Return to Transcripts main page


Spanish Borrowing Costs Soar; Bankia Bailout; Ten-Year Bond Yields; European Markets Mixed; Greek Elections; Italian Footballers Arrested for Price-Fixing; Securing Euro 2012; Euro, Pound, Yen Flat Against Dollar; Future Cities: Dhaka Tackles Clean Water Shortage

Aired May 28, 2012 - 14:00   ET


NINA DOS SANTOS, HOST: Borrowing costs soar, the stock market sinks, but Spain still rules out an international bailout for its banks.

Italian football is under investigation. Lazio's captain is arrested for match-fixing.

Also on the show, the Lada Classic finally splutters towards a halt.

I'm Nina Dos Santos and this is QUEST MEANS BUSINESS.

Good evening. Spain's borrowing costs are spiraling and so is the need for this nation to borrow more money. The government is currently working on a plan to bail out the country's fourth-largest bank to the tune of $24 billion. Well, Spain says that it won't take money from Europe to bail out its banks, preferring instead to go direct to the bond market.

At the current prices, well, that could be a painfully hard decision to make. Ten-year bond yields for Spain are currently edging ever-closer towards that 7 percent level that is widely seen as unsustainable.

Do remember that Ireland and also Portugal were those countries that were frozen out of the world's capital markets and forced to seek an international bailout from the IMF soon after their yields actually reached that kind of level.

Well, there are still reports that the government may recapitalize Bankia with government bonds, which it could then use to try and draw from the ECB. For the moment, Bankia shares have fallen as much as 27 percent during today's trading session, though they did manage to close down about 13 percent, so recouping some of that loss.

Remember that they were suspended for most of the day on Friday on the back of an emergency board meeting. Let's go over to Al Goodman who joins us now live from Madrid.

So, Al, this situation vis-a-vis Bankia just seems to get worse and worse on the day. And it's also a vicious circle, because if Spain borrows more money to bail it out, well, Spain itself may need a bailout.

AL GOODMAN, CNN MADRID BUREAU CHIEF: That's right, Nina, and you had the Spanish prime minister, who hasn't offered that many news conferences here in Spain, mainly when there's been a visiting dignitary or when he's been abroad at a summit, because Bankia shares were tumbling this day.

And the basis points, that's the spread between what investors demand Spain pay for their investments against the German bond, which is considered to be much safer, that was rising. That's bad news for Spain.

The Spanish prime minister got out and did a news conference, trying to calm down the markets. Now, he spoke about four hours before the markets closed, but he couldn't stop that slide.

He said there will be no European rescue for the Spanish banks, and he was asked if the -- if the decline of Bankia had anything to do with the rising basis points, that spread on the debt, and here's what he had to say about that.


MARIANO RAJOY, PRIME MINISTER OF SPAIN (through translator): No. I don't think that influences the decision that was taken regarding Bankia and the appropriate risk premium, absolutely not.

I think the decision that has been taken regarding Bankia and all the decisions we have taken in relation to the financial sector. What it gives us is a peace of mind because it is an exercise in transparency.


GOODMAN: Nina, what the troubling thing is for the international investors is that they've heard this sort of "we are transparent, everything is fine" and the government has said that repeatedly in the last months, and then a few days later, something changes and they say, well, we have to go back and take a look at that problem. There is a confidence problem, not just abroad, but right here for Spanish deposit holders. Nina?

DOS SANTOS: Is there a concern here that, yes, as you were just saying, Al, you hinted on before, that people could lose an awful lot of their money here. Because what Spain hasn't done is it hasn't created a bad bank to put all these bad property assets in to ring sense the problem.

GOODMAN: Well, that is one of the things that the government is demanding, that the Spanish banks create separate entities and basically put all these bad funds in. But if you take a look at the bigger problem, of course it goes back to the real estate boom.

The banks got -- really were aggressive. During that real estate boom, they got stuck with a lot of bad debt, about $220 billion worth of it. Bankia had about 20 percent of that, it's considered a problem child.

So, as the government is trying to sort through all this, it's got in addition 24 percent unemployment, it's got a very high deficit, and people are saying, which way will it turn? So, you're hearing in the bars and in the offices, people are worried.

Do they leave their money in Bankia? Do they move it to a different bank? Will there be a run on the bank? So far, there hasn't been. The government says there won't be, but people are very nervous. Nina?

DOS SANTOS: And you can imagine that that would be perfectly logical. Al Goodman, as always, many thanks there in Madrid.

Now, as you could just hear before, Al was referring to the kind of spread or difference that some these countries have to pay when they raise money on the international markets.

And what we saw originally when the euro project was conceived, well, these countries in peripheral Europe and also the other more fiscally prudent countries basically had to pay more or less about the same when they rose money on the debt markets.

But if we home in in particular on the sort of troubled children, problem children, here, like Spain, Italy, also Portugal, which has already had a bailout. What we're seeing of late is that they're having to pay an awful lot more money to try and raise money on the international markets.

This is basically the yield, so they're going to have to pay -- get investors to spend, to ask for more money to try and invest in their bonds, whereas, paradoxically at the other end of this scale, Germany is being seen as a much, much safer bet at the moment, and so they're having to pay record low levels.

Now, what I want to show you is this. If you take a look at sort of yields as we stand at the moment, so this is the sort of interest that these countries have to pay to borrow money on the international market.

The ten-year bonds, well, take a look at this. Obviously, Greece is the issue at the moment, its yields standing at close to 30 percent. Even Portugal just shy of 13 percent, and Spain at 6.5 percent, Germany at 1.7 percent.

We often say, for instance, that the sort of cutoff level is about 7 percent, beyond which it just becomes so expensive, especially with a debt pile the size of Spain's, to service this on the open market. It's getting very close to that.

But what I also want to show you is the spread, because this is what Al Goodman was telling us about before, the difference between what Spain has to pay to borrow money and Germany has to pay to borrow money works out at 517 basis points. In percentage terms, that's 5.1 percent.

And remember, these are countries that are supposed to be within the same monetary union and the same club. They're not trading in the same way at all.

Let's move on from the European bond markets to the European stock markets, because they were heading in every direction this Monday. Spain's IBEX, as you'd imagine, was the worst performer. What we saw was falling banking shares dragging that index down by more than 2 percent to a new nine-year low.

Stocks in Athens also heading this other way this time, though, soaring by nearly 7 percent. But do remember that, of course, that market has been very choppy, very difficult to gauge.

As the political situation remains uncertain, investors there, as you'd imagine, are focusing pretty heavily on what the opinion polls are showing, and for the moment they have shown a huge surge in popularity for the pro-bailout New Democracy party.

In London, the FTSE 100 showed some modest gains by the end of trade. We also saw Frankfurt's XETRA DAX falling by about a quarter of one percent. Do remember that there's no trading in Switzerland today, and no trading in the United States because it is the Memorial Day holiday.

Let's get more on the topic of Greece now that we've addressed the issued in Spain, and Paula Newton joins me in our London studio. So first all, let's go back to what we were saying, Paula, about the New Democracy Party. It seems as though people are finally, perhaps, Christine Lagarde might say, seeing the light. How long will it last?

PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: No one in Greece knows, and speaking to people in Athens today, I think many people were caught off guard. It was a few polls showing that they were ahead.

Does this mean that Greece has gone to the brink? Many people there betting that, look, a pro-bailout stance is the best thing for us right now. We don't know. Key here, Nina: many people say there are still many Greek voters that are undecided. We're in for a rocky road on the markets and in Greece, at least until the middle of June.

DOS SANTOS: And even if New Democracy does do particularly well, it's not a given that PASOK, which is the only other party that really is pro- bailout and pro-austerity terms, would get enough of a vote for them to form some kind of working government.

NEWTON: Absolutely. And imagine if we're in deadlock again and this continues. We already see the effect in Europe as a whole. This will be a persistent problem.

And all of that, add to all of that the fact that there have been warnings, now, from very credible people saying that look, Greece will run out of cash. They will have no cash flow to run their country by the middle of June. What happens then? Still an open question mark.

Many people turning to the IMF to see what happens then. Christine Lagarde, being very tough in a weekend interview and saying, "I think Greeks should pay their taxes and -- " basically, she didn't say this, but basically the implication was stop whining.

What controversy today that stirred up. She certainly had thousands of entries, terrible entries, actually, to her Facebook page. She then tried to temper her remarks, again, using Facebook to respond.

Bottom line, Nina, what this says to people in Athens is, say, look, haven't we been humiliated enough? We're the ones paying the price for this? Why does she have to add insult to injury. And I think, Nina, we have seen the last of comments like that in terms of political fallout.

DOS SANTOS: Yes, it was interesting. Her comments were more or less along the lines of I feel more sorry for the people in African who can't feed their families than the people in Athens. By implication, making that comparison, it almost hints of Greece not being part of the eurozone anyway.

NEWTON: Well, you reach an interesting point, there, and I think Greece is starting to feel, "Hey, wait a minute. I thought we were all in this together." But instead, we've got an "us versus them" mentality.

This all points to, Nina, the fact that the markets will start asking for more. They are going to again start pressuring everyone to act like a financial union. That means euro bonds, apparently a very dirty word, still, on this continent.

DOS SANTOS: Yes, certainly very taboo. Nineteen crucial EU summits later, they're still a taboo topic.

NEWTON: Nineteen?

DOS SANTOS: Nineteen. We're braced for the 20th in June. Paula Newton, as always, many thanks for that.

NEWTON: Thank you.

DOS SANTOS: Well, it's a story reminder of the days of match-fixing. Lazio's captain is arrested, Juventus's manager is currently being questioned, and Italy's plans for the Euro 2012 championship lies tattered. We'll bring you an update when we're back after the break.


DOS SANTOS: Some of Italy's top footballers have been arrested and a police investigation into alleged match-fixing. Offices visited the Italian national team's training camp just days before Euro 2012. Patrick Snell joins us now from the CNN International Center to tell us all. Patrick?

PATRICK SNELL, CNN SPORTS CORRESPONDENT: Hi, Nina. Yes, huge news out of Italy, and just what the squad, the Azzurri squad, preparing for Euro 2012 did not want to hear.

Just to recap it for you, we're going to try and break it down for you, all the key components, police have raided the domiciles, the homes, if you like, of various players, coaches -- yes, players and coaches, other officials, too.

It all went down early Monday, and it was part of a nationwide operation. The biggest name for me, probably the Lazio captain Stefano Mauri, the highest-profile player, without question. He's been taken into custody. Just to let you know about him as a player, 32-year-old, attacking mid-fielder, and he's been with the Rome-based club since 2006.

Now, what other ingredients do we have? Well, officers also raiding, as you say, the Italian National Team training center. This to question Domenico Criscito in that one, as well, Criscito.

They actually reportedly searched the room of the former Genoa defender, looking for evidence that would connect him to the match-fixing scandal. He was excluded as a result from the Italian squad for the Ukraine and Poland as a result of the ongoing investigation.

The biggest name in terms of coaching, that Juve manager Antonio Conte, who just won the Serie A crown with Juve, that was earlier this month. A picture of him there with the silverware.

He also being questioned, and police want to find out more info, as well, about several matches that took place last season when he was at Siena with Serie B. We just got reaction from him, as well. We'll bring you that in just a few moments.

But to recap it for you, Monday's operation, as I say, part of a wide- raging investigation, already seen a number of arrests, some current and former Italian players, as well.

And as I say, this is not good news for the nation as a whole. In June of last year, the interior ministry set up a special match-fixing task force, as well, to try and combat this, all in response to a number of high-profile cases.

Now, over the last few months, authorities have found evidence that several coaches -- as I say, these are big-name players and coaches, as well, implicated. Officials have taken money from betting syndicates allegedly based in Eastern Europe and Asia. This to fix league games in Italy.

Authorities believing the warrant lists three Serie A games that were fixed in the 2010-2011 season, namely Bari against Sampdoria, Genoa/Lazio and Lazio/Lecce.


ROBERTO DI MARTINO, INVESTIGATING MAGISTRATE (through translator): Regarding Lazio and Lecce, if we look a bit at this Hungarian connection, we believe that there has been a gain of around two million euros with these bets, with 600,000 euros used to corrupt the players.

There has been an intervention at Coverciano, but I don't want this to take on too much importance in the sense that this intervention only involved Criscito, on whom we had to carry out a search, and we had to guarantee him the right to be present or nominate a person to be present during that search.

Therefore, it was a problem that only involved Criscito, and there are not any other suspects in the Italian National team or any likelihood that anyone else could be suspected regarding this case.


SNELL: OK. As promised, straight to reaction from Antonio Conte, the head coach at Juve. We've had this in within the last few moments. This is what he has to say in English: "My football history as a player and a coach speaks volumes. Ask my teammates, players, and opponents."

He went on to say, "Don't forget that for my honesty and integrity, I've had to confront an extreme aggression, as well." So, the words, there, of Antonio Conte, Juve's high-profile coach has come out fighting. He added, "I and my players have nothing to do with these facts."

This story is going to roll and roll, Nina. It's probably only just getting started. We're probably going to get endless weeks and months, now, of claims and counter claims, allegations, perhaps even court cases, as well. Not what Italian football wanted, particularly, as I say, with the European footie championships due to get underway in less than two weeks, now. Nina?

DOS SANTOS: Absolutely not. Patrick Snell joining us from CNN Atlanta. Many thanks for that.

Now, do remember that there are just 11 days left before that Euro 2012 tournament kicks off. Poland and the Ukraine are co-hosting the European football tournament, and all of this week, CNN is focusing on Poland. This is the country that is spending at least $28 billion on infrastructure and sports venues for this particular event.

Well, as you'd imagine, with worries about hooliganism, security is a top priority for the event's organizers. Jim Boulden takes us, now, on a behind-the-scenes look at how police in Warsaw are currently preparing for one of the biggest tournaments of the year.


JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): Poland is no stranger to football violence. Legia Warsaw suffered violence during the domestic cup final last year. Water canon had to be utilized by the police to control fans.

Of course, European football tournaments are no stranger to violence, either. So, the 2012 Euros will have police across Europe on high alert.

In Warsaw, authorities have spent years preparing for potential trouble, along with the ongoing concerns everywhere about terrorism.

MARIUSZ SOKOLOWSKI, PRESS OFFICER, POLISH POLICE (through translator): It's such a big event, it is impossible to exclude one or the other, and we have to be ready for everything.

BOULDEN: And ready it is, say the police.

SOKOLOWSKI (through translator): The whole security plan is ready. The right equipment has been bought, the sites that needed to be renovated for the tournament have also been completed. And now, it's time to put all that we have done into practice.

BOULDEN (on camera): Europe's football governing body, UEFA, called a test event held here between Poland and Portugal in February a big success. Of course, it also gave the Polish police a chance to test their readiness.

BOULDEN (voice-over): Poland's police have already taken advice from British police, who have been controlling football games for decades. In fact, Poland's police will have a lot of help from mid-May.

SOKOLOWSKI (through translator): Each of the participating countries will send their own police officers along with the fans. There will be at least a few police officers from each country.

BOULDEN: They will be at this police command center in the hot seat when their respective teams are playing. The Polish government says there is a lot riding on the games, co-hosted with Ukraine in June.

BEATA STELMACH, POLISH DEPUTY FOREIGN MINISTER: We know that what we deliver must be the best and the top level, so we are absolutely the best- prepared for the Euro 2012. Welcome everybody who wants to see not only football games, but also to see how hospitable we are and how beautiful the country is.

BOULDEN: Much of the welcome will come not from the authorities but from those on the actual front line, the leisure sector.

SOKOLOWSIK (through translator): That's why today already we are educating our people in hotels and restaurants how to behave during certain situations so that it is one big party and so there is no need for the police to take actions. The less we are visible and less we need to act, the better the event will be, as it will show that Euro 12 will be a very safe event.

BOULDEN: Poland is following on from lessons learned at recent big European events. All fans are welcome, even those without tickets. Big fan zones will be dotted around the country. Poland has a month to throw a party and transform the country's image.

Jim Boulden, CNN, Warsaw.


DOS SANTOS: They have less than 11 days to go, now, until the Euro 2012 championship. Time now for a little Currency Conundrum for you out there. The Canadian dollar has the nickname the Loonie. The big question is, why is this?

Is it A, because the first dollar coin had a loon bird on the back of it? B, because a batch of the first coins had a toxic property and handling them resulted in developing temporary madness? Or could it be C, because many Canadians thought the decision to introduce the dollar coin itself was just a mad idea, and as such, they named it the Loonie in protest?

Speaking of the world's currencies out there, and in particular the big three, the euro received an early boost from news that the pro-bailout Greek party is standing ahead in opinion polls, although it has managed to slip back, now, given the current problems that Spain is enduring.

It's virtually unchanged at the moment against the greenback, as you can see, trading at 1.2533. Sterling is also fairly flat, and so is the Japanese yen.


DOS SANTOS: Welcome back. Dhaka is facing a crisis. The Bangladeshi capital already has a shortage of clean drinking water, and a recent hot summer has sapped supplies. With half a million new migrants arriving in this capital every single year, well, the city of Dhaka is looking to make use of what it already has. Leone Lakhani now reports from our Future City.


LEONE LAKHANI, CNN INTERNATIONAL CORRESPONDENT (voice-over): Hundreds of rivers flow through Bangladesh, emptying out into the Bay of Bengal. The capital, Dhaka, is surrounded by water.

LAKHANI (on camera): Life in low-lying Dhaka can be a paradox. Flood water rise up to a meter during the monsoon months, and there's an ongoing shortage of clean drinking water.

PARTHA HEFAZ SHAIKH, DIRECTOR OF POLICY, WATERAID BANGLADESH: Cities are about people, and for people, you need water. Water is life.

It's about the fundamental life of people. You talk about sanitation, it's our big need.

K.M. NURUL HUDA, BANGLADESH MUNICIPAL DEVELOPMENT FUND: Dhaka City, with this present population, requires or needs over 2,400 million liters of water a day. But at this moment, they can supply only 1,924 million liters of water a day.

LAKHANI (on camera): The need for clean water is most keenly felt by low-income residents and slum-dwellers. Providing access to safe and legal water supplies is an ongoing battle.

SHAIKH: This is the Uttar Kalshi slum, and around 1700 families live here, and on an average, 45 people in a family. This is a representation of 30 percent of Dhaka.

LAKHANI (voice-over): Here in Uttar Kalshi slum, something quite remarkable has happened. This is Bangladesh's first legal water supply to a slum area, a battle that started in 1992.

TAQSEM KHAN, CEO, DHAKA WATER SUPPLY AND SEWERAGE AUTHORITY: We were working along with the NGOs, and the NGOs are now working with us, they are making the infrastructure inside those slum areas, and we are supplying the water.

SHAIKH: That is basically a bore hole. It's a well dug in the mud. It has a pump inside, which pumps water from underground.

MOSLEM UDDIN, PRESIDENT, UTTAR KALSHI CBO (through translator): Before the legal water supply, we used to buy our water, and it was really expensive. It would only run for one hour a day.

LAKHANI (on camera): This city gets its water from the underground, but those supplies are fast depleting, up to three meters a year. So, the plan now is to make more use of the heavily-polluted surface water, treat it, and make drinking water.

LAKHANI (voice-over): That's what's happening here, at the Saidabad Water Treatment Plant. The polluted river water becomes potable tap water.

KHAN: Unfortunately, in Dhaka City, the rivers surrounding the city are polluted because of the fact that there are many industries, especially dyeing industries and garment industries, which are on the better side of Dhaka City, and those industries are mostly polluting.

We clean the water, and then we give it to the people for drinking. It's a potable water and, according to WHO and also Bangladesh standard, it is absolutely potable and drinkable water.

LAKHANI: This plant operates during the dry season, when low water levels mean more concentrated pollution. It uses a biological process to get rid of the impurities, bacteria which eat up the pollutants.

MARTIAL DAUTREY, BRANCH MANAGER, DEGREMONT SUEZ: So, at this stage of the treatment, most of the ammonia has been removed from the river water.

KAHN: One of the aqueducts we are standing here, and this is giving almost 225 million liters per day, which is approximately 10 percent of our total supply water.

DAUTREY: So, this is the final filtered water.

LAKHANI: Dhaka Water and Sewerage Authority's plan is to depend more on treated surface water. This means expanding this site and building three more.

KAHN: Over the next 10 years, we are confident that we will complete all those projects, and if we can do so, then the focus will be 70 percent surface water that is treated water from the river and only 30 percent will be underground extraction.

LAKHANI: Dhaka is a city of many people with many needs, and water is the most basic. Protecting and safeguarding this resource for all of society must be a priority.


DOS SANTOS: Fate dealt JPMorgan a miserable hand earlier this month, and now the stakes on Wall Street are arguably even higher than before. We'll take you inside the regulation poker game. That's next.





NINA DOS SANTOS, CNN HOST: Hello and welcome back. I'm Nina dos Santos in London. Here are the main news headlines this hour.

U.N. envoy Kofi Annan is in Syria, trying to salvage his peace plan after Friday's massacre of more than 100 people. World leaders have strong words for the Damascus government over the killings. The French president's office said that Syria's leaders will have to answer for the, quote, "murderous folly."

At least 19 people were killed by the fires swept through a popular shopping mall in Doha, Qatar. The victims include 13 children, four teachers and two firefighters. The interior ministry says that the fire started at a nursery in the Bellagio (ph) shopping complex.

Heavy smoke rises amid chaos at a shopping center in Kenya's capital, Nairobi. A powerful explosion ripped through the mall injuring at least 28 people. Kenya's prime minister is blaming foreign forces for the blast, but so far investigators haven't identified the cause and no one has claimed responsibility.

Spain's prime minister Mariano Rajoy says that he won't seek outside aid for the country's struggling banking sector. Spanish borrowing costs have soared and so has Spain's debt after the government of Greece's bailout, the nation's fourth largest bank at a cost of $24 billion (ph).

The captain of Lazio, Stefano Mauri, is among 19 people arrested by Italian police as part of an investigation into alleged match fixing. Well, the event's manager, Antonio Conte, has also been questioned.

Police arrived at the Italian National team's training camp earlier this morning to interrogate the defender Domenico Criscito as well, and this comes 11 days before the Euro 2012 tournament.


DOS SANTOS: As hopes grow tonight that Greece will keep its place within the Eurozone, well, attention is turning to Spain, where borrowing costs are currently hovering just below the danger zone. Stephen Pope is an independent market strategist. He joins us now live in our London studio to discuss all of this.

So first off, Stephen, if we come to Spain, what they're doing, is it dangerous? Presumably it is, because it's just kicking the can down the road.

STEPHEN POPE, INDEPENDENT MARKET STRATEGIST: Well, it is certainly dangerous when the prime minister tries to persuade the public and the markets that Spain will not have to seek any outside assistance to recapitalize all of the banks because they're looking at putting this $23 billion, 19 billion euros into Bankia.

Here is a banking group whose entire asset base developed (inaudible) Spain's GDP. And with the 10-year yield now well over 6 percent, heading over 6.5, indeed, it's just (inaudible) Spain can't afford to raise money in the open markets. So --

DOS SANTOS: So it's basically pouring good money after bad?

POPE: Yes, I think there really has to be a sense that if they could find the money to create a bad bank, relieve some of these struggling lenders, all their distressed assets so they're well below par value and just put them into a contained case, and then maybe start to create some better banks, it might be a way forward. But not this Band-Aid solution again.

DOS SANTOS: Let me be blunt: will Spain need a bailout? Presumably we can't afford one.

POPE: Well, this is always the danger, isn't it, that the fire that was created is not sufficient because I think Spain will have to go and seek assistance.

DOS SANTOS: What kind of assistance? Are we talking from the IMF? Are we talking some kind of assistance from the ECB that means the ECB could loosen its mandate? That's what Spain's trying to get them to do.

POPE: Well, indeed. And so a game of brinkmanship. Now if the ECB was to come out and say we will reliquefy (ph) every single bank in Eurozone where the money is needed, that would solve one of the problems. If they said we'll be a backstop to all governments within the Eurozone, again, you would see these yields come screaming lower.

But until the ECB is persuaded to do that, or unless the leaders at their next summit give them the mandate to do that, you're just going to carry on with this situation where yields will be creeping higher in the periphery. Spain will be the next one to take on aid from the Troika. But we know they probably would apply the discipline a little bit more rigidly than we've seen in other countries.

DOS SANTOS: Now speaking of applying the discipline rigidly, we have had some interesting comments coming out of the head of the International Monetary Fund, (inaudible) Christine Lagarde, not particularly charitable when it comes to the people in Athens. Presumably that's just pouring oil on the fire, isn't it, ahead of these elections?

POPE: I think it's a question of maybe Madame Lagarde said what other people think that are not there to say in public, and perhaps her words were less than fortunate in their choice and selection, because it certainly inflames not just the people of Greece but the politicians who, in a few weeks' time, somebody from the IMF is going to have to deal with quite seriously.

So I think we know that there's been a history of tax evasion in Greece, but there is a better way of suggesting they rectify the problem rather than being very blunt and, you know, front forward about it.

DOS SANTOS: Well, we see this impasse when it comes to a potential solution -- Eurobonds -- so jointly issuing pooled debt here where all of the countries in the Eurozone would guarantee each other's debt. That has been taboo territory for Germany for so long that Germany's benefited from having an artificially low currency.

POPE: Well, certainly Germany has benefited greatly because although their exports have gone into the Eurozone, I think the Germans are seeing it from a different perspective. Recently, after years of wage discipline, which was quite a strange thing for someone like Ikey Mattel (ph) to adhere to, they've allowed wages to rise above inflation.

So Germany deliberately making its labor force less competitive than it has been in the past and allowing others to have a margin for improvement in the labor pool activity. You don't need other unions in other countries saying we must have the same wage rate. But certainly to try and collectivize debt, Germany don't want to give up this yield advantage they have now.

DOS SANTOS: And so one-word answer: Eurobond, yes or no?

POPE: For me, no.

DOS SANTOS: You're one of I would say about 50 percent of people I've been polling this week, says the same thing, and last week. So there you go. You're in a camp, but it's still opinion divided.

Thank you very much for joining us, Stephen Pope there, joining us from Spotlight Ideas.

Well, Jamie Dimon has been asked to testify at the U.S. Congress next week after JPMorgan lost $2 billion on his watch. Those trades upped the ante for calls for tighter regulation on Wall Street. Felicia Taylor went to a New York poker club to find out if the so-called Volcker rule could still be on the cards.



FELICIA TAYLOR, CNN CORRESPONDENT (voice-over): Kenny Rogers' sage advice in "The Gambler" is as timely as ever --


TAYLOR (voice-over): -- as seasoned poker players know all too well.


TAYLOR (voice-over): It takes a smart and steady hand to play the game, where large pots of money can be made.


TAYLOR (voice-over): Or lost in an instant, and too-risky words "all in" --




TAYLOR (voice-over): -- could spell the difference between fortune and failure.

UNIDENTIFIED MALE: I got nothing. I'm going to fold.

TAYLOR (voice-over): In this high-stakes game of both luck and skill, we can gain new insights into a heated political battle over the Volcker rule.

TAYLOR: Here at the School of Cards, people pay good money to get the necessary skills to be able to win at the poker table. The Volcker rule wants to make sure that banks never come and sit at the gambling table and play with their own money.

TAYLOR (voice-over): In the past, commercial banks have had two different stacks of money to invest, two different sets of chips, their own reserves and their clients' money. Under the Volcker rule, that would change.

UNIDENTIFIED MALE: The Volcker rule puts a strong wall between these two sets of money. This money is protected from gambling for the banks' own profit, while clients' money can be used with adequate permission to go and gamble in the financial markets.

PETER CATALANO, FINANCIAL ANALYST: It basically shortens the ability for a company to make more profit, which, at the end of the day, is what corporations are all about.

TAYLOR (voice-over): Paul Volcker, former head of the Federal Reserve and former Obama adviser says this ban on so-called proprietary trading could help prevent another financial crisis.

PAUL VOLCKER, FORMER CHAIRMAN OF THE FEDERAL RESERVE: We don't have to protect more speculative activities that are not an inherent function of commercial banking.

TAYLOR (voice-over): Critics, like JPMorgan Chase CEO Jamie Dimon say the rule goes too far, but sometimes bad bets in poker -- or in finance -- can spiral out of control. In fact, JPMorgan's recent multi-billion dollar loss could end up strengthening the Volcker rule in Congress.

MIKE KONCZAL,THE ROOSEVELT INSTITUTE: When you're betting with your own money, as we see with poker and we see with any other gambling game, sometimes you lose big. You lose big very quickly out of nowhere. And those kind of immediate collapse cause panics. They cause contagion.

UNIDENTIFIED MALE: So is that good or bad?

UNIDENTIFIED MALE: This would be bad. This is an example of me chasing right now. I'm losing this hand and I'd still be putting more money. If I'd been betting this, I'd still be betting this hand.

TAYLOR: So it's like the bank continuing to put more money after a trade, even though they think that they could win it in time, likelihood is that they're not.

UNIDENTIFIED MALE: They had money (inaudible).

TAYLOR (voice-over): Chasing bad bets with taxpayer money at risk.



UNIDENTIFIED MALE: (Inaudible). (inaudible).

TAYLOR (voice-over): We'll find out if the Volcker rule protects the playing field after it's finalized in July -- Felicia Taylor, CNN, New York.


DOS SANTOS: Well, U.S. stock markets are actually closed today for the Memorial Day holiday. That's when the country stops to remember those who've died in military service. Many veterans of the wars in Iraq and also Afghanistan are now coming home, looking for work in an extremely tight labor market.

Christine Romans now reports on one company that's gone out of its way to recruit its own army of vets.


CHRISTINE ROMANS, CNN ANCHOR: For Dave Devanzo to find a job, all it took was a sign.

DAVE DEVANZO, U.S. NAVY (RET.): I've been driving past that Modern sign probably for, you know, before I moved out here 12 years ago for probably about 18 years before that.

ROMANS (voice-over) This billboard off I-95 outside of Philadelphia, construction equipment company Modern Group wants to hire people just him, veterans. He retired from the Navy in August after 29 years.

DEVANZO: It was a bit of a shock, I think, for me. I'd put all the applications out, all my -- all the work I had done, put my feelers out there and got little response, very little response. So I saw the sign out front and I called the HR department, sent them my stuff and the rest is history.

ROMANS (voice-over) And that's what led him to a job as a shop technician here.

DEVANZO: I will tell you this, my first-ever job interview -- and I'm 47 years old right now -- happened at Modern Group. So it was a change, definitely a change.

ROMANS (voice-over) Dozens of applications poured in to Dave Griffith, Modern's president and CEO.

DAVID GRIFFITH, PRESIDENT AND CEO, MODERN GROUP: You can imagine the visibility that that sign gets.

ROMANS (voice-over) He's hired 27 veterans and reservists from all branches of the military.

They tend to be more disciplined, more focused, more sensitive to the customer. I think there is a great attention to detail for folks coming out of the military.

JASON BLAIR, U.S. NAVY (RET.): He's shown me quite a few things around here.

JERRY MILLER, U.S. Marine CORPS (RET.): Yes, we got to help each other out.


MILLER: You know, we're all on the same team. Inevitably our mission is to do the -- get the entire job done and, you know, keep this company rolling.

ROMANS (voice-over) There's a huge push to hire more veterans. The unemployment rate for post-9/11 veterans has been steadily improving, 9.2 percent in April. But it's still higher than the national average.

Some 40 major U.S. companies have pledged more than 100,000 jobs to veterans by 2020, including Time Warner, the parent company of CNN. Already this year 12,000-plus vets have been hired. The fields that have been hiring veterans? Government, health care, tech and manufacturing.

GRIFFITH: I feel very strongly as a CEO that our obligation is to honor that service. If we can do that in such a way that we can hire these young men and women and bring them on board and also do good for our company and our stakeholders, I can't imagine why I wouldn't do that.

DEVANZO: We do within the military, there's nothing more than really a snapshot of society anyway. So coming here, working with these guys here, it's just -- I think it's a perfect transition.

ROMANS (voice-over) Christine Romans, CNN, New York.


DOS SANTOS: More insights into the Murdoch empire next from Tony Blair. We'll hear from the former U.K. prime minister on the power of the British press (inaudible) dealings with the head of (inaudible).




DOS SANTOS (voice-over): Time now for an answer to our "Currency Conundrum" of the day. Earlier in the show we asked you this question: why does the Canadian dollar have the nickname "the Loonie"?

Well, the answer to this question is, A, the reverse of the $1 coin has a Canadian loon at rest in the lake. These coins were actually introduced as a cost-saving measure back in 1987 to replace $1 bills.


DOS SANTOS: Well, he may be godfather to Rupert Murdoch's child, but Tony Blair has denied being too cozy with the head of News Corp. The former British prime minister was facing the U.K. Leveson inquiry into standards in British press and with protests to, well, it soon turned into a pretty dramatic day. Our Dan Rivers was there.


DAN RIVERS, CNN CORRESPONDENT: Well, it was another consummate performance by Tony Blair, who was looking tanned and relaxed as he spent more than four hours answering questions about the nature of his relationship with Rupert Murdoch, a relationship he described as a working relationship, denying that he got too cozy with Rupert Murdoch, but admitting that he felt it was necessary in 1995 to fly halfway `round the world to meet the media mogul and his top executives in order to persuade him that he would make a good prime minister.

Of course, famously, he then went on two years later to win a landslide victory with the backing of Rupert Murdoch's "Sun" newspaper. But he consistently denied that at any point he traded policy changes in return for favorable coverage from Rupert Murdoch's tabloids.

TONY BLAIR, FORMER BRITISH PRIME MINISTER: I don't know a policy that we changed as a result of Rupert Murdoch. What -- by that, am I saying, he's not a powerful figure in the media? Well, no, of course he is. And of course you're aware of what his views are. And that's why I say part of my job was to manage this situation so that you didn't get into a situation where you were shifting policy.

RIVERS: He admitted that perhaps he had failed himself to tackle the thorny and difficult issue of press regulation. But he said that he thought if he had gone down that route it would have pushed all other issues off the table and would have put him at the center of a media firestorm.

But perhaps the most dramatic moment of the day was just before lunch, when a protester burst into Court 73 and said Tony Blair should be put on trial for war crimes for his involvement with the 2003 invasion of Iraq, something that Tony Blair insisted on refusing immediately afterwards -- Dan Rivers, CNN, London.


DOS SANTOS: So dramatic day there at the Leveson inquiry, (inaudible) of justice. We'll be right back after this (inaudible).



DOS SANTOS: Well, it's the end of the line for the Lada Classic. The Russian carmaker AvtoVAZ has announced that it's stopping production of the series, which, for decades, was the top and only choice for Russian car lovers. In Moscow, CNN's Phil Black took one for a nostalgic spin around the town.


PHIL BLACK, CNN CORRESPONDENT (voice-over): In Moscow today, you can't escape the Soviet Union, the symbols of its power, its traditions and its legacies are everywhere, including on its roads, where you'll still find the peak of Soviet car building, the Lada Classic series.

BLACK: A bit tricky.


BLACK: This is actually the second Lada 2107 we had to hire, because the first one broke down.

BLACK (voice-over): Classics were exported as the Riva (ph) and they're famous around the world for being cheap, poor quality and inspiring bad jokes.

BLACK: It's like what do you call a Lada at the top of a hill? A miracle. What do you call a Lada driver who says he has a speeding ticket? A liar. And famously, how do you double the value of a Lada? You fill the tank.

BLACK (voice-over): For 42 years, Russian state car maker AvtoVAZ has been turning out Ladas that look just like the 1966 Pierce 124 they're based on. When CNN visited this plant 15 years ago, its managers admitted the cars were already long out of date.

They continued to sell largely because of the price, as little as $4,000. And drivers had almost no choice. But as the Russian market flooded with international brands, sales dropped. So Lada is now finally killing off the Classic.

BLACK: One highly opinionated British motoring journalist has declared this is the worst car in the world. It is certainly a unique driving experience. Despite poor ratings in safety, comfort, quality, speed, the Lada Classic series continues to enjoy a very special place in the hearts of many Russians.

BLACK (voice-over): Vasili Babashkin (ph) and his friends are restoring Ladas their inherited from their grandfathers, a much loved feature of the Classics is their simplicity. They're cheap and easy to repair with the skills handed down between generations.

"This was the era of the Soviet Union," Vasili (ph) says, "the time when we were always first, the time of our grandfathers. It must be remembered."

Lada Classics were once a status symbol. But this is now a country where you can see a Lada parked next to a Maserati, Bentley and Ferrari.

Igor Mosareta (ph) is editor of Russia's "Behind the Wheel" magazine.

"In 1970, it was a delight for the Soviet people," he tells me. "It fit all European requirements. It was comfortable with a large trunk. For its time, it was a beautiful car, but its time has passed."

Lada and its international partners, Nissan and Renault, are now focusing on producing modern affordable car, and they're hoping to maintain a large slice of the Russian market, which is predicted to become Europe's biggest within a few years.

But the Classics won't disappear quickly. There are millions of them on Russia's roads. And like other Soviet hangovers, they've shown they can last -- Phil Black, CNN, Moscow.


DOS SANTOS: China is trying to assert control over Internet whispers it's forcing people to use the microblogging site Sina Weibo to abide by new user contract. The site, which is similar to Twitter, has an estimated 300 million users.

Well, Weibo is rolling out a point system to make sure that people obey by the rules, and each account begins with a total of 80 points. Users will get deductions for any perceived misconduct, and that includes posts that, quote, "spread rumors, disrupt social order or destroy social stability."

Well, you could also be docked for threatening the "honor of the nation" or "promoting illicit behavior," such as, for instance, gambling. Accounts that go down to zero will be canceled. It's all part of an ongoing state push to try and govern social media.

In April, China's Internet regulator temporarily suspended comments on Sina Weibo and its rival, Tencent QQ. And just last December, well, Beijing required all microbloggers to disclose their real names.

We'll be right back after this break.


DOS SANTOS: Welcome back. Let's just recap our main story for you this hour.

Spain's borrowing costs are spiraling, 10-year bonds of this country are now edging ever closer to the 7 percent level that's widely seen as financially unsustainable. The government in Spain is currently working out some kind of plan to bail out the country's fourth largest bank, Bankia, to the tune of $24 billion.


MARIANO RAJOY, SPANISH PRIME MINISTER (through translator): No, I don't think that influences the decision that was taken regarding Bankia and the appropriate risk premium, absolutely not.

I think the decision that has been taken regarding Bankia and all the decisions we have taken in relation to the financial sector. What it gives us is a peace of mind because it is an exercise in transparency.



DOS SANTOS (voice-over): Well, Spain's IBEX is actually the worst performer among European markets, falling bank shares dragged it down by more than 2 percent to a new nine-year low. Stocks in Athens, on the other hand, though, headed in the other direction, soaring nearly 7 percent in the session. In London, we saw the FTSE 100 showing a modest gain.

France XETRA DAX fell by a quarter of 1 percent. You remember there was no trading in Switzerland today or the United States because of the Memorial Day holiday.

And that's it for this edition of QUEST MEANS BUSINESS. I'm Nina dos Santos in London.



DOS SANTOS (voice-over): Welcome back. You're watching CNN. Let's just give you a main roundup of the news headlines this hour.

The U.N. envoy Kofi Annan is in Syria, trying to salvage his peace plan after Friday's massacre of more than 100 people. World leaders have strong words for Damascus over the killings. The French president's office said that Syria's leaders will have to, quote, "answer for their murderous folly."

This is a new video CNN has just received of a deadly fire in Qatar's capital of Doha. At least 19 people were killed when the blaze swept through a popular shopping mall in that city. The victims included 13 children, four teachers and two firefighters. The interior ministry says that the fire started at a nursery in the Bellagio (ph) shopping complex.

Spain's prime minister Mariano Rajoy says that he won't seek outside financial assistance for the country's struggling banking sector. Well, Spain's borrowing costs have soared of late and so has the nation's debt. This is after the government of Greece's bailout of the country's fourth largest lender, Bankia, at a cost of $24 billion (ph).

The captain of Lazio, Stefano Mauri, is among 19 people to be arrested by the Italian police. This is all part of an investigation into alleged match fixing. The event's manager, Antonio Conte, has also been questioned as that probe goes on, and it comes 11 days before the Euro 2012 championship.

DOS SANTOS: That's a main look at the stories that we're watching for you here at CNN. "AMANPOUR" is next.