN SIMON, CNN CORRESPONDENT: Well, there hasn't been a lot of popularity, you're right, with some of the new Facebook changes that have been rolled out over the last several days, specifically with the news feed and this ticker that you're now seeing on the right hand side of your screen. If you're a regular Facebook user and you've logged in recently, you know what I'm talking about. There have been a lot of complaints about it.
But hearing Mark Zuckerberg take the stage today, I think we have a better understanding of why Facebook is rolling out these features.
Let me talk to you about a couple of them.
Facebook is now launching what it calls the Timeline. This is a new way to talk about your life online, if you will, on Facebook. The Timeline will have dates of all the various important dates of your life. You can add pictures to a particular year. You can add the kind of apps you like to a particular date. It's called Timeline.
And on the right hand side of the screen now on Facebook, there is this thing called Ticker. And people were wondering what that was all about. Well, it's interesting, because if you're, say, listening to a piece of music or a song that's on Facebook, what it will show is exactly what you're listening to and then another user can actually just hover over it and you can see what they're listening to and just punch it, and suddenly, you're listening to the music together in a virtual way, if that makes sense.
The same applies to TV shows and movies around the world, not in the United States yet. Netflix launched a partnership with Facebook in 45 countries. Not in the United States yet. But many countries around the world, you can now see what movies your friends are watching actually on Facebook, hover over it and then you can watch that movie, as well.
So some interesting new announcements today. Facebook profoundly changing the way it -- it's doing the site. And they think that ultimately users are going to enjoy it. Right now, there have been some bumpy spots, but we'll see what happens going forward -- Max.
FOSTER: I guess they're getting involved in the media side of things, Dan, because Apple is doing so well. Other competitors are doing well. They just have to get into that somehow and it's doing it through partnerships.
SIMON: I think that's a good way of looking at it. And when you talk about music, when you talk about watching TV shows or movies, inherently, those are social items. People like to know what kind of music you like, what kind of movies you like, etc. So it's a natural fit for the company. And you're right, in terms of competing with Apple, Apple has some ambitious plans ahead when it comes to the cloud and music content, etc. So Facebook felt like it had to sort of take the next leap into this space and that's what they're doing today.
FOSTER: OK, Dan Simon in San Francisco, back with you as we get more.
Thank you very much, indeed.
Now, a week of dry weather is in the forecast for parts of Western Europe.
Meteorologist Pedram Javaheri is at the CNN International Weather Center for us to explain that one -- hi there, Pedram.
PEDRAM JAVAHERI, CNN METEOROLOGIST: Hi, Max.
Yes, dry weather expected the next couple of days now. We've seen high pressure in place here. And you know what's odd about all of this is that today is the last official full day of the summer across the Northern Hemisphere. The equinox officially taking place on the 23rd at 9:04 a.m. GMT. And what this all means for our friends across the Northern Hemisphere, we're talking about days, of course, getting shorter.
And the Southern Hemisphere, yes, they are getting longer. Your temperature is expected to warm up in the coming months.
But with all that said, try telling that to Mother Nature across portions of Europe, because we're going to see conditions begin to warm up. A little disturbance well to the north right now, across the region is spreading a few clouds across portions of Ireland, the northern region of Scotland there getting some light showers at times.
But besides that, generally clear skies. We do have a disturbance over a western area of Turkey producing some rainfall. But generally clear skies for a large part of much of Europe over the next couple of days.
And as this sits in place, high pressure going to really begin warming the temperatures up through Friday, Saturday, Sunday. If you're around Munich going out to Oktoberfest, you're certainly going to see temperatures in the mid and upper 20s with sunny skies.
And again, this deflects the storm track well north of the UK. So that gets you sunny skies and warm temperatures even up there.
Take a look at this. An interesting statistic here for the consecutive rain-free days of the summer season, since we are now wrapping up the summer season. Dublin only saw five straight days in the summer season of no rain in that part of the world.
London officially, at the Gatwick observation, coming in with 11 consecutive days, being their longest stretch of a dry period for the summer season.
And France, Paris coming in at seven straight days of no rain at one point during the summer season.
So we're going to see these numbers here stretch as we head on into fall. But if you're traveling across portions of Europe, a little blustery at times around Dublin. Give yourself some 30 to 45 extra minutes there.
But generally, we're looking at travel conditions to be not problematic in the next couple of days.
A different story down across portions of Mexico. This is Hurricane Hilary, right now, a lot of convection or a lot of thunderstorms associated with the feature. And you can pick out the eye as it tries to form right here. And that's the storm south of the Mexican state of Oaxaca. We know we have the Mexican government already urging folks to take this very seriously. This storm could become a Category 3 or greater in the next 24 to 48 hours.
But around the coastal resort areas of Acapulco, working your way towards just north of that region, you're going to see very, very strong swells over the next couple of days and also very heavy rainfall with rough seas.
So that's the latest in the weather department -- Max, let's send it back to you in London.
FOSTER: Pedro, thank you very much, indeed.
FOSTER: Time now for Tweets from the Top.
Air Asia's CEO, Tony Fernandes, is optimistic despite the recent slip in his company's share price. He Tweets this: "Oil prices going down. Good news or good for U.S. airlines or U.S. Airlines, I think more likely."
New York Mayor Michael Bloomberg says: "The solutions to this global epidemic are at hand. The tools are in place. Leaders simply need to act."
But not everyone agrees with Mr. Bloomberg. Economist Nouriel Roubini, very respected, Tweets: "U.S. Eurozone and U.K. are effectively in a recession now and policymakers are running out of policy rabbits to pull out of their policy hats."
A leading economist said similar words to us earlier on the program.
And a reminder, you can follow Richard on Twitter.com/richardquest. Richard's away on assignment, but Tweeting up a business traveler's storm.
He'll be back, by the way, tomorrow.
You're watching QUEST MEANS BUSINESS.
Just ahead, we'll check the latest stock market action for you in Europe, but in the U.S., in particular. Very moving -- it's moving very fast.
FOSTER: It is time to check the market numbers for you.
On Wall Street, the sell-off showing no signs, really, of slowing up today, down more than 4 percent currently. It sank below the 11000 point mark at the open and it's headed downward ever since.
Financial stocks taking a real beating, including the three banks downgraded by Moody's yesterday, Bank of America, Wells Fargo, Citigroup. Investors seem to be abandoning equities altogether and piling into U.S. Treasuries instead.
The NASDAQ and the S&P 500 are also off by around 3 percent.
A very bad day.
And if you think those numbers were bad, have a look at Europe. A sea of red across all the big three. And we're not exaggerating when we say that there are -- there's not a single share on these three indices that made any gains today. That was just the kind of day it was.
The worst losses were in Paris, where yet again, it was the country's banks that bore the brunt of all this. Soc Gen and Credit Agricole both finished the day down by 9.5 percent.
Now, a story beyond words -- that's how the trader accused of a $2.3 billion fraud was described by his lawyer in a London court today. Kweku Adoboli worked at a Swiss bank, UBS, where he's accused of carrying out unauthorized trades.
At a brief hearing today, the 31 -year-old faced a new charge for fraud dating as far back as late 2008. He hasn't yet entered a plea and remains in custody.
Meanwhile, tubs CEO met with the board of directors in Singapore. He's expected to call for a vote of confidence. The meeting continues on Friday.
Asian stocks also went down today. Financial stocks leading the steep losses in Japan and Hong Kong.
In China, new figures from HSBC show that manufacturing is slowing in the world's second-largest economy. That could mean that Beijing's policies to slow down red hot growth are taking hold.
Meanwhile in Australia, mining stocks led losses there.
That is QUEST MEANS BUSINESS.
I'm Max Foster in London.
Thank you for watching.
The news continues on CNN.