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QUEST MEANS BUSINESS
Former Royal Bank of Scotland CEO's Knighthood Annulled Over Role in Financial Crisis; Michel Barnier Says EU Must "Stand and Deliver"; Eurozone Jobless Rate at 14-Year High; Youth Unemployment Big Concern for EU; Spain's Economy Minister Calls Youth Unemployment Rate "Unacceptable"; US Earnings Season; Mixed Results on Wall Street; European Markets Up; Euro Crash, the Musical
Aired January 31, 2012 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, HOST: Fred the Shred sheds his knighthood. The ex-boss of RBS is directly blamed for the financial crisis.
Stalled growth, rising unemployment. Europe tackles the jobs crisis.
And from treats to better treatment. Hershey's says it will invest to improve conditions in West Africa, a new development in CNN's Freedom Project.
I'm Max Foster, this is QUEST MEANS BUSINESS.
Hello to you. From New Year's honor to New Year's dishonor. Tonight, the former Royal Bank of Scotland chief executive is being humiliated over his role in the financial crisis. His failure at RBS is said to have contributed to the UK's worst recession since the second World War. In a few moments, we speak to a member of parliament for the Conservative Party.
Now, a knight no more. We've been talking about him, and here's a bit more background, really, to the story.
Fred Goodwin joins a small group, really, of high-ranking individuals who've had their knighthoods annulled, including Zimbabwean president Robert Mugabe and spy Anthony Blunt.
Now, in a rare move, the queen, on the advice of the government officials, has stripped Goodwin of that knighthood on the grounds that he has brought the honor system into disrepute. Goodwin was awarded the title in 2004 for services to banking.
The UK government said the failure of RBS played an important role in the financial crisis, and Fred Goodwin was the dominant decision maker at the time, and the retention of a knighthood for services to banking couldn't be sustained.
There has been growing pressure for Fred Goodwin to be stripped of his title following his role in RBS's near collapse in 2008, which required a $70 billion bailout. The queen annulled the title following that Whitehall advice.
Now, the government says this is an exceptional case. Mr. Goodwin ran the Royal Bank of Scotland during the financial crisis of 2008. Public anger of his role in the bank's collapse and his decision to take a generous pension added fuel to the fire.
Both Labour Leader Ed Miliband and Prime Minister David Cameron both supported the decision to have his title removed.
The decision comes just a day after the current CEO of the bank had to forgo his bonus. On Monday, Stephen Hester turned down a bonus of $1.5 million, bowing to government and public pressure.
David Ruffley is a Conservative Member of Parliament, and he joins me now from Milbank here in London. Thank you so much for joining us.
DAVID RUFFLEY, CONSERVATIVE MEMBER OF PARLIAMENT: Good evening.
FOSTER: Of course, this was a title bestowed on Fred Goodwin by the previous Labour government, but do you think this is a very important symbolic decision?
RUFFLEY: I think it is. It doesn't matter who gave him the honor, it happened to be Labour, but whoever gave it to him, it should have been stripped from him.
The committee I sit on, the Treasury Select Committee, has taken a lot of evidence, and we've seen the city watchdog, the FSA, make it perfectly clear in their report at Christmas that this man was reckless. He was a very bad verging on dangerous manager.
He took a very small -- relatively small bank and, at the height of his power, it was bigger, the balance sheet was bigger, than British gross domestic product. And he didn't quite know what he was doing. And it's they city watchdog that said that.
Now, the rules say that if you are censured by a professional body or a regulator, you can have your honor removed from you.
So, that's what's happened, and I think anyone watching thinking, well, this is banker bashing, this is anti-capitalism, it's not that at all. I'm a free market conservative, but I thought, along with many other people in parliament across the political divide, that there had to be some accountability.
Because let's remember, Fred Goodwin has never been taken to court, he's never been subject to criminal proceedings, he's never been subject to civil proceedings even though we knew he behaved recklessly in the management of that bank.
So, justice had to be done, and removing the honor will never set everything right, but it's the only thing that's actually happened to him at the moment.
FOSTER: Where will this sit in history, because I -- when people will look back at the credit crunch, historians assess the financial crisis, they can look for people to blame and, effectively, what London has done today, what the queen has done on advice, is say this is one of the key people to blame for the global financial crisis, because this was a top ten bank, wasn't it?
RUFFLEY: I don't think we're going as far, or the committee's going as far as saying that he was to blame, that he brought down the whole banking system in the Western Hemisphere.
What we are saying is that when people in very significant financial institutions like this, or for that matter, hospitals or teaching, or law firms. If you are censured by your regulator or professional body, then that brings honors into disrepute.
And when the city regulator in London really gave a damning assessment of how he'd run RBS, there was no alternative but for the honor to be taken away.
Now, I would stress, this isn't just targeting bankers. I think this power should be more widely used in other sectors of British life and other sectors of the economy. And Goodwin, I repeat, has not actually had a day in court. He's actually escaped criminal prosecution and civil proceedings. That's what the city watchdog said.
FOSTER: Yes, and this is --
RUFFLEY: So, there wasn't really -- there wasn't really much more we could do to show are displeasure for this man who did so much damage.
FOSTER: And it is very rare for an honor to be taken away from someone who hasn't been convicted of any sort of crime. So, it is pretty - - it's a big move. Could he have saved himself?
Because the thing that really infuriated, I know, MPs, but also the public, was the fact that despite everything, he still insisted on walking away with this massive multimillion-dollar pension pot.
And there was a real pressure, wasn't there, from Westminster to try to give some of that back. Could he have saved himself, this title and this humiliation, if he had been a bit more humble.
RUFFLEY: It's a good point. He did actually take voluntary cuts. He left initially with about 650,000 pounds, slightly more than that, as the annual pension he would get until the day he died. Now, that was just an obscene amount of money.
I gather that that has been voluntarily negotiated down with RBS to about 350,000 pounds, so he certainly tried to, I think, stave off the criticism. But frankly, for what he did, he did bring the honor into disrepute. He was censured by the premier regulator in the city of London, and this is what has to happen to him.
FOSTER: OK, thank you very much, indeed, for joining us --
RUFFLEY: Thank you.
FOSTER: -- with that. And now, for one EU commissioner, reining in banker bonuses is a question of justice. Michel Barnier says he's working on a proposal to make the system more fair. Ahead of that, he's also got a warning for the eurozone.
Barnier told Richard in Davos that the EU must stand and deliver in 2012, because now it's a question of trust.
MICHEL BARNIER, EUROPEAN COMMISSIONER FOR INTERNAL MARKET AND SERVICES (through translator): It is time to do what we have decided to do in Europe and implement and deliver on what has been decided.
For ten years now, we've had a monetary union. We have had a single currency, but we have had a lack of economic union. But what has been done so far has been incredible, but we have worked on putting our budgets closer together and some of our tax efforts together. But 2012 is the year -- a key year for decisions and for implementation.
RICHARD QUEST, CNN INTERNATIONAL: Why should I believe you? Because you said -- not you personally, but I certainly do -- but European politicians said 2011 was the year. And if I'm not mistaken, 2010 was going to be the year. So, why now?
BARNIER (through translator): Because all the European leaders are taking what are very brave decisions and some as a result may not win the elections that they're coming up for. Considerable efforts are being required of citizens.
So it's not just a question of words being uttered. It's actually decisions being taken on the single market. Laws are being passed. So, it's a question of generating trust in the politician.
QUEST: 2012 is the year that action is taken. I'm wondering, if we look at the role that financial services play, are you satisfied with, for example, the level of regulation, the level of development, and the way in which the banks have reformed themselves?
BARNIER (through translator): No, I'm not satisfied. We have lived through an unprecedented, a historic crisis over the last four years, which had its origins in the United States in the banking sector and the irresponsibility shown by some banks. But the G20 has taken a number of decisions which now have to be implemented.
Now, there is the Dodd-Frank Act in the United States. We in the European Union have adopted 26 different laws which deal with the regulation of the financial sector and financial activities. We need proper implementation of all these regulatory decisions. Decisions have been taken, but they have to be made effective.
QUEST: How close are you, now, to taking action on bank executive pay? I know that you are angry about it. I know you feel in some cases it is excessive, and you've threatened to do something about it.
BARNIER (through translator): Already, we have adopted one first regulation on bonuses, and I need to check, I've been checking whether this has been properly applied in each of the European countries, but it has not been sufficiently well applied. What we have so far is not enough.
After all, how can you explain to people who are suffering from the crisis that bankers are continuing to be paid high remunerations, high bonuses? This is unacceptable to the population. So, we need a new regulation, something which would bring about a ratio, a minimum ratio between -- within banks between the lowest wages paid and the highest salaries. It's a question of justice.
QUEST: It's a question of justice, but how close are you to wanting - - to now saying it's time for action? How close are you?
BARNIER (through translator): I think that before the end of the year, I shall be putting a proposal to limit pay by the end of this year.
QUEST: By the end of this year.
QUEST: You won't be very popular, will you?
BARNIER (through translator): No, I'm not trying to be popular. I'm trying to bring about more rules so that we have transparency in the financial markets so that the financial markets that we need are put to the service of the real economy and serve the real economy.
FOSTER: Well, when we return, an urgent call for action as eurozone unemployment soars. Nearly half the young people in Spain are without a job. We'll be talking to the economy minister next.
FOSTER: The jobless rate in the eurozone is at a 14-year high at 10.4 percent, 16.5 million people are out of work in the 17-nation currency block.
More than 3 million of those, 21 percent, are under 25, and the president of the European Commission says those numbers are unacceptable. Jose Manuel Barroso wants governments to take urgent action.
He is setting aside more than $28 billion from EU funds to cut youth unemployment. He wants the eight member states with the worst jobs record to set up a so-called action teams or a set of teams. These would be dedicated to job creation and training and would target early school leavers.
It will be paid with unallocated money from the European social funds, and Barroso added that a commission team will be visiting the eight countries in February to ensure they're making what he calls "concrete progress."
Let's take a look at how youth unemployment compares around Europe, then. It hovers around 0 to 10 percent in these countries: Norway and Germany. So they've got the best rates right now.
Not many countries are 10 to 15 percent, you've only got one country in that category, and that's up in Denmark.
Most of Europe ranked here, between 20 and 30 percent, as you can see.
Now, we're getting into high numbers now, 30 to 45 percent youth unemployment, countries like Greece. That wouldn't surprise you.
But the highest figure's actually here. More -- about one in two youths out of work, Spain and Macedonia, there.
Spain's economy minister, Luis de Guindos, says the rate of youth unemployment is unacceptable. Overall, the number of jobless in that country has just topped the 5 million mark, the highest figure in 17 years.
During an interview with Richard, Mr. de Guindos tried to explain why so many Spaniards are struggling to find work.
LUIS DE GUINDOS, SPANISH ECONOMY MINISTER: We have a very negative economic situation. We are the country with the largest unemployment rate all over Europe and all over the UACD.
Spain has not been hit much harder by the crisis than other countries in terms of decline of GDP, but our problem is that in terms of labor market performance, what would have been the worst-performing country of all industrialized nations.
And I think in that regard, while the situation is not easy, we have known recently that we have finished last year with an unemployment rate of almost 22 percent of the labor force. And simultaneously, you know the situation of youth unemployment is unacceptable, totally, for this government.
QUEST: And in terms of reform of the labor practices, in terms of the reforms that make it easier to do business -- people watching this program will want to know what you're going to do to make the environment more conducive for pro-growth business?
DE GUINDOS: I think that the labor market reform is going to be key. It's going to be the vital instrument to restore growth and to promote growth in Spain.
And I think it has to be based on three main pillars. The first one is to modify the wage bargaining process, the wage settlement process in Spain that now incurs labor conditions in the small and medium companies.
Secondly, we have to simplify the number of contracts that we have in Spain, trying to bridge the gap with the upsiders and the insiders in the labor market.
And finally -- and this is also important -- we have to improve the active policies for the unemployed people.
FOSTER: Coming up on QUEST MEANS BUSINESS, fourth quarter figures are out in the US. We're finding out which companies are ship-shape and which aren't.
FOSTER: Investors are watching news out in the United States very closely tonight, because the major corporations are delivering their fourth quarter figures. Here are just a few of the results coming through.
The oil giant, ExxonMobil, reported earnings of $9.4 billion. That's an increase of 2 percent compared with the same period in 2010.
A big slump in profits for the world's largest drug maker, Pfizer. They were down a staggering 50 percent to $1.44 billion.
And the global shipping company UPS reported a 6 percent increase in revenue, totaling $14.2 billion. But it suffered a big drop in operating profits to $725 million from just over a billion.
And let's put those figures into perspective. CNN's Felicia Taylor is following developments for us from the New York Stock Exchange. Hi, Felicia.
FELICIA TAYLOR, CNN CORRESPONDENT: Hey, Max. We're here at the ExxonMobil post, and right now, the stock of ExxonMobil is down $1.64 at $83.85. That's because, honestly, the biggest problem for this company is -- has to do with production and output.
The only reason that they actually barely made it in line with estimates is because of higher oil prices. That was able to offset the fact that they don't have enough production out there. One analyst said higher oil prices cover up a lot of mistakes and difficulties.
Now, Max, I'm not sure that you're old enough, but some of our mature viewers will remember that this started out as a company called Esso, and before that it was Standard Oil. So literally, Esso, "put a tiger in your tank," is SO, Standard Oil.
Now, we tried to get an oil cam, we just couldn't do it. So, there we are, with ExxonMobil. It's OK their forecasts for future growth aren't looking so good, but they're mostly worried about the economy and whether or not there's going to be a reduction in global demand. So, that's the problem for Exxon.
Here we are at the Pfizer post, and Pfizer right now is also trending downward just ever so fractionally. The issue for Pfizer, of course, is that it lost a lot of its patents, especially with one drug, the cholesterol drug, Lipitor. And unfortunately, they have a lot of generic competition to worry about right now.
The other drug that people would be familiar with is Viagra. This, of course, is the erectile dysfunction drug. I've never had any experience with it. How about you, Max?
FOSTER: Uh, no.
TAYLOR: I'm just -- you know, I -- just a question. Just an idea, I don't know.
FOSTER: A very successful drug.
TAYLOR: I've never seen a --
FOSTER: A great commercial success.
TAYLOR: It is a very successful drug. It is. It was up about 2 to 3 percent in sales, so clearly people are out there using it. It's definitely a boon for Pfizer. However, Pfizer really is going to have to worry about generic competition.
They are ramping up their forecasts for the rest of the year, so it's good news for them. They say they have other drug compounds coming to the marketplace. We'll have to see if it's going to make it up for Lipitor.
Lipitor made $10 billion for them in just 2010 alone. The loss of these patents has cost them $5 billion in 2011. So, we'll see what the future is for Pfizer. But the CEO is very optimistic.
And then, of course, the largest shipping company in the world, UPS. This is the real winner of the day. That stock, though, is also down ever so fractionally. But they benefited from increased shipping demand, particularly because of the holiday shopping season and also because of e- commerce. Those online sales are boosting the fact that they are selling many -- or rather, shipping many packages.
They've increased their growth rate forecast for this year by 9 to 15 percent. That's enormous. They're expecting global demand pretty much throughout the world to continue shipping.
And this is a bellwether for the American economy, because it basically crosses all sectors and shows what people are sending and where they're sending it to. So, good news for UPS. Max?
FOSTER: That was some live shot. How many props did you have there, and how much space did you move through? That was something else. Amazing.
TAYLOR: We try.
FOSTER: Felicia, thank you very much.
As you were seeing, earnings results not helping US stocks there, especially the numbers from ExxonMobil. Here's what Wall Street stands -- where it stands at the moment, let's have a look. Currently down 0.2 percent in the Dow, NASDAQ up, though, S&P500, the broader market pretty much unmoved.
Most of Europe's major benchmarks managed to hold their gains. Financial stocks led the way on Tuesday. Investors were cautiously optimistic, we can say, after European leaders agreed to launch a more permanent rescue fund to contain the region's debt crisis.
There's little laughter in the financial world these days, but plenty to be had at its expense, it seems. A stage play parodying the euro crisis has come to Berlin. As Diana Magnay now reports, German audiences are taking it all in good humor.
UNIDENTIFIED MALE (singing): My name is Sarkozy, all nations look to me.
DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT (voice-over): It was only a matter of time before the doom and gloom of even something as dry as the eurozone debt crisis became the stuff of satire.
UNIDENTIFIED FEMALE (singing): I'm Angela from Germany, Europe is quite safe with me.
MAGNAY: Turned into stage material by a business journalist who felt the crisis was slowly turning to farce.
DAVID SHIRREFF, "THE ECONOMIST": When you report about this stuff week in, week out, as I do, you wonder why -- sometimes why these people deserve to be treated seriously. You can see what they want to do, what they should be doing. And they're not doing it.
UNIDENTIFIED FEMALE: Why? Because we are experts -- we are very good with our own house.
UNIDENTIFIED FEMALE: Housekeeping.
MAGNAY: They may be the butt of most of the jokes, but in a country not known for its sense of humor, the Germans are still laughing.
MAGNAY (on camera): What did you think of this euro-skeptical tone at the Germans?
UNIDENTIFIED MALE: Well, we are used to that from the English anyway. So, well, it's OK. It's their opinion, and some of the Germans are euro- skeptical, too, although they won't say it out loud.
UNIDENTIFIED MALE (singing): In another 50 years --
MAGNAY: The end of the euro is not a foregone conclusion, but as the crisis limps from summit to summit, nor is it just the stuff of fantasy.
UNIDENTIFIED MALE (singing): It was a worthy cause, but with fundamental flaws. A kind you'll know you'll never, that couldn't last forever.
MAGNAY: Diana Magnay, CNN, Berlin.
FOSTER: Well, from the heady world of finance to the balmy, delegate- rich state of Florida where the clock is counting at polling stations all over the state. The search for a Republican nominee continues, and we'll go live to the sunshine state a little later in the show.
FOSTER: Welcome back. I'm Max Foster, you're watching QUEST MEANS BUSINESS. These are the main headlines this hour.
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FOSTER: In Syria, an opposition group now says at least 30 people have been killed on Tuesday during clashes with government forces. This video, posted online, appears to show an oil pipeline that was blown up in Homs. Thick smoke pours from the fire with shelling going on in the background. Syria's government blames armed terrorists for the pipeline blast.
In the coming hour, we're expecting the head of the Arab League to address the UN Security Council. He's expected to relay what the group's orange-vested observers saw during their monitoring mission in Syria. Also, members will debate a draft resolution that calls on Syria's president to transfer power to his vice president, a resolution Russia opposes.
Voters are going to the polls in the US state of Florida in the biggest primary yet in the Republican race for the White House. Polls show Mitt Romney with a double-digit lead over his next closest challenger, Newt Gingrich.
A Spanish judge famous for his human rights work took the stand on Tuesday at his own trial. Baltasar Garzon refused to answer questions from the prosecutor. He's charged with abusing his authority whilst investigating human rights abuses that occurred under Spanish dictator Ferdinand Franco.
Technical experts are recommending that crews end their underwater search of the Costa Concordia. More than a dozen people are missing from the wrecked cruise liner, but officials say the submerged part of the ship have become too dangerous to enter. They'll continue to search areas of the ship that are above water.
FOSTER: Now some good news -- a sweet success for CNN's Freedom Project. Hershey is investing $10 million over the next five years in improving the lives of West African cocoa farmers. The investment could help more than 2 million people by 2017.
The company's also partnering with the Rain Forest Alliance to satisfy all of its Hershey's Bliss products. Rain Forest Alliance ensures the cocoa is produced sustainability, and the workers and farmers are protected.
Andy McCormick is vice president of public affairs for The Hershey Company. He spent time in the Peace Corps in Ghana and served on the board of the World Cocoa Foundation and the International Cocoa Initiative. He joins me now live from Harrisburg, Pennsylvania. Thank you so much for joining us.
Quite a turnaround, it feels, for Hershey. Is it a dramatic change from your perspective?
ANDREW MCCORMICK, VICE PRESIDENT OF PUBLIC AFFAIRS, THE HERSHEY COMPANY: It's not a dramatic change. We've been working in cocoa for 50 years. What we announced yesterday was a series of initiatives that look over five years, that look forward and try to do two things that are different than in the past.
One is to partner ever more closely with the governments and the NGOs who are helping us tackle this complex problem together, and then secondly to use things like modern technologies, like cell phones, to accelerate the learning by cocoa farmers about modern farming methods.
We think by doing that they will raise incomes in their family and each time that happens, we see a benefit in school attendance, school enrollment. So we think it links together very nicely. And in addition for the U.S. consumers, we are certifying the cocoa for our Bliss brand and major Hershey's products.
FOSTER: What proportion of your products will be certified now, so customers can feel really comfortable about eating it?
MCCORMICK: Yes. In the U.S. right now, about 1 to 2 percent is certified cocoa. And what we're doing is looking at the entire universe of cocoa farmers. There's 2 million cocoa farmers. They're on small farms.
So what we are trying to do with our productivity and village improvement projects is to come up with programs that meet the needs of all 2 million, while also trying a certification for American consumers of Bliss.
FOSTER: There's a lot more to be done, of course, for the whole industry. But it does feel as though there's some sort of momentum now for real change and to address the lives of local people in the areas where you harvest this stuff. Am I right in feeling a momentum for change, so all chocolate will one day be clean?
MCCORMICK: I think there is significant change occurring in West Africa. In Ghana, for instance, cocoa production has tripled in the last 10 years, from 300 million -- 300,000 to a million tons this year. And at the same time, school attendance has increased by 25 percent.
What Hershey is saying is that change is accelerating. Change is possible. And through our CocoaLink mobile phones projects, which we're now introducing into the Ivory Coast, we're seeing a win-win for the farmer, for the region and for the business. And we think that's the right and responsible thing to do.
FOSTER: What's the big challenge you're facing now, I mean, in terms of the organizations you need to partner with to make this happen? Have you got still big challenges? What sort of challenges are we talking about?
MCCORMICK: The main challenge is to integrate all the positive initiatives so that they work together. And that's where we see the mobile platform as being so significant.
We're envisioning a future where the cocoa farmer will be able to send a picture of diseased trees back to Ankara (ph) or Abidjan, to the experts in the government, and get an answer in the same day about a malfunction of a tree that would have taken 30 to 60 days, if answered, in the past.
So we're very aware of the issues from child labor or overall poverty. But we do think the time is right, and we think our programs will help us all move forward.
FOSTER: Andy McCormick of Hershey, thank you very much indeed for joining us.
You'll hear a little more about the CNN Freedom Project on our website. Do go to cnn.com/freedom. There you can get facts about modern- day slavery and what people around the world are doing to fight it. There is change going on, as you can see. There's also a section that shows how can you can help. That's all at cnn.com/freedom.
FOSTER: The tropical state of Florida in the U.S. is feeling extra heat today, where voters are in the throes of casting their ballots for a Republican nominee. There are more than 4 million registered Republicans in Florida, and the competition is fierce.
The latest poll numbers show Mitt Romney ahead of Newt Gingrich, some even suggesting a double-digit lead. Romney spent most of the day in his headquarters in Tampa, where he's been doing some last-minute campaigning.
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FORMER GOV. MITT ROMNEY, R-MASS., PRESIDENTIAL CANDIDATE: -- in Florida is a pretty good indication of your prospects nationally. So, for me, Florida is big. But New Hampshire is big, too. And I'm hoping that as I go to Nevada and Minnesota and Missouri and Colorado and Arizona -- and the list goes on and on -- that I'll be able to get a lot of support, in part, because of the response here of people in Florida.
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FOSTER: Meanwhile, his rival, Newt Gingrich is making several pit stops across central Florida. He says he's very confident on the outcome.
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FORMER REP. NEWT GINGRICH, R-GA., PRESIDENTIAL CANDIDATE: We're going to beat a big lie campaign with a big truth campaign. We're going to beat money power with people power. We are going to go all the way to the convention and we are going to win in Tampa, and we are going to be the nominee, with your help, for the Republican Party.
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FOSTER: Well, with less support but still in the running, Rick Santorum and Ron Paul both have moved into Colorado, campaigning for a vote that doesn't actually take place until next week. With three different winners in the three contests so far, the vote in Florida could be the decider.
Hala Gorani's in Tampa, Florida, joins us now. We keep being told this is the crunch one. Is that the case this time?
HALA GORANI, CNN ANCHOR: I'm sorry. You're being told what? I didn't hear those last few words.
FOSTER: We keep being told each one of these votes is the crunch vote. Is --
FOSTER: Is that correct this time?
GORANI: You know, in the case of Mitt Romney here, it's expected -- and you mentioned a few polls, that he is going to win out in Florida. And that gives him 50 delegate votes at the Republican National Convention in August. So this, of course, will give him that extra momentum. He is the clear front-runner.
But you also heard from Newt Gingrich that he is not going to give necessarily, even if he loses in a resounding manner in Florida, that we -- he will go all the way to the convention, that some of these states that are Southern, that are more conservative might rally behind him. So this might be a long, drawn-out slugfest in the Republican field.
There still might be those two, Mitt Romney and Newt Gingrich, as I said, kind of duking it out, all the way, at least until Super Tuesday, which is the first week of March.
Now let's talk about the voters themselves, though, because being here gave me an opportunity to talk to ordinary people, people who have either cast absentee or early ballots, or people who plan on going to the polls today. And I asked them what their biggest issue is. Is it immigration? Is it health care? Is it the economy? This is what they told me.
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GORANI (voice-over): Enrique Carlo just became a U.S. citizen. This year, he will vote in his first-ever presidential election. He works in the country's oldest family-run cigar factory in Tampa. Though he came to Florida from Cuba, and the state's voting population is 13 percent Latino, immigration is not his main concern.
ENRIQUE CARLO, J.C. NEWMAN CIGAR CO.: Who is able to keep my job safe, that's the one I'm going to vote for.
GORANI: Well, what do you want to hear from the candidates?
CARLO: What do I want to hear? Not just saying that U.S. companies are the United States.
GORANI (voice-over): Here at J.C. Newman, in business since the late 19th century, some older employees have worked for decades, like Virginia Jones. Her output: up to 5,000 cigars a day, and still working.
VIRGINIA JONES, CIGAR WORKER: I can't afford really to not work anymore. You have to keep working.
GORANI: May I ask you how old you are, then?
JONES: Sure. Eighty years.
GORANI: You're what?
GORANI: OK. (Inaudible).
UNIDENTIFIED FEMALE: What?
GORANI: She's 80. (Inaudible)?
GORANI (voice-over): Maybe cigar making is good for the complexion.
In another part of town, the Town and Country Senior Center, over a game of Mah Jongg, Sally Hill says she's not happy with the current president, Barack Obama.
SALLY HILL, RETIREE: To send jobs to Europe, to China, is horrible, because we have to keep it home.
(UNKNOWN): It's ludicrous.
GORANI (voice-over): Next door, a tai chi class is underway. Older Americans here are a formidable force in any election. Seventeen percent of Floridians are over 65. And they vote in big numbers.
Naturally, there's concern about health care.
SUSAN MCKAY, RETIREE: I've already picked my candidate --
GORANI (voice-over): Susan McKay says she's already voted for Newt Gingrich, one of nearly 600,000 Floridians who cast early or absentee ballots.
MCKAY: I have a friend who's retiring to Poland because it'll be free there, but they pay 22 cents a dollar in tax. So it goes toward their health care.
GORANI (voice-over): Just a few hours before the primary in Florida, it's lunchtime at La Tropicana cafe, and decisions have already been made by other voters as well.
KEN COCHRAN, FLORIDA VOTER: I picked Romney.
GORANI: Right. And you think, why? In a general election he's better positioned?
COCHRAN: I think he will -- he will -- he'll be the only one that can beat Obama.
GORANI (voice-over): In less than 24 hours, Florida will have chosen one Republican as the recipient of all 50 of the party's primary delegates, the party one step closer to producing a challenger to Barack Obama.
(END VIDEO CLIP)
GORANI: And, Max, of course, the big question is, who, in the Republican field, has more, quote, "electability," as they call it, who is most likely to challenge Barack Obama?
In nationwide polls, both Newt Gingrich and Mitt Romney still trail behind Barack Obama in a head-to-head contest. So they are really going to have to strategize going forward to find a way to challenge him, to threaten him a nationwide election.
FOSTER: Hala, thank you very much. This is a really fascinating race, isn't it, so far?
Now the housing market in Florida is a red-hot political issue in many ways. The state forson bollock (ph) of the U.S. housing boom, and when the bottom fell out of the market, Florida fell first, and it fell pretty hard, too. Home values plummeted, foreclosures skyrocketed. At the center of it are people, communities, cities trying to deal with the crisis, as Christine Romans now reports.
(BEGIN VIDEO CLIP)
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Real estate agent Scott Nicholas is busy these days. He's doing an occupancy check at this foreclosed Jacksonville house. The bank owns it and wants to get rid of it.
SCOTT NICHOLAS, REAL ESTATE AGENT: In some cases, of course, we learned that the tenants there living on the property who are completely unaware that it was in the foreclosure process. And, of course, that conversation can be - can be a little interesting. But for the most part, the properties are usually vacant.
ROMANS: House after house, street after street, 47 percent of homes here are underwater, and half of all sales are homes in distress. No one is immune, not even real estate agents.
NICHOLAS: Many realtors have gone to the short sale process and the foreclosure process themselves. So this is not anything where it's just a specific niche in the community is having this problem. Everybody is. But right now, it's just tough and it's tough for everybody whether it's a foreclosure on a $20,000 house or $450,000 house.
ROMANS (voice-over): Thousands of homes in the market, listings on the Internet show how a tragedy for many is an opportunity for others. Homes for as low as $5,000, and investors are scooping up entire neighborhoods.
CHIP PARKER, FORECLOSURE DEFENSE LITIGATOR: Jacksonville is a beautiful, vibrant city, and it's being attacked by a cancer from within, house by house. And what we see in these neighborhoods, established neighborhoods and new neighborhoods, you start to see vacant houses, decaying lawns. You really lose a sense of community when your neighbors all of a sudden have gone.
ROMANS (voice-over): Real estate professor Sid Rosenberg said the average home price here is down $80,000 from the peak.
ROMANS: The foreclosures started before the job loss. Can you fix the housing market without fixing the jobs market?
SID ROSENBERG, PROFESSOR, UNIVERSITY OF NORTH FLORIDA: I think the job market is really the key. I mean, there's no question that if people don't have a job or even if people have a job and it's not really consistent and predictable, they can't really feel good about going out and buying a house.
ROMANS (voice-over): Tony Kronenburg is fighting to keep his house. He has an MBA. He understands finance. But the death of his wife and a loss of a job came just as the market collapsed.
TONY KRONENBURG, FIGHTING FORECLOSURE: Are you all set there?
UNIDENTIFIED MALE: Obviously Wells Fargo is the plaintiff of your case, OK? Now, Wells Fargo says in paragraph five, plaintiff as servicer for the owner and acting on behalf of the owner with authority to do so has the right to foreclose on your home. But they never tell you is who owns this loan.
ROMANS (voice-over): Kronenburg says Wells Fargo agreed to a trial mortgage modification, reducing his payments in half, which he claims he's faithfully made. But soon the bank declared him to be in default.
KRONENBURG: I kept arguing with them and finally in frustration I just gave up because I had heard that, you know, if you don't make your mortgage payments, that's the only way you can get their attention. I can't tell you how frustrating it is.
ROMANS (voice-over): For now, he'll continue to fight to keep this home, hoping the bank doesn't take it away -- Christine Romans, CNN, Jacksonville, Florida.
(END VIDEO CLIP)
FOSTER: CNN will have live coverage and analysis of the results in Florida tomorrow. That kicks off at midnight here in London. It's all part of CNN's "America's Choice" coverage of the 2012 U.S. presidential election.
Now when we come back, Steve Case knows a thing or two about entrepreneurs. The AOL cofounder talks about the president's big push to help small businesses generate U.S. jobs.
FOSTER: President Obama hopes to give U.S. employment a boost. He's urging Congress to expand tax relief for small businesses, what he calls the engine of American jobs growth. The push is part of the Startup America program, initiated a year ago today. Can it really accelerate growth, or is it still unsteady on its feet? We go to Felicia Taylor at the New York Stock Exchange. It's been going a year, so any results?
TAYLOR Yes, there are some results, and this is a -- this is a great program that's been initiated. Obviously, jobs remain a major question for the U.S. economy.
And while the two parties in Washington continue to argue over how to best create them, some in the private sector are calling for action, in particular Steve Case, the AOL founder, former AOL-TimeWarner CEO, currently chairs something called the Startup America Partnership. It's aimed at kickstarting entrepreneurs and small business job growth.
Partnership has been pushing president and Congress hard to enact laws that support these startups. We heard the president talk about this in the State of the Union, you know, what he was referring to as insourcing, in other words, keeping the jobs, creating them in this country.
Case says he's optimistic that legislation could pass Congress hopefully this year.
(BEGIN VIDEO CLIP)
AOL Co-Founder Steve Case: It's hard to get things done, but I think this is an area where we can come together and need to come together to build the bipartisan support for this, you know, pro-entrepreneurship legislative package. The president last week said if Congress gives him the bill, he'll sign it. We're going to do what we can to make sure they get him a bill.
(END VIDEO CLIP)
TAYLOR: So, hopefully, that will happen.
Among the ideas that the president has proposed to help startups, a 10 percent tax credit for companies that create jobs this year and eliminating country-specific immigration caps in order to attract more highly skilled workers.
So it's a really -- it's a great program. They're helping literally hundreds of different small businesses. And when they talk about startup, they really do mean small businesses -- Max?
FOSTER: And what -- I mean, I guess it's logical, but why the focus on those startups? Why is it so important?
TAYLOR: Well, literally, because it creates jobs. I mean, think about it. Every company, at some point, was a startup. And once a firm reaches maturity, say three, five, 10 years down the road, they're less likely to be hiring at a significant rate.
In their, you know, youth, in their, you know, beginnings, they are obviously looking for talent. And that's why Case argues that support for startups is necessary to fuel the U.S. recovery. Take a listen.
(BEGIN VIDEO CLIP)
CASE: We probably are going to hit bottom a year or so ago, and we're kind of edging back up, but there's still work to be done. But I think what's inspiring everybody is what the entrepreneurs are doing.
It's not just a lot of focus on the big companies, what they're doing, but it's really these entrepreneurial companies that really are taking a risk with new products and services and trying to change the world. And we need to make sure that we're all doing what we can to help them get those companies started, and make sure those companies are started here -- "
(END VIDEO CLIP)
TAYLOR: Basically, it's the bedrock of the American economy. So to underscore the importance of entrepreneurship, in job creation, the Startup America Partnership says that companies less than five years old accounted for all U.S. net job growth between 1980 and 2005.
So if you look at it from that perspective, this is where we're going to be able to create jobs and hopefully get the economy moving again, and people feeling better about, you know, what's, you know, in their bank accounts and spending again. So it all has that trickle effect -- Max?
FOSTER: OK, Felicia, thank you very much indeed for that great stuff.
Now I can report that Jenny Harrison's been very rude to me today. She's been talking about me being soft. Of course, I've been complaining about the weather. But Jenny Harrison isn't in London. She doesn't know how cold it is.
JENNY HARRISON, CNN METEOROLOGIST: Well, you -- it is very cold, but, Max, my good news, you're getting off lightly. But yes, you're right, I did -- I called you a soft Southerner (ph), didn't I?
There is actually, having said that, you have got a winter warning across the U.K., across most of England, anyway, for these low temperatures, I have to say, nothing like central and eastern Europe. Now, of course, the temperatures are really dipping down at the beginning of the end of last week, and have a look at the temperatures.
This is last night and today, so Monday night into Tuesday morning. It got down to -22 in Bucharest, and the average at this time of year is - 4. Even Moscow, when the average is -12, it was -21. Have a look at what is going on out there, across into eastern Europe, because already, there have been a number of deaths reported. We've got some video, hopefully, to show you.
This is actually in Turkey, where the conditions have really paralyzed the traffic across many areas, but also in Ukraine, there's been so much snow, and the temperatures have just been so bitterly, bitterly, dangerously cold, at least 30 people have actually died in Ukraine. And people there, of course, bundling up, doing their best to actually get on and, you know, go about their daily lives.
But, my goodness, the conditions are really making that extremely difficult, and the cold in particular. So we've had all this snow come down in the last week. And there were temperatures like this -- this snow is actually going to stay on the ground.
Come back to me, and I can show you what the temperatures are right now. These are the actual temperatures. So -21 in Kiev, -20 in Moscow, Warsaw -14, -6 in Berlin. Then look what happens when you factor in the wind. So it feels like -30 Celsius in Kiev and -14 in Berlin. There's that -4 in London.
But the snow is very widespread, not across the southeast. That's where the highest amounts have been recorded, but look at this (inaudible) in France and also Exmoor in England, a lot of snow here as well. And as I say, the air is cold. The snow will be hanging around.
So remember, if you are heading out on the roads, A, it is very dangerous. But, first of all, just check that you can actually get to your location. But some of these things, they seem very obvious, but, you know, you need to make sure your car's in good working order, and then really pack a good emergency kit.
And, you know, food and water, everything you might need, blankets, anything that might help you, should you run into trouble, even if you get stuck in a long, long traffic jam because of the weather conditions, just like have been happening in Turkey.
Right now, or we have been up until the last week, we've been in what's called the positive phase of the Arctic oscillation. When that happens, the winds are actually very strong and it keeps that cold air around the north and around the North Pole. And then further to the south, it stays mild, because the air isn't as cold. This is what's happened in the last few days.
There's that dip below, and that shows us that now we've moved into a negative phase of the Arctic oscillation. So as you might expect, the winds are much weaker, and that cold air is able to actually extend southwards and impact much of Europe in this case. High pressure on top of that, so this cold air is filtering all the way south, and it is going to stay like this for many days to come.
These are temperatures going forward. So it should be fairly bright and clear. And these are temperatures, London, which should (inaudible) close to freezing, then into Bucharest, the temperatures get even colder.
Moscow, look at these temperatures, more snow in your forecast on Thursday, and then also in Kiev, you can see here with the temperatures well below freezing, particularly in the overnight hours. These are the overnight lows, Tuesday into Wednesday. This is what we can expect, hovering at freezing in London, -5 across in Paris. The snow will stay to the south.
There is more on the way because those systems are working their way around that high pressure. And this is how the accumulations will go. So more countries will be impacted by heavy snow for the next couple of days, and at best, Wednesday by day, -18 in Kiev, but just above freezing there in London, Max.
FOSTER: It's been unbelievable. It's so mild, and then suddenly so cold. (Inaudible). It's a shock, true.
Jenny, thank you very much indeed. We'll have more after the break.
FOSTER: A German government spokesman says Chancellor Angela Merkel will push China to reduce its Iranian oil imports. The European Union will impose an embargo on Iranian oil starting on July the 1st. Embargo would likely put a dent in Iran's bottom line, since 20 percent of Iran's oil exports go to China.
Chancellor Angela Merkel will make her case in person when she heads to Beijing on Wednesday. A weak up in the main markets now. European markets were largely unchanged. There was more optimism on the markets over Greece today. European leaders agreed to launch a more permanent rescue fund to contain the region's debt crisis.
Home prices fell more steeply than expected in November, and consumers turned less optimistic in January. The highlights or hurdles still facing the bumpy economic recovery after accelerating at its fastest pace in 11/2 years at the end of 2011. The U.S. economy is expected to slow in 2012.
Here's where Wall Street stands at the moment. Not much movement, but the Dow 30, down about 0.2 percent. That is QUEST MEANS BUSINESS. I'm Max Foster in London. Thank you so much for watching. The news continues, of course, here on CNN.