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QUEST MEANS BUSINESS
NATO Secretary General on Afghanistan; Facebook Falls Below IPO Price; Euro Crisis Talks
Aired May 21, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RALITSA VASSILEVA, CNN INTERNATIONAL ANCHOR: Hello, everybody, I'm Ralitsa Vassileva at the CNN Center. We're going live to Chicago and the NATO summit where the NATO Secretary General Anders Fogh Rasmussen is speaking. Let's listen in.
ANDERS FOGH RASMUSSEN, SECRETARY GENERAL, NATO: -- and ours to gradually and responsibly draw down our troops, but we will remain combat ready until we have completed our ISAF mission at the end of 2014.
However, that will not be the end of our commitment. The government of Afghanistan has invited NATO to help provide support to the Afghan security forces after 2014, and we are ready to lead a new training, advising, and assistance mission.
And let me be clear. This will not be ISAF under a different name. It will be a new mission with a new role for NATO.
We all know that our long-term success rests on strong, skilled, and sustainable Afghan security forces. Today, we reaffirm our strong commitment to support their training, equipping, financing, and capability development in the years to come.
Allies and partners are playing their full part. I welcome the financial commitments that some have already made.
I would also like to recognize the steps taken by Russian, the Turkish Republic, Uzbekistan and Kazakhstan, to facilitate the transit of ISAF cargoes. We count on Pakistan's commitment to support the efforts of the international community to promote peace and stability in Afghanistan.
The Afghan government has also committed to playing its part, and not just financially. President Karzai has confirmed his government's commitment to a stable, democratic society based on the rule of law and good governance.
This includes the need to fight against corruption and to protect the human rights of all Afghans, including women. These commitments are vital to Afghanistan's long-term stability and our long-term support. A peaceful, stable, and prosperous Afghanistan will benefit the whole region and beyond.
Many challenges remain, but we are determined to succeed. And based on today's discussion, I'm confident we will. And with that, I'm ready to take your questions.
UNIDENTIFIED MALE: I don't know all of you, so please introduce yourselves before you ask your questions, and I'll go the BBC Mark Mardell in the first row.
MAX FOSTER, HOST: NATO, there, speaking at the summit, and we've been reporting on CNN here on the day that they're referring a lot to Afghanistan in that formal agreement on NATO-Afghan transition plans. Bring you more that comes out of that question and answer session a little later on in the show for you.
But good evening, I'm Max Foster. You're watching QUEST MEANS BUSINESS, now, and we're going to crack on with some big business news today, because it floated, but now it's sinking. Facebook shares fall below the IPO price. That's the big story today, and it is the largest IPO yet undertaken by an internet company, and it's starting to look like a major flop, actually.
Despite the hype, doubts remain about Facebook's business model. Tonight on QUEST MEANS BUSINESS, we're looking and asking why there is little investor appetite and how Mark Zuckerberg can demonstrate to investors that he can convert the site's 900 million users into profits.
Facebook's lackluster debut on Friday is being followed by those sharp losses. Right now, shares are down more than 9 percent. At under $35 each, that's well below the IPO price of $38. Many of those early investors are down more than $3 on every share that they bought. They were hoping they'd be making a fortune.
Now, looks like the most hyped and biggest tech IPO ever is a bad bet so far. CNN's Felicia Taylor joins us now from New York, and you and I are being very smug, aren't we? Because we didn't believe the hype. But explain why there was a lot of support for the share price on Friday but not today.
FELICIA TAYLOR, CNN INTERNATIONAL CORRESPONDENT: Well, the syndicate, which is basically the three major underwriters of the bank, which is Morgan Stanley, JPMorgan Chase, and Goldman Sachs, would step in naturally to support the stock at $38 a share, $38 a share being the listing IPO price. So naturally, they would step in and buy it.
And traders today are telling me that they actually had to step in so frequently because there were so many different day traders pushing the stock downward that they actually acquired more than they intended to, they spent more than they intended to, so that they've already lost money on the trade.
So therefore, today, the second day of trading, essentially, for the stock, they aren't stepping in as frequently, because they're basically reducing their exposure to the stock, and that's why you're seeing it trading around $33, $34 a share.
What's interesting is that they didn't step in, though. Obviously, they spent so much money on Friday trying to sort of cover their position and keep the stock at a certain level that simply today they can't step in and do so forever. At some point, the stock has to find its own place.
And the lead-up to this IPO was interesting, as well, because there was a lot of side buying by the employees and private share owners that already sort of hyped the stock, and so it was already trading before the actual IPO.
So, there's considerable critique out there as to where this stock will actually end up in terms of its value. Take a listen.
(BEGIN VIDEO CLIP)
BRIAN WIESER, SENIOR RESEARCH ANALYST, PIVOTAL RESEARCH GROUP: Need to be clear. It is still a faster-growing company than Google. And at the same time, it is also a riskier company than Google. But when you account for all those risks, we get down to a $30 price point.
But again, I think that investors will get there as soon as they spend time to think about the risks imbedded in the company and the risk around ongoing sequential revenue growth. We think that there will be growth, just not maybe as much as the price the IPO expected.
(END VIDEO CLIP)
TAYLOR: And that's exactly the point. Everybody is curious as to where there is going to be growth in this company. The timing for GM to have come out last week ahead of the IPO and say listen, we're removing our advertisements from the Facebook pages because it doesn't actually generate any revenue wasn't such great timing.
They obviously knew that the stock was about to come out and start trading publicly, so the question on many people's minds, and clearly this analyst is saying that the fair value for the stock is at $30 a share, considerably less than the IPO price of $38. Max?
FOSTER: Are we in a different investing environment these days, as well, from say 10 years ago when people had some spare cash, looking to the future, looking for growth companies, putting money into them.
Whereas now, they haven't got as much spare cash and they're not so quick to believe in just predictions. They want facts, they want resources, they want cash, they want profit-making.
TAYLOR: Well, look. Facebook is certainly a phenomenon of the future. Social media has certainly been a thing that everybody wanted to get in on. But we don't know where Facebook is actually going to make its money.
With Google, like the analyst said, there's always a different search. People will constantly be searching for something different every day. How many new Facebook users can there be? How many conversations, how many threads can you have? And how will that actually generate any revenue? Those are all unknown -- unknown answers.
And so, when it comes to putting in the spare cash that we do have that might be sitting in the mattress or in an account, you want a sure thing. You don't really want to take chances on some tech IPO that may or may not actually generate any income down the road. So, it's going to take some months before people are really sure that Facebook is there to stay and not just be a phenomenon.
FOSTER: Felicia, thank you very much, indeed. That is the big corporate story of the day, but the big economic story of the day continues to be Europe. And Europe's finance chiefs still think they can keep the eurozone intact, but there are big deficits and big differences of opinion in the way.
The French and German finance ministers have promised to do whatever is necessary to keep Greece in the euro. They just can't agree on what that is yet.
Wolfgang Schauble met his new French counterpart Pierre Moscovici for the first time today, and the two countries are still split on euro bonds. The new French president Francois Hollande put the idea forward at this weekend's G8 meeting, but Germany still opposes it.
Spanish bond yields continue to rise. The government says it can still hit its deficit target and fix its banking sector, but economy minister Luis de Guindos said Spanish lenders would not be asking for external foreign aid and that regional governments are still committed to meeting EU deficit targets.
On Friday, we learn the deficit -- that deficit was bigger than expected, and he said that today the economy's likely to shrink 0.3 percent this quarter.
Jose Manuel Barroso says Europe's failure to fix the debt crisis isn't a question of countries lacking support. The European Commission president told CNN's Christiane Amanpour that the problems in Greece came from Athens itself.
(BEGIN VIDEO CLIP)
JOSE MANUEL BARROSO, EUROPEAN COMMISSION PRESIDENT: The problem with Greece is not a question of the support that has been given. To give an idea, if you put together all the support in terms of grants and loans and also write-off of private debt, it corresponds roughly to 177 percent of the Greek GDP.
To compare, the Marshall Plan was on average 2 percent of GDP of the countries that were receiving aid. So the problem is not a question of lack of support to Greece. The problem is a question of Greece implementing the necessary reforms so that it can come back to growth and to confidence. This is indeed the problem.
(END VIDEO CLIP)
FOSTER: Well, you can see Christiane Amanpour's full interview with the European Commission president tonight during Amanpour in an hour's time.
Mohamed El-Erian believes when it comes to Greece, there's plenty of blame to go around, and European politicians have to answer their fair share. The CEO of PIMCO joins us from the company's headquarters, now, in California.
Thank you very much, indeed, for joining us. You've been analyzing who's to blame for all of this, and it's an important question, isn't it? And it should be addressed right now as things go from bad to worse. What's been your conclusion?
MOHAMED EL-ERIAN, CEO, PIMCO: Well, we should certainly learn from this. I think that there are four distinct parties that collaborated during the boom and are now in conflict during the bust.
So first, I think the Greek government, they over-borrowed and they haven't adjusted quickly enough and adjusted in the right way. They accepted conditions that are unrealistic.
Second, private creditors. The private creditors were willing to lend to Greece at ridiculously low interest rates, and now they're sucking the oxygen out of Greece.
Third, the European partners. They provided the context in which all this has happened and have not been very organized about providing support.
And finally, the IMF. The IMF is the trusted advisor. It is the guardian of soundness and stability, and it hasn't played its role.
So, I think there's enough blame to go around. And the important thing now is to look forward and make sure that these four parties come together before the costs are even higher and, most importantly, higher for the most vulnerable segments of the populations.
FOSTER: You blamed everyone there, though, haven't you, effectively? And can you really get everyone to agree when things are looking bad. It's agree -- it's one thing when things are going well, some of them might have been turning a blind eye, but now you're asking them to be actively involved and save Greece.
EL-ERIAN: Yes, and that speaks to how difficult the situation is and why, unfortunately, it's increasingly probably that Greece may have to exit the eurozone. And the hope is that it can exit the eurozone but remain within the EU so that it can tap money to stabilize the situation.
This is a very expensive and a very disruptive situation. We shouldn't be here, but we are, and now the question is, how do you manage it, taking into account how difficult it is to coordinate these four parties?
FOSTER: How quickly could Greece come out of the euro? When do you think is the earliest point at which it's likely to happen?
EL-ERIAN: So, it's hard to tell, because there are two parties that are the marginal price-setters that will decide whether it exits or not. One are governments, and they had a timetable, and they have a willingness for Greece to remain within the EU, right?
But willingness is not enough. Why? Because they have to convince the population, and what we saw last week, Max, that was a little big frightening, which is what they call a "jog" on the banks. So, not quite a run on the banks, but a jog on the banks.
And it's very important that Greece and its partners stop that process, because when people start withdrawing money from banks, that in itself can force outcomes that are very disruptive.
FOSTER: OK. And I want to ask you before you go about Facebook, because it's a story I'm sure you're well aware of. It's a bizarre old thing, isn't it, the fact that the shares are actually falling? But perhaps a lesson to us all, as well.
EL-ERIAN: Oh, absolutely. I don't think it's so bizarre because of the run-up to it. The range kept on being set higher and higher relative to expectations, and then the price came at the top of the range.
I think it's a lesson of two things. One is, don't allow the familiar to trump value. And one problem that investors have is they tend to be attracted to the familiar name, and with 900 million users, you can see how a situation can become over-hyped.
Secondly, for those that were hoping that the Facebook hype would bring in investors that are on the sideline, it's not going to happen. If anything, it's going to scare them off even more.
FOSTER: OK, Mohamed El-Erian, thank you very much, indeed, for joining us.
Now, Greece will go and it won't be the only one. Hungary's economy minister tells us exit from the euro is inevitable now, as well. Next on QUEST MEANS BUSINESS.
FOSTER: Hungary's economy minister says Greece will exit the euro and they probably won't be alone, that's the added threat. Richard asked him how serious the euro crisis is for Hungary.
GYORGY MATOLCSY, HUNGARIAN ECONOMY MINISTER: In 2010, the crisis was a little bit worse for my country, because at that time, Hungary was behind Greece.
All our macro economic figures were similar to each other without a membership in the eurozone. Meaning, by definition, assistance for Greece. Now, the situation for Greece is much worse and it is quite dangerous and risky for the whole eurozone.
RICHARD QUEST, CNN INTERNATIONAL: Would you join the British prime minister's call when he says "make up or break up"?
MATOLCSY: An absolute thought that a 100 percent break-up is out of the question, that's my point. However, the structure of the eurozone must change. Within a couple of year's time, probably, a couple of countries belonging to the eurozone will be out of the eurozone because they are not able to live up to the expectation of Germany and the other strong players.
QUEST: So, you are expecting certainly Greece and one or two others to go?
MATOLCSY: Definitely. That's -- definitely, that's my forecast. And it will be a slow process from the point of view of the eurozone. However, the eurozone became a little bit complacent after the early days.
They made huge economic policy mistakes that the original structure of the eurozone was not the best one. They were not able to set up a European monetary fund for themselves. And also, they couldn't be able to set up a procedure for leaving the eurozone.
FOSTER: And Hungary's economy minister isn't the only one anticipating a Greek exit. Despite a weekend pledge from G8 leaders that it will stay, there's increasing speculation Greece will leave the single currency. If it does, a return to the drachma is an option. Jim Boulden explores the country's currency possibilities.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): This Greek restaurant in London takes old drachma notes for fun. Well, fun for now. But could the real Greek restaurant one day soon take a real drachma? Will Greece set fire to the euro?
JOHN PEET, EUROPEAN EDITOR, "THE ECONOMIST": There isn't much of a precedent for this. Greece is at least in theory, it's a member of the OECD, it's a developed country. It would be the first time we've been in a situation where a country like that has defaulted -- it would have to default -- and torn up its agreement with the IMF and its creditors.
The euro became Greece's legal tender in 2002. But now that Greece can't pay its bills, it's had to take massive loans from European institutions and the International Monetary Fund.
Forget that technically there is no legal way for Greece to leave the euro or be kicked out. But if -- if -- Greece stops paying its creditors and leaves the euro system, what are the options?
Here is our list. Firstly, Greece could still use the euro notes and coins without any say over the euro itself.
JAN RANDOLPH, IHS GLOBAL: But we do have countries, like Kosovo and Montenegro, that are fully euroized. They circulate and trade in euros, even though they are not officially members of the eurozone. We have dollarized economies. Ecuador.
BOULDEN: So, secondly, Greece could join Ecuador and Zimbabwe and adopt the dollar or another third currency. But these countries have no control over their interest rates, and they can't print more US dollars to pay bills.
So, a third option: continue to use the euro for everyday items, like a cup of coffee or a taxi fare, but also print Greek IOUs.
PEET: And there are some Greeks who have said, look, we might carry on using the currency for our normal day-to-day business. The problem is that Greece doesn't have enough money, so they may have to resort to some kind of printing of scrip or some other alternative just to pay their own people.
BOULDEN: That takes us back to the most talked-about idea, bringing back the drachma. Greece would have to temporarily shut the banks, print the currency, then re-denominate all bank accounts and bills into drachma.
Analysts say Greeks will lose 30 to 50 percent of the value of savings as the drachma would quickly lose value. Foreign exchange trading platform ICAP has been preparing for a new drachma quietly for a year, publicly for the last six months.
ED BROWN, ICAP: Where we do have some work to do and what we've focused on over the last six months in particular is the relationship of a drachma to the euro, because obviously, the euro currency didn't exist prior to Greece's ascension into the euro.
BOULDEN: A new drachma would allow Greece to turn on the printing presses to pay salaries and bills. But it would also take years for the country to rebuild its reputation in the markets.
Jim Boulden, CNN, London.
FOSTER: Taking us to your Currency Conundrum. In 1979, US president Jimmy Carter was featured on which of the country's coins? Was it the United States, Dominica, the Philippines? Keep watching, we'll have the answer on that later in the show for you.
Let's take a quick look at the currency movements. The euro is holding its ground against the US dollar, actually. It's roughly the same as it was at the end of last week, with one euro buying just under $1.28.
There's not much change against the British pound, either, though we are seeing gains of a fifth of one percent against the Japanese yen.
FOSTER: Each year, half a million new migrants arrive in the Bangladeshi capital of Dhaka. Each year also brings floodwaters that submerge parts of the city under a meter of water. Housing and an ever- growing population in such an unstable environment has been a major challenge.
Now, town planners think they've found a way to rise about it all with Dhaka's floating satellite sub city, as Leone Lakhani reports in this week's Future Cities.
LEONE LAHKANI, CNN INTERNATIONAL CORRESPONDENT (voice-over): Dhaka, Bangladesh: a mega city of 15 million people sprawled over one of the world's largest river systems. The pressure for housing is intense.
LAKHANI (on camera): Historically, Dhaka's development has been unplanned, unregulated, and unprecedented. With 500,000 new migrants arriving in Bangladesh's capital each year, finding space for them is a problem. This is one of the most crowded cities on the planet.
LAKHANI (voice-over): Dhaka is a beacon for families searching for higher ground, escaping the floods. Many of the slums are like this, informal settlements built by the water.
IQBAL HABIB, ARCHITECT AND URBAN PLANNER: Every city has a saturation point. Internal migration has to be reduced towards 1 to 2 percent, not more than that. Let us do that. We are hitting a desperate situation.
LAKHANI: Urbanization is overwhelming this city, with public service providers really struggling to keep up. Water, energy, housing, are all in demand, and one third of the people live in slums.
Nazrine (ph) pays around $20 a month to rent this space.
(WOMEN CONVERSING IN BENGALI)
LAKHANI: In rural Bangladesh, architect Mohammed Rezwan has an answer.
MOHAMMED REZWAN, ARCHITECT AND BOAT BUILDER: The funniest thing that when we mix bodies, we can incite maybe 50, personal balance. At 17, personal balance issue is one of sea water.
We have introduced 54 boats to provide education to other facilities, and we are reaching directly -- I mean directly -- around 90,000 canoes.
LAKHANI: Floating villages: schools, clinics, and farms, keeping communities functioning through the flood that comes every year, slowing the flow of displaced people into Dhaka.
REZWAN: The idea can be replicated in Dhaka contest, because around four million of our people are leaving in the slums in Dhaka. I'm very close to them, and I think this society is -- Dhaka is a city surrounded by the rivers.
LAKHANI: Back in the big city, Iqbal Habib thinks floating communities have a home here at the Hatirjheel Lake Project.
HABIB: With this facility, there will be a lot of facilities on the water, like there could be floating libraries, floating schools. I believe Venice is our model. This was a natural Venice, and we'll just bring it back to its original domain and original beautiful potentialities.
LAKHANI: Twenty kilometers in the center of Dhaka, another plan to deal with population pressure is unfolding. This is Purbachal, one of the government's satellite cities built from scratch to tease people away from Dhaka.
NURUL HUDA, CHAIRMAN, RAJUK: All the people come to Dhaka City for their job opportunities, and those who are women, they're working in the government factories, and the men are just pulling the rickshaw. So, that is the main reason to come into Dhaka City and day by day, all the slums.
LAKHANI: There's not much here now, but in two and a half years' time, it's scheduled to be finished, 62,000 flats, 25,000 residential plots. Moving out of the crowded city center certainly appeals to many, and the last sell out of land here at Purbachal, 158,000 people applied for the 50,000 plots.
HUDA: Definitely what we have initiated the last couple of years, if you make it much more enhanced, much more comprehensive and organized, definitely we are looking towards a livable 50 million people mega city.
LAKHANI (on camera): Planning for this city's future is about accepting its geographical limitations, rising to the challenge of finding new solutions to old problems.
LAKHANI (voice-over): The challenge for Dhaka is how to house the millions and improve the slum conditions. The World's Bank predicts that this will be the second-largest city in the world by 2020, with 25 million people needing a place to lay their heads each night.
FOSTER: Up next, Waterstones' MD James Daunt tells us why he's just struck a deal with a company he recently branded a "ruthless, money-making devil."
FOSTER: Welcome back. I'm Max Foster, these are the news headlines this hour.
Al Qaeda in the Arabian Peninsula is claiming responsibility for a suicide bombing in Sanaa, according to the FP news agency. The explosion killed more than 100 Yemeni soldiers and injured more than 220 people. Al Qaeda militants have been fighting government troops in other parts of Yemen.
Violence in Syria has spilled into Lebanon again. Supporters and opponents of Syria's regime fired bullets and rocket-propelled grenades at each other in a neighborhood in Beirut. At least two people were killed and 18 wounded. Lebanon's government is calling for restraint on both sides.
Aerial footage of the northern city -- of a northern city shows widespread damage from Sunday's earthquake. At least seven people were killed by the powerful magnitude 6 tremor. A strong aftershock rattled the area again this morning, and authorities say up to 11,000 people have been left homeless.
French prosecutors are expanding their prostitution investigation involving Dominique Strauss-Kahn. They say there's suspicion of gang rape stemming from an alleged incident of nearly a year and a half ago. A French newspaper has quoted a woman saying Strauss-Kahn used force against her at a Washington hotel, but police say no reports of such an incident was filed, and Strauss-Kahn denies the allegations.
Leaders of the NATO summit in Chicago are confirming plans to withdraw troops from Afghanistan by the end of 2014, but they're also planning a post-withdrawal mission to focus on training, advising, and assisting Afghan forces. Monday is the final day of the current meetings.
The CEOs of Apple and Samsung will meet in San Francisco today to try to resolve a legal fight over their products. Apple accuses Samsung of copying its product. Samsung accuses Apple of violating its patents. As Paula Hancocks explains, the two companies share a complicated relationship.
PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT (voice-over): It is a love/hate relationship with billions of dollars at stake. Samsung and Apple are currently fighting around 30 different lawsuits in nine different countries around the world, suing and counter-suing over SmartPhone and tablet patents for the past 12 months. But for both, the legal battles are double-edged.
HANCOCKS (on camera): Now, many of us already know what an Apple iPad looks like. This is the product itself. But to truly understand how interconnected these two companies are, you have to go inside the iPad.
So this, as I said, is an Apple product. And beneath here, you can see here, are the Samsung chips. So, even in the midst of all this legal bickering, these two companies are very interdependent.
HANCOCKS (voice-over): Analysts say up to 15 percent of Samsung's operating profits come from Apple orders, and Apple is heavily dependent on Samsung components.
The US company could threaten to use hardware from other companies and move away from the South Korean company, but it would be a costly move.
(BEGIN VIDEO CLIP - SAMSUNG ADVERTISEMENT)
ANNOUNCER: It's time for a better tablet.
(END VIDEO CLIP)
HANCOCKS: Despite the risk of losing Apple as a major customer with the increasing lawsuits, it is possible that there's no such thing as bad publicity for Samsung.
PARK YOUNG-JOO, WOORI INVESTMENT & SECURITIES: Samsung was recognized as the very strong rival against Apple, so it's kind of -- Samsung electronics is saving their advertisement costs. That's what I believe.
HANCOCKS: Most analysts agree it is high time the two bosses met to end the bitter litigation and work towards an out-of-court settlement, even if the meeting wasn't voluntary but ordered by a US judge.
As for now, the only ones truly benefiting from the status quo are the lawyers.
Paula Hancocks, CNN, Seoul.
FOSTER: While it's not unheard of, once bitter rivals to kiss and make up, Amazon has struck a deal with book seller Waterstones to bring Kindle e-books and e-readers to real-world bookstores.
Now, last year, Waterstones' managing director, James Daunt, labeled Amazon a "ruthless, money-making devil." I spoke to him earlier in one of Waterstones London stores, and he said it's a turning point for the company.
JAMES DAUNT, MANAGING DIRECTOR, WATERSTONES: It's something of a U- turn, but a very positive one, and where at last, Waterstones' actually able to fully and confidently partake in the digital sphere. A significant part of our customer base are choosing to read digitally, at least in part, and at the moment, we don't have a really compelling proposition for them.
Effectively, you choose your e-reading outside of a bookshop environment, and we needed to bring that into a bookshop environment, and all our customers quite clearly want to do that. This is about us saying, as book sellers, this is the best array of devices and here is a very simple and easy way in which to buy them.
FOSTER: I need to put a couple of past quotes to you. You're probably expecting them. "They never struck me as being the sort of business in the consumers' interest. They're ruthless -- they're a ruthless, money-making devil." That's what you said about Amazon.
DAUNT: But I think the inventiveness of copy editors can sometimes over-elaborate --
FOSTER: Let me give you another one --
DAUNT: But no, I mean, I --
FOSTER: This is back to your point that you were just making. "The computer screen is a terrible environment in which to select books. All that you get is, 'if you read this, you'll like that.'" So, you're going back on what you initially thought about this whole system.
DAUNT: I don't want to sound too much like a politician, now, but in fact, that is exactly my stance now. What is lacking in the digital sphere is the bookshop environment, and the way in which within a bookshop you discover books.
And we're bringing that to digital readers. You can now come into Waterstones in a -- an environment which -- and only part of this story is a digital one. The other part of our announcement today is about refurbishing our estate and really making it a dynamic and wonderful place in which to be.
But allowing digital readers to use their Kindles to choose books within a bookshop environment. I do continue to think that a bookshop is the best place in which to discover new reading.
FOSTER: A lot of people do like coming into bookshops, and they do miss that with the Kindle. So, you -- how do you view the future halfway house? Because there seems to be one there, which you're trying to tap.
DAUNT: It's exactly the -- what we're trying to do. We're trying to say that you'll -- we are about providing you reading in the best possible environment, and whether you choose to read that physically or digitally, I really don't mind.
At the moment and currently within Waterstones, we don't give you a digital option. You can neither buy a digital device nor digital content easily and sensibly in what should be the most compelling environment in which to do so, which is a bookshop. As a result of this agreement with Amazon, you will be able to do that.
FOSTER: Have Kindles opened a new market, as in they've expanded the market and there's still the market for the paper books?
DAUNT: Certainly the statistics all say that reading as a whole is increasing. The proportion that is being bought out of our physical bookshops has declined, and a lot of that decline has been because of the substitution element that's going on in digital. But the overall market is increasing. What is important for Waterstones is that we become part of that bigger market as a whole.
FOSTER: Is this a game of catch-up, though, for you, now? Do you wish you'd got in sooner?
DAUNT: I very much wish we'd got in sooner, and that -- that wasn't to be, and it is a game of catch-up. And we're doing so with the strongest player in the market, which I think is entirely driven by what we perceive as being in the best interest of our customers.
FOSTER: There you are. Not a U-turn, but certainly a change of strategy.
Now, he is the prime minister they're calling DVD Dave. Find out why the UK's man in charge loves to "chillax."
FOSTER: A little earlier, we asked you, in 1979, US president Jimmy Carter was featured on which country's coins, the United States, Dominca, or the Philippines? And the answer is B, Dominica. His image was embossed on commemorative $20 and $50 coins.
Now, even with the eurozone falling apart, it's good to know world leaders still found time to enjoy a bit of football. At the G8 summit, British prime minister David Cameron was caught punching the air, as he would, as Chelsea, a British team, beat Bayern Munich in Saturday's Champions League.
German chancellor Angela Merkel looks slightly less impressed, but gave him a hug anyway. US president Barack Obama can only watch open- mouthed -- probably doesn't understand a lot of it. Mr. Cameron and Mrs. Merkel did manage to hug each other, as we saw, afterwards.
And the new biography of the prime minister says he has a dedicated routine to "chillaxing," as the book describes it. Apparently, Mr. Cameron enjoys a bit of karaoke and regular date nights with his wife, Samantha.
Some colleagues are calling him DVD Dave because of his extensive library, including shows like "24" and "Desperate Housewives." He's also fond of tennis, using a ball machine called the "Clegger." His deputy is Nick Clegg, by the way, named after the deputy prime minister.
And Dr. Jeff Gardere is the adjunct assistant professor at Touro University in New York. Now, I have to say, in this country, Mr. Cameron's got a bit of grief because people wonder how he's got all of this time. Not just because he's a prime minister, but also because he's got a pair -- he's a parent to young children. But you actually think he's a bit of a hero.
JEFF GARDERE, ADJUNCT ASSISTANT PROFESSOR, TOURO COLLEGE: I think he's an incredible role model to your country in that every scientific and medical piece of information shows us that if you are a workaholic, and we know he must be in order to be a prime minister, after all.
That if you do not take time away from your work, if you do not relax or "chillax," as your press have been calling it, if you don't exercise, if you don't some time away from work, you are a prime candidate for a heart attack, for strokes, for high blood pressure.
Therefore, what he's doing is showing the people that, "Yes, I can do this incredible job, I can be that workaholic, but I know where to find my balance when it comes to chilling, relaxing, and even getting some exercise and still being romantic with my wife and being part of my family." I think this is fantastic.
FOSTER: There's two sides to this, the physical and the mental. The physical side you're referring to there is just taking a break from the stress, right? So, you're giving your body a break. But talk about the mental benefits of switching off from work at least once a day, properly.
GARDERE: Oh, yes. When we're looking at the mental relaxation, being able to get away, we know that when it comes to the brain, it needs time to regenerate. That's why we have something called REM, rapid eye movement sleep. We need that time for our brains to be able to rest and process information.
We can't always get that rest. President Obama, for example, says he only needs four hours of sleep at night. So, he is another candidate, if you will, for someone who should be taking a lot of time to just relax the mind.
And that's what your prime minister does. It's not so much that he's laying back on the couch. He's giving a new definition to this term "chillaxing" because he is empowering his mind, he's making it stronger by being involved in recreational activities. The brain needs that kind of a balance.
FOSTER: What about these computers games. Apparently he plays a lot of Fruit Ninja. People may recognize that game. I know it from my kids. But it's pretty intense. Is he relaxing and getting away from it by doing things like that?
GARDERE: Well, it's interesting that you say that, because for some people to be able to regenerate their brain, their body, they need to actually get that sleep.
But for other people, again, it's about just doing something completely different than what is part of your routine. Getting those brainwaves to function different, being able to look at the cognition, as far as solving different problems away from the stress of the work.
So, I would assume that your prime minister enjoys the video games because it's also a stress buster even though it keeps his mind going, but in a different way than the usual of his 9:00 to 9:00 or 9:00 to 10:00 PM.
FOSTER: If you could, let's look at the group psychology here, as well, because there's a -- there's a big backlash to all of this talk about his "chillaxing." The public --
FOSTER: -- more widely seem to have a big problem with their prime minister not working all the time and putting their best interests first. So, what's going on with the group national mentality, here?
GARDERE: I think what may be going on here, and it may not be so much the fault of the people or even the media.
I think when you are a workaholic and when you do still find that time to have that balance, again using this term "chillaxing," you shouldn't be bragging about it. Because then, I think it takes away from that image of being that hardworking person and looking a little bit more like a slacker. Let other people talk about your "chillaxing."
I believe your prime minister has said, "Yes, I chillax, and I'm really great at it." That's not really what you do, so I hope your prime minister learns maybe a lesson from that. Don't brag about the fact that you can do these other things that bring down the stress, because it may take away from your public persona of having to have your nose to the grindstone all the time as a world leader.
FOSTER: Dr. Gardere, thank you very much. A fascinating insight, there.
We'll be back in a moment. We're just going to have a chillax.
FOSTER: Lots of sunshine coming to Europe. That's the rumor, at least. Meteorologist Jennifer Delgado can confirm whether or not it's true.
JENNIFER DELGADO, CNN METEOROLOGIST: That's right. I hope you enjoyed your chillaxing moment there in between breaks. But yes, weather is changing, and we're talking about a warm up through parts of Europe as well.
But there has been some reports of some heavy rainfall over the last 24 hours. Look at some of the totals coming out of southern parts of France, as well as into northern Italy. You can see, look at the totals there. We're talking up to about 85 millimeters of rainfall.
We're also going to be dealing with still some more scattered showers as we go through the evening hours. And on the radar, it's still popping up, you can see some stronger storms developing, especially right along the Alps. You can see southern parts of France, as well as into Germany, and we'll continue to see periods of some heavy downpours.
But that area low pressure is going to be moving down towards the south, and eventually over towards the east, and that's where the scattered showers are going to be.
For the areas, including parts of Italy, that are recovering from that earthquake, they're still going to deal with the chance for a few scattered showers for tomorrow, but overall the weather pattern's going to be changing. We're talking about warmer temperatures as well as the sky brightening.
But meanwhile, another storm system comes in from the Atlantic, and that's going to be bringing wet conditions for Ireland as well as into Northern Ireland and, of course, into England.
Now, high temperatures, as I said, are worming up. Tomorrow for a high, 26 degrees in Madrid, 20 degrees in Paris, 22 for a high for you, too, even though you are going to see more clouds working in there Max. But for Berlin, 28 degrees and 26 degrees in Athens.
And also want to update you on the tropics. We do have a system spinning in the east Atlantic, and we're watching that because it looks like it's going to develop into a hurricane as we head later into the week. Well, you can see, very disorganized right now, but it is a tropical depression, number 2E, and the winds right now, 56 kilometers per hour.
But as it moves through warmer water -- and again, a very favorable wind environment -- we're going to see the winds becoming up to about 150 fathom. That's why we're saying it could become a hurricane potentially within the next 48 hours. And then, looks like it's going to weaken and possibly as a tropical storm.
But keep in mind, this area you're seeing in yellow from south of Acapulco up to Puerto Vallarta, that is our cone of error, so there's a possibility we could see that track switching around. But again, this is what I really like about the storm. The storm name, if it does become, again, tropical cyclone, it would be Bud. Just plain old Bud after Aletta. The names are a little different this year.
FOSTER: Fantastic name. I think it works very well. Thank you very much, indeed, for that Jennifer.
Some MNA news for you, now, out of China, in fact. Dalian Wanda Group has bought American cinema chain AMC Entertainment for $2.6 billion. It's a big old deal. Wanda, a Beijing-based private conglomerate says it will invest an additional $500 million in AMC to reduce its debt and upgrade its cinemas and other facilities.
The deal creates the world's biggest cinema operator and cements closer ties between the Chinese and American film industries. Everything's getting some Chinese money at the moment, it seems.
Let's have a look at the US markets, quickly, for you. The Dow very much being affected again by what's been going on in Europe. Concern about the European situation up again, it's just general, really. Up nearly one percent. Also, some focus on Facebook and how their shares aren't doing too well.
We'll bring you some Tweets from the Top after this short chillax.
FOSTER: Let's bring you some Tweets from the top, now. What big thinkers are saying on Twitter today. Now, Berkley professor and former US Labor Secretary Robin Reich -- Robert Reich writes, "If euro credit debt crisis worsens, JPMorgan's does too, since Morgan's bets turn even worse."
Huffington Post founder Arianna Huffington is tweeting about JPMorgan's CEO, meanwhile. She writes, "Jamie Dimon continues to complain about regulation as his bank's losses top $30 billion."
And Mark Zuckerberg's sister, Randi Zuckerberg, has a short, sweet update from Sunday and writes simply, "This week equals smiley faces," four smiley faces, in fact.
And here's one of the reasons for that. Mark Zuckerberg's status update on Saturday read, "Mark added a life event, married Priscilla Chan." Here's the photo that went with that, and perhaps the biggest news is that he seems to have taken off his hoodie for once. He's in a suit, although his tie isn't really done up.
That is QUEST MEANS BUSINESS. I'm Max Foster, thank you so much for watching. "Amanpour" is next, but we'll have a news update for you first.