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QUEST MEANS BUSINESS
French Finance Minster Says Euro Crisis Improving; European Markets Down; Dow Off 50 Points; US-China Trade Dispute; US Relations with China, Russia Strained; Japanese Companies Suspend Operations in China; Pound Up, Euro Down; The $100,000 Kitchen
Aired September 17, 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: Tonight, France's finance minister tells me there is hope of stability and growth.
Taking its China woe to the WTO. The US challenges China.
And cutting edge, not cut price. Electrolux's chief exec shows me his expensive kitchen. I'm Richard Quest, it's a Monday, and I mean business.
Good evening. There is light at the end of the tunnel. So says France's finance minister as he also declares Europe's debt crisis is improving and a banking union structure must agreed by the end of the year.
Pierre Moscovici was in London. He met his British counterpart, the chancellor George Osborne. Moscovici described the talks as "positive, friendly, and fruitful." He conceded neither man could conceal their differences on the eurozone.
The French minister says that currency block is closer to being a secure place, so I asked him very simply, is the worst over?
PIERRE MOSCOVICI, FRENCH FINANCE MINISTER: I hope so. I think there is -- appear likes good signals, light in the tunnel. Because if you look at six months ago, you see that the mood there was uncertainty plus austerity, and we're moving to a situation where we have the hope of stability plus growth.
There are several factors showing that: the decision of the central bank, the elections in the Netherlands, the decision of the central court - - the Constitutional Court of Germany concerning the ESM. The climate is much better. The markets feel quieter. So, I'm confident that we can find a global, secure solution for Spain, Greece, and for the whole eurozone.
QUEST: On the issue of banking reform, I don't want to make too much of potential disagreements between France and Germany or Germany and Britain, but it's not going to be either as quick or as easy as perhaps President Barroso suggested last week.
MOSCOVICI: Banking union?
QUEST: Banking union, yes.
MOSCOVICI: Supervision? Well, it's never easy, because when you've got a decision to be taken by 27 member states, which is a very different system. It's not easy. But I think it has to be quick.
And what I hope is that we got an agreement before the end of 2012, we've got a strong basis, which is the proposal of the commission. Let's have it as the basis -- common basis. And with Mr. Osborne, we made good progress. We are proud, and maybe close to each other.
QUEST: By the end of the year?
MOSOVICI: By the end of the year. It's necessary that was the conclusion of the June European Council. Me must stick to it.
QUEST: If we look at the -- in the French economy itself, you've been asked a million times about the 75 percent tax. Why bother with it? It'll raise little money, it's painting a negative picture of the economy, it's painting a negative picture of entrepreneurialism in France, and you say it may only last two years at best. The costs are higher than the rewards.
MOSCOVICI: No, because this is a strong promise made by Mr. Hollande during his campaign. Why so? Because the inequalities are so big in France, because some people earn so much money while other get into poverty that we want to ask them for a patriotic effort for two years.
And I'm quite certain that this won't bleed a talent or brain out of France. I've got a lot of talks with the business community in France. I wouldn't say they love it, but the understand.
QUEST: I need to ask you finally, are you prepared to, now sir, to condemn or to criticize the taking of the photographs and the publishing in France of the Duke and Duchess of Cambridge on holiday?
MOSCOVICI: I don't appreciate that. I don't think these are the right methods. And I think that when we have got so prestigious guests, but it would be good for everybody, they have the right for their private life or their privacy. And so I understand the emotion of the British people about that. I share it.
QUEST: You condemn it?
MOSCOVICI: I share it, this emotion. I don't think this is a good way to work in the press.
QUEST: The French finance minister talking to me earlier here in London.
The stocks in France suffered the worst losses of the major indices on Monday. Each of the big four lost some ground. They closed at -- Friday at their highest level yet in 2012, so maybe a bit of a give-back was a given.
Resource and industrials took the biggest hit after the Swedish steelmaker SSAB issued a profit warning because of falling demand, down almost 7 percent. The French rival, ArcelorMittal, off by almost 4 percent in the Paris market. To New York and the Dow Jones --
QUEST: -- Industrials. The Dow is off 54 points, just nearly half a percent, after the strong gains that we have seen, five-year highs on the major indices. It's hardly surprising that we're seeing a bit of a breather. We'll get some more analysis on what might be ending up a little later in the program.
Coming up in a moment, the US says China isn't playing fair, and as a result, their industry is suffering, and it's going to the World Trade Organization. We'll tell you what that's got to do with the US election when we come back. This is QUEST MEANS BUSINESS, good evening to you.
QUEST: The US government says China is breaking international trade rules, and the US has filed a complaint with the WTO, the World Trade Organization. It accuses China of illegally subsidizing exports of cars and auto parts, and China's retaliated, saying it's looking at things of its own.
Maggie Lake is in New York. This, Maggie, has got nothing to do with trade and everything to do with elections.
MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: Absolutely, and if you wanted any evidence of that, Richard, then you just have to see where President Obama was speaking today about this in the state of Ohio.
It is a critical swing state in the November elections for whoever wants to be president. The thought is you cannot win without Ohio behind you. Ohio, very dependent on the automobile industry, about 12 percent, just a little over 12 percent of their employment comes from that very industry.
Still, administration officials say this is an issue that they have been on. Have a listen to how the president described it when he was out there.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Today, my administration's launching a new action against China. This one against illegal subsidies that encourage companies to ship auto parts manufacturing jobs overseas.
These are subsides that directly harm working men and women on the assembly lines in Ohio and Michigan and across the Midwest. Your senator, Sherrod Brown, has fought as hard as anybody to stop this --
OBAMA: And we are going to stop it. It is not right, it is against the rules, and we will not let it stand.
(END VIDEO CLIP)
LAKE: We'll not let it stand. Now, Romney, his opponent in the presidential election, Mitt Romney, taking a shot at the president saying, listen, this is just campaign politics. He has been criticizing President Obama for being soft on China, running ads just like this one you're about to see. Have a listen.
(BEGIN VIDEO CLIP)
MITT ROMNEY (R), US PRESIDENTIAL CANDIDATE: It's time to stand up to the cheaters and make sure we protect jobs for the American people.
UNIDENTIFIED MALE: Barack Obama, failing to stop cheating, failing American workers.
(END VIDEO CLIP)
LAKE: Of course, Obama responding that Romney has profited from China and has outsourced jobs during his time at Bain, so this is going back and forth.
What's interesting, Richard, is we knew that the economy was going to be central, here, in this election. Interesting that they're both hitting on China and the issue of China again, but when you talk to political watchers who travel around the country, they say that concerns about China's economic might -- the issue does resonate with voters.
QUEST: But hang on a second, Maggie, hang on. China tonight saying that it's looking at its own complaints back at the United States. This is -- first of all, though, it's going to take years, whatever happens. You and I will be collecting our pensions before this ever gets resolved.
LAKE: If there's any left.
QUEST: I -- I was being optimistic. Knowing the way the WTO, knowing the Boeing-Airbus, knowing the slow pace of this, isn't it -- isn't the nakedness of doing this so soon before the election just a little too much obvious?
LAKE: It depends on who you ask, Richard. This is a tight election. It doesn't seem like anything is out of bounds. But you are absolutely right.
When it comes trade relations between these two countries, both of the policies are being set and determined by the domestic politics of both the US and China, their concerns about their own economic growth and how they look to their own internal audience.
The real work, the real relations, of course, are being hammered out in a much more nuanced way with those in the back office. When you hear this, this is all campaign rhetoric for domestic audiences, no matter who you're listening to.
QUEST: Right, but what we've got now is -- just to be clear -- what we've got now is a situation where the US says it's about to file a complaint against China on illegal subsidies, and China, as I read it here, is -- has filed a complaint on countervailing duties. Tit for tat, and we're no further on.
LAKE: And Richard, you know, you're a lawyer, and you can -- let's compare this to what we see happen in the corporate world. I'm going to sue you over intellectual property, you're going to sue me, we're going to fight, fight, fight, fight, fight, fight, fight until we get right down to a jury trial --
LAKE: -- and then the CEO's are going to get together, have a talk, and you hope that there is a settlement. Very similar to what China -- American-Sino watchers say they expect when it comes to this. Lots of bickering, but hopefully the leaders get together and make some very small, quiet progress.
QUEST: Maggie Lake, kindly reminding me of my age in a previous life. Many thanks, indeed, for joining me. Frankly, if I give advice on anything, you'd all be in trouble.
OK, the complaint comes 50 days before the -- the presidential election, that much is clear, and that much is obvious. As Jill Dougherty reports, the cooperative international stance that the president took in 2008 is now increasingly difficult to maintain.
JILL DOUGHERTY, CNN WORLD AFFAIRS CORRESPONDENT (voice-over): On Russia and on China, Barack Obama made cooperation his motto.
OBAMA: In an interconnected world, in a global economy, nations, including our own, will be more prosperous and more secure when we work together.
DOUGHERTY: But with the Kremlin's increasing authoritarian outlook and with Beijing's growing assertiveness in Asia, he's found that approach more difficult.
OBAMA: After a decade in which we fought two wars that cost us dearly in blood and treasure, the United States is turning our attention to the vast potential of the Asia-Pacific region.
DOUGHERTY: With his pivot to Asia, Mr. Obama made a strategic decision for the US to play a larger, long-term role in Asia. And facing a more than $200 billion trade deficit with China, he brought suits against Beijing at the World Trade Organization.
OBAMA: We're going to continue to be firm in insisting that they operate by the same rules that everybody else operates under.
DOUGHERTY: He fended off Republican and Democratic demands to designate China a currency manipulator, concerned it would start a trade war. Angering Beijing, he signed off on arms sales to Taiwan, but refused to sell them advanced F-16 fighter jets.
But Mitt Romney vows to take off the gloves.
ROMNEY: And so, if I'm president of the United States, I will finally take China to the carpet and say look you guys, I'm going to label you a currency manipulator and apply tariffs unless you stop those practices.
DOUGHERTY: China, Governor Romney says, is a cheat.
ROMNEY: China is stealing our intellectual property, our patents, our designs, our know-how, our brand names.
DOUGHERTY: Romney says he would sell more arms to Taiwan, and he'd confront China on its human rights record. With Russia, Obama tried the reset button.
HILLARY CLINTON, US SECRETARY OF STATE: We want to reset our relationship as --
SERGEY LAVROV, RUSSIAN FOREIGN MINISTER: Let's do it together.
CLINTON: So, we will do it together, OK?
DOUGHERTY: He won a new start arms control agreement, got Vladimir Putin's green light opening crucial supply lines for coalition forces in Afghanistan, and canceled the Bush administration's plan for putting missile defense components in Poland.
Mitt Romney blasts Obama's approach.
ROMNEY: Under my administration, our friends will see more loyalty, and Mr. Putin will see a little less flexibility and more backbone.
DOUGHERTY: Romney says if he's elected, he'll ditch Obama's reset button. Russia, he says, is --
ROMNEY: Without question, our number one geopolitical foe.
DOUGHERTY: Romney vows to reevaluate that arms control treaty and to confront the Kremlin on its human rights record.
But would Mitt Romney substantially change US policy toward Russia or China? Four years ago, Barack Obama took a harder line, too. Once in office, he tempered that with diplomatic calculus.
DOUGHERTY (on camera): Right now, Moscow and China oppose US efforts to remove Bashar al-Assad in Syria. But Washington needs their help on other challenges, like Iran and North Korea.
Debates over Russia and China often are black and white. But seen from inside the White House, there's a lot more gray.
Jill Dougherty, CNN, the State Department.
QUEST: Continuing our nightly digest of business and economics around the world, and Japanese businesses in China are caught up in a territorial dispute that's been brewing for centuries. At the center of it all are these islands in the East China Sea. Both countries claim ownership.
In China, anti-Japanese sentiment is so strong and anti-Japanese protests so violent, big name brands, like Toyota and Panasonic, have shut down their factories. Chinese state media is warning that trade ties are in jeopardy. CNN's Stan Grant has more.
STAN GRANT, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): This is a protest China is happy to allow. Such public anger is normally banned here, but not when it's aimed at old foe Japan. Japan's embassy in Beijing and consulates across the country targeted, Japanese-owned business attacked, and calls for a boycott of Japanese products. The protests may be staged, but the anti-Japanese feelings come naturally.
UNIDENTIFIED MALE (through translator): If that bastard Japan is too out of line, we can use force. We are as strong as them, at least in military.
UNIDENTIFIED MALE (through translator): I think China should use force, since it's impacted the fundamental interests of our nation, there is no need to consider further on this issue.
GRANT: The flashpoint, a dispute over who owns what China calls the Diaoyu Islands. Japan asserts its control of the rocky outcrops for over a century. China says its claim dates back hundreds of years.
"There shouldn't be any discussion on Diaoyu Island. It has always been a party of China." Chinese analysts like Guang Xiangiang, say this is a fight rooted in history and age-old hatreds. Diaoyu, or as Japan calls them, Senkaku, have been won and lost in war.
Japan says China ceded sovereignty when it lost the Sino-Japanese War in 1895. Japan's surrender in World War II clouded the issue again. Japan says it won back the islands in a 1972 treaty with the United States.
"The US handed over the island to Japan for its own purpose during the Cold War," Guang Xiangiang says. "So personally, I think the US should take the blame for the dispute on Diaoyu Island."
China's Foreign Ministry says the US should stay out of this dispute. "We hope that the US can earnestly honor its principle of not taking positions on the Diaoyu issue," this spokesman says.
GRANT (on camera): And there's another factor: China is preparing for a leadership transition amidst Communist Party infighting. Right now, it suits the power brokers to have public anger directed at an enemy outside rather than an enemy within.
Stan Grant, CNN, Beijing.
QUEST: So to tonight's Currency Conundrum. The Duke and Duchess of Cambridge are being presented with this gift on their trip to the Solomon Islands. It's made of shell money, the traditional currency of the Pacific Islands. It's handmade and still being produced.
So, what will it buy you? A bride? A religious blessing? Modern money? Good one. The answer later.
Sterling and euro both hit four-month highs. Right now, pound's against the dollar, while the euro's slipping a bit. The yen is also down against the greenback. Those are the rates --
QUEST: -- this is the break.
QUEST: Dining at its most decadent. Electrolux, the Swedish appliance company, has now launched a new grand cuisine kitchen range.
All right. So, you think your kitchen's expensive? They start at $100,000. It includes vacuum sealers, blast chillers, and even your own professional chef to show you how it all operates. It's everything including the kitchen sink.
Now, the important thing is, what Electrolux says, it's the first time that consumers can have a professional kitchen, a professional standard of kitchen in -- themselves. To find out more, I went for a lesson on kitchen-omics with the chief exec of Electrolux, Keith McLoughlin.
QUEST: Keith, this kitchen costs a great deal of money, 80,000 euros. Why have you done it? Very few people can buy this sort of thing?
KEITH MCLOUGHLIN, CEO, ELECTROLUX: This is Electrolux Grand Cuisine, and what that's about is for the first time ever, professional -- true professional equipment and appliances are available to the consumer market.
We have about 90 years of history in the professional cooking business, and now for the first time, consumers have access to those products.
QUEST: But what evidence is there that you can sell enough of these kitchens to make it profitable? We haven't all got 80,000 euros, you know.
MCLOUGHLIN: We've obviously done our research, and we know that there are markets and high net worth individuals who have the interest, and there's an unmet need, there. So, we've done the research, we know how big the market is, and there are consumers that have the interest and the wherewithal to have the very best that professionals use.
QUEST: Right. So, you've got big sinks, lots of pretty ovens that I don't quite understand, and we've got Chef over here.
MCLOUGHLIN: Come over here to Chef Paolo and let him show you what we're doing here on this Electrolux Grand Cuisine sear hob.
UNIDENTIFIED MALE: Would you like to run a trial? Please.
QUEST: Free food? What a question!
Well, that's rather good.
UNIDENTIFIED MALE: Do you like it?
QUEST: Rather good. Now, this requires professional --
MCLOUGHLIN: No, that's the point. This is developed for the consumer to use. Very easy, very simple, intuitive. Consumers can use it.
QUEST: Does Chef come with?
MCLOUGHLIN: Actually, when you buy this suite of appliances, we will send in a professional chef to your home, fly him in, and show you how it all works together. That's part of the deal. It's fantastic.
QUEST: All right, let's talk about what's happening in -- what, Electrolux is in every European country. Deep in the heart of the economy, what are you seeing at the moment?
MCLOUGHLIN: We're seeing soft consumer demand. So, of course, it started with Southern Europe, and those markets in Spain and Portugal and Italy are down about 50 percent and they're not moving much. So, they're back to, in some cases, 1990 levels of appliance demand.
But what we have been seeing recently is we've seen the famous contagion financially, but from a consumer confidence standpoint, that's spreading. So, we're seeing Central Europe slowing down a bit, Northern Europe, Nordic, Scandinavia.
QUEST: Hang on. This is worrying for you.
MCLOUGHLIN: Yes, it is.
QUEST: Contagion is spreading.
MCLOUGHLIN: Consumer confidence is weakening throughout Europe, which is obvious, given what's going on. So, Europe, as other parts of the world, have to get done the deleveraging and rebalancing so the consumers and employment regains.
QUEST: As chief exec, what can you do? You can't pull out of all our pits. You've still got to find growth. Asia and other parts of the world can only do so much.
MCLOUGHLIN: So, of course, we're participating in 150 countries. So, it's not about pulling out anywhere. It's about making the choices -- the right choices -- to execute the strategy around innovation, around operational excellence, and around growth in all markets.
Ultimately, what we get paid for from the consumer is bringing relevant innovation to the marketplace, and that's what we do every day.
QUEST: How are you strategically positioning the company to deal with, not just this crisis, but to be ready for the next -- for the upturn, if it comes, when it comes.
MCLOUGHLIN: No, it's when it comes. So, we're in a cycle, and the upturn will come. So, we're investing in R&D, we're investing in brands, we're investing in channels, we're investing in geographies, emerging markets, and making sure the company is appropriately represented.
We're investing in the brand. We're investing in bringing professional heritage, called Electrolux Grand Cuisine, for the first time ever to the marketplace.
QUEST: You seem like a sane man. Why would somebody have Grand Cuisine with these -- very expensive kitchens at a time of economic destruction?
MCLOUGHLIN: Our view is, we're in a cycle, not economic destruction. So, this cycle is difficult, we think, and our view is that most of the major governments, whether it's Brazil or China or Germany or the US, are taking actions to stimulate the economy.
So, we think we'll get through this. So, you work through the cycle, and of course you make choices along the way, but you continue and invest to grow the company and bring value to the marketplace.
QUEST: I think we'd better go back over there. At least we can taste some food.
QUEST: Free food and a very expensive kitchen. Now, the program that brings you the decision-makers and those in charge. We've already heard from the French finance minister, you've heard from the CEO of Electrolux.
After the break, the head of Mexico's stock exchange tells us that things are going up. And we'll also bring you a political solution for a political problem. Jose Manuel Barroso on why Europe needs better leadership.
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.
We're seeing more anti-American anger over the US-made film that insults the prophet Mohammed. Three hundred protesters have clashed with police along the road leading to the US embassy in Kabul in Afghanistan. Several police were injured and some of their vehicles have been set alight.
The film has set off demonstrations in Pakistan. These crowds protested outside the US consulate in Karachi. At least one person was killed in an anti-American protest in a Pakistani tribal region near the Afghan border. And the prime minister has ordered the YouTube website to be blocked after the site would not take down the offending video on its own.
A popular miners' activist has been dropped from addressing striking workers at the Marikana mine in South Africa. Police prevented the former ANC Youth leader Julius Malema from reaching the miners.
South African president Jacob Zuma says the lost production in the country's mining sector is costing more than half a billion dollars this year.
Anti-Japanese protests -- I beg your pardon -- in Japan -- let me start that again.
Anti-Japanese protests in China are becoming increasingly destructive. Some Japanese firms have shut down factories. China is furious over Tokyo's moves to take control of a small group of uninhabited islands which both countries claim.
Lawyers for Britain's Duke and Duchess of Cambridge have filed a criminal complaint in Paris against the photographer who took topless photos of Catherine, duchess. (Inaudible) France press reports that the judge will rule on an injunction on Tuesday.
The photos have already been published in three countries. The Royals want to keep them from spreading any further. The couple are currently in the Solomon Islands on a royal tour.
QUEST: The head of Mexico's central bank says a third round of QE -- quantitative easing -- in the United States -- it was announced by the Fed last week, and that is good news for Mexico.
Agustin Carstens says the Federal Reserve stimulus plan could help to ease inflation because it makes monetary policy look relatively tight, which attracts capital. That's likely to strengthen the pace, so make imports appear cheaper.
Join me over in the library, and you will see what I mean.
So you have Agustin Carstens. You remember he was actually a candidate to be managing director of the IMF. The rate for the central bank has held steady, 41/2 percent since mid-August. Now the bank is now warning this month it may have to raise rates due to inflation.
Annual inflation (inaudible) I expect, is this 41/2 percent in August, compare that, say, to the U.S. down of 1.82 percent or the European Union just around 2 percent.
However, when we talk about Mexico, the OECD does have a very robust performance of 3.6 percent. And they (inaudible) to increase up 3.8 percent. So squeezing some of this inflation out of the economy is going to be a core goal of the central bank.
And if you look at the market, it's at an all-time high in July. Fascinating, what you're looking at here, because at a time when all major markets -- the Dow, the European markets -- are at five years' high, we're seeing a gain of 17.4 percent in the past 12 months. That's, of course, been a currency issue involved in that. But still, nonetheless, a very robust performance.
Luis Tellez is the CEO of the Mexican stock exchange. He joins me now live from Mexico City.
When we look at this performance in Mexico, what to you is the biggest worry? Obviously the Eurozone crisis is high on the agenda. It could take everybody down with them. But what to you is the biggest concern at the moment?
LUIS TELLEZ, CEO, MEXICAN STOCK EXCHANGE: Well, first of all, let me talk about the positives. Mexico has a very positive fiscal stand. It has, as you mentioned, a monetary policy which has been very wisely undertaken. And we were hit and we're being hit by a commodity price inflation, especially corn, as you know, corn is the staple food in Mexico.
Now what could go wrong? I think the most important think is Europe. We are very positive about QE3. We're positive about Mr. Draghi's new bond purchase program. And what has happened is that the rest of the emerging markets are actually having problems in terms of growth, in terms of inflation and in terms of consistency of policies, which Mexico has not.
So we have been having, in the last months, inflows of foreign investments, foreign financial investment. And --
QUEST: Let me -- if I can just jump -- if I can just -- forgive me. If I can just jump in very briefly with just a -- to talk about that, because as we look at the inflation numbers, and you look at the growth numbers, there does have to be surely a worry that unless monetary policy - - because bearing in mind (inaudible) the neighbor, monetary policy may have to be brought into effect, if that inflation starts to get sticky.
TELLEZ: Well, that -- I think that's the case, but the Bank of Mexico has (inaudible) rates for quite a while for more than a year. And even though there has been pressure on the side of the productive sector. And that has allowed the exchange rate to appreciate. That is going to help the inflationary outlook.
And I do think that we will end up more towards the OECD numbers than the ones that you did mention. But I must recall that corn is our staple food and corn has increased almost two times. So that's a once-and-for-all shot at our inflation rate.
QUEST: Politically, the election, economically now seemingly a lot more stable, do you believe the environment is that much better now than it has been in the past for FDI, for Mexico, I suppose really -- I suppose what I'm really asking in a polite sort of way is it time for Mexico to reach the potential that it frequently has promised but never quite delivered?
TELLEZ: Well, I think it's time. President-elect Pena Nieto, during his campaign, talked widely about different structure reforms. I personally think the most important structure reform that Mexico has to undertake is in energy.
Unfortunately, due to the constitution and to legal restrictions, we have two energy monopolies, one in hydrocarbons and the other one in electricity. And that could be a major bottleneck for growth. And but President-Elect Pena Nieto has said that his priority or one of his priorities is in energy reform, a wide-ranging energy reform, which would bring competitiveness to the sector.
So I am certain he will deliver.
QUEST: Final question, final thought, and of course, needless to say, does it matter to you, sir, does it matter to the Mexican economy, does it matter to the Mexican stock market who wins in November in Washington?
TELLEZ: Well, we are very worried about the fiscal cliff and I do think it matters. I think it's very important that the U.S. gets a presidency that has the leadership to take economic policy forward. The President Obama did follow the same path that President Bush was following after the 2008 crisis and whoever wins need to have leadership and avoid a fiscal cliff, which would keep Mexico very strongly.
QUEST: I think we could all agree that is something of an understatement, sir, as the fiscal cliff gets ever closer.
Thank you for joining us today from Mexico. Look forward to having you and talking to you again on the program, please, standing invitation.
After the break, I'll be back in with the European Commission president, Jose Manuel Barroso (inaudible).
(BEGIN VIDEO CLIP)
QUEST (voice-over): We have a "Conundrum" revealed for you. The question, in the Solomon Islands, what can you buy using traditional money made of shells? Out of that lot, the answer is a bride. Modern money is used for everyday business, but purchasing a bride, tradition still demands the use of shell money.
(END VIDEO CLIP)
QUEST: I don't think we are instructed on exactly how many shells gets you what and anyway, I suspect that's a subject for another day on another program.
Greece has only a matter of weeks to convince the rest of Europe that it deserves the next round of bailout money. So says Austria's finance minister in an interview with "Der Standard," the Austrian newspaper.
Asked how much time Greece have, Maria Fekter said, "This is about weeks. They have to deliver something, be it the measure of privatization or other reform measures."
President Barroso, president of the European Commission, says he's no doubt Greece will honor its commitments. If it fails, there will be no more bailout cash.
Last week, you'll remember, he was on this program and I asked European president if the situation in Athens was still grave cause for concern.
(BEGIN VIDEO CLIP)
JOSE MANUEL BARROSO, EU COMMISSION PRESIDENT: I was with the prime minister of Greece recently, and I have no doubts about their determination, in terms of implementing the necessary reforms. So I hope that the other members of the euro area will also leave no doubts about the need to keep the integrity of the euro.
So I'm confident that if Greece, of course, fulfills the conditions, there is a willingness to do whatever is necessary to keep Greece in the euro.
QUEST: It's a case of if Greece fulfills the conditions, if this happens, if that happens, there's still a sizable number of ifs where Greece is concerned.
BARROSO: Because we are now making the final assessment and we have to be clear with our Greek partners and friends that it cannot come at, let's say, without conditions, further support to Greece. So it's why it is important to say that this is a condition that we cannot avoid.
But I believe there is determination also on the Greek side now.
QUEST: So, in your speech, you talk about a financial and economic crisis, a social crisis, a political crisis, a crisis of confidence. What I don't hear you say is a crisis of leadership.
BARROSO: No, but that is precisely the answer. To square the circle, we need leadership. What I said was there is a problem that is at the end a problem of confidence. This is a political problem. And to solve a political problem, we need a political solution. The solution is leadership. If you read carefully the word, leadership is there as well.
But I want people to understand that without this leadership, we will not be able to overcome the crisis. So I have also - I am making a strong demand on national leaders to commit to our project. Because I believe that if you explain the challenges, people are ready to support.
(END VIDEO CLIP)
QUEST: That's President Barroso on the question of Greece. And Greece is going to be the issue in the weeks ahead.
Now to the weather forecast, Jennifer Delgado is at the World Weather Center for us. Interesting weather patterns, isn't there (inaudible) some very serious storms that we've seen in recent weeks. And the position in many parts still greatly uncertain.
JENNIFER DELGADO, AMS METEOROLOGIST: Certainly. And we're looking at even some rain out there right now, a few parts of the U.K.
And Richard, it's not severe but some areas really do need some bad amounts of precipitation. We'll get to that in just a moment. But on the radar, it's raining out there for areas including Scotland, Ireland, Northern Ireland, wet conditions right now. This is a look at the radar over the last 12 hours.
But what is ahead for tomorrow and the next couple of days? Well, Richard, the good news is the weather is actually going to be pretty nice out there. We'll keep a few showers around really for tonight and as we go through Tuesday. And by Wednesday we're really going to see a shift in the weather pattern.
We'll take the showers all the way over toward eastern parts of Europe, affecting areas including parts of Poland, Lithuania, Latvia. You can see streaming down to parts of the Adriatic Sea. But areas over toward the west, we have this big ridge of high pressure in place. And that means quiet weather for areas including you, from London.
You're going to be looking at nice weather. Spain, Portugal, France, nice weather but really in some areas you've really certainly need some precipitation. This image behind me kind of gives you an idea of some of the dry conditions. And as we've gone through the last couple months, for summer, temperatures have actually been above average in more than half of the country.
Rainfall, of course, has been below average after a wet start. And then the southern one-third of the country is still in drought. And we're talking a bad drought. And no rain is really going to be in the forecast as I showed you earlier, coming through the next couple of days. We may see a low coming in by the end of the week.
High temperatures for tomorrow for Paris, high of 19 degrees; London, 18; 28 degrees for Madrid and 26 degrees for Vienna. Now that's the good weather. The bad weather, Richard, is setting up for the U.S. I don't know if you have plans to come over here any time soon, maybe tomorrow, if you're going to be flying into the northeast, we're going to be seeing a lot of delays out there.
All the action right now down towards the southeast, affecting parts of Louisiana, Mississippi, Alabama, well, all this mess is going to be moving up towards the north. As it does, it's going to be bringing with it heavy rainfall.
This frontal system is going to interact with all this moisture coming in from the Gulf and we're going to be looking at some problems with some flooding. This is going to be the forecast as we go through midweek. So if you're going to be trying to fly into, say, JFK, LaGuardia, Boston or Washington, D.C., expect a lot of delays tomorrow.
And that's going to have a ripple effect. You can kind of see that front as it pushes through. Look at this line of storms, Richard, that certainly shows you the possibility of some of those severe storms coming through. We're also going to see some of the coolest air of the year arriving by Wednesday.
QUEST: There's no question. It's definitely a bit more nippy out there than it was. Many thanks, Jennifer Delgado. It'll soon be time for the winsiet vest (ph) and a scarf.
DELGADO: I hate that.
QUEST: There's an answer there somewhere.
QUEST MEANS BUSINESS, one year to the day since the Occupy movement began. The protesters and the police are back on the streets and we hear from the activists.
QUEST: Apple says many of its customers who ordered the new iPhone 5 for the release day won't get the new phone until October. The company says demand's exceeding supply. Well, there's a law of economics if ever there was one.
And while the majority of orders for this Friday's release, they will be honored, other customers will have to wait. More than 2 million orders were taken within 24 hours of the new phone appearing on the Apple website, more than double the record set by the 4S last year.
Shares in Apple are at an all-time record. Alison is with me in New York.
I mean, look, just give me the number. Just give me the number and then let me weep quietly in the corner as I think about the number of times that I've thought, I really should buy. Well, maybe it's too high. Well, maybe it's too -- well, maybe...
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: You and me both. Believe me, you and me both and then the other million or so people who wanted to buy and said, oh, it's too high; I'm going wait. Yes.
And right now you may have missed the boat, Richard, at least I know I have. Shares sitting at $697.90. Yes, I mean, I've been watching this year priced very closely today. Apple did get up to $699.54.
You know, everybody's looking to see it get to that $700 mark. You know what's interesting, remember when Apple, Richard, was at $500 and we were all talking about the price target of $700-$750? And it seemed outlandish, not so outlandish any more. Now those price targets are going anywhere from -- to $900. Maybe not so crazy after all, right, Richard?
QUEST: All right. Of course, it does mean you can only buy one share (inaudible). You don't get many shares for your money, so to speak. This story about the iPhone 5 and 2 million and people not getting, what on -- I mean, what do we make of this?
KOSIK: You know what it is? We love our gadgets. We're addicted to them. But specific gadgets. The iPhone, it is addicting. Also, you know, there's that -- there's that mindset to always want to get the next best thing. And at the same time, there is this pent-up demand.
You know, you saw that in Apple's earnings, most recent earnings. They didn't sell as many iPhones as expected or actually they didn't sell as many iPhones because it was expected that that carryover would come in the fall.
Now when the iPhone 5 is released, so you know, everybody wants the next best thing, at least what -- where Apple's concerned. You know, they've got a new thing. Let's see if they can stick to it.
QUEST: Broader markets, and how they are trading this afternoon, obviously, worth mentioning, it is the Jewish New Year. So I'm expecting a fairly quiet day in New York.
KOSIK: It is pretty quiet. Expect tomorrow to be quiet as well. You know, especially after that sort of big Federal Reserve-fueled run-up that we saw last week, not such a huge surprise to see it kind of pull back a little bit. You know, there is a reason for that. You know, part of the reason is that weak regional report that came from the factory sector, the Empire State Manufacturing Index, Richard.
KOSIK: The plunge, much more (inaudible) September. You know what it is? It's back to reality. It's back to reality that the market is not reflecting what's going on in the economy.
QUEST: We'll leave the Empire State report to one side, if we may, because (inaudible) Alison in New York.
And by the way, if you are celebrating the Jewish New Year this time of the year, l'shanah tovah to you.
Occupy Wall Street, the protesters return to the streets of New York today, one year since the movement first began. Police arrested dozens of demonstrators who tried to block access to the New York Stock Exchange and made a human chain around it. Organizers say it's all about flexing people power in the streets. Other have doubts it's enough to last (inaudible) change.
CNN's Poppy Harlow is in New York with that story for us tonight.
(BEGIN VIDEO CLIP)
POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: Some folks think this movement has fizzled, that you guys are done for.
JUSTIN WEDES, OCCUPY ACTIVIST: They've been running that obituary since day one.
UNIDENTIFIED MALE: People power! People power!
HARLOW (voice-over): It started with this one year ago.
UNIDENTIFIED FEMALE: It's our duty as Americans to fight for our country and to keep it, you know, true to serving its people.
HARLOW (voice-over): A grassroots movement that made the 99 percent and the 1 percent part of our lexicon, Occupy. In a Brooklyn workspace, Justin Wedes is keeping Occupy alive today.
WEDES: What's changed is that people now recognize that the game is rigged and as we organize and as we evolve and grow, we're going to continue to resist. That's the impulse behind Occupy Wall Street.
HARLOW (voice-over): That impulse grew in New York's Zuccotti Park, took over stoops in Brooklyn.
UNIDENTIFIED FEMALE: I want the banks to stop foreclosures.
HARLOW (voice-over): Spread from Oakland to Berlin to Hong Kong, saw thousands of arrests and got people talking.
UNIDENTIFIED MALE: All great movements start with just a few people.
HARLOW: Police are trying to clear us all off the street right now.
UNIDENTIFIED MALE: So me what a police state looks like.
CROWD: This is what a police state looks like.
HARLOW: Around 1:00 am on November 15th, cops surrounded Zuccotti Park and evicted the protesters who'd been camping out here for two months. They didn't go calmly and they vowed to keep the movement alive.
UNIDENTIFIED MALE: (Inaudible) stand.
HARLOW (voice-over): For a few months, they worked out of an office. Ironically, right off Wall Street.
UNIDENTIFIED FEMALE: And when you walk in, you get a name tag like this.
UNIDENTIFIED FEMALE: This is some of our working spaces. You can see lots of Occupiers working here.
HARLOW (voice-over): Hoping to reinvigorate the movement, May 1st, a day of action around the globe. But it wasn't sustained.
HARLOW: Do you think it's relevant today?
UNIDENTIFIED MALE: I think the message has got diluted.
UNIDENTIFIED FEMALE: I don't see any reason that it would have diminished in importance.
UNIDENTIFIED MALE: They just seem to be a ragtag bunch of people.
HARLOW: Stronger? Weaker?
MARK BRAY, OCCUPY ACTIVIST: Different. I think that there are things that are stronger. I think our connections to actual organizing issues are definitely stronger.
HARLOW (voice-over): Occupy says it has about $40,000 left in the bank and has formed groups focusing on specific issues, like student debt and housing. There from the beginning, Mark Bray says, give it time.
BRAY: If you look at all the social movements in history, whether it be the Civil Rights Movement, the feminist movement, it takes decades before you get going.
HARLOW (voice-over): Zuccotti Park is no longer occupied, but it is still surrounded by police barricades, a reminder of the past year.
BRAY: We don't need to sit in the park. We've got your attention. Now what we need to do is actually follow through.
HARLOW (voice-over): Poppy Harlow, CNN, New York.
(END VIDEO CLIP)
QUEST: Now one piece of information I do need to bring to your attention this evening, there are now reports that the U.S. oil company, Chevron, has been fined $171/2 million for an oil spill in Brazil. That information just coming in to CNN at the moment, $171/2 million for a fine for Chevron for a Brazilian oil spill.
I'll have a "Profitable Moment" after the break, when we will consider the Eurozone, again.
QUEST: Tonight's "Profitable Moment," a light at the end of the tunnel and good signals, well, tonight, the French finance minister, Pierre Moscovici, on this program, summed up the sense of hope which has infected the Eurozone. It's the first sign we're emerging at last from the darkness of the protracted and brutal economic crisis.
I certainly have felt it as a result of the events of the past few weeks. It feels differently out there, something about it.
Well, in 1946, Churchill said, "The world must build a kind of United States of Europe. In this way will hundreds of millions of toilers be able to regain their simple joys and hopes."
It seems others are coming to that idea. What really lies at the end of the rainbow is integration if the Eurozone is to survive in its present form. What a seven days we have seen taking us closer to Churchill's dream and tonight, of course, we get that extra element -- the politicians and finance ministers saying that things are looking better.
There are risks and dangers ahead -- let no one be fooled. But at least there's light at the end of the tunnel, and it might not be a train. 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.