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QUEST MEANS BUSINESS
Stocks Soar; Double-Dip Warning; Packing a Shirt in 30 Seconds or Less
Aired November 28, 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, HOST, QUEST MEANS BUSINESS: From Black Friday to golden Monday, stock markets, they are a-soaring. Spirits in Europe most certainly aren't. The OECD's warning of a double-dip. And business travelers unite. Tonight, we show you how to pack that shirt in 30 seconds or less.
I'm Richard Quest. The start of a new week, and yes, I mean business.
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QUEST: Good evening. It's a rum old world that started this week. The day that the OECD forecasts slower growth and warns of a serious possible double-dip recession in Europe and lower growth worldwide. And stock markets are unruffled. The DOW is up the best part of 200 and 300 points. It was over 300 a short while ago - a gain of two and a half percent.
Euro bosses (ph), too, are extremely robust. I'll give you the update in a moment. But it shows what a very odd world it is at the moment.
The global economy is still deep in the woods with no guiding light. And we could all stray far further from the path to the recovery. A warning from the OECD. The Organization for Economic Cooperation and Development. Basically, the developed economies of the world.
The OECD says growth across its 34 members will likely slow as economies expect to 1.6 percent in 2012. That's down from their original forecast. Confidence is sinking, people are losing faith in Europe's decision-makers and their ability to actually deal with this. The organization says there needs to be, urgently. Expects things to improve.
First of all, the EFSF - the stability fund - has to be bulked up fast to make an effective firebreak. Secondly, it needs to allow the ECB - the European Central Bank - to fire that silver bullet, extend its balance sheet, and print more money - something that the German government is vehement against.
The chief economist at the OECD is warning the financial shocks in Europe could start a global chain reaction.
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PIER CARLO PADOAN, OECD CHIEF ECONOMIST: Well, there are a number of triggers that could happen, like sovereign default or a major banking event. The point is not so much to trigger as the whole Euro area is in trouble today and any event could trigger waves that would lead the area into depression this year, next year, and 2013. But also spread its negative impact across the ocean to the United States and even hurt growth in emerging economies.
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QUEST: So, on that pessimistic note, a transmission of weakness, a possibility of a double-dip, even a depression, and an inability of policy- makers, you may well ask why should your stocks be doing so well? The U.S. stock markets are showing a robust - actually, with the DOW up 2.6 percent. The NASDAQ - a gain of three and a third. Even the S&P 500. It is also - it's the retail stocks amongst the biggest gainers after the record sales over the thanksgiving weekend.
Strong gains, too, in Europe. The numbers show an extraordinary reaction to what's happening. Bearing in mind what the OECD says. The best of the day was in Paris with the CAC 40 up five and a half percent. XETRA DAX similar four and a half. The FTSE up three percent. Barkley's up 7.8, Deutchebank 7.2, BNP Paribas - you're not fooled, up 10.3 percent.
Yields are falling across most of Europe. The IMF told CNN there are no bailout discussions with the Italian authorities. If you now look at those numbers, a tad higher on the German. The Spanish is just perhaps also rising a bit. And the Italians are hardening at 7.2 or 3 percent. The UK now has the lowest - is now turning into a benchmark of -
JIM BOULDEN, CORRESPONDENT, CNN: That would be a big story on another day, wouldn't it? The UK now having yields lower than Germany?
QUEST: I to just get straight to this. Why are the markets up on a day when the OECD said recession is on the cards in Europe?
BOULDEN: They're seeing something out of Paris and Berlin. The markets are seeing a follow on from last week when Mrs. Merkel got together with Mr. Sarkozy and Mr. Monti in saying, "We're going to strike a deal in the next couple of weeks, if not in the next couple of days. We're going to make a plan that the rest of Europe is going to have to follow. The commission's going to have to follow, the parliament's going to have to follow".
Now, some of this has been denied, but some of it looks like it's true.
QUEST: This is what the Europeans - I was in Switzerland today -
QUEST: And they're calling it "The Super Club".
BOULDEN: Yes. Well, some of this has been denied that it would be like a "Super eight" of just the eight -
BOULDEN: -- eight biggest Euro countries would get together and create their own - but the bottom line is tough talk coming from the capital saying that they're going to have to strike a deal that's going to make it legally binding that countries in the Eurozone have got to stick to their budget targets.
QUEST: But, Angela Merkel says she wants to start opening up the treaties. And, at next week's EU summit in Brussels - council summit - that will be one of the proposals. Are they going to open up the treaties?
BOULDEN: Opening up the treaties, yes. But that takes some time. What we're looking at now is the possibility that what Paris wants is to have some changes that they can do quickly that do not necessarily mean treaty changes in Finland, the UK, Malta. You know how long all that takes. My goodness, we saw how long it took just to get the EFSF to be increased.
QUEST: Come on, Jim. It's a false paradise, today's market rally.
BOULDEN: It's an extraordinary false paradise. It's one day. I mean, look at every other piece of news. But, you took Black Friday - we cannot dismiss that for the UK - for the markets here. Because Asia started this rally because of Black Friday numbers. Because of the retail sales.
BOULDEN: Then you have these rumors that there's going to be a very strong statement - very strong decision, finally, out of Europe.
QUEST: All right. Valentijn van Nieuwenhuijzen is a Fixed Income Strategist at ING Investment Management. When you take the markets and you take the OECD warning, what do we make of it?
VALENTIJN VAN NIEUWENHUIJZEN, FIXED INCOME STRATEGIST, ING INVESTMENT MANAGEMENT: Well, in the end, I think what we should take from it is the realization that if nothing happens with respect to policy makers changing direction, that we are going to see negative growth and that we are running a risk of very prolonged period of negative growth. So, we really need a game changer to get this negative spiral of debt problems to sentiment to weaker growth to further fiscal tightening out of the way to bring a more prosperous outlook for markets and for the economy in Europe.
QUEST: Everywhere that I have been reading over the past few days has had apocalyptic predictions for the Eurozone. The Economist basically says it's heading for a crash if something isn't done. Brokerage notes left, right, and center saying the same. Where do you stand on that?
NIEUWENHUIJZEN: Well, in the end, actually, I don't think the apocalypse will be realized. But, of course, you have to take into account that we have a very big negotiation game on the table in Europe. And, as with any negotiation, you wait until the very, very last moment - until you're at the edge of the cliff - until you show your cards.
And, at that moment, I think there will be something of a ground bargain and you will have a deal between the ECB and the Germans on the one hand, and the rest of Europe on the other hand. Which will result into a lender of last resort provisioning by ECB, but also a fiscal framework which is credible and sustainable in the medium term to keep the rest of Europe in check. And that will probably be the deal at the last minute.
QUEST: You are in the market and watching the market. Does the market - are you prepared - is the market, do you believe, prepared to wait for that grand bargain and wait for treaties to be reopened and renegotiated?
NIEUWENHUIJZEN: No, the market is not prepared to wait at all. And actually, as we've seen over the weekend in Belgium, the markets will force politicians' hand to, in the end, make these types of deals. So, in the end, it will come down, probably, to a period of further pressure to force these types of deal on the table. Until we see these concrete results, I think the markets will behave very volatile, but not chose a stronger action to the upside. But once we have the deal - once the ECB gets over its hurdle of resisting this provision of last resort, lending of last resort - then there will be significant upside.
QUEST: Finally, the market - and I'm not necessarily asking you to comment on one day's market movement, but in the middle of a crisis, when you can get the DAX up four and a half, the CAC up five, the FTSE nearly three percent - the world's gone mad.
NIEUWENHUIJZEN: Well, I think, you know, I would still describe the market as somewhat of a manic-depressive state. And, very often, we see the biggest one-day up-moves in bear markets. And that is typically the case if you have a lot of tension in the market and a lot of negative positioning by investors. As soon as the market turns up, they want to cover their short positions. But it's not necessarily enough to be convinced that we have a sustained upward market for the next couple of weeks or months. And, again, therefore we need more policy action.
QUEST: All right. So we'll talk more about that in the days ahead. Certainly, as we head towards a European summit meeting next week.
An historic day for Egyptian democracy. What it means for the economy is much less clear. On Election Day in Egypt, we'll be live in Cairo after the break.
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QUEST: Election Day is officially over. A few moments ago, the majority of polls closed in Egypt. The country's first elections since February's revolution ended the regime of Hosni Mubarak. Voting's been described as brisk, though it comes in a time of sever political and economic uncertainty. Jim Clancy is in Cairo for us, tonight.
Brisk voting on elections. Bearing in mind the recent troubles in Tahrir Square, people had said should, perhaps, have been postponed. Are they glad the voting went ahead?
JIM CLANCY, INTERNATIONAL CORRESPONDENT, CNN: Awe-inspiring is the way that it went down today at the polls. And yes, people were glad to be there and cast their ballot. Sure, Richard, some people donned black as they went out, out of respect - a solemn show of support for those 40 or more people who have lost their lives in just the last 10 days. Thousands of people wounded in clashes here in Cairo and elsewhere around Egypt.
But today was a day for the ballot box, not the protests in the Square. It was a day when Egyptians said they really felt that things could change, that they could have a voice. Many said that, for the first time in their lives, they felt they were casting a ballot - having their voices heard. Here's what one told me about the mood.
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UNIDENTIFIED FEMALE: It's an awakening. I'm very happy and I feel that, even when I seed old ladies hardly walking, it makes me feel that really Egypt is reviving.
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CLANCY: Now that was at a polling station. It was set aside exclusively for women. And I can tell you right now, most of them, at least here in Cairo, were voting for liberal candidates and liberal parties. They have a choice now. But they want to ensure that there is separation of church and state - that religion doesn't smother liberal politics in this country. They see it as something that will ensure their future - not only their own future, but the future of their daughters and granddaughters.
Richard, back to you.
QUEST: OK, all right, Jim. That is, to some extent, if you like, the optimistic side. But, as I'm going to show in just a moment, the economy is anything but in good shape. So, how and where are they as they vote of the necessity to get that back on track?
CLANCY: Well, many of them, Richard, are very aware indeed. Now, in Tahrir Square, behind me, you have political activists that are standing up, speaking out against the military government, demanding that it yield leadership to civilian forces in this country. At the same time, there are a large number of voters out there that say what we really need is stability. After all, what was the root of this Arab awakening? Yes, it was political on one hand, Richard, nobody denies that.
But it was also economic. It was about jobs. It was about opportunity. And people here in Egypt - they look at the tourism industry that is virtually shut down, and they say, "Enough of this. We've got to bring back stability. We've got to bring back growth to Egypt's economy". They are very aware of that. Back to you.
QUEST: Stay exactly where you are, Jim. Stay where you are for 30 seconds or so while we just look at these numbers. I'm coming back to Jim in just a moment because this is really the environment that Jim is talking about.
You've got reserves that have been sharply drained down as money has been taken from out of the economy. The central bank is desperate to keep the Egyptian pound steady. So, reserves are down nearly 40 percent. Egypt's GDP growth - now the IMF is predicting 1.2 percent this year, 1.8 percent next. Bear in mind that, in Egypt, the norm was seven percent. And that is what's necessary to create the growth.
And you have tourism down 37 percent in the second quarter. A cornerstone of the Egyptian economy. More than a million tourists stay away. If Jim is still with me - you heard me go through those numbers. Jim, democracy is part of that story, but at which point do the protesters say it's time to get on with running the country again?
CLANCY: Richard, let's have no illusions here. There are some of the young people down in Tahrir Square that put politics paramount - above all. They will stand their ground and demand change, no matter what troubles it wreaks on the economy. But I think a far larger group understands exactly what you've been talking about.
One man told me he didn't think that Egypt had enough reserves to carry on more than several more months into the future - that we were very quickly approaching a critical phase. You talk about tourism being down 50 percent - I talked to a young man who was in the tourism industry and he said, "It's virtually shut down". That, despite the fact this is the perfect time to come and visit Egypt. There are a lot of these troubles that are gelling in the minds of people. They line up at the ATM machines and they wonder when will all of this turmoil give way to some real, steady progress?
And they wonder, Richard - this vote is spread out over months. Does that mean it will be months before there's an end to all of this? A lot of Egyptians hope not. Back to you.
QUEST: Jim Clancy for us tonight in Cairo with head ups on many things, Jim, now. As we move on our agenda, we spin the globe to "Future Cities".
When you are out walking the city, it's best to look your very best.
(BEGIN VIDEO CLIP) QUEST: In Tokyo, even man's best friends are in hot pursuit of the body beautiful. "Future Cities" in Tokyo.
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QUEST: Never let it be said that we don't or can't - oh yes - do cute on this show. I don't know what it is. Sometimes, just looking at these little chaps, it cheers you up. Well, it cheers me up, certainly, after a long day. Especially on the road.
That's why, whether it's dogs, cats, or anything else on four legs, we love pampering our pooches and pets. How to do that in a dense urban environment like Tokyo? There they are finding unique ways to make room for man's best friend.
Andrew Stevens is in Tokyo for "Future Cities".
ANDREW STEVENS, ANCHOR AND CORRESPONDENT, CNN (voiceover): Japan has always been known as a land of innovation - a high-tech world that's a unique mix of the quirky and the cool. And Tokyo, like many of the world's international capitals, is also a place where the stress of daily life can wear on any city dweller. A city where any open space is cherished. As are the city's pets.
In this busy district, close to the heart of Tokyo, you'll find this shop. It specializes in aqua fitness for dogs. Yes, you heard that right.
UNIDENTIFIED MALE (through translator): This is basically a sports club for dogs with a swimming pool and running machine. A place for dogs to exercise.
STEVENS (voiceover): There's a variety of cardio workouts on offer.
UNIDENTIFIED MALE (through translator): Her back legs are getting weak and she's having trouble walking. We heard about the training program they have here. So we've been bringing her here for about six months now.
STEVENS (voiceover): Whether it's warming up in the tank, running against the current - if you look closely, those are weights tied to this little one. They can swim laps with their owners cheering them on. Or, like any reputable gym, there's a treadmill, which can be raised to a steep incline.
UNIDENTIFIED MALE (through translator): Pets now have much better lives, living indoors and eat well. But they also end up having the same sort of lifestyle diseases and stresses. They also lack exercise. So I believe we need to provide them with the same sort of care as humans. And that is how this place started out.
STEVENS (voiceover): Each dog's progress is monitored closely. It's not cheap. Prices start at about 60 dollars a session. But the gym's founder says don't be fooled. The morning walk or even stroll isn't enough, because sometimes it's the dog who's walking the owner. Here, he says, it's all about pushing your pet to its full potential.
UNIDENTIFIED MALE (through translator): Because dogs today live longer, they're facing senior and elderly care problems, just like humans. We need to figure out ways so they can also live a healthy, long, life.
UNIDENTIFIED MALE (through translator): We only want the best for her. Like parents would for their children.
STEVENS (voiceover): Of course, it's not just dogs that are adored in Tokyo. This cat cafe has two branches in the city. A place for those with a love of felines, but not the space or the time to own one themselves.
UNIDENTIFIED MALE (through translator): I think we have a majority of clients who don't have the possibility to have pets at home.
UNIDENTIFIED FEMALE (through translator): It's very difficult to have a pet in the city. There are many residential buildings which place restrictions on them. It's a place where I take some time off. You forget your worries.
STEVENS (voiceover): Another option - if you want to get out and about with a pet, rent one for the day. Yoichi (ph) Honma (ph) has had this shop for 34 years.
YOICHI (ph) HONMA (ph) (through translator): In Japan, there are many buildings where residents are not allowed to keep pets. But there are people who would like to have one only for holidays such as summer vacations. Young couples or families with small children come more often.
UNIDENTIFIED MALE (through translator): Since it's a wonderful day, we wanted to go for a walk. And we thought it would be great to bring along a dog.
STEVENS (voiceover): There's a wide selection, too. And, yes, many rentals do turn into purchases. Just a few ways to help people reconnect with pets -
UNIDENTIFIED MALE (through translator): He wasn't booked, and they told us he was wonderful.
STEVENS (voiceover): -- and relax in a crowded and stressful city. Andrew Stevens, CNN, Tokyo.
QUEST: "Future Cities" with the pets of Tokyo. In a moment, working together to reinvigorate the economy. A meeting of three presidents at the White House. What did Messrs. Obama, Barroso, and Van Rompuy come up with?
QUEST: Huge crowds in Damascus are denouncing the Arab League for voting to impose economic sanctions on Syria. State TV is reporting pro- government rallies in several other cities, as well. The country's foreign minister says sanctions will close the window on solving the crisis.
Election day in the Democratic Republic of Congo, the second time voters have gone to the polls since the war there formally ended in 2003. The vote was taking place in a climate of fear, uncertainty and violence, not to mention concerns over logistical issues. The incumbent, Joseph Kabila, had 10 challengers for his presidency.
Monday brought an ominous warning from the OECD. It says the world's top economies could see deep recessions unless Europe and the U.S. deal decisively with their respectively with their financial troubles. The group's statement described the Eurozone debt crisis as, in the words, a key risk to the world economy at present.
It is appropriate that the OECD should warn about transatlantic debt problems, whether it's the Eurozone crisis or the failure of the budget agreement process in the United States. Both sides seem to have similar problems. Under a cloud of debt contagion, President Obama and the president of the European Commission say they are committed to fixing their economies. At a meeting at the White House the leaders said they'd work together to create jobs and ensure stability.
Maggie Lake is in New York -- Maggie, two or three, in this case, or four, or however many there were there, drunken men walking down the street, propping each other up, each saying -- I mean I read the -- I read the statement.
MAGGIE LAKE, CNN BUSINESS CORRESPONDENT: Yes, very long on rhetoric, short on specific proposals, isn't it, Richard?
And this is what we've seen time and again. But I don't know that we expected very much more from this. One of the main reasons, as you start to look at the videotape as they sat around holding a press conference is that the real power broker wasn't there. We all know that that's Germany.
Nonetheless, Obama meeting with the European officials, Barroso and Van Rompuy, and saying -- Obama making it very clear that the U.S. stands ready to do its part to help Europe -- we don't know what that means -- has a stake in its success.
And -- and at the summit, Obama said very clearly that the Eurozone crisis is a huge issue for the U.S. economy. And there's been a sort of interesting debate going on here, because you'll know, of course, that while Europe has been mired in this debt mess, in some ways, it's been helping the U.S., because Treasury yields have fallen as people flock to U.S. Treasuries. That's helped sort of take the heat off of the United States in terms of dealing with the debt issue here. It's kept borrowing costs very low.
Now, however, the -- the conversation is really turning to if there is a Eurozone meltdown, there is no way the U.S. economy is going to avoid taking a big hit on that. And that, of course, has a huge stake not only for the economy, but for President Obama as he starts to -- starts to head into the election and try to win reelection, if it hits the economy...
QUEST: All right...
LAKE: -- it could send that jobless rate up and the stock market, there's going to be a real problem for him personally -- Richard.
QUEST: Stay where you are, Maggie. Do not go far.
Todd Benjamin is with me, my old sparring partner.
Todd, so you've got these, if you've got them in the room, neither side is doing very well and you've got a market that's up 2.5 to 3 percent.
TODD BENJAMIN: Well, look, I think this is a huge relief rally. First of all, you had better than expected retail sales in the United States over the Thanksgiving holiday. That helped the market. And, also, you have this idea that maybe the EU leaders are coming up with an idea that would help lead to some sort of resolvement of this huge issue they're facing. I remain skeptical. You've got...
BENJAMIN: Because, first of all, I don't think we the European leaders really understand the nature of the problem...
BENJAMIN: -- which is -- wait -- growth and competitiveness. Secondly, I think that the ECB is not going to play ball. They won't become the lender of last resort. See, as Maggie pointed out, the real power broker was not there at this meeting. That's Angela Merkel. She's not willing to have Eurobonds. I could give you other reasons...
QUEST: OK. If you're right...
BENJAMIN: -- but we only have three minutes here.
QUEST: -- if you're right...
QUEST: -- then things are bad.
BENJAMIN: Things are beyond bad. This crisis is worse than the financial crisis of 2008, because they have fewer options, fewer bullets left in the holster.
QUEST: Maggie, that -- how does that play into the American psyche of what you saw today in the White House?
LAKE: It's a huge problem, Richard. And -- and in terms of the American consumers' psyche, they're not even there yet. They don't sort of fully understand this, but the banking system is at the center of it again. If Europe craters and it pulls the U.S. banking system down with it or -- or at risk with it, with less ammunition to deal with it, it's going to mean a whole world of problems here. We still have a fragile consumer. Housing is a mess. I mean we are still sort of inching our way out of this recovery.
Any kind of contagion like that will absolutely come here and it will be a massive setback for us. And -- and in terms of the rally today...
QUEST: All right...
LAKE: -- everybody is talking about Black Friday. Banks are up. Banks aren't rallying on Black Friday, they're rallying on the hope and prayer Europe gets its act together. And if it doesn't, we are going to see a major reversal of this. A lot of concerns brewing behind the scenes, underneath this rally -- Richard.
BENJAMIN: No, I agree totally with you, Maggie, in terms of what you're saying. The banks are rallying because they hope there is some sort of resolution to the Eurozone crisis.
But it's not that simple. In many ways, EU leaders have made the crisis worsen.
When they came out with their latest plan in September, the third in a year-and-a-half, which they said would be the final resolution and it cratered in the markets within 48 hours, part of that was recapitalizing the banks.
What does that do?
That actually takes credit away.
QUEST: All right...
BENJAMIN: That makes growth harder to come by. They don't get it, Richard.
QUEST: This morning's "F.T." Has as its lead story a report about credit -- creditors...
QUEST: -- now, you see you're -- you're already...
BENJAMIN: Yes, that's Angela Merkel right now.
QUEST: That's Angela Merkel complaining about what you're saying.
BENJAMIN: Yes, exactly.
QUEST: This morning's...
BENJAMIN: Let's turn that off. OK, yes. OK. Yes. OK. Yes.
QUEST: This morning's -- it's live. It's fun.
This morning's reports are the credit squeeze is rapidly starting to happen again. Banks have a funding gap.
BENJAMIN: Absolutely. In fact, yes, there's a funding gap of about $150 billion, $200 billion this year alone. It's going to get worse next year. You're seeing an inner bank lending market. Things are getting much tighter because there's not confidence.
Also, why has the euro held up relatively well compared to the crisis?
QUEST: Go on?
BENJAMIN: Because very simply, money is coming back that banks have put on deposit with the Fed, coming back to Europe to help that funding gap.
QUEST: Let's pause for a second. Let's just listen. President Obama has been speaking at that summit.
Let's hear what the president said.
QUEST: Oh. It's all going extremely well so far. And...
BENJAMIN: Well, look, there is not much that he could say, all right?
BENJAMIN: That's the hell of it. I don't mean any disrespect...
QUEST: Oh, that...
BENJAMIN: -- all right.
QUEST: -- that's being uncharitable.
BENJAMIN: No. No. Listen, you've got three guys in a room.
BENJAMIN: They can agree. But you have 17 members of the Eurozone. That makes it really tough, all right?
And you have Congress, where opposition has become a strategy. You have political paralysis, you know, in the U.S. in terms of their own debt crisis. And in Europe, Germany holds all the cards. It's that simple.
QUEST: All right. Maggie, back to you for -- for your final word. What we're seeing today, today is Cyber Monday, which is basically a manufactured idea that people shop online.
You'll be buys today, won't you?
We know you're buying -- doing all your shopping online.
LAKE: Yes, we talked about this. Richard, I actually haven't yet. I'm a -- I'm the complete wrong person to ask about Christmas, I'm so behind with this.
But I do want to circle back. None of this will matter. The good retail sales, none of it will matter if Europe craters.
LAKE: And people are talking about days left to resolve this. And I will tell you, from this point of view, watching from over here, people are very worried, back in '08-'09, it seemed like an economic problem, a banking problem. This time it seems like a political one, unless Germany underwrites this, it's not going to happen. And a lot of people are getting worried that politically, the...
LAKE: -- the consensus isn't there. It's a real concern.
QUEST: You get the last word, briefly.
BENJAMIN: I would agree with Maggie 100 percent...
QUEST: All right.
BENJAMIN: -- that Germany holds all the cards. I think because they have an election on the horizon in 2013, Merkel has to figure out a graceful way to sell this to the German people. I think that would be a tough sale, if she is willing to have Germany do more in terms of Eurobonds.
And the second thing, very quickly, Richard, when they decided to have the bondholders in Greece take a haircut on those bonds, they made the situation much worse because there's no...
QUEST: Oh, no, no...
BENJAMIN: -- there's no more credit...
QUEST: No, no, no. Hang on...
BENJAMIN: -- there's no more...
QUEST: -- hang on.
BENJAMIN: There's no more free...
QUEST: No, no, no.
BENJAMIN: -- ride in the sovereign debt market and it undermined the insurance market in terms of the CDS market.
QUEST: I -- I don't...
BENJAMIN: A fundamental error.
QUEST: -- I don't agree.
BENJAMIN: A fundamental error.
QUEST: I do not agree with you on that. I do not agree with you on that, Todd. They should have taken that decision on the first bailout. That was a precursor. That was a necessity to getting the situation sorted out.
BENJAMIN: It exacerbated the situation, Richard.
QUEST: You -- right. We'll have to agree to disagree. Instead, let's listen to the president of the United States.
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BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The United States stands ready to do our part to help them resolve this issue. This is of huge importance to our own economy. You know, if Europe is contracting or Europe is having difficulties, then it's much more difficult for us to create good jobs here at home because we send so many of our products and services to Europe. It is such an important trading partner for us.
And so we've got a stake in their success and we will continue to work in a constructive way to try to resolve this issue in the near future.
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QUEST: All right. There you are. The last word to the president.
Maggie is in New York.
Not long to get my present, Maggie, a couple of more weeks. Just a -- don't -- don't let me stop you.
LAKE: I'm working on it. I'm working on it.
QUEST: All right.
Todd is in wrong on the question of the development. But we'll come back to that one in the future.
Good to see you.
You'd better go now to your phone. It will be...
BENJAMIN: I'll vote with the markets.
QUEST: Ah. You had to have the last word.
And we carry on.
Let's move on.
Coming up after the break, a bit of sanity--- a food giant pledges to do away with the darker side of chocolate. Nestle is joining a campaign to eradicate child labor on cocoa farms.
It's QUEST MEANS BUSINESS
QUEST: One of the world's leading chocolate producers is to investigate whether it is unknowingly using child labor. Nestle is to join forces with the Fair Labor Association to launch an independent investigation into how many children are working for its suppliers in Ivory Coast. You'll know because you've watched this program when we've covered it, 10 years ago Nestle and other global food companies signed the international commitment to end child labor, particularly the Cocoa Protocol.
This year, a U.S. government backed report found more than 1.8 million children are still being excluded -- included.
Earlier, CNN's Jim Boulden spoke to Jose Lopez, the executive vice president of operations at Nestle.
He asked Mr. Lopez why now has Nestle decided to join forces with the FLA.
JOSE LOPEZ, NESTLE: We are not satisfied with the progress this issue is doing generally. And we have looked for ways to increase the effectiveness of the activities that people like ourselves can be engaging to in bringing to a better situation, child labor issues in -- in places like Ivory Coast.
And to do so, we had worked with the Fair Labor Association, which we knew from their work also originally and have found that they can open new avenues to make progress by creating transparency, traceability and understanding beyond maybe what is the -- what is today considered generally.
JIM BOULDEN, CNN CORRESPONDENT: Now, of course, the -- the chocolate companies signed this protocol back in 2001 called the Harkin-Engel Protocol. And...
BOULDEN: -- aid agencies have been critical ever since, saying that nothing has changed as far as child labor in places like the Ivory Coast.
What's going to be different this time?
What's going to change, especially for Nestle?
LOPEZ: The topic of what will change will also be in our ability to influence the people that actually will be able to take decisions within their legal few more weeks, within their allocation of resources, in the countries. And I'm, of course, referring to the influence we can have with clear data, with transparency, with demonstrations of how ideas and how things could be improved that are based on -- on new facts and new, probably, ways to look into the entire supply chain.
So, indeed, the level of scrutiny that we want to have on the current supply chain could not be brought in by the old associations and this is what we will do with the -- with the Fair Labor Association ourselves.
BOULDEN: Of course, Nestle is a huge player in the cocoa market. But if the other companies don't follow, maybe it won't have as much impact as you would like.
Do you expect your competitors to follow?
Are you asking, calling for them to take this step, as well?
LOPEZ: Actually, in essence, that's a very good question in the sense of how we would see the effectiveness going forward. And we would see effectiveness by other players following, but also finding the original ways of contributing.
And -- and I have to say that the, you know, I respect our competitors in that sense. And many of them also, suppliers, our suppliers. And so I know they are involved in -- in a lot of activities.
So we have to see our association with the Fair Labor Association as being complementary to the efforts that are already being undertaken by -- by many players.
(END VIDEO TAPE)
QUEST: The Freedom Project and the question of the Cocoa Protocol.
We'll be back with more QUEST MEANS BUSINESS after the break.
QUEST: TM Lewin has been selling business ware and attire since 1898. It's now trying to collar more customers overseas.
The company's international sales were up 26 percent in the first half of the year. It wants to match those abroad with those in the U.K. by 2016.
Now, all of this is very important. But frankly it's a little bit dry. Instead, when the TM Lewin chief executive, Geoff Quinn, joined me, we needed to talk more than just numbers. He taught me a lesson I'll never forget -- how to pack your shirts in a suitcase.
First, though, we did have to deal with these pesky numbers.
How is any company in these challenging environments growing international business?
GEOFF QUINN, CEO, TM LEWIN: We already have some experience, small experience, growing our business. But it's going to be a mixture of both franchise stores -- we're opening our own stores in Australia. We also are partnering with Myers in Australia to open a chain of 30 concessions.
QUEST: You describe the environment as challenging. And we hear on this program today just how challenging.
Can you be optimistic about the year ahead?
QUINN: Well, unfortunately, I am an eternal optimistic. And -- and actually, I can, because I think that businesses that succeed through their products and not through necessarily just the environment. You can overcome the environment if you have the right product and you have the right mindset to go out and sell it.
QUEST: OK. We've got -- we need to talk more about -- less about the economics and more about the shirts themselves. We have some here. And you've been making shirts for -- for quite a few years.
What are the latest trends in shirts?
Boring people like me always wear the same type.
QUEST: But what are the latest trends?
QUINN: If I can show you, one of the last trends is actually to wear a shirt that's very business minding during the day.
QUINN: But actually, in the evening, you can then open it up and -- and -- and away you go. So that's for the people and that's not got a double cuff. That's a button cuff.
QUEST: So are -- are double cuffs in or are they out?
QUINN: No, they're still very much in. This range, actually, also comes in double cuffs, as well.
QUEST: Right. Right.
QUINN: I just happened to bring along a single cuff tonight.
QUINN: Checks are great.
QUINN: They're great.
QUEST: But -- but in terms of the cut of the -- the cut of the collar...
QUEST: What -- what are we -- what are -- what is the smart person wearing these days?
QUINN: OK. The smart person, this -- this collar has got a duke of York collar, which actually is very similar to what you're wearing. So there's a smart person.
QUINN: Then, of course, you've got the Prince of Wales collar. That's very, very traditional,
QUEST: A bit of a bit old-fashioned is what you're attempting to paint.
QUINN: Well, yes, but it's -- but it's -- it might be old-fashioned, but, actually, it's so classic, it's so smart.
QUEST: Right. Now, one of the things that we all have to -- the problem many people have like us face is, of course, when we're traveling, is folding a shirt.
QUEST: Let's put these over here. You believe that you can fold a shirt for me.
QUINN: I can, indeed.
QUEST: And all we need is a magazine. Now, for the purposes of this, we've got the copy of the ECB's ler -- last month's staff magazine, with our old friend, Jean-Claude Trichet on it. Probably the best thing, maybe you can do with this here.
QUINN: Clearly, it's very important which magazine you use to fold your shirts, which will obviously affect...
QUINN: -- affect the outcome of the -- of the shirt folding. Simply what you do is using a shirt very much like the shirt forward (ph), it's placing it in the center and then follow the natural contours of the board. And with the -- this is the shirt. This is straight out the bag, so it's not been pressed or anything. Fold it through and fold that cuff back up so that's coming down to the end there, pull the other side across, fold it through, shake that like so, bring that back up, fold that one just down there, then literally, once over, once up, pull the magazine back out again and you have a shirt ready to go.
QUEST: Wow! I've never actually -- all right. I know we're going to take a bit of extra (INAUDIBLE) this because I know our viewers are going to be fascinated by this. You take the magazine and you put it there.
QUEST: Under the collar?
QUINN: Yes. Just to -- just up to the top of it.
QUEST: Up to the top?
QUINN: Up to the top.
QUEST: You fold that over...
QUEST: -- and you bring that down.
QUEST: You bring that up?
QUEST: And you leave it like that.
QUINN: Yes. Just up and -- and down just so that...
QUINN: -- you can use it that way.
QUEST: This thing comes across.
QUEST: Goes down.
QUEST: Goes back up.
QUEST: All the way?
QUEST: And then let down again?
QUINN: Yes. That's that -- just -- just above that line.
QUEST: Just above the line. This thing goes once. And then all the way.
QUEST: Turn it over.
QUEST: Take it out.
QUEST: Here's what I have already to come right out of the...
QUEST: -- yes.
Thank you very much.
QUINN: Thank you very much.
QUEST: So we're putting this on the Web. People want to know.
Thank you very much.
QUEST: Thank you.
(END VIDEO TAPE)
QUEST: Let's have your thoughts on how we did with that. The Twitter address, as always, is @richardquest is where you can follow on that and give us your thoughts of how you fold.
Jenny Harrison, I'm told that that works remarkably well for blouses, as well as shirts.
JENNY HARRISON, CNN METEOROLOGIST: Richard, I've never seen anybody as ham-fisted as you. Remind me not to get you to pack my case. I'm actually very good at packing my clothes, I'll tell you. I am very good.
And it's all -- it's gone quiet.
Right. So I'm going to talk about the lack of snow across areas of Europe in just a minute because it could be quite a -- a thing as we go through the next few months. Already, we've seen a real lack of any sort of precipitation across Central Europe and it's because we've had, for weeks now, high pressure in control.
But what that's also meant, of course, is we have had these really strong areas of low pressure heading across the northwest and continuing across the region.
Now, literally beginning Friday then into Saturday and Sunday, we have had some tremendous winds across the northwest of Europe. These were the peak winds, though, as reported on Monday. Look at this. In Poland, 133 kilometers an hour. That's just over 80 miles an hour. But, in fact, on Friday, the strongest gust of wind was in the Faroe Islands. And that was 205 kilometers an hour.
Now, we've seen all these systems come across. They're very intense areas of low pressure. And they have been spreading those winds all the way across Northern Europe.
These are the current winds at the moment. These are sustained winds, these numbers. So 40 kilometers an hour in Plymouth. That means we've got gusts in excess of probably 55 or 60 kilometers an hour. And the winds are beginning to pick up again. They have actually eased off in the last few hours. Once again, they're picking up, but they're strong right the way across as far as Western Russia down toward the Black Sea.
There are also more very heavy amounts of rain pushing in now across the areas of Scotland, also Ireland. There are more warnings in place. The U.K. Met Office has issued warnings across Scotland because of the severity of this. We've had wind warnings in place throughout the weekend. Now it's changed over to (AUDIO GAP). The strong winds really aren't going to ease up. They're going to continue up through Scandinavia and they'll funnel their way up through the Baltic Sea.
At the same time, the temperatures, they are becoming a lot cooler. We've got this front swinging through, so that's going to bring in some much fresher, cooler air in the wake of that system. When it comes to traveling, another day when we could face some fairly lengthy delays. Look at these delays here -- London, Glasgow, Amsterdam, all because of these very strong winds and, as you might expect, Dublin and Copenhagen, as well.
Now, there is the rain coming in with the system. We will see some more snow through high elevations, even across Scotland, once again through Norway. But then look at Central Europe -- just nothing at all to talk about there. We just haven't had any rain and certainly not any snow.
Now have a look at this for comparison. This is November 2008. Now, this was a season with a lot of snow, it has to be said. But very good start to the season -- loads of snow covering all the line of the Alps.
Look at it this year, there's barely any snow there at all. It's the blue that you (AUDIO GAP) that means, of course, is not good news at all for all the skiing resorts (AUDIO GAP).
I'm out of time. That's as far as I can go. I was going to show you a picture. But look at this, nothing measurable since the 19th of October. It's not so much the temperatures. We just haven't had the rain, which, of course, turns to snow over the mountains.
QUEST: And, indeed, I was in Liechtenstein this morning and in Zurich, where the -- the mountains were bare for all to see.
Jenny, we thank you.
A Profitable Moment on the markets after the break.
QUEST: Sometimes the markets tell us what analysts are too polite to say. We've seen traders cut through the chatter and cut to the chase. A sea of red persuades us things aren't as rosy.
Well, today isn't one of those days. Stocks soared. European markets threw the roof. There's something worth buying out there.
Whether the market is right is another matter. The OECD says growth is slowing, Europe is in recession. The contagion is enormous.
We don't know anything that we didn't know already. But as we come to the end of today, we need a few more stock market rallies to tell us that things will be all right. Otherwise, frankly, it's all just pie in the sky waiting for the next storm.
And that's QUEST MEANS BUSINESS for tonight.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I hope it's profitable.