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QUEST MEANS BUSINESS
Monti Meets Merkel; Draghi Fights Back; Europe Financial Leaders Fire Off; Choppy Session for European Markets; US GDP Up; US Stocks Struggle After GDP Reading; Romney Promises 12 Million Jobs; Out With Outsourcing; Dollar Climbing Against Euro; London 2012 Paralympics; Marketing the Games
Aired August 29, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
NINA DOS SANTOS, HOST: Tonight, exceptional measures for exceptional times. Mario Draghi defends his bond-buying plan.
Bailout funds or bank? Monti and Merkel disagree over the ESM.
And the A soothes nervous fliers with the help of Captain All Right.
I'm Nina Dos Santos, and this is QUEST MEANS BUSINESS.
Good evening. The leaders of Germany and Italy say that the eurozone is on the path to recovery. After a meeting in Berlin today, the German chancellor, Angela Merkel, said that she's convinced Italy's austerity measures will pay off.
(BEGIN VIDEO CLIP)
ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): Mario Monti informed me again today that the far-reaching consolidation and reform agenda of the Italian government is impressive and that the reforms are being carried out step-by-step and implemented. And we -- and I personally am convinced that these reform efforts will bear fruit.
(END VIDEO CLIP)
DOS SANTOS: And Italian prime minister Mario Monti vowed to press on with his plan after positive initial results.
(BEGIN VIDEO CLIP)
MARIO MONTI, PRIME MINISTER OF ITALY (through translator): The progress that we have achieved is slowly starting to be acknowledged by the markets. We got good results with our government bonds yesterday and today, especially when you look at the interest rates. And the international organizations have also acknowledged this.
(END VIDEO CLIP)
DOS SANTOS: Beneath the camaraderie, there's still disagreement about some pretty significant measures that Europe could be taking next.
Mr. Monti made it clear that he wants the block's permanent bailout fund, the so-called European Stability Mechanism or ESM for short, to have its own banking licensing. In effect, that would give it the power to fund itself from the European Central Bank.
Angela Merkel says, on the other hand, that currently is just not possible under the terms of the existing treaties that govern the eurozone. Diana Magnay joins us now live from Berlin with the latest on these talks.
So, first of all, Diana, it seemed as though they were at pains to show that they were in agreement about a lot of stuff, but really, the crucial issue of this license will be key, because without it, the permanent bailout fund can't get the money it needs.
DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT: Well, that's right, but I wouldn't say that that was an obvious bone of contention at this meeting. It really only arose in the questions afterwards.
And I think that Mr. Monti's response was important to sort of highlight that it wasn't as black and white as maybe it sounds, that Angela Merkel has said no to a banking license and that he said yes.
He said we must consider things like a banking license, things like the bailout plan, as a mosaic -- as pieces of a mosaic that sort of make up the bigger picture of good governance going forward in the eurozone. So, it wasn't something that he was demanding had to take place immediately in contradiction of what Angela Merkel was asking for. I think that's one point that needs to be made.
And also, the sort of general tenor of their conversation was sort of conciliatory. It was Angela Merkel saying, congratulations on your reform program. You've been making some very difficult steps and spending cuts and raising taxes, raising the retirement age. And those steps will put Italy on the right path and will improve the path towards European competitiveness.
And Mario Monti, who's been a thorn in her side for a lot of this EU process since coming into power and since his last trip to Berlin, which was in January this year, really was by her side in saying, we realize now that with Germany's help, this is a step-by-step process. We feel we're on the right path.
And there was a definite show of unity, which is, of course, what the markets are looking for to try and bring the yields down on the Italian bonds, Nina.
DOS SANTOS: But the other thing the markets are looking for is some kind of action from the ECB, and that is facing fierce resistance from inside Germany, not just among politicians, but among those key central bankers.
MAGNAY: Absolutely, it is. But Angela Merkel has been pretty clear that she will probably back calls by Mario Draghi to implement a bond- purchasing program, which he'll probably outline next week, if it's tied to countries' requests for help through the bailout fund and, therefore, to certain conditions.
Mario Draghi wrote in a letter to "Die Zeit," probably aimed at the German Central Bank, at Jens Weidmann, who heads up the Bundesbank, saying in extraordinary times, the ECB will have to take extraordinary measures to preserve price stability across the EU.
Really, a justification for any steps that he is going to be making, but still saying that comes within our mandate, our mandate is to ensure price stability, and we must take the steps that are required. But it still doesn't mean that we're acting sort of dependent on government.
Angela Merkel said we must support Mario Draghi in the steps that he's taking, but she also said what the ECB does is the ECB's business. They are independent, and the tools that we have, such as the permanent bailout mechanism, are the right tools that we need. And also this sort of growth path are the right tools that we need to get Europe out of the mess that it's in, Nina.
DOS SANTOS: Pulling the fine-tooth comb through all those European treaties is a job that I don't envy. Diana Magnay joining us live from Berlin. Thanks ever so much for that.
Well, as Diana was just saying, as the ECB puts the finishing touches to a bond-buying plan, its president says that exceptional measures are sometimes necessary, aren't they?
Fighting back a tide of criticism from Germany that I was referring to before, this man, Mario Draghi's opinion piece in the German newspaper that was written today, as Diana was talking about, insists that the European Central Bank still shouldn't be bowing to political pressure. Let's have a look at exactly what he said.
In "Die Zeit" newspaper -- this is what Diana was referring to -- Draghi wrote this. He said, "Fulfilling our mandate sometimes requires us to go beyond the standard monetary policy tools." He goes on to say that the ECB will remain independent and it will always act within the limits of its mandate.
His words have come after some pretty hefty public criticism suggesting that the ECB isn't doing enough to try and contain the crisis, which is already into its third year.
Now, another person that Diana was referring to before is this man. In "Der Spiegel," which is an influential political German magazine, the head of Germany's own central bank, Jens Weidmann, has been saying that an ECB bond-buying program is, quote, "too close to state financing via the monetary press."
And has said what he says the ECB should do is that it fundamentally should say that it can't solve problems that way, because if it does so, it would risk creating new ones.
Then, we also have this: the former ECB chief economist, Dr. Jurgen Stark, has also been making some comments, saying that the European Central Bank, if it embarks upon a process of enlarging its mandate to deal with the crisis, it could be embarking on a dangerous path.
In an opinion piece for another influential German newspaper, this time it was "Handelsblatt," which is sort of the equivalent to the "Financial Times" over there in Germany. He says that the role the ECB appears to be taking when it comes to taking -- to be taking on will, quote, "overburden the central bank. It will allow its independence to be further eroded by politics."
He also goes on to say that the central bank will no longer be able to fulfill its core task of delivering price stability. That means keeping inflation at or around 2 percent, which is the crucial level for the eurozone.
And then we get back to the Italian prime minister, Mario Monti, here, as you can see here. What he's saying is that he's fighting Draghi's corner.
In an interview with the Italian financial newspaper, "Il Sole 24 Ore," Mario Monti has been saying that he's warned that preventing the ECB from buying government bonds to try and address these imbalances like, for instance, the Bundesbank is trying to do, could, he says -- just could -- end up, particularly in the case of Germany, becoming a financial "own goal with paradoxical effects."
So, the war of words certainly continue. And as such, that's a topic I'm going to be discussing now with Jan Randolph, who's the director of Sovereign Risk at IHS Global Insight. Thanks so much for coming on.
You'd be forgiven for thinking that there's a certain amount of deja- vu when you hear words like that. The rhetoric doesn't seem to change. The stances seem to be hardening.
JAN RANDOLPH, DIRECTOR, SOVEREIGN RISK, IHS GLOBAL INSIGHT: Yes, there's a fundamental policy issue here. Buying bonds. I think there has to be clarity about why you're buying these bonds.
There's a big difference between the ECB buying bonds to ensure stability and lower borrowing costs and buying bonds which is a route to debt financing or financing government budget deficit, which is the horror of the Bundesbank.
But as the other German colleague, Jorg Asmussen on the ECB board, has said if the future -- if there's a doubt about the future for currency, that currency, that currency cannot be stable. And that's reflected in the high yields of Spain. It's not just Spanish risk, it's also eurozone risk, and that has to come down.
DOS SANTOS: So, what we know is that the Germans are fiercely opposed towards this idea that of giving the European Stability Mechanism, the so- called permanent bailout funds, a banking license so it can borrow from the ECB. Do you agree with that, though? Is that going to be the sort of panacea? It's the latest thing they're fighting about, but it couldn't cure all the ills.
RANDOLPH: Well, it -- it would be a solution. It's originally a French idea to turn the ESM into a bank, basically, and then they can borrow unlimited amounts from the European Central Bank. That horrifies the Germans because they see unlimited liability that could hit the German taxpayer sometime down the road. And it takes the pressure off governments to reform.
The key thing is for Spain and Italy to reform. While they're reforming, they should be supported by financing. But Mario Draghi's been very bold -- very bold and smart. He said, we are prepared to help in the financing. We are prepared to make sure that Spain and Italy remain liquid, have enough cash.
And if you have enough cash, you're unlikely to default. That's a very important message. But it's conditional on governments supplying to the ESM, and Germany approving ESM money -- what program. That has to come first.
DOS SANTOS: But this reminds me of the 2008 financial crisis, when everybody put their hands into their pockets to try and prop up their banking systems, and people were worried about moral hazard. Basically, if you give somebody money to solve the problem, they don't learn their lessons. And they lost some more.
RANDOLPH: The Germans, of all the players here, are scared of this moral hazard, the idea of them providing greater and greater guarantees without conditions.
But the Germans have also said we are prepared to help as long as underneath that there is real reform. There is taking a grip on your budget, but more importantly, reforming your economy. And if that happens, they should be financially supported. In other words, the ECB's prepared to be an IMF, but the signals have to come from the governments.
DOS SANTOS: Should the euro weaken, ever so briefly?
RANDOLPH: It will probably weaken over the longer run, I think. That's probably the case. It would also help on exports for everyone.
DOS SANTOS: It certainly will, particularly for Germans. Thanks so much, Jan Randolph, there, joining us from IHS Global Insight.
Well, stocks here in Europe had something of a choppy session this midweek, Wednesday. As you can see, we saw basically a question of two up and two down.
The London FTSE 100 trading just for the second day this week, because remember that Monday was shut for a national holiday. That market ended flat yesterday, and it ended down by about two thirds of one percent today. Xetra DAX not doing quite so badly. Zurich SMI up and the CAC 40 down by half of one percent.
When it comes to some of the stocks, in particular, to focus on, mining shares fell for a second section. The FTSE is heavily skewed towards that. Rio Tinto, which is a stock that's listed on the FTSE, was actually down by more than 3 percent. Also, Arsenal Missile down by 1.8 percent.
All of these indices are actually showing losses so far for the week as a whole. But as I was just saying before, we're only about two or three trading sessions into the week, especially if you consider the London session. That's only been trading yesterday and today.
In the United States, the elections will be fought on the key battleground of the domestic economy, and how to make America's factories turn out that most valuable products, freshly-made jobs. Stay with us.
DOS SANTOS: The US economy grew faster than initially thought in the last quarter, a rare glimmer of positive news these days on the economic front. When it comes to annual growth between the months of April and June, that has been revised upwards, now, to 1.7 percent. That's 0.2 percent higher than original estimates.
While exports were strong, consumer spending which, remember, accounts for about two thirds of the US economy, grew at a very, very weak pace here, and it's not enough to signal any major improvement in the jobs market, either.
Some economists believe that GDP needs to actually grow around about 3 percent a year to have any big impact on unemployment, which stands at around 8.2 percent at the moment.
Let's see whether that's had any effect on the stock market on Wall Street. Maribel Aber joins us now, live from the NYSE for more on that. Hi, Maribel.
So, this is, I suppose, better than expected, the GDP revision, but we should remember that it's just a revision from previous figures, so it's not exactly bone-shattering, is it?
MARIBEL ABER, CNNMONEY.COM CORRESPONDENT: That's right, Nina, you're absolutely right on that one. And in terms of what we're seeing as -- in terms of impact on Wall Street, not a lot here from that report. Stocks were completely flat for much of the morning, and they are now just modestly higher.
What Wall Street will be curious to hear about will be what Ben Bernanke has to say about the GDP reading when he speaks at that Jackson Hole conference in a couple of days. So, this reading is sure to make things a little bit more complicated for the Fed, especially when it comes to that stimulus conversation we keep talking about.
So, as you say here, all-in-all, it's not a bad report. It's obviously good that the headline number was revised higher, Nina, but not a great one, either. As you mentioned, consumer spending is still at a weak level here and at a 1.7 percent growth, it's just not enough to bring down unemployment. A
And as we talked about, also, earlier, many investors and economists are just saying that perhaps this other round of easing is not a good thing for the broader economy. Nina?
DOS SANTOS: Yes, it's difficult to read the signals, isn't it? Especially when you think about potential QE 3 coming along. One moment, the GDP's better than expected, the next moment it's worse than expected. It must be difficult for them, and that will be reflected in the "Beige Book," won't it?
ABER: Sure, sure. And the reading from the Federal Reserve called -- this "beige book" was just released just few minutes ago, and measure -- it measures, really, the economic conditions across 12 regions in the United States.
And what it found was that the US economy expanded across all 12 of those districts, and most reported that retail activity had increased. So, that's a good sign, since it points to an increase in consumer spending, there, and it pretty much jives with the GDP report today, Nina.
Now, many said real estate was also improving, again, matching with the recent string of upbeat housing data that we've gotten. But many regions reported a softening in manufacturing. That's something we've seen in recent economic reports as well.
So, Nina, nothing too surprising in there, and not having too much of an impact on the markets so far.
DOS SANTOS: OK, Maribel Aber, thanks so much for bringing us the latest there from Wall Street.
Tonight, the economy is in focus at the Republican convention, and one of Mitt Romney's promises has been raising eyebrows. It is something we've been telling you about before on QUEST MEANS BUSINESS. It's this key pledge to create 250,000 jobs per month every month on average for the entire presidential term.
Glenn Hubbard is the senior economic advisor to the Romney campaign. He's also dean of Columbia Business School, and he says that this is possible.
(BEGIN VIDEO CLIP)
GLENN HUBBARD, SENIOR ECONOMIC ADVISOR, ROMNEY CAMPAIGN: There's one study that suggests we could get 2.3 million jobs in 18 months just from going back to pre-crisis levels of policy stability.
Second is better policy, tax reform, the expenditure restraint, that remove the fear of very high future tax burdens. It's not a matter of flipping a single switch. It's millions of switches for entrepreneurs and business owners all over America. And yes, it can happen.
(END VIDEO CLIP)
DOS SANTOS: For Americans who are trying to get back into employment, "outsourcing" is a dirty word. The loss of contracts to firms abroad has become a pressing election issue, and both President Obama and Mitt Romney are keen to prove that they'll create jobs at home, as Maggie Lake now reports.
MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Thank you.
MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT (voice-over): Whether on the campaign trail --
ROMNEY: If there's an outsourcer in chief, it's the president of the United States.
LAKE: -- or amid the barrage of political ads on TV.
UNIDENTIFIED MALE: Mitt Romney's firms were pioneers at helping companies outsource their manufacturing to countries including China.
LAKE: Outsourcing is a hot-button issue again in presidential politics. In states like Ohio, Pennsylvania, and Michigan, where scores of factory jobs have been lost, it is a deeply emotional issue.
JOE KLEIN, "TIME" MAGAZINE: They do a lot of focus grouping and polling and testing, and what they find is that this is very resonant.
LAKE (on camera): This is the garment district of New York, and this statute is a tribute to the thousands of textile workers who once filled these buildings. This was a bustling manufacturing hub, but those factories and those jobs are long gone.
LAKE (voice-over): In recent years, the manufacturing sector of the US has been hit particularly hard. Over 5.5 million jobs lost between 2000 and 2009, a million alone to China. But that tide may be turning as companies rethink their commitment to lower-wage countries.
HAL SIRKIN, BOSTON CONSULTING GROUP: Wages in China are topping $3 an hour. Wages will probably be something around $6 an hour or so in 2015. It start to become competitive with the US. You have the intellectual property risk, and being far away from your consumer means you're not on top of the trends.
LAKE: General Electric and Caterpillar are just a few of the companies who have recently brought some of their production back to the US, and 53 percent of companies questioned in a recent survey by the consulting firm, The Hackett Group, say they are thinking of making the move.
Economists warn the manufacturing revival has a long way to go, but both candidates are pledging they can get the job done. Mitt Romney continues to call for lower taxes for business to spur investment and tougher trade relations with China.
ROMNEY: I will make my job one creating good jobs for the American people.
LAKE: President Obama is also calling for tax incentives for companies that bring jobs back to the US and touting the auto industry bailout, which Romney opposed.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Three and a half years later, the American auto industry has come roaring back.
KLEIN: I spent a week in Ohio in June. People are incredibly grateful for the fact that we still have an auto industry. That saved jobs rather than create new ones, but if it hadn't happened, the bottom would have dropped out of Ohio.
LAKE: Some might dispute that, but Ohio is a must-win state, and the polls there are close. The debate over who can best bring jobs back to America could be crucial as we head toward the home stretch of this campaign.
Maggie Lake, CNN, New York.
DOS SANTOS: And remember that the amount of people, or at least the rate of unemployment in the United States stands steady at around about 8.2 percent, according to the latest figures, so jobs very much a burning political issue.
The other issue that caught our attention over the course of the week is a pledge by the Republican Party, if elected, to perhaps return to the gold standard underpinning the US currency. Speaking of which, it's time for our Currency Conundrum again.
Here's the question tonight: how often does the US Treasury Department look to enhance the design for its dollar bills. Is it A, every 7 to 10 years? Is it B, every 15 to 18 years? Or is it C, every 23 to 29 years? We'll have the full answer for you later on in the program.
Well, speaking of the US dollar, it's currently climbing against the euro on the back of that positive revised GDP data. Investors are also waiting for word from the Fed about that crucial issue of quantitative easing. And the greenback's also up against the Japanese yen, currently trading at 78.73. We'll be back after this.
DOS SANTOS: Two and a half million tickets, more than 4,000 athletes, and an opening ceremony that promises to be a blockbuster. Heard it before? Well, the next part of London 2012, the Paralympic Games, kicks off in about an hour from now.
And it's been a bit of a scramble for the organizers, because they've had barely two weeks since the Olympic Games finished to get some of these venues in ship-shape for the new set of athletes. Some, like the main stadium at the Olympic Park in London just need a little bit of tweaking.
And other venues have been specifically built. For instance, wheelchair tennis is being held on hard courts at Eaton Manor rather than the grass courts of Wimbledon. These Paralympics are the biggest yet, and London 2012's marketing chief, Daniel Ritterband, says that advertisers are keen to get in on the rush for gold.
(BEGIN VIDEO CLIP)
DANIEL RITTERBAND, DIRECTOR OF MARKETING, LONDON 2012: I think over the last sort of 15 or so years, you've seen the interest in the Paralympic Games grow more and more, and this is reflected in the investment put into the elite level of sport for Paralympic athletes, as well.
So, I think in Sydney, it was around $15 million. For the UK, it's about 15 million pounds has gone into elite sports as well. So, this is -- this is fantastic sport. This isn't second-best sport. These are truly super humans.
(END VIDEO CLIP)
DOS SANTOS: So, the athletes are ready. Now, CNN's very own Jim Boulden takes a look at how record TV sales and TV rights could turn into a golden haul for the sponsors.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): Since London started planning for the Olympic and Paralympic Games seven years ago, organizers stressed the two sporting events have always been closely tied and made sure sponsors were onboard for both.
STEVE MARTIN, M&C SAATCHI: This is the first time an Olympics and Paralympics has been sold as a package. You've got to remember that, and that's why the Lloyds TSBs, the Adidas, the EDF Energies, the Cadbury's, they're mega companies, but they're partners to both the Olympic Games and the Paralympics.
BOULDEN: Add to that, British Airways, which has blanketed London with Paralympic branding. The airline barely took a breath between the two Games.
Contrast that with British supermarket chain Sainsbury. It chose to be a Paralympic sponsor only, using David Beckham as its brand sponsor.
DAVID BECKHAM, BRITISH FOOTBALLER: As we look forward to this massive summer of sport, one --
BOULDEN: Analysts say Sainsbury is taking advantage of the more liberal marketing opportunities available in the Paralympics.
MARTIN: It is very different, because there is branding within some of the venues, there's branding in some of the athletes' bibs, there's some branding, actually, in all parts of the actual venues, as I say, themselves. So, Sainsbury's has taken that as a really clear opportunity to stand out and do something a bit different.
BOULDEN: These sponsors could've only dreamed about the buzz leading to these Games. Olympics Part II, some are calling it.
RITTERBAND: In previous cities, they have struggled selling the tickets, and often they are given away for the Paralympics. In no -- rather, the success of the Olympic Games a couple of weeks ago saw the tickets for Paralympics sales going through the roof.
BOULDEN: But sponsoring the Paralympics has its own challenges.
MARTIN: I think the Paralympics is a very -- tricky one. You can fall into a few traps from a sponsor brand. Ultimately, you talk to any Paralympic athletes themselves, they want to be taken as serious athletes.
Yes, they've been billed as super humans, which I think is absolutely correct, but you can get it very wrong from a sponsor if you suddenly go on sympathy vote. These athletes don't want that.
BOULDEN: These Paralympics have already set new records. More than 100 countries are televising the Games, and TV rights are generating a record $15 million in revenue for organizers. Paralympic sponsors may find that part two of the Summer Games exceeds all expectations.
Jim Boulden, CNN, London.
DOS SANTOS: Just ahead here on QUEST MEANS BUSINESS, while Hurricane Isaac stirs up a world of worry, drivers may actually get a break at the petrol pump. We'll explain why next.
DOS SANTOS: Hello and welcome back. I'm Nina dos Santos. These are the main news headlines this half-hour.
(BEGIN VIDEO CLIP)
DOS SANTOS (voice-over): Hurricane Isaac is wreaking havoc along a wide band of the southern U.S. Gulf Coast. The category 1 storm pushed ashore overnight in Louisiana exactly seven years after Hurricane Katrina's disastrous landfall there.
The rebuilt levee system is holding for the most part. But the storm surge did overtop one of the smaller floodwalls. That was in Plaquemines Parish.
Eighteen months into the Syrian conflict, President Bashar al-Assad says that the situation in his country is actually improving. In a rare interview with the pro-regime TV station, he says that the destiny of the Syrian people is in its hands, and he encouraged Syrians to desert what he calls, quote, "terrorist groups."
More violence was reported today in Syria. Video posted online today is said to show that rebels capturing a government checkpoint outside the Syrian capital (inaudible) showed or at least was said to show. An opposition group now says that 89 people have been killed so far today. CNN cannot independently verify the authenticity of these images.
Former Ukrainian prime minister Yulia Tymoshenko has lost her appeal in the country's highest court. She was hoping to have her conviction for abuse of authority overturned and to end her seven-year prison sentence as supporters, including the European Union, say that her case is politically motivated. She now plans to appeal to the European Court of Human Rights.
The opening ceremony for the Paralympic Games starts in about an hour from now. Organizers of London 2012 have been billing the show as another blockbuster with an award-winning British director at the helm. More than 4,000 athletes from 165 countries will enter London's Olympic Park for the biggest Paralympic Games ever held.
(END VIDEO CLIP)
DOS SANTOS: More than 90 percent of oil production in the Gulf of Mexico remains shut down until Hurricane Isaac passes by. That includes hundreds of oil rigs and platforms. Production is actually down by more than 1.3 million barrels a day.
Well, crude oil prices are actually falling at the moment because of Isaac has avoided the Gulf Coast's major oil facilities. And there was also an unexpected rise in inventories. Deep -- and as (inaudible) finance ministers also appeal to oil producers to try and boost supply to alleviate the situation.
Now at last, if we take a look at the Brent crude price, that was when we last checked, is down about 13 cents to $112. Well, when it comes to Nynex crude, that was down about $1.10 to $95 per barrel.
Now the price of oil has actually gone down. Isaac has caused some pretty interesting movements at the gas pump, because as you'd imagine, the price of fuel has been rising there. Let's start out with the United States.
As you can see there, the price of petrol is actually jumped more than 18 cents a liter. That means that drivers are currently paying around about $1.01 per liter.
But when you take a look at what everybody is paying, well, you'll still see that people in America are getting a pretty good deal, starting out with one of the highest gas prices anywhere in the world here, Norwegian motorists are being squeezed to the tune of about $2.63 per liter.
Then if you take for instance Germany, well, German drivers are paying almost twice the amount that people in the United States are paying. And there's still some positive news for American drivers if you put it into context with other places around the world, because take a look at that. The United Kingdom is still about $2.05.
Well, the oil price information service, which reports petrol pricing used, predicts that gas prices could begin to fall as early as Monday. But as I was saying, only Russia has a little bit less at the petrol pump than the United States when it comes to what we pay.
Hurricane Isaac is continuing, as we were saying before, to hammer the U.S. Gulf Coast. It continues to strike the state of Louisiana. Of course, seven years after the fateful day back in 2005, when Hurricane Katrina made landfall.
And while Isaac is less powerful, it's a major test for the improvements that have been made after Katrina. Let's get the latest from Martin Savidge, who is in New Orleans for us at this hour.
Pretty blustery conditions there, Martin. First of all, we're not seeing any significant flooding where you are, but we have seen one of the levees that's been overcome by the storm surge.
MARTIN SAVIDGE, CNN CORRESPONDENT: Right. That was down in the south. It was actually where the water overtopped, as they say. That was outside of the system that had been improved by billions of dollars after Katrina, that was exactly seven years ago today.
Here in the city of New Orleans, they're still getting beaten up by this storm. They have been all night. They will be all day. But the levee system and the flood control system, according to all the authorities, is working the way it is expected to work. And that's, of course, good news, reassuring to many of the residents here.
But how do they feel about this storm that arrived exactly to the day seven years ago of Katrina? I talked to them last night.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Tropical storm conditions expected with hurricane --
SAVIDGE (voice-over): Want to know how folks in New Orleans really feel about another hurricane on the anniversary of Katrina? Well, don't talk to them before the storm.
SAVIDGE: Well, it's starting to come down out there.
SAVIDGE (voice-over): Talk to them during it.
BILL BOESCH, CARPENTER: It just brings all of that back up, you know, that whole experience and the loss.
SAVIDGE (voice-over): Bill and Gigi Boesch lost everything and started over.
B. BOESCH: And then this is all new, of course. This is the house we built after the storm.
SAVIDGE (voice-over): He admits to being more prepared since Katrina. He stocks coolers, bought a generator and added something.
SAVIDGE: So you added another level to this house?
B. BOESCH: Correct.
SAVIDGE: Just in case?
B. BOESCH: Just in case.
SAVIDGE (voice-over): As in just in case the city floods again. Isaac intensifies as we drive to New Orleans East.
DEREK BRUMFIELD, POLICE OFFICER: Hi.
SAVIDGE: How are you?
SAVIDGE: Martin Savidge.
BRUMFIELD: All right. Come on. (Inaudible).
SAVIDGE (voice-over): And meet police officer Derek Brumfield.
Like Bill, Derek lost all he had in Katrina, rescuing only this picture that hangs prominently in the house.
SAVIDGE: Why is it important to save something.
BRUMFIELD: Because of just to think about -- this was in the house before and it survived, just like me. So I kept it.
UNIDENTIFIED MALE: And then those waters could --
SAVIDGE (voice-over): Like everyone we meet, Derek alternates between watching the television and watching out the window.
BRUMFIELD: Wind's blowing hard like that, something. It brings back memories.
SAVIDGE (voice-over): Because of those memories, he evacuated his daughter and grandkids. His neighbors left, too, so this cop has a new beat.
SAVIDGE: Yes, it's picking up now.
SAVIDGE (voice-over): His own street.
SAVIDGE: You think people come out in a storm like this, do some harm to --
BRUMFIELD: Yes, it has been done.
SAVIDGE (voice-over): Derek isn't the only one we find out on patrol.
SAVIDGE: How are you? Martin Savidge.
SAVIDGE (voice-over): I arrive at the home of Dr. Norman Francis just in time for the power to go out.
SAVIDGE: So let's just wait.
DR. NORMAN FRANCIS, PRESIDENT, XAVIER UNIVERSITY: (Inaudible).
SAVIDGE: There we go.
SAVIDGE (voice-over): Fortunately, he's got a generator.
For over half a century, he's been the president of Xavier University. He's been married to Blanche even longer.
Seven years ago after losing their home, Blanche began suffering from dementia. Norman thinks Katrina played a part.
FRANCIS: She did not ever want to go back.
SAVIDGE (voice-over): In the years since, they moved four times.
SAVIDGE: You can't help at some point in the night, have your mind drift back to seven years ago?
FRANCIS: Oh, no question about it. And in fact, let me just say to you, the worst times -- like it's going to happen -- is to have it happen at night.
BRUMFIELD: It brings back memories (inaudible) --
SAVIDGE (voice-over): For the people of New Orleans, the real power of Isaac is not wind. It's memories.
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SAVIDGE: That's very true. You know, I happened to be inside the Superdome here in New Orleans exactly when Katrina struck, and then also was in the convention center, the two epicenters, you could say, of suffering in this community as a result of that storm seven years ago, 1,800 lives lost in the state of Louisiana. It is the storm people will not ever forget, Nina.
DOS SANTOS: They certainly won't. Martin Savidge on the ground for us in New Orleans. Thanks so much for that.
Well, Jenny Harrison's standing by at the CNN International Weather Center to tell us about the progress of Hurricane Isaac.
Jenny, so it's -- part of the problem is that it's not moving off very quickly at all, is it?
JENNY HARRISON, CNN METEOROLOGIST: That's exactly it, really, Nina. Because it's still sitting in the same position and it's still so close to the ocean, there's more and more waters and even the land, it sort of made landfall across, it's just a really marshy, swampy area for the most part. And so there's nothing really to actually take away a lot of the (inaudible) from the storm.
And so it's just continuing to sit there, continuing to feed over these warm waters in the Gulf of Mexico. And for now, we've still got in some areas to the east of this eye, hurricane force winds right now those are the same winds, 121 kmh. It is showing some signs of moving to the northwest, but only at 10 kilometers now. That's a very, very slow pace.
As you can see within 12 hours on, it really is still just sort of along these southern shores of Louisiana, and then eventually and within 24 hours, so (inaudible) 24 hours on, so still Thursday sort of morning hours certainly it is still going to be likely in more southern areas of Louisiana. Now these are the winds.
This is the forecast again, showing you the winds. And so even once the storm has worked its way inland, some very, very strong gusty winds all the way along the shore, and look at the peak winds that we're reported when the storm was actually making landfall, 129 kmh. Now (inaudible) an area just outside New Orleans itself.
New Orleans, we saw wind there 119 kmh. And this is what it has been looking like for hour after hour. And just as Martin was saying, of course, it really must just get so wearing for everybody there, regardless of whether you're looking at waters rising or not. With winds like this still, 65 kmh, 55 kmh, 52 in New Orleans, we've had these tornado watches in place for several hours.
This, just showing you again, and this is what I mean about the really strong thunderstorms and also the hurricane force winds. They tend to be within those very, very strong cells, those thunderstorms that are easily east of the eye wall, 240 mm of rain already in New Orleans. And of course, just more and more images like this.
And you can't really see where the sea should end and the land should begin. So the next few hours, still very, very slow, not a great deal of movement. Then eventually, look at that, it does push off to the north, the northwest, but the rain, Nina, this is going to continue to come down and we could still, in the next 48 hours, see about half a meter of rain in New Orleans itself.
DOS SANTOS: OK. Jenny Harrison with the latest there on Hurricane Isaac, now a category 1 storm, as she was saying. Thanks so much for bringing us that.
Just ahead here on QUEST MEANS BUSINESS, (inaudible) wants to become one of the heroes of the Paralympic Games. We'll examine why this sportsmanship always travel well.
DOS SANTOS: Tonight, a lot of scrutiny for Ryanair. European competition watchdogs launched an investigation into the carrier's third takeover bid for Aer Lingus. Dublin-based Ryanair is Europe's leading low- cost airline.
The latest probe indicates that the budget carrier may have to make some big concessions if it wants this merger to go ahead. Ryanair already owns about 30 percent of Aer Lingus at present, and let's have a look at how the shares fared on Wednesday's trading, as you can see Ryanair shares here. And it's today down (inaudible) percent, Aer Lingus shares, though, ending the day basically flat.
Air China concerns one of its New York bound jets was forced to return to Beijing today after a (inaudible) suspect message. The flight has been reschedule then.
In Europe, we also saw military jets being scrambled when Amsterdam Schiphol Airport lost radio contact with a plane operated by the Spanish airline Vueling. Well, the jet landed safely and the carrier said that there was a communication failure.
So as you'd imagine, news headlines like those don't do much for people who are nervous of flying. But British Airways has a new double solution to remind passengers just how safe it is to take to the air. Starting this Sunday, it's airing an in-flight video on all of its journeys, that's called, "Flying with Confidence." Here's a sneak preview.
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UNIDENTIFIED MALE: The message here is clear: trust the professionals. They are safe and secure behind a locked and reinforced flight deck door, and they have your safety and well-being as their number one priority always.
(END VIDEO CLIP)
DOS SANTOS: Well, the video gave us advice and reassurance to first- time frequent flyers as well -- frequent flyers, I should say -- passengers can also take a day-long British Airways course, where pilots will guide you through every stage of your journey. (Inaudible) earlier today to meet with the pilots especially fronting this "Flying with Confidence" scheme.
His name is Capt. Allright, and yes, that really is his name.
(BEGIN VIDEO CLIP)
DOS SANTOS: So this new video, why launch it now?
CAPT. STEVE ALLRIGHT, PILOT, BRITISH AIRWAYS: Well, for many years, we've been running courses here at British Airways for people that are nervous flyers. And I just thought we actually need some help on board and we have the well-being video channel and we just thought it would be a great idea to have an actual video for people that are nervous.
Maybe they suddenly had some turbulence on board and they get very frightened. And they can actually access the video.
DOS SANTOS: And you're the face of that. So what does one have to do? Does one have to speak calmly, explain some of the technical procedures?
ALLRIGHT: I'm not --
DOS SANTOS: How's it work?
ALLRIGHT: -- I'm not sure it's my face that I'm (inaudible) for. It's perhaps the fact I've been involved for 18 years and I've -- I have obviously met many hundreds of -- and maybe thousands of people that are frightened flyers over those years. And so therefore I know the (inaudible) techniques where we teach on the course.
DOS SANTOS: What's been one of the big examples, say, that really has stuck in your mind most recently about somebody who's just been so scared to fly that you thought almost how can I convince them that this is going to be OK?
ALLRIGHT: I was just on my last flight, actually, back from Chicago. And one of the cabin crew called up and mentioned there was a teenage girl that was having great difficulty, you know, breathing almost because she had (inaudible) got a bumpy flight previously. And we had a little bit of turbulence on that flight.
And so I actually popped down and spoke to her and basically talked -- it's really about controlling the breathing and some other techniques that we've -- which we teach on the course.
DOS SANTOS: Is it people who haven't flown before that get scared? Or is it also, as you just said before, somebody's who's -- they're a business passenger, been flying for years around the globe and just they have a bad flight and that's it, they lose their nerve?
ALLRIGHT: It's both of those, in fact. I mean, about 10 percent of the people that come on our courses have never flown, maybe sometimes for 50 or 60 years, and they've got grandchildren in Australia they want to visit.
Or indeed business travelers that have been perfectly fine for many years and then they suddenly have a bumpy flight or a perceived or actual incident on board. And that then triggers a reaction. There's many different types of people, in fact. I mean, one common course is people that don't like not being in control.
So we ask people in the course, we say, who doesn't like being a passenger in their car? And there's a lot of hands go up. So we aim to educate them to trust the pilots, trust the professionals. We're one of the most regulated professions, you know, on the planet. So by helping them to trust the pilots, then they fell easier about the fact they're not actually driving the aircraft.
DOS SANTOS: You're going to become the star.
ALLRIGHT: Well, I don't know about that.
(END VIDEO CLIP)
DOS SANTOS: Captain Steve Allright. He says he wasn't chosen for his face. Maybe he was chosen for his name, though, and his 25 years of flying experience.
Just ahead here on QUEST MEANS BUSINESS, Eurostar sets up to keep Paralympians on the move.
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DOS SANTOS (voice-over): Well, time for the answer to today's "Currency Conundrum," earlier in the show I asked you how often the U.S. Treasury Department looks to enhance the designs of its dollar bills. The answer to this conundrum is A, every 7-10 years. The process of changing the designs began back in October 2003 when security improvements were added to the $20 bill.
(END VIDEO CLIP)
DOS SANTOS: The opening ceremony for the Paralympic Games is due to start in around about half an hour from now. The athletes are at London's Olympic Park. And some of them traveled to the British capital via Eurostar, which unveiled some specifically adapted carriages to carry Belgian and French teams. Richard went along for the ride.
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RICHARD QUEST, CNN HOST (voice-over): When it comes to opportunity, Eurostar isn't one to miss something golden. The high-speed rail operator wants to be the 2012 Olympics gateway for mainland Europe.
NICOLAS PETROVIC, CHIEF EXECUTIVE, EUROSTAR: There is capacity still left in the turnout. So we can have more slots and we can work our trains to be harder.
QUEST (voice-over): In fact, it's putting its train to the test in more ways than one, (inaudible) the workload, overhauling the interior, to bring some of the 4,000 Paralympians to London.
QUEST: Converting these first-class carriages that normally carry the business elite between London, Paris and Brussels, is quite a undertaking. You get rid of the seats and you make room for the wheelchairs.
UNIDENTIFIED MALE: Every seat you see in the trailer is going to come out. Every table in the trailer is going to come out and basically where you see tables, these bulkheads will be fitted in their place. That will allow the disabled athlete to come in, back up his wheelchair onto the bulkhead and click onto the bulkhead so that he's safe to travel.
QUEST (voice-over): The modified trains are being used by members of the French and Belgian Paralympic teams.
MOEZ EL ASSINE, FRENCH PARALYMPIAN: It's important for us to welcome in London together. It means all the French team in one times.
QUEST (voice-over): The athletes say they know all too well the frustrations of travel, the importance of planning ahead.
NATHAN STEPHENS, BRITISH PARALYMPIAN: It's one of the barriers we have to overcome to become a great athlete. You know, we've got to take all these other things into consideration before we even travel, before we even get to the event, before we pick up a javelin, all of this comes first. And it's just (inaudible) being a Paralympic athlete.
QUEST (voice-over): In the future, Eurostar will be doubling the number of seats for disabled passengers when it starts to roll out a whole new fleet of trains.
PETROVIC: (Inaudible) coming up on the new trains and refurbished trains for next year.
QUEST: Free wi-fi?
PETROVIC: Yes, it might be free, but we have (inaudible) decision, but it's --
QUEST: Free wi-fi.
PETROVIC: OK, then. We'll listen to you.
(END VIDEO CLIP)
DOS SANTOS: Richard Quest there, reporting on those changes being made to the Eurostar fleet.
We'll have a full check on the market action on Wall Street after the break, and look at how stocks finished the day.
DOS SANTOS: Welcome back. U.S. stocks are slightly higher at the moment after new figures showed the U.S. economy grew at a slightly faster pace in the second quarter than we originally thought. As you can see, the Dow Jones industrial average is poised to close up to the tune of about 0.1 of 1 percent or about 18 to 19 points at the moment, at a level of 13,121.
This is better than expected GDP reading was also reiterated in the Federal Reserve's Beige Book, which says things are improving gradually for the world's largest economy. That Beige Book released just about half an hour ago.
Let's have a look at how European stocks ended the day, because it wasn't quite the same performance, they've been shut for a number of hours now, but as you can see, there's a decidedly mixed session.
What do you make of the stories that you've seen on this show the last hour and what do you make of the market action over the last few days?
Well, you can tweet us. You can find myself (sic) @ndossantoscnn, and you can also get in touch with Richard, who's on holiday at the moment, I think sunning himself in the Mediterranean somewhere. You can get in touch with him via Twitter as well @questcnn.
And that's it for QUEST MEANS BUSINESS. Thanks for watching. I'm Nina dos Santos in London.
DOS SANTOS: You're watching CNN. This is a wrap of the main headlines we're watching in the news this hour.
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DOS SANTOS: Hurricane Isaac is wreaking havoc along a wide band of the southern U.S. Gulf Coast. The category 1 storm has pushed ashore on overnight in Louisiana exactly seven years after Hurricane Katrina made disastrous landfall there back in 2005.
The rebuilt levee system is holding for the most part. But the storm surge still overtops one of the smaller floodwalls. That was in Plaquemines Parish.
Eighteen months into the Syrian conflict, President Bashar al-Assad says that the situation in his country is actually improving. In a rare television interview with the pro-regime TV station, he said that the destiny of Syria is in the hands of its people, and he encouraged Syrians to desert what he calls, "terrorist groups."
Former Ukrainian prime minister Yulia Tymoshenko says that she will take her case to the European Court of Human Rights. Tymoshenko lost an appeal on Wednesday to have her conviction for abuse of authority overturned. She's currently serving a seven-year prison sentence for that charge.
The opening ceremony for the Paralympic Games starts in about half an hour from now. Organizers of London 2012 have been billing the show as another blockbuster with an award-winning British director at the helm. More than 4,000 athletes from 165 countries will enter London's Olympic Park for the biggest Paralympic Games ever.
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DOS SANTOS: That's a look at the top stories we're watching for you here at CNN. "AMANPOUR" is next.