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QUEST MEANS BUSINESS
Draghi Dashes Hopes on ECB Action; Spain's Banking Crisis; Obama, Cameron, Harper Call for Eurozone Action; NASDAQ Facebook Compensation; NYC Stores Hiring Cantonese, Mandarin Speakers; Pound and Euro Rally; Egypt: Revolution Vs. Stability
Aired June 6, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: Draghi digs in his heels. Don't expect the ECB to ride to Europe's rescue.
The NASDAQ gives back compensation for brokers hit by the bungled Facebook IPO.
And from the racetrack to the railway track, Ferrari's new high-speed train.
I'm Richard Quest. I mean business.
Good evening. The head of Europe's Central Bank has dashed hopes that the ECB might step in to fix the financial crisis. Speaking in Frankfurt a few hours ago, President Mario Draghi was adamant: it's not up to the ECB to fill the vacuum left by indecisive politicians.
So, today, ECB policymakers voted to leave the official interest rate on hold at a low of one percent. The president admitted the vote to do that was not unanimous. Some members wanted a rate cut.
Mr. Draghi also urged Europe to focus on getting its house in order, saying government should worry about how the crisis affects the rest of the world later. Don't worry about them, they'll come along. They've got their own problems. My words, not his.
And he played down the prospect of more quantitative easing, saying monetary policy shouldn't be a substitute for action by elected politicians.
(BEGIN VIDEO CLIP)
MARIO DRAGHI, PRESIDENT, EUROPEAN CENTRAL BANK: I don't think there is a silver bullet for this. The ECB will continue to act to have its monetary policy oriented to price stability in the medium term.
We think that this is our best contribution to growth for both the euro area and our trading partners in the rest of the world.
(END VIDEO CLIP)
QUEST: So, what we now have is what I'm calling Draghi's Dilemma. It's basically the true definition of dilemma: a circumstance in which a choice must be made between the two or more alternatives that seem equally undesirable.
"Undesirable" is the key to a dilemma. In Draghi's case, jump in now and lose credibility or wait until politicians take an action and may risk the whole lot. The Draghi Dilemma is putting it into perspective with Jim Boulden, because as he decides what to do, he has the problems of Spain.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Can I borrow some of that from you and talk about Spain's Dilemma? Because Spain is in the middle of a massive financial reform. The government has told the banks they must shore up their defenses in case things get even worse.
So far, we've been told they need $40 billion to plug the wholes left by bad loans. The problem is, it's still not clear how badly the banks were damaged by the real estate collapse in 2008. Estimates for further cash injections range from $30 billion to $90 billion.
Ramon Pardo of London's Kings College tells me that wide estimate is part of the problem.
(BEGIN VIDEO CLIP)
RAMON PACECO PARDO, KINGS COLLEGE: The problem with the Spanish banks is that we don't know how bad they are, and we are four years into the crisis, and nobody really knows how many losses will need to be written down.
So, in essence, the situation is much worse than the world expected when the crisis began, but on the other hand it's not as bad as in other countries, such as Greece, for example, or Ireland.
(END VIDEO CLIP)
BOULDEN: But just how bad is it? Well, there are a number of independent investigations going on now in Spain to get a clearer picture. The IMF should release a report on Spanish banks next week. Then, two government-sponsored audits, said to be very independent, are expected to report at the end of this month.
Then later in the summer, many of the big accounting firms will reveal their own audits. Then, it should be clear, but only then, we'll know how badly the banks have been hit.
So, now the question is, how do we get money into these banks to recapitalize them? Spain's healthy banks won't have a problem, but the government cannot pay the whole bill without greatly increasing its budget deficit or cutting spending in other areas during tough, austere times. That's why Europe is looking seriously at other ways to pump money into Spanish banks.
QUEST: Jim, the ECB has already said it will not let Spanish banks borrow directly. They have to go through -- or from the EFSF.
QUEST: They have to go through the sovereign --
QUEST: -- through the government. So, do they need to borrow? Could Spain, as a sovereign, fund the recap of its banks on its own? Is that the question?
BOULDEN: It could do it, but as I said, it would then have a hard time doing the other things it needs to do without cut -- without the budget deficit getting out of control. And we know what's already happened to Spain --
QUEST: Is there -- is there actually a money shortage in the banks?
QUEST: Or is this -- this is tier one.
BOULDEN: This is -- yes. This is about a buffer, a safety zone, putting money back into the banks, increasing the percentage that's in the banks compared to the real estate loans. But these real estate loans, many people say, are much, much worse than we know.
QUEST: Jim, we thank you for that. You'll be watching this very closely. Not surprisingly, intense frustration across the Atlantic about the long, drawn-out uncertainty. Barack Obama has joined the British prime minister in calling for, in their words, "immediate plan to resolve the crisis."
Strong words, too, from the Canadian prime minister, Stephen Harper. He says Europe needs to sort itself out, and soon.
(BEGIN VIDEO CLIP)
STEPHEN HARPER, PRIME MINISTER OF CANADA: I don't want to sound too alarmist, but we are kind of running out of runway, here. And in terms of the structure of the eurozone, in terms of addressing some of these problems, we do need to see the broader game plan.
We just can't say let's wait until the Greek election. We cannot have a Greek election determining the future of the global economy. That's not fair to anybody.
(END VIDEO CLIP)
QUEST: The Greek election, the Spanish banking crisis, the very question of the banks in the eurozone. Will they determine the future? Keith Wade is the chief economist at the London investment house Schroders. He says the EU is playing a game of chicken with Greece and Spain. I asked whether he believes Mario Draghi eventually, when all is said and done, will come to the rescue.
KEITH WADE, CHIEF ECONOMIST, SCHRODERS: Certainly, listening to Draghi today, you would've thought not, and he's still very much maintaining the view that liquidity that he's provided is giving the banks and sovereigns across Europe an opportunity to put their house in order and recapitalize themselves and get their fiscal programs in order.
I think he's still playing a bargaining game, actually. I think he will ultimately come around, but I think we have to see how events play out first.
QUEST: It's getting dangerous. Draghi's Dilemma is to wait and see if -- and maybe things get much worse, or to jump in now, use his ammunition, and perhaps lose his credibility. That's his problem.
WADE: Well, I think that's right. And really, what we see is that he will come in. But I think he will come in in response to events after the election in Greece. When we think there's quite a high possibility that the Greek government will try to renegotiate the bailout package, this will probably not be successful and could well lead to Greece having to exit the euro.
I think in those circumstances, Mario Draghi and the ECB will definitely pump liquidity in because they'll want to provide liquidity to the banks around the periphery of Europe in order to hold the rest of the euro together and to limit contagion.
So, I think what he's doing is he's holding back, he's keeping his powder dry. And at the moment, he can say, right, there's no need for this liquidity.
QUEST: All right.
WADE: But if he has to, he'll come in.
QUEST: You have raised and brought forward the date at which you think Greece will leave the euro. You're a trouble maker, Keith.
WADE: Yes, well, sorry, but that's really how we see it. I think there's two possibilities here. We could well see an anti-austerity government in Greece coming in if Syriza win. And then, they would want to change the memorandum of understanding, and I just don't think the troika, the ECB and the EU and the IMF are really prepared to play along with that.
The other problem that Greece faces is it's running out of money and it's breaching the bailout conditions. So, the troika then faces a very difficult situation where they say, well, OK, Greece, you've done it again, you've breached the conditions, we'll just give you more money.
If they don that, I think they can expect Portugal and Ireland to come in and ask for better terms and conditions.
WADE: And I don't think they want that, either.
QUEST: If you add Spain into this volatile mixture, help me understand tonight just how serious is the Spanish element, as it relates to the banks.
WADE: It's -- well, it's serious, but it's not beyond their control or what they can provide. There is enough funding available to recapitalize the Spanish banking system. At the moment, though, we haven't had a formal request from Spain that they actually want the money --
QUEST: But --
WADE: -- they seem to be holding out.
QUEST: Right, but let me just interrupt you, because that -- that I just want to sort of end on. Isn't this Spanish incident or this Spanish occasion exactly what happens?
They wait, they wait, they wait, and instead of getting ahead of the curve, in three months' time, you know where this is going to end up, I know where this is going to end up, and we'll both be saying to each other, why didn't they do it three months ago when -- and prevent a worse disaster?
WADE: Well, this is a classic pattern that we've seen throughout the whole euro situation. Spain is very concerned that if they do ask for money now, they're going to have to be tied to a lot of conditions.
They're already tied to quite a lot of conditions, so I don't really see why -- it wouldn't really make a lot of difference. But I think ultimately they'll have to do some restructuring as well as the bank recapitalization. The real problem in Spain is lack of growth, so if they don't do it now or even later, they'll have to do it next year.
QUEST: One of the economists we always look forward to hearing the views from, that's Keith Wade of Schroders. In a moment, the ECB holds out --
QUEST: -- and the stock markets head higher. Why the US should be up 205 points when there's so much turmoil in Spain. QUEST MEANS BUSINESS.
QUEST: Markets are higher in New York, and that of course begs the question as to why the Dow Jones should be putting on more than 200 points. Alison Kosik is in New York.
All right. You tell me that Greece is the problem and it goes down, or Spain, or whatever. Nothing's really happened, so why are we up 200 points today?
ALISON KOSIK, CNN CORRESPONDENT: And that's the point, Richard. There's a lack of bad news. That's the good news for the US markets. That's why you see a rally here going on across the board, the Dow up almost 200 points.
You know what? We found out eurozone economic growth held steady in the first quarter. Economists had been expecting a downward revision.
And also, there's just this sheer trading of -- trading value of this, per se. Stocks have really been beaten down lately, so, you're also seeing these buyers snapping up bargains, financials are leading the gains. Investors are also still hoping that additional stimulus could be both coming from both the ECB and the Federal Reserve.
Though we did just get that -- the Fed's beige book, that's the survey of regional economic conditions. It was actually quite more bullish, I think, than anyone expected. The Fed used language like "modest growth" for most of the economy in these regional areas.
So, there was a bit of a surprise with that, and actually some of the Dow's gain have come back down. And I'm thinking that happened because now maybe there are questions whether or not there will be additional stimulus from the Fed, Richard.
QUEST: It's a rum old world, Alison, when the best we can say for a 200-point gain on the market is that it's because nobody did any damage.
KOSIK: Exactly. The bar is really low these days, if you haven't noticed. So, that bar is really low. That has a lot to do with it.
QUEST: All right. Thank you. Don't do any damage, got somewhere to go before the end of the trading. Alison Kosik in New York.
Now, the NASDAQ is setting aside $40 million to compensate brokers, remember, who lost out on the day Facebook went public. There was a technical meltdown at the exchange. It delayed trading. It was all a real mess.
CNN's Maribel Aber is at the NASDAQ in New York. This is a -- look, it's an admission, whatever legally it is, that they cocked it up. But I'm wondering, $40 million doesn't sound like a lot of money for what was the world's biggest tech IPO.
MARIBEL ABER, CNNMONEY.COM CORRESPONDENT: Yes, Richard, you said it right there. Call it a big red mark, then, for NASDAQ for the botched Facebook IPO. And as you say here, NASDAQ is going to pay out $40 million to compensate some financial firms.
And on the web conference call, there, they did want to make clear, this is member firms, member firms only. Again, the deal here is a combination of cash and trading discounts, $13.7 million already earmarked for trader losses.
But that breakdown, Richard, of the $40 million isn't really clear. I know that it's got $10.7 million in there for the profit that NASDAQ made in its first day of trading. I think there's a cap by regulators of $3 million, so somehow they put the math together and came up with $40 million.
But one thing is clear: the SEC still must first approve the plan before it can go through. They just filed this with the SEC. And it's really not clear whether this $40 million's going to satisfy investors who want their money.
QUEST: Oi! Hang on, Maribel. I'm jumping in, here. This money is going to brokers who took positions that weren't traded.
But to the poor Joe Schmoe who bought these shares because maybe, arguably somebody had said they were going to do well, and we can argue about Morgan Stanley's role until the cows come home. Or because of too much supply -- whatever it is. To the poor Joe on the street, who's now nursing a loss of 33 percent on day one -- versus day one, naught. Nothing. Nada.
ABER: Yes, Richard, you've got it right there. It is going for the member firms. And when I say member firms, too, I mean there are still qualifying factors. I think there's three different levels of the different types of trades that qualify in there.
So, yes, the poor investors still out there, no word on anything on customer losses there, just going to the firms.
Again, some orders weren't fully executed until much later, causing firms to lose money, but of course, causing a lot of customers, the Joe Schmoes, a lot of money there, too.
QUEST: Joe Schmoes of the world, unite.
QUEST: Many thanks, indeed, Maribel, joining us. Many thanks, indeed.
If I say "Nin hao," some of you will know exactly what I'm saying, I'm saying "hello" in Mandarin. Well, hopefully, although with my pronunciation, you may be lucky if you can work out what I'm saying.
An expression you may have heard from a sales assistant if you've been shopping in New York. High-end retailers in the Big Apple are taking on Mandarin and Cantonese-speaking staff in response to a new wave of consumers. They are the big spenders from China, they have a penchant for big brands, the very expensive ones, the sort that Felicia Taylor buys.
FELICIA TAYLOR, CNN INTERNATIONAL CORRESPONDENT (voice-over): Louis Vuitton, Channel, Tiffany, Gucci, Christian Dior, and Coach, just to name a few.
UNIDENTIFIED FEMALE: You can buy Channel and buy Dior.
TAYLOR (on camera): The luxury market has an eager buyer in town: the Chinese tourist. And they're bringing big bucks to the US, snapping up fancy, high-priced goods, and the high-end shops are doing just about everything they can to attract the Chinese customer who has newly-acquired deep pockets.
BILL BROBSTON, BERGDORF GOODMAN: Over the last 12 months, we've seen an uptick. I think there's been so much wealth created there over the last decade that a lot of Chinese citizens are getting out and shopping more and having more experiences outside China.
TAYLOR (voice-over): High-end retailers, like Bergdorf Goodman, will go to extra lengths, such as holding a private fashion show at its Fifth Avenue store, followed by drinks with designers Oscar de la Renta, Diane von Furstenberg, and others, giving Chinese customers the chance to shop privately in the store after hours, accompanied by Mandarin-speaking staff.
WEN SHEFILEN, BERGDORF GOODMAN: Chinese customers generally like to deal with somebody that has a cultural sensibility and understands some of the preferences in terms of modesty, in terms of style. And ultimately, at the end of the day, they would like someone who speaks their language.
HOWARD DAVIDOWITZ, DAVIDOWITZ & ASSOCIATES: We've had over 300,000 Chinese visitors to New York. That means jobs, that means budget, that means a lot to us. They're more comfortable with Cantonese and Mandarin, we ought to take the time to make them feel comfortable.
TAYLOR: Montblanc, known for creating some of the finest pens in the world, hosted a private concert with pianist Lang Lang at its New York flagship store.
JAN-PATRICK SCHMITZ, MONTBLANC NORTH AMERICA: We today not only offer special products, which are interesting to the Chinese, but also services like our staff speaks Chinese.
TAYLOR: Speaking Mandarin was a valuable skill to have when it came to landing the job.
THOM SU, MONTBLANC: It certainly made me stand out of all the other candidates here. We have a lot of clients from mainland China that are -- that seem more open to having someone who speaks Chinese to help them understand our product.
TAYLOR: The product includes this Year of the Dragon pen and brochures printed in Mandarin, and wallets custom-fit to hold Chinese yuan and American dollars, which they need fewer of when shopping in the US.
UNIDENTIFIED FEMALE: Expensive luxury goods are much cheaper.
TAYLOR: That's because of China's added taxes on imports and consumption. There is also more an offer when it comes to the high-end names. On average, Chinese buyers spend more than other tourists, shelling out about $6,000 on each visit, as opposed to about $4,000 other tourists spend. And when it comes to their favorite activity, the US Travel Association says shopping tops the list.
Felicia Taylor, CNN, New York.
QUEST: Now, our Currency Conundrum for you. How do vending machines detect whether bank notes are authentic, is our question for you today. Do they scan it magnetically, examine it under ultraviolet light, check for size and weight? Ooh, I like this one, I think I know the answer to it. The answer later in the program.
That's the Conundrum, now the rates. The pound strengthened with traders moving out of safe haven dollar, hopes that Europe will get its grip on its debt crisis. Sterling is two thirds of a percent higher against the dollar. The euro rallied -- well, not really much, just 1.255. Those are the rates --
QUEST: -- this is the break.
QUEST: Cairo's Tahrir Square is awash with protesters again as the scene of demonstrations that helped to bring down the dictator, now they're furious about the choices before them in the presidential run-off.
A few blocks away, revolution fatigue is setting in -- for Cairo shopkeepers, that is. Nothing's more important than a bit of stability and a little bit of economic growth, and for that, you need customers and you need people willing to buy, as CNN's Ben Wedeman explains from Cairo.
(GIRL CHANTING IN ARABIC)
BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): The crowds have returned to Tahrir Square, this young cheerleader vowing not to leave.
(GIRL LEADING CROWD IN CHEER)
(MAN CHANTING IN ARABIC)
WEDEMAN: The demonstrators are here to protest against the continuing influence of Mubarak regime holdovers, particularly Ahmed Shafik, Hosni Mubarak's last prime minister and one of the two candidates to make it to the final round of the presidential elections in mid-June.
UNIDENTIFIED MALE: Because he's in the old regime, and we didn't make a revolution to repeat the old regime, the bad regime, the bad vibe.
WEDEMAN: The choice is between Shafik and Mohamed Morsi of the Muslim Brotherhood. Self-described activist Abdul Hedi (ph) puts it this way.
"You have two drugs. One kills you, and the other gives you a bad stomach ache. They're both bad, but Morsi of the Muslim Brotherhood, his drug is light, it doesn't kill you. So, we'll give Morsi four years. If he doesn't work out, we'll come back to Tahrir and bring him down." It's one place where the thrill of last year's revolution still lingers.
WEDEMAN (on camera): Tahrir Square has become the center of Egypt's turbulent revolutionary universe, but at the end of the day, Tahrir Square is a very small piece of land in a very big country.
WEDEMAN (voice-over): A few blocks away, on 26 July Street, it's a whole different scene. Store owners and street vendors are hoping for customers, but pedestrians do more looking than shopping. The economy has been in the doldrums since the revolution.
"It's enough that Egypt has been falling for the last year and a half," says Said Mohammed, a government worker. "We want it to go up again."
Here, the thrill of revolution has warn off.
"We can't always go to Tahrir," says Mohammed Hrer (ph). The country comes to a halt. I work in tourism, and there are no tourists. Two years ago, the hotels were full. Now they're empty. Lots of my friends can't find work.
Work may be hard to come by, but demonstrations like this one just down the street, are easy to find.
Ben Wedeman, CNN, Cairo.
QUEST: In a moment, the internet address book is growing. The Rolodex swells for 340 undecillion. Undecillion. How do you say that word? And anyway, do you know what it means? Undecillion, after the break.
QUEST: Hello, I'm Richard Quest, more QUEST MEANS BUSINESS in a moment. This is CNN, and on this network, the news always comes first.
(BEGIN VIDEO CLIP)
QUEST (voice-over): A Syrian opposition group says fierce fighting has killed at least 42 civilians this Wednesday. Video posted online appeared to show gunfire in the town of Haffeh in Latakia province. Activists say that's where at least nine of today's victims died.
The presidents of Russia and China are restating their position to a foreign intervention in Syria. Vladimir Putin and Hu Jintao released a statement saying all parties in the conflict must stop the violence and start a dialogue without outside interference.
In Afghanistan, two suicide bombers killed at least 22 people at this market in Kandahar. Police say at least 50 other civilians were injured. They described the bombings as a coordinated attack. Many of the people at the market were truckers who move supplies for NATO.
Egypt's state news agency say Hosni Mubarak may be moved to a hospital outside the jail where he's currently in prison. The deposed dictator's health is apparently getting worse. The 84-year-old man was sentenced to life behind bars for his role in the killing of hundreds of protesters during last year's revolution.
The European Central Bank left interest rates unchanged. The EC president, Mario Draghi, said it was up to government to get their finances in order. The announcement came despite concerns that Spain's banking sector need outside help. Spain has not made any formal requests for help.
QUEST: So are you familiar with what your Internet address is, your IP address? Well, it's buried somewhere, and if the right person tells you what to do, eventually (inaudible) computer support people you will be able to find out the IP address. I never manage to find it.
Well, could be even harder soon because today the Internet takes a major evolutionary step. (Inaudible) the world's biggest online companies, including Google, Cisco and Facebook are all launching IPv6, Internet protocol version 6, the new technology to future proof against explosive growth.
Come over here and I will show you what I mean. Now every computer has a packet of information that is sent around the Web, the IP address, as it is known. It is the (inaudible), it's unique and it's your link between yourself and everything else. Now, unfortunately, that is -- ooh.
That's the IP address and that is what it is going to currently come to become when the thing gets bigger. So to put this in again, let me make this a little bit clearer. Oops. Today's I'm having trouble with me -- oof. There's the IP address at the moment. All right. It's one, two, three, four, five, six, seven, eight, nine, 10, 11.
There are 11 of those numbers and in total they make up 4.3 billion potential -- 4.3 billion potential addresses. However, under the new protocol, IP6, that is going to expand and what it does when it expands, we get a lot more numbers.
We get one, two, three, four, five, six, seven, eight, nine, 10, 11, 12, 13, 14, 15, 16 (inaudible), 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30 (inaudible). You get a lot more. And when you get all of those, you end up with a potential 340 trillion trillion trillion permutations. It's known as an undecillion. Hopefully far more than we will ever need and at least than any of us will ever need in our lives.
Shelly Palmer is the host of the weekly TV show about the living and working in the digital world. He joins me in our studio.
Well, undecillion, this Internet is an extraordinary -- it's an extraordinary development, but it comes about because of the sheer number of gadgets that we have, Shelly.
SHELLY PALMER, HOST, "DIGITAL LIFE WITH SHELLY PALMER": So, look, IPv4, which is what the original -- the Internet protocol is really 12 numbers, it's four groups of three. Now you have one followed by 36 zeroes. That's an undecillion. It's a frighteningly large number.
The goal here, though, is to be able to give an IP address, an Internet protocol address to every single device in the world. Now according to Cisco and people who know stuff like this, by the end of 2015, there will be about 15 billion connected devices in the world.
And with IPv6, every single device will be able to have a unique address that can be found so that if you have a phone and a tablet and another phone and another tablet and a computer and a smart TV and a smart car and a smart toaster, each one of those could have a unique IP address that could be addressed, you know, from anywhere in the world.
QUEST: Is there a general agreement? I mean, we know with domain names, Shelly, they can never agree and everybody calls the screen ICANN and who's involved with all of it, is there a general agreement on the IP 6?
PALMER: IPv6, yes, it is agreed to. These are numbers, and so they're unique numbers, and it's -- you take them in blocks the way you take regular IP addresses and blocks. And you distribute them. And that's pretty well understood. What ICANN does is ICANN puts names -- they have the name services and they're selling name services over these numbers, and that's an entirely different subject.
IPv6 really was built to solve a problem that's just really starting to happen now, which is that there's literally billions of devices in the world, and each one needs a unique Internet protocol address so that it can be recognized by other devices. You walk in a room, and your device can find the other devices, and it can find you, and they can talk to one another and you can address them individually.
QUEST: I need to talk about Facebook, both the Nasdaq paying out the brokerages, or at least compensating the brokerages, I know that's a -- I notice the investors don't get any compensation. But that's another story for another day.
But also, look, I mean, was it just overpriced, Shelly? Was it --
PALMER: Richard --
QUEST: -- was it a dog with fleas?
PALMER: This is so easy. This is so easy. Facebook says they have 900 million users. They made a billion dollars with their 900 million users. That's basically $1.10 a share.
So at $1.10 a share, if you look (inaudible) -- you look at the numbers, if they add everybody on the Internet, which would allow them to have 2 billion users, because there are 2 billion PCs connected to the Internet, they basically could double in size.
Most analysts would say that's a $25 billion company. That's a $7-$8 stock. So that's what you're looking at. You're looking at a company that's worth $7 or $8, not $25 or $26, where it closed today. Their total universe is 2 billion connected PCs. That's it.
QUEST: To you and I and everybody else in this superstructure of media, there's some of the blame for pumping that by all the hype that we gave Facebook.
PALMER: I think there was a lot of hype. I also believe that people just thought that because they use Facebook that there was some value there. But look, in this case, nobody was fooled. Again, there are only 2 billion PCs connected to the Internet. The only way Facebook makes money is by selling ads on PCs. They have half the marketplace at a billion.
If they had the whole marketplace and no one ever had 100 percent of a market, they'd make $2 billion. That's it. So I don't think that investors were fooled. I think that there was a lot of hype. And guess what? Nasdaq made a pretty big mistake and, yes, Richard, the stock was overpriced.
By the way, for us on the street, not for the people who raised the money -- I thought it was brilliantly priced if you own -- if you are Facebook, that's a $16.8 billion you get to keep. It's brilliantly priced.
QUEST: Nice work if you can get it, as they said where I come from. Shelly, good (inaudible).
PALMER: (Inaudible) where I come from, too.
QUEST: Good to see you.
Shelly Palmer in New York. We're always glad when Shelly -- we've got all our favorites on tonight's program.
OK. So I said that had you ever heard of an undecillion? Undecillion? Where do they get those words from? I have no idea. But we want to hear what your views are. firstname.lastname@example.org, both at IP and on the whole Twitter things. And @richardquest. If it wasn't called an undecillion, wonder (inaudible), under the arches, under here, what would it be called instead? @richardquest is the Twitter address as always.
When we come back in a moment, our "Business Traveller" and a challenge for Ferrari. Can the Italians take pole position in high-speed rail? In a moment.
QUEST: Now to "Business Traveller" this week and Ferrari, if you can't afford to actually travel in a Ferrari on the road, well, you might have more luck with traveling in a Ferrari on high-speed rail. It's a leap from Formula 1's PitLink (ph) to Italo, Europe's first privately operated high-speed train. The chairman, Luca di Montezemolo told CNN's Ayesha Durgahee how the prancing horse is adapting to the rattlers.
(BEGIN VIDEO CLIP)
LUCA DI MONTEZEMOLO, CHAIRMAN, FERRARI: Our idea was to do a train for everybody. So train with three different alternative, three different what we call ambiences, club, prima, smart, for different costs, for different people, for (inaudible) even marketing position inside these three.
But with two elements in common, low prices and very, very enormative (ph), comfortable train with important and good services in the station and in the train.
AYESHA DURGAHEE, CNN CORRESPONDENT: Are you starting a rail renaissance?
DI MONTEZEMOLO: I hope so. I think that this is important, particularly for Italy, yes. But I think that not only we, even other players can invest in Europe using the train as the best way to travel inside Europe, at least inside a few countries in Europe for sure. Germany, Switzerland, France, Spain and Italy.
And we are also very pleased we have a strong European pattern like a Sensev (ph), because we need an important, particular at the beginning, industrial partner with a strong know-how. And we hope in Italy that we will open also the competition in the regional trains, because through competition, you will have better services, better prices and the possibility to create new jobs.
In Italy, we believe in the future. We like to invest. We like to risk, again, this is not as our competitor that has got in the back, the state, the money of the state. We are really private. I hope that this will say so, because we have a very precise business plan. As you know, the economic situation is not of the best. Having said that, we feel that the people is finally pleased and happy to have a choice.
(Inaudible) today is seen with a really very modern, very innovative (ph) and very comfortable train. There are other trains in Europe, but for me, high-speed train will be the future of Europe.
(END VIDEO CLIP)
QUEST: Now we'll be obviously following that and seeing how successful it is on the long run.
On the other side of the world, Singapore Airlines low-cost carrier Scoot made its maiden flight this week from Singapore to Sydney. It had been trying to strip anything unnecessary out of the planes to save weight and fuel.
So out went the wired-in entertainment system; in comes iPads. That'll be $17 U.S. per flight, thank you very much. And chief executive Campbell Wilson told me recently on a trip to Singapore the low-cost market in Asia is growing fast.
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CAMPBELL WILSON, CEO, SCOOT: Clearly there's a growing market here, the international air travel is growing about 6.3 percent per annum. The no-frills market is growing much faster. In eight years in Singapore, it's gone from nothing to about 25 percent of Chinese throughput. And so there's a market that wants to travel no-frills and wants to travel farther afield.
QUEST: Scoot is flying to Sydney.
QUEST: One of the key routes for Singapore Airlines. Those passengers you're going to cannibalize?
WILSON: Not necessarily, no. I believe there's a whole market that doesn't even consider some airlines because of their positioning in the market, because of the perceived expense of flying and because of the bells and whistles that they might not want.
(END VIDEO CLIP)
QUEST: The CEO of Scoot; we'll be talking to him in the weeks ahead about how they are progressing.
A storm system is heading towards northwest Europe, bringing strong winds and heavy rain.
Forgive me, Jennifer Delgado, but that is absolutely nothing different to what we experienced over the weekend here in the U.K.
JENNIFER DELGADO, AMS METEOROLOGIST: It is going to be different.
QUEST: Oh, why?
DELGADO: It's going to be windy.
DELGADO: It's going to be windier out there.
It wasn't so bad with the wind over the weekend. I'm -- we're talking gale force winds arriving later on today, Thursday as well as into Friday. So, Richard, it is going to be a little bit different out there. But you're kind of used to the bad weather, I'm sure.
Look what's happening right now on the radar. We're still dealing with the wet conditions out there, scattered showers, moving through parts of England. You can see really heavy up towards areas including Scotland, then also spreading through parts of France as well as into Germany.
Now as Richard was saying, yes, it's not really that much different, but there is -- if you look at this low, it's going to be bringing some real heavy rainfall, especially in the southwestern part of England.
And with those gale force winds kicking in, it's also going to be ushering in another round of colder air and that is going to stick around for your Friday as well as into early part of Saturday as well. So the next couple of days aren't looking so fantastic across the region.
Here's a wider view of what the weather's going to be like for today. You can see where the strong winds will be right along that frontal system. We're also talking about some rain as well as some strong storms moving through parts of Russia.
You can see from Moscow, high temperatures for your Thursday, will be in the 20s. You're going to see 29, 28 for Madrid, 17 degrees for London, so a little bit warmer there. Your average should be at 19.9 degrees, so you're just a little bit below average for your afternoon high.
But for areas that are really struggling, we're talking about parts of Australia as well as into New Zealand, and New Zealand digging out of some very heavy snowfall. Let's go to this video here. This video basically showing you streets are shutting down.
This is out of the South Island. Now of course, the North Island's warmer. They usually don't see this much snow, but they've picked up some heavy rainfall. And certainly this caused some cancellations for flights, and it happened through parts of Christchurch, out where they picked up 10 to 15 centimeters of snowfall, and you can also see some of the rainfall, picking up about 100 millimeters.
Meanwhile, over to the west, we're talking for parts of Sydney, Australia, winds were up to 127 kilometers. This is off the coast of Sydney, and you can see the waves are really crashing there. And this is, of course, right along the Tasman Sea, a great day, I guess, if you're one of those dangerous surfers out there. But really, that's a little too rough, even for my taste.
And finally, I leave you with some video that we've been talking about for a couple of days, Richard. Here's that video of Venus. I know the weather wasn't so nice for you to see it, but a lot of people came out to watch it. They had the protective eyegear. And, Richard, is this -- is it all you thought it would be, Venus passing in front of the sun?
QUEST: I'm sorry. Am I supposed to be -- is it that little thing about 1 o'clock?
DELGADO: Yes. It is that little thing about right at 1 o'clock. It is. That's Venus.
QUEST: And -- right. And remind me when the last time this happened and when it's going to happen again.
DELGADO: No. Well, it happened in 2004. The next time, it really doesn't matter, because we'll all be dead by then. It'll be 2117.
Quite a while.
QUEST: Right. That little thing going -- hello, I mustn't be mealy- mouthed. Thank you.
DELGADO: You're welcome.
QUEST: Thank you. Thank you.
In a moment -- (inaudible). I do actually love looking at eclipses. The smell of success in Sin City (inaudible) will be king of rare cuisine (inaudible).
(BEGIN VIDEO CLIP)
QUEST (voice-over): How do vending machines detect whether banknotes are authentic? Yes, it was a tricky. The A and B, magnetic scanners detect the magnetized ink used on the banknotes; ultraviolet light detect the denomination of the notes, each one with a different fluorescent property. (Inaudible) early warning.
(END VIDEO CLIP)
QUEST: Introducing the king of rare cuisine in Las Vegas, the young man who started out creating truffles on the Strip when he was just a teenager. Now up in the world, flying in sought after ingredients from around the globe for the city's finest restaurants. A gastronomic gamble, as Poppy Harlow found out, it is tasty and profitable.
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This is my favorite -- this is my favorite domestic caviar. And it's produced in Sarasota, Florida.
POPPY HARLOW, CNNMONEY.COM CORRESPONDENT (voice-over): At 26 years old, Brett Ottolenghi has all but cornered the market on rare food in Sin City.
BRETT OTTOLENGHI, OWNER, ARTISANAL FOODS: Several air cargo shipments come in each day from around the world, and we pick them up and deliver right to the Strip.
HARLOW (voice-over): From truffles to caviar and saffron, Ottolenghi scours the planet for the rarest of ingredients to entice (inaudible) in Vegas' top restaurants.
OTTOLENGHI: Daruma is a type of wasabi. It's coming from Oregon.
HARLOW: That is delicious.
OTTOLENGHI: This is a jamon iberico de bellota. So this is a Spanish pig that's been raised partly in the wild, eating acorns.
UNIDENTIFIED MALE: Good, how are you?
UNIDENTIFIED MALE: Good. (Inaudible).
MATHIEU CHARTRON, EXECUTIVE CHEF, RESTAURANT GUY SAVOY: (Inaudible) bread because all the time you get something new he is bringing it at restaurant and he show me his menu, where he raise it from and we have the same passion.
OTTOLENGHI: This is the best wagyu beef that's produced outside of Japan currently. We currently sell this at $72 a pound. About 95 percent of our business is with approximately 170 restaurants across the Las Vegas Strip.
HARLOW (voice-over): High rollers and star chefs mean demand around the clock, even for the strangest of ingredients.
OTTOLENGHI: This is freeze-dried phytoplankton.
HARLOW (voice-over): But getting these delicacies across the border can be tricky.
OTTOLENGHI; There's not a lot of precedent, so we have to work it out, figure it out with the Department of Fish and Wildlife, USDA, FDA.
HARLOW: When you came here to Vegas at 19 years old, there's a lot of competition, doing what you do, how did you get your foot in the door? How did you get meetings, even, with these chefs?
OTTOLENGHI: I started off by getting in one shipment of fresh white truffles from Italy, and they were beautiful. They were the size of sweet potatoes. They were huge. I would load up a small box, jump on the bus, take it into the strip and I got very quick at walking the whole Strip.
The chefs would say, I'm really excited to see what you have. I don't actually use truffles, but maybe next time you come around, can you bring this ingredient with you or can you look into this ingredient for me.
HARLOW (voice-over): Ottolenghi has been doing this half his life, literally.
OTTOLENGHI: For me, it started in truffles. I started my company when I was 13, and it was called The Truffle Market. It was a small website.
HARLOW (voice-over): From his Pennsylvania childhood home, to the midst of the desert, he's never taken a loan, slowly growing his business from its own profit.
HARLOW: Why Vegas?
OTTOLENGHI: I can see that there was a market emerging here in Vegas, with high-end restaurants, and I really wanted to be a part of that and help the chefs. I could see that this was a desert and they were probably going to be a lack of more exotic ingredients.
HARLOW (voice-over): In Las Vegas, Poppy Harlow, CNN.
(END VIDEO CLIP)
QUEST: Our "Profitable Moment" after the break.
QUEST: Tonight's "Profitable Moment", as the rot of Europe's debt crisis spreads, ECB President Mario Draghi says people underestimate the extraordinary benefits of the currency union, the euro has brought. As his predecessor Jean-Claude Trichet put it, "Price stability since the start has been impeccable." But that impeccability has come at a major cost.
Growth has gone, inflation is above target and will be for some time, and the block has become a ticking time bomb the policymakers can't or won't defuse. And what's more, Mr. Draghi's game of chicken with European leaders is attracting the scorn of the world, as you've heard tonight. The international community's demanding a solution.
So President Draghi, praise the benefits of the euro all you like, 11 percent of Europe's workforce that's unemployed would almost certainly beg to differ. And when we put it in that context, certainly the euro might not seem to be all that praiseworthy over the national currencies before.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest. whatever you're up to in the hours ahead, I hope it's profitable. (Inaudible) next.
The U.S. Army says one of its helicopters has been shot down over Afghanistan. Two NATO soldiers died in the crash in Ghazni province. The Taliban has claimed responsibility.
Also on Wednesday, at least 22 people died after suicide bombers attacked a market in Kandahar. Police say at least 50 people were injured.
A Syrian opposition group says fierce fighting has killed at least 42 civilians this Wednesday. Video posted online appears to show gunfire in the town of Haffeh in Latakia province. Activists say that's where at least nine of today's victims died.
The presidents of Russia and China are restating their opposition to foreign intervention in Syria. Vladimir Putin and Hu Jintao released a statement saying all parties in the conflict must stop the violence and start a dialogue without any outside interference.
Canadian police say the believed human remains sent by mail to separate scores (ph) in Vancouver are linked to the grisly murder of a Chinese student. Luca Rocco Magnotta is accused of the killing. DNA tests will be conducted to see if the body parts belong to Jun Lin, killed recently in Montreal.
Those are the top stories we're following on CNN. Now to New York, "AMANPOUR" is live.