Return to Transcripts main page


Greek Bailout Split in Two; EU Meeting in Brussels; Czech Prime Minister Doesn't Believe in EU Fiscal Pact; Europe A La Carte; ISDA Rules No Credit Event in Greece; Eurozone Unemployment Rises; European Markets Up; European Council President Reelected; EU Justice Commissioner Calls Google's New Privacy Rules Illegal; LEGO Builds Up Profits; Tornadoes Kill Dozens in U.S. Midwest; Interview with Steve Yankovich; Interview with David Marcus; Interview with Werner Hoyer

Aired March 1, 2012 - 14:00:00   ET


RICHARD QUEST, HOST: A divided fortune for Greece as Europe keeps hold of the bulk of the bailout.

One size doesn't fit all. Tonight, the Czech prime minister tells me we must celebrate national differences.


PETR NECAS, PRIME MINISTER OF THE CZECH REPUBLIC: I don't believe in uniformity in Europe.


QUEST: And bricks and flicks. LEGO's chief exec builds on the success of Harry Potter and Star Wars.

I'm Richard Quest. I mean business.

Good evening. You'll get half now and half when the job is done. Eurozone leaders are splitting the Greek bailout cash into two. They will hand out cash to private creditors who've agreed to take a haircut and also to Greek banks who are in urgent need. The rest they will keep, which was going to go directly to the Greek government, until the bondholders have completed the debt swap.

So, one more twist and turn in the torturous tale of keeping Greece afloat. CNN's Charles Hodson is in Brussels, where finance ministers are meeting ahead of leaders. Good to see you in Brussels, Charles. The -- this latest bizarre twist. What were they thinking? What's behind it?

CHARLES HODSON, CNN INTERNATIONAL CORRESPONDENT: Well, I think it actually -- it's kind of so far, so good. The eurozone finance ministers have finished their meeting, actually, now, and as far as we know, the European Council, the heads of government, are now having their dinner and they're talking about the economy.

But to get back to Greece. The funny thing is that, in a way, seen from here, it's not the headline anymore. It's kind of, so far, so good. The Greeks are doing what are expected.

And yes, OK, they've split it, they're not going to release all of these funds straight away, they've cut it in half. But actually, we should have a decision on the private sector initiative -- in other words, the big haircut for private Greek debt holders -- by March the 9th. And by then, it's hoped that everything will have fallen into place.

But the odd thing about this summit that is going on here, Richard, is that there are two big issues here, one of which is not on the agenda at all, and that's the size of the European stability mechanism, which comes in on July the 1st. The hope on the part of the G20 and the IMF is that that will link up with their funds to create an enormous $2 trillion -- $2 trillion firewall.

But the other issue is very much the macro economic background, and that is pretty grim, as I've been hearing from the Swedish prime minister, Fredrik Reinfeldt.


FREDRIK REINFELDT, PRIME MINSITER OF SWEDEN: Since we see somewhat positive signals in the world economy, and also more form orientation in Southern European countries, I think this is the first meeting with less only crisis management, and also more growth orientation, how to open our free trade agreements with important parts of the world, opening up markets, getting the internal market to work better. Things like that.

HODSON: But are you confident that the agreement with Greece, which was hammered out recently, will work? Because there are difficulties there.

REINFELDT: I think there are a lot of burdens still on the Greek people. There's a lot of things needed to be done by Greek politicians. They're actually in an election coming up.

But what we have seen is more other important countries increasing their reform orientation. It should leave Spain, Portugal, and North Ireland. Therefore, I think that gives, in a total a more hopeful feeling around the European economy.


HODSON: Fredrik Reinfeldt, there, the Swedish prime minister, talking to me a short time ago. And yes, there is good news. There's actually good news out of Greece, there's good news out of Portugal, there's good news out of Ireland.

But this reminds me, actually, as they prepare to sign the big treaty on European financial stability tomorrow morning, it's like that game of Whack-a-Mole. All of these little animals keep popping out of the lawn, and they're having to bash them back down.

The Irish referendum, for example. The Federal Constitutional Court decision in Germany, which makes it much harder for them to fast-track some of the decisions. I think clearly we're very far from out of the woods, here, Richard.

QUEST: All right. Charles Hodson with that lovely thought of bashing down the little heads as they pop out of the lawn. Many thanks, indeed, Charles, in Brussels tonight.

The Czech prime minister isn't a big fan of Greek bailout and anyway he doesn't want to join the fiscal pact, either. The Republic is the only EU member apart from the UK that's refusing to join. Today, the prime minister told me he doesn't believe in uniformity when I asked him whether there was any chance he might sign up to the fiscal compact after all.


NECAS: I will not sign this treaty, but of course, to be fully honest, it's not any kind of definite no. It's possible in conformity with Article 15 of this treaty to sign anytime in the future, so it's possible that the Czech Republic will sign in the future, but not now.

QUEST: You're all dancing around this really difficult issue of how much and how quickly you're prepared to allow Brussels to rule the day. That's really what this is about.

NECAS: I'm not in favor of federal Brussels. I'm an anti-federalist politician. But at the same time, I can imagine a situation when monetary union will not work without fiscal union.

QUEST: Isn't that inevitable that if the union is to work more efficiently and effectively, it is inevitable that Brussels becomes more federal?

NECAS: Probably yes. Frankly speaking, when we would like to improve the situation in the monetary union, it will be necessary to go by a fiscal union. But again, it's the issue for the countries like the Czech Republic to evaluate the whole situation because we've got commitment to access eurozone, but it was a very different eurozone than years ago than today.

QUEST: Then paint for me a picture, because you describe it in your speech last night, "A multi-speed Europe is a reality," you say.


QUEST: But instead of speed as in fast and slow, you talk about an "ala carte" principle.


QUEST: So, what's on the menu of this ala carte?

NECAS: There will be sundaes, which consist of single market and acquis communautaire. And then, it will be possible to make a choice whether, for example, you will join monetary union with fiscal part, but in the future probably with X union, not -- it would be better to go by an ala carte approach.

QUEST: Will that work?

NECAS: I'm absolutely sure. I do believe that diversity is the best of Europe. So, I don't believe in uniformity in Europe.

QUEST: Where do you draw the line between what you will allow on an ala carte principle and what you will insist as table d'hote?

NECAS: I would say that the line is current situation. Current legal framework, current primary law of the European Union.

QUEST: What about things like digital privacy, telecommunications? You seem to want to draw the line on the single market.

NECAS: Yes, yes, yes. As a part of single market, it would be possible to create a legal framework for a common European approach, of course.

QUEST: Are you afraid, as David Cameron clearly is, the British prime minister, that in putting together their fiscal compact and in doing all the things necessary to make monetary union work, the single market will suffer?

NECAS: Yes. I'm afraid of the situation, and I share this opinion. I do think that it would be a very dangerous situation to have a single market and a competitiveness issue as a special part of negotiation of the eurozone. So, I wouldn't like to see artificial division line between eurozone and the rest of European union vis-a-vis competitiveness and single market.

QUEST: But isn't it inevitable? if you have 17 members, which will increase, getting closer together on monetary union, it will inevitably create that split.

NECAS: So, it's a very good question, and you hit the nail on the head. But at the same time, I do believe that the fundamentals of the European Union must be single market and single market must inform EU 27.


QUEST: Now, in that interview, the Czech prime minister coined the phrase "Europe ala carte." What does he mean? What better place to find out what an ala carte menu might look like when it comes to the European Union than one of the London's leading French restaurants.


UNIDENTIFIED MALE: Good afternoon, sir.

QUEST: Hello.

UNIDENTIFIED MALE: This is Europe ala carte.

QUEST: Ah, Europe ala carte.

UNIDENTIFIED MALE: How are you today?

QUEST: How am I? Undecided. Ooh, I say, splendid menu. A lot of choice. I think I'd like to start with the Schengen Treaty with open borders.

UNIDENTIFIED MALE: Oh, that's a very good choice. That is very good, sir.

QUEST: For my main course, now, I see you have monetary union.


QUEST: Can I have monetary union without the fiscal compact?

UNIDENTIFIED MALE: I'm afraid the chef will not allow it to be.

QUEST: No? Oh, dear. Well, we won't have monetary union, then. Instead of that, what are -- ooh, ah. Now we're -- hang on. You've got close cooperation on defense policy.


QUEST: Is that fresh?

UNIDENTIFIED MALE: It's very fresh, sir. It just arrived today.

QUEST: Just arrived? And sprinkle a little bit of social policy on the side.

UNIDENTIFIED MALE: OK, I'll do that. Let me put that down for you.

QUEST: Excellent. And finally, dessert. Well, I think for dessert, it has to be -- ooh, my favorite. Open skies.

UNIDENTIFIED MALE: Oh, yes, that's a very good choice, that's very popular, most agreeable.

QUEST: And to drink, lots of European wine.

UNIDENTIFIED MALE: Oh, that's a very good choice, sir.

QUEST: Thank you.

UNIDENTIFIED MALE: Thank you, sir.

QUEST: Thank you.


QUEST: Europe ala carte. Now, let's look at what else happened in our turmoil of the eurozone today. It may sound like a default, it may look like a default. Those in charge of deciding these things say, somehow, not now, but Greece is not in default.

It is the ISDA, the swaps and derivatives association, in a ruling on two questions, a bit of a head scratching both on the question of subordination by the ECB and the actual CAC clauses. The long and short of it is, they say no credit event for the time being.

But noticeably, they have left open the possibility that when the collective action clauses are actually implemented, not just merely put into the contracts, then there may be. But for the moment, there is no credit event.

This is a worrying number. Eurozone unemployment has increased to a euro record of 10.7 percent in January. Spain and Greece are the two worst countries, and whatever number that makes even worse, youth unemployment is reaching 50 percent in both countries.

These are the numbers. The markets like what they see at the moment. Banks enjoying ECB cash. Spain had a successful bond auction.

And one other note to bring you this hour. Herman Van Rompuy, the Council president, has just been reelected to a second 30-month term.

Coming up after the break. We see what's on the menu. As the vice president of the European Commission Viviane Reding tells me, Google's new privacy policy is breaking the law. And eBay talks about surrendering your data gives you smoother shopping.

Also, building blocks and profits from LEGO's chief executive.



QUEST: Google's new privacy policy is illegal, says the EU Justice Commissioner, Viviane Reding, who told me the policy, which came into force today, breaches EU law according to data protection agencies in several member European Union countries. She said it's time for national regulators to take action.


VIVIANE REDING, EU JUSTICE COMMISSIONER: Well, the national regulators have joined their forces in order to analyze what these new rules of Google would mean, and they came to the conclusion that the rules contradict the European law on data protection, and they asked Google to postpone the new system. Unfortunately, Google has not listened to them.

QUEST: So, they haven't listened to them, what happens now? Because the US, the regulators, your office, everybody's asked Google to do nothing. To wait. And they haven't.

REDING: They haven't. That means they are contrary to the European law, which means that the national regulators can act on their territories.

QUEST: Are they going to act? Are you encouraging national regulators to act?

REDING: National regulators have as an object to implement the rules on the data protection, so they should do that on the basis of the national rules, which is on the basis of the European rules, implemented by the national regulators.

QUEST: OK. But to somebody watching tonight, who needs this put into simple things to understand, as commissioner with responsibility, are you saying that it is time for action, since Google has not listened?

REDING: It is time for action to reform our rules so that they really become biting, and that is why on the 25th of January, I presented the reform of the actual rules, which would then mean that a company like Google, not obeying the European rules, would go towards a sanction of 2 percent of the world turnover of this company. Which would mean for Google, 560 million francs, so that would be, then, persuasive, I think.

QUEST: So, you can't do that at the moment, because you haven't got those powers or those rules. But you would encourage national regulators to do whatever they can to stop this new privacy rule, is that correct?

REDING: If the national regulators are of the opinion that those privacy rules are contradicting their national data protection rules, they should act.


QUEST: Couldn't be much clearer than that. John Abell is's New York Bureau Chief and joins me now. John, extraordinary. Google has managed to annoy a large number of the US attorneys general, the European Commissioner, vast national regulators. Have they really misjudged this so badly, or do you think they think they can just ride it out?

JOHN ABELL, NEW YORK BUREAU CHIEF, WIRED.COM: Well, actually, I think it's none of the above. I think what they're doing here is cataclysmically underwhelming.

They're not collecting any new information as of today. They're simply using the information they have been collecting since the beginning of all these services and they're co-mingling it so that they can develop new products and create new ads.

I'm not here to pimp for Google, but today is kind of a non-event kind of day.

QUEST: Oh, now you say that, you say that, John, and I can see why, but the fact is, one piece of information used by one division is not nearly as valuable as when you can pass it around. And to use the financialese, you can leverage that information. And that's what they're doing, isn't it?

ABELL: You're absolutely right. The difference here is that Google is using it as Google. So, your relationship with Google is whatever it is. Google isn't selling that information to other people. They're not selling it to Facebook and nameless entities in the European Union.

So, you may not like that, but guess what? If you've been using Gmail since 2004, whenever it started, you have been in the Google ecosystem having your mail sniffed for little text ads that no one claims to look at, but which provide 97 percent of Google's $37 billion revenue.


ABELL: So, you're in there.

QUEST: So, am I getting -- and people who've tweeted back to me @RichardQuest, are we just getting hot under the collar about nothing? And when we hear Viviane Reding saying it's against EU law and national regulators should take action, do you think she's missing the point?

ABELL: I really don't know. I'm not familiar with the laws that she's talking about, and it didn't really sound as though she was, either, strangely. It was a very curious non-response.

But look. The European Union has its laws, China has its laws, the United States has its laws. Multinational -- global companies have to deal with local laws. And if Google has to face charges the way other American companies have, Microsoft in the European Union, they will, and we'll see what happens.

But they're not being fined today. And unless the laws have to do with the collection of data, which Google is not doing any new collection today, I really don't know what the point is.

QUEST: OK, so, finally, we are -- whether Google passed muster or not, or Facebook's new privacy or whatever, you would agree that at the moment, the technology and the abilities are moving far faster than either the public's acceptances or the regulations.

ABELL: I would go you one better. It's moving faster than people even dare to try to understand. And the reason that this isn't as awful as other things might be is that one of the things Google has done is to make their rules digestible and comprehensible and brief, so at least you know, I don't want any part of this, unlike other companies, which shall remain nameless.

QUEST: We thank you, sir. You will not remain nameless, John Abell joining me from New York. Always good to have you making good common sense on QUEST MEANS BUSINESS for us tonight. Many thanks.

Up next, brick by brick, LEGO's profit pile on. We'll have the LEGO chief exec on this program after the break.


QUEST: Very little work got done in the QUEST MEANS BUSINESS office today as people played with the toys all day. Until, of course, we asked and had to put the toys to work. Building and building, year after year after profits, LEGO has risen once again.

This is what LEGO's profits look like when you put it into their own. Every year, those profits keep rising, and between the last two years, they're up almost 12 percent. In the space of just five years, they've quadrupled from there to there.

And much of it is down to spinoffs like these Star Wars LEGO, Harry Potter LEGO, and the new Ninja Go LEGO, all of which has kept us amused all day. Talking of which, you never know where you might find some LEGO.

The company said licensing deals performed considerably above expectations, and away from the bricks, LEGO's video games have sold well, too.

The one thing that didn't work was its computer online game. It lasted barely a year because a lack of paying subscribers.

LEGO says it's very satisfied with the overall numbers. I asked the chief exec if he'd still be as happy if he didn't have all these famous characters to rely on.


JORGEN VIG KNUDSTORP, CEO AND PRESIDENT, LEGO GROUP: It's obvious that fairy tales, great stories, not just any movie that comes out, but the really great stories that entice children are driving roleplay, and roleplay is a very important kind of play related to LEGO bricks.

QUEST: How can you find the formula that will let LEGO access online that will let you have a presence and a growing industry in digital, where you so far have struggled? Because that -- opening up that is going to be important for you.

KNUDSTORP: Absolutely. No doubt, digitalization is just something that transforms business, it changes the customers we have, it changes how we interact with them, it changes how we run our own business, and it certainly changes our product portfolios, as well.

Already today in the video games market, the LEGO video games are top three item in all the markets across the world, so we're present there. We're present with our website, where we have 20 million unique users every month.

But we're struggling to develop the right kind of online game experience that comes really close to what it's like playing with LEGO bricks, and I see us continuing trying to find the formula there, but we're probably still in the very early days of getting that right.

QUEST: Does it go back to this idea that you have to have the bricks that you can touch, and if you haven't got the bricks, mousing on a screen ain't as good?

KNUDSTORP: You know what? The thing is, that the thing that comes closest to building with bricks -- because building with bricks is really a systematic, very logical exercise, and yet, very creative. The one thing that comes the closest to that is programming a computer. That's where you really are creative and, at the same time, work in a very logical structure.

Some of our products, like LEGO Mindstorms, actively encourage the very simple form of programming to help children write rather than just be a reader or a receiver of digital play.

And that's what's very important to us, is that when we offer something and that it's digital, is that it's not passive entertainment, that it's not just about watching, it's about using your brain, using your fingers --

QUEST: Right.

KNUDSTORP: -- combine and construct.

QUEST: You have been bitten by the critics who say LEGO for girls is the same as LEGO for boys. In the past, you have had that difficulty. Well, I can see behind you over your right shoulder, you've got sort of LEGO for girls. What is the difference between LEGO for boys and LEGO for girls?

KNUDSTORP: Well, essentially, it is the same thing. LEGO is about taking some fairly standard sizes and manipulating them in various ways and building anything you can imagine. And girls have always done this as much as boys.

But when we package it as pirates and knights in a castle or Star Wars --

QUEST: Stereo --

KNUDSTORP: -- it appeals less to girls.

QUEST: Stereotyped, stereotypes. You're pandering to them.

KNUDSTORP: Absolutely. That's the threat, of course, and I have to say that when we package a pirate ship, it appeals very strongly to boys, that's what all of our research suggests. And when we package it as a cafe, well, then it just appeals more to the girls.

So, certainly, we are confirming, if you like, the stereotype, in that sense, but it's also being confirmed in all the research we're doing and the conversations we have with both kids and their parents.

QUEST: Which, coming from a company in egalitarian Denmark must sit very uncomfortably on your shoulders.


KNUDSTORP: Well, I think in a way, yes. But in other ways, I just have to say that we are not doing it just because we're putting it in somebody's head that this is the way it looks. It's because we've actually done a lot of thorough research on our own.


QUEST: The CEO of LEGO. After the break and the news, home and dry. A nightmare at sea is over. The crippled Costa Allegra, the cruise ship finally docks, we'll hear from the passengers about their three-day ordeal. It's QUEST MEANS BUSINESS. It's up next.


QUEST: Hello, I'm Richard Quest.

More QUEST MEANS BUSINESS in a moment.

This is CNN. And on this network, it is the news which always comes first.

After nearly a month of heavy bombardment, relief could finally be flowing into the besieged Syrian neighborhood of Baba Amr. Aid groups now have permission to enter after rebel fighters withdrew. Activists are still describing a violent situation. One activist in Homs said that 17 residents have been killed while trying to flee the area.

This newly released video shows conditions aboard the crippled Costa Allegra cruise ship as it was towed across the Indian Ocean. The ship docked safely on Thursday in the Seychelles, three days after an engine room fire knocked out the power. Passengers told us they enjoyed steaming tropical heat and lived mostly on salami sandwiches.

Another person has died from a killer tornado outbreak in the Midwestern United States. At least 13 people are now confirmed to have died in the states of Missouri, Illinois, Kansas and Tennessee. One tornado was clocked with winds of 273 kilometers an hour, an unusually powerful storm for this time of the year.

The European justice commissioner says Google's new privacy policy is illegal and she's calling on national regulators to take action. The new policy came into effect today. European watchdogs say it breaches data protection laws.

The Iranian government is using posters, handouts, Tweets and text to urge voters to participate in Friday's presidential elections. Balloting will be Iran's first national vote since the controversial 2009 presidential election. Some 3,400 candidates are on the ballot, all conservatives Iran's Guardian Council has approved.

So as you heard in the news, an unusually powerful storm with exceptionally ferocious tornadoes has killed people in the United States.

Jenny Harrison is at the World Weather Center -- Jenny, the core question is, why is it so powerful this year?

Is there any specific factors involved?

JENNY HARRISON, ATS METEOROLOGIST: You know what, Richard, just really powerful thunderstorms. And it's all about that circulation, the vortex that just developed. And, of course, this particular region of the U.S., you've got this huge area of sort of flat ground. This is why there is so much damage from tornadoes in the United States. You remember, tornadoes can happen in any country around the world, but they are usually much more powerful here, because all of the different elements come together.

The thunderstorms are so much more ferocious. And then we've got these huge expanses of land with, really, very little to actually stop the tornado from, you know, falling apart.

But just look at the actual size of the area that was hit by these thunderstorms. Now, I'm not just talking about the one tornado, but look at this vast area that actually saw severe thunderstorms, one million square kilometers.

So you put France and Spain together, and that is the size of the area that these thunderstorms came through Tuesday, through Wednesday. Fifteen states in total. And we know about, obviously, the deaths that has occurred, but also just the -- the damage, so widespread.

Have a look at some of this video. I mean there's just so much of it, because, obviously, when you've covered 15 states, there has been damage in, you know, all of that number of states. But this area particularly badly hit. This, of course, is Harrisburg. This is in Southern Illinois. And this is where the majority of people have died, in this particular region.

And then, when you look at it on the ground, I mean there's just nothing left. Everything has just been torn apart, as this particular tornado came through.

Now you mentioned, Richard, of course, about the strength of this tornado. And, yes, this is what is known as EF4. If you come back to me and I can actually show you where that actually fits within the scale of tornadoes. So from zero to five, this was number four. This is described, the damage, as devastating. And, in fact, the winds are thought -- estimated at about 273 kilometers an hour. Remember, those winds coming from just about every direction in that vortex of power.

Now, when it comes to how frequent you see a tornado of this damage, this strength, this power, well, less than 1 percent, which is, obviously, some good news. But we're also getting to that time of year where the tornado season really begins to kick in. The thunderstorms get stronger. And this is what happens. So we're just in March now and look at how the numbers obviously increase.

But generally, the tornadoes will be of a lesser strength of the one that came through Southern Illinois.

It's been very quiet throughout the last 12 hours across this particular region. But there are more thunderstorms developing. There they go. They're developing, they're pushing eastwards, a very similar are to where the damage was done yesterday, where the deaths occurred, as well. So there are warnings in place Friday to Saturday. These thunderstorms are going to be coming through at the latter part of Friday into Saturday.

So, as I say, warnings in place. More strong thunderstorms on the way. It's that season, unfortunately, Richard. So we'll keep an eye on these storms over the next 24 hours.

QUEST: Jenny Harrison at the World Weather Center, on track and on top of the latest storm developments.

When we come back after a very short break, we're going to take another look at the privacy question.


STEVE YANKOVICH, VICE PRESIDENT OF MOBILE, EBAY: A year ago, people would not opt in to location when an app -- they installed an app that asked for location. Today, the vast majority of people will let the app do that, because they get the value-add and how you help me if you know this.


QUEST: From the Mobile World Congress in Barcelona, why eBay and PayPal are seeing customers benefitting from sharing more of their information.


QUEST: Today is March the 1st. And as you heard earlier, like it or not, Google's new privacy policy took effect. Google has claimed throughout that by combining user information from its different sites, you, the user, get a more tailor-made service, which is to your benefit.

Now, eBay says its users are seeing the benefits of handing over more personal and private data, actively opting into things like sharing locations.

It was at the Mobile World Congress in Barcelona that Jim Boulden spoke to eBay's Steve Yankovich and PayPal's David Marcus. They say you can now do more with their mobile apps than you can with a desktop.


YANKOVICH: We represent eBay on the different mobile platforms, right?

So to do what you were doing on the desktop, to do it on mobile. And really what we're doing, the reason we're here is we're bringing an end to end experience now to transform how people shop. So it doesn't matter where you are.

And so we have things at the front end of the shopping experience, like scan bar codes and QR codes to identify a product with a frictionless way all the way through finding that product and discovering and understanding, through pictures and in a way that you would expect to understand a product, through payments with PayPal on the other side.

UNIDENTIFIED FEMALE: So I take out my phone and I open my eBay fashion app. This app lets me stay on top of current trends and build up my wardrobe. It also has this really great feature, image blotch. It lets me take a picture of something I find inspiring and even I can collect different articles of clothing that match.

JIM BOULDEN, CNN CORRESPONDENT: When I think of PayPal, of course, security is a huge issue. And I'm very happy using it on my laptop at home on my wireless. You're going to have to convince me that I should be doing that on the mobile while I'm walking down the street.

DAVID MARCUS, VICE PRESIDENT OF MOBILE, PAYPAL: Well, I'll tell you, I -- I wanted to say something when you said that you were used to using PayPal on your computer, because a lot of our users are using PayPal on their cell phones. Now, our payment volume on mobile is going to grow 50 X between 2009 and this year. And we're expecting about $7 billion worth of payment volume, up from $150 million only in 2009.

So a lot of our users are using PayPal internationally to pay for things on their cell phones, just because it's easier not to type your credit card details, your shipping address, you know, in a tiny mobile phone, but also because people trust us with security.

BOULDEN: People have to be willing to give a lot of information and allow that information to be stored, even down to your dress size and your photos when you walk into the store.

You're convinced that Europeans, Asians, are going to have no problem doing that?

YANKOVICH: Sure. Well, there's different levels of information. I mean you may -- you may just show us what you're looking at by taking a picture, right, of a dress. You're not telling us anything just yet, right?

We then bring you images of dresses. At that point, maybe what you do is you refine it by saying I'm a size 6. So it depends. If you're willing to let us know more about you because you shop with us more and more and more, in fact, you know, record, actually, your sizes, because that makes it more convenient. Don't show me a size I can't wear, then great, you're opting in. And you understand what we do and how we help reduce friction the more you tell us.

It's just like now, today, you know, a year ago, people would not opt in to location when an app -- they installed an app that asked for location. Today, the vast majority of people will let the app do that, because they get the value-add and how you help me if you know this.

BOULDEN: So in one year, that mentality has changed?

YANKOVICH: Absolutely.

MARCUS: Yes, I think if you can get something from it, you know, if you go every day to a coffee shop and they know you on a first name basis and they serve you, you know, the Frappuccino or whatever it is you want, you know, you want that, right?

So it's OK to share information if you get something out of it. And, of course, if your information is safe and not shared with other parties, which, you know, we're very well known for.

And that's not the future, it happens today.


MARCUS: So for instance, you know, we announced here a partnership with a hotel chain called Yotel in airports all around the world where you can book a hotel room straight from your mobile phone in the airport, pay for it with PayPal and then, you know, you're assigned a room and you get in front of the door and it opens magically when you get there.


QUEST: The debate of privacy that will run for long.

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.




I'm Juliet Mann on a typical British High Street, a window on the health of the economy.

Here at ground level, there are all the shops, cafes and bustle you would expect. Now, look up. In offices above, you'll find solicitors, recruitment consultants, chiropractors and advertising agencies.

Small and medium sized firms that the EU's own bank, the European Investment Bank, calls the Rein (ph) economy, making up 99 percent of all European businesses.

Coming up, I speak to the president of the European Investment Bank, which lent small and medium enterprises 13 billion euros last year. And I investigate some surprising and alternative investments.

The European Investment Bank lends to small businesses and other projects across the European Union with money raised on capital markets. It's maintained its AAA rating despite recent economic turmoil. EIB funding for small and medium sized enterprises, SMEs, reached a record level in 2011. I caught up with the bank's president, Werner Hoyer, at the EIB's Brussels office. He says he supports growth and jobs in Europe through lending, lending and advising.


MANN: Let's talk about the role of the EIB.

What does it do?

What could it do? What should it do?

WERNER HOYER, PRESIDENT, EUROPEAN INVESTMENT BANK: Lending, lending and advising. That means we lend money for long-term investments, investments which otherwise could be financed only under big difficulties because of the interest rates or because of the length of the tenure of a loan.

And we are -- you know, we can bring in its special characteristics and advantages, blending, because we bring together money from member states and the EU Commission and blend it -- blend it with the money which we get from the capital markets and advising. This is the area where we can play out our specific strength, because EIB is able to give not only financial advice, but, also technical advice.

MANN: You're one of the biggest lenders in the world. I think you lend more than even the World Bank.

Are you also the biggest borrower?

HOYER: Of course, $76 billion last year. That's quite -- quite a sum of money. And when I began my new job just a few weeks ago, I was really impressed to see our market experts figuring out at what time to place what kind of a bond in which currency at what conditions and what tenure.

MANN: But you're not just going for safe bets. You had record investment in Greek small and medium enterprises last year. Presumably, you're looking at doing the same in economies which are struggling more than they'd like to be, like in Italy, like in Spain.

HOYER: Well, of course, it is more difficult in some countries. But this is exactly why, then, a bank like EIB is needed. And let's turn the thing around. There are countries in the European Union whereas they are difficult for EIB to place loans because the -- the interest rates, for instance, in Finland or in Germany, are so low, that even for us, it's difficult to compete.

MANN: But that difficulty that small and medium sized enterprises find in getting funding, in getting the loan, is not unique to a country that's in trouble. It seems to be unique across Europe.

HOYER: This is why, in our business model, this has a huge priority, SMEs. We have about $13 billion in loans for SMEs in 2011. And it will be of a similar size in 2012. And that means we reach more than 120,000 SMEs this way.

And they are the backbone of growth and innovation in -- and employment, of course, in Europe.

MANN: So SMEs are the engines of the European economy.

Why is it being left, I suppose, to the EIB to inject that cash that they need?

HOYER: Well, others do it, as -- as well. But of course we are the biggest producer of this kind of credit offers. And you can see the big differences among the member states of the European Union.

MANN: For example?

HOYER: Well, if you look at Italy, for instance. Italy is very successful in SMEs. Many Scandinavian countries are. Germany is. So there is a a couple of good examples. And one should remind one's self that the production of -- of new technologies, of innovation, is, in very, very many cases, linked to -- to small and medium companies -- sized companies.

MANN: So do you have a five year plan?

A 10 year plan?

HOYER: I start with the six year plan for my contract and...

MANN: And take it from there?

HOYER: Let's see what happens then.


MANN: Werner Hoyer there.

After the break, I'm lured off the high streets and into a car showroom to test drive some alternative investments.


MANN: The irresistible contours of classic European cars -- Ferraris and Jaguars. This one belonged to screen siren, Bette Davis.


Cars like these are the traditional toys of wealthy collectors, the epitome of style and glamour. They're also money making machines for savvy investors.

Last year, classic car prices beat returns on equities and even outperformed gold. As we know, when times are tough, demand increases for physical assets with intrinsic value. And the rarer, the better.

I'm joined by Corey's (ph) Classic Cars auctioneer, Chris Routledge.


Hi, there.

MANN: Now, you can't get rare than this, can you?

ROUTLEDGE: This is a 1968 Ford F3L, so rare, it's the only one in the world.

MANN: Wow.

Is it your pension?

ROUTLEDGE: It's not. It's a -- it's worth a million pounds. I wish it was my pension.

MANN: Cars like this, are they just for the enthusiast, the traditional collector?

ROUTLEDGE: Once upon a time, a car like this would have probably represented twice the value of the owner's home. But all of these cars have now been sold for these life-changing amounts of money to proper bona fide international investors now. And that's where cars like these are going.

MANN: Are we talking, then, about a different kind of investor that could -- yes, this one is a million. But cars go at auction for tens of millions of pounds.

ROUTLEDGE: Most recently, there's been a report of a Ferrari that's been sold for $31 million, arguably, the most expensive old car ever sold publicly. Yes, the types of people who are buying them are now buying them solely as investments, much like if you were to buy a Picasso or an important piece of -- of English furniture for investment. You've quite often got people buying these cars now that might not necessarily be enthusiasts and they might just be looking to buy only one, but a real big proper one.

MANN: To put in their portfolio.

ROUTLEDGE: In their investment portfolio, along with their art, along with their other collectibles.

MANN: Well, I think this is just a little bit out of my price range. But tempted, with low interest rates, falling property prices and a decade or so of poorly performing markets. Now might be your time to think about an alternative investment.

In this diamond workshop in Antwerp, craftsmen cut, buff and polish, to give these sparklers the kind of finish that will fetch the best possible price. Diamond sales around the world net around $16 billion a year, but while there is a global diamond price index, diamonds aren't trade like silver and gold, on the financial markets. So investors add precious gems to their portfolios through very specialized funds.

When it comes to diversification, there's plenty of opportunity out there for a quirky trade.

ROUTLEDGE: The people who trade these markets definitely have a bit more of a specialized experience. They know more about what makes these markets move. Now, things like corn and wheat and soybeans are and have been, in the last few years, very exciting.

MANN: It's important to know your stuff. If you're trading corn or wheat, keep an eye on the weather and get a feel for who the big producers are and what their harvests yield.

The U.K. Housing Index also is worth a look. Liquidity in this market is low, unless end of month data is just out. Look for hints on which way the market will move by monitoring interest rates, consumer confidence and industry statistics.

And no, we're not here drowning our sorrows after a trade gone wrong. Wine has been outperforming equities, gold and oil. And you don't have to collect wine to trade it, although it helps to have a nose for the latest trends.

Even your country's banks are worth a look. In the U.K., the FTSE 350 is good for getting a diverse spread across that whole sector. But beware of news from the big players who are overweight here, as that could cause a spike in a generally falling market.

Trading all that is weird and wonderful gives investors more exposure, makes portfolios more diverse and can be more exciting than standard stock picking and currency trades.

Park your cash in the right assets, spot the road-worthy trends and shrewd investors could drive up the value of their investments over the longer-term.

That's it for this week's MARKETPLACE EUROPE.

Don't forget, you can Tweet me, @julietmanncnn, and let me know if you've had success with any alternative investments.

See you next week.