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QUEST MEANS BUSINESS
IMF Head Calls for Action; European Council President Says Leaders Must Not Lose Sense of Urgency; Europe's Week Ahead; Italy's Trade Deficit; European Markets Down; Bumi Bad to Worse; Defense Ministers Scrutinize BAE- EADS Merger Plans; European Picture Drags Down Dow; Google Buoyed By Android Success; 5 Million iPhones Sold Opening Weekend, But Shares Down; Our Mobile Society: Digital Wallet; Mobile Commerce; Facebook Tracks Spending; Privacy and Our Mobile Society; Euro, Pound Down; Formula E: Electric Racing Due to Start 2014
Aired September 24, 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: We need delivery. IMF Managing Director Christine Lagarde calls for decisive action on the economy.
Five million iPhones sold in just one weekend. We explore how technology is changing our lives.
And electric circuits. The CEO of Formula E on racing with electric cars.
Hello, I'm Nina Dos Santos and this is QUEST MEANS BUSINESS.
Good evening. The head of the International Monetary Fund has called for Europe's leaders to turn their words into action. Christine Lagarde warned today that global growth will be slower than predicted in July, with Europe remaining the epicenter of the crisis.
(BEGIN VIDEO CLIP)
CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: This time, what we need is not just a bounce. We need a sustained rebound. A sustained rebound. Not a bounce.
If this time is to be different, we need certainty more than uncertainty, and we need decision-makers to turn into action-takers, which will require courage and the ability to rise above the short-term agenda of the domestic boundaries.
(END VIDEO CLIP)
DOS SANTOS: The president of the European Council says that leaders can't afford to step back from crisis mode, despite seeing the first results of their reforms. In a video message today, Herman Van Rompuy said that recent measures are pulling Europe out of a crisis, but there's still plenty more work to do.
(BEGIN VIDEO CLIP)
HERMAN VAN ROMPUY, PRESIDENT, EUROPEAN COUNCIL: I see a tendency of losing the sense of urgency, both on short-term policies and on the longer term. This must not happen. We have to keep on reforming our economies, making them more competitive, making it easier to create jobs. It won't always be simple, but is the best way to secure growth and employment for the future.
(END VIDEO CLIP)
DOS SANTOS: Well, Mr. van Rompuy's comments come amid a fresh wave of optimism over the euro. In recent weeks, what we've seen is stock market gains, also lower bond yields, in some of those most-troubled European indebted states.
Now, Christine Lagarde is set to meet with the German chancellor, in fact, Angela Merkel, just on Wednesday. And that will be coming even with a busy week for Europe. Let's just have a look at exactly what we've got on the cards.
So, what we have is, on Tuesday, Mrs. Merkel is going to be meeting with the European -- Central Bank president, Mario Draghi. That meeting will be taking place in Berlin. At the moment, we don't really know what kind of topics they're going to be discussing, but you can bet that the ECB's own bond-buying plan will be high up on the agenda. Also, the issues with Greece.
And then, what we're seeing is on Thursday, here, we're expecting the Spanish government to announce a whole raft of new reforms here. Further austerity measures could be on the cards. They could actually be vital if Spain is to end up asking for a full-blown bailout. That's Thursday, September the 27th.
And then, what we've got last but not least on Friday in Paris, we've got finance ministers in France unveiling the latest budget, the 2013 budget, in Parliament for France. So, that'll be another keenly-watched item on the agenda.
Now, Italy is exporting more goods and trying to close its trade gap with other countries. Italy's trade deficit last stood with other countries outside of the European Union, I should point out here, at around about $1.25 billion for August, and that in turn compares to a $3.2 billion gap just the same month last year.
We're going to be discussing this with Riccardo Monti of the Italian Trade Promotion Agency, the president of that organization, is in our studio this evening. Thanks very much for coming on QUEST MEANS BUSINESS, Mr. Monti.
First of all, how are you managing to attract trade and long-term investment to Italy when the horizon is pretty, let's say, cloudy for countries like Italy and periphery Europe?
RICCARDO MONTI, PRESIDENT, ITALIAN TRADE PROMOTION AGENCY: Well --
DOS SANTOS: And that's putting it politely.
MONTI: Yes. I believe Italy has a lot of good reason for attracting investors. Italy's a very strong exporting country. We have over 200,000 companies and export. So, in the DNA of the Italian entrepreneurs, there's the capability to export.
This year, we will have the first trade balance with the oil at $100- plus per barrel. The last time we had that was 2003, and oil was about $25 per barrel.
So, we have a very solid economy with about 80 billion euro trade surplus in manufacturing, and I think we will export our way out of the crisis.
DOS SANTOS: So, who is investing most and buying these Italian exports? Is it a case of, as I was just saying in the introduction there, non-eurozone countries, non-European countries. Because your eurozone partners can't necessarily afford to be buying more these days. Many countries are in a recession in that flow.
MONTI: Yes, I think we should separate. Italy has been doing very well on the exporting side. And of course, non-euro area has been growing much more. We had about 10 percent in the first six months of the year.
We have a very strong performance in the US and Russia. In some areas, we're still very strong, which is good towards China and north of Africa and all the countries.
Italy produces a lot of the things that the people of the world love. We're producing machinery, fashion, luxury. But also a lot of mid-range products that are very popular all over the world.
DOS SANTOS: But you produce a lot of sovereign debt that people don't love and aren't buying.
MONTI: Well, I think that is -- the situation now is much better than it used to be. Don't forget that Italy has a very big strength. Italian families are very rich: 8.6 trillion net wealth. And the ratio of net wealth to a disposable income is the highest in Europe.
DOS SANTOS: Now, that's absolutely true, I'll give you that one, because I lived and worked in Italy for many years, particularly in the northern industrial belt. What we're seeing is a huge amount of small, family-owned companies that are rather successful at the moment.
But here's the catch. Is it difficult for them to get over the bureaucracy, let's say, and the tax burden in a country at a time when, obviously, austerity is the order of the game?
MONTI: Well, of course we're trying to improve bureaucracy, and all that's in its aspects. I believe there's a lot of work to do. But I think Italy now is a much better place to do business down than it was 12 months ago.
And I think that this government is doing a hell of a job in improving every aspect of our value chain, both on the bureaucracy side and the business side.
DOS SANTOS: Has the eurozone crisis made your job particularly difficult?
MONTI: Well --
DOS SANTOS: And how so? What challenges?
MONTI: First of all, whatever you export, you need to finance this export. So, having a high spread becomes a higher cost of export financing. So, this particular element is being really a serious issue for Italian exporters. So, the fact that the spread has been going down is very good news.
And the fact that we have such a good performance. We're standing very high-spread. It's a very promising factor for the future of Italy.
DOS SANTOS: OK, Riccardo Monti, thank you so much for joining us, there, the president of the Italian Trade Promotion Agency, which is also responsible for all things like foreign direct investment and also the exports of those goods that are made in Italy.
Let's have a look at how stock markets closed in Europe and, bearing in mind, they started the week yet again with a lot of concerns about how the eurozone crisis is going to play out. Countries like Italy in the forefront of people's minds as much as Spain.
Now, mining and banking shares were some of the worst performers in these markets, as you can see. The market's getting off to a little bit of a rocky start on this first Monday trading session. Anglo-American also one of the stocks that was down by quite a bit in London, down about 2.6 percent on the FTSE 100 that erstwhile was down about just 0.25 percent.
And over in Frankfurt, we saw the Xetra DAX being dragged down also by Commerzbank. That bank down by nearly 3.7 percent. On the CAC 40, Societe Generale down about 1.6 percent.
Over in Zurich, the SMI ending the day down just 0.1 percent, better performer of the other four. But as you can see, that was also dragged down by the banks, Credit Suisse finishing the day down about 2 percent.
And heading into specific company news, Bumi was one of the world's worst performances in London today. Shares plunged nearly 25 percent in this company after the Indonesian coal miner launched an investigation into what it called, quote, "potential financial and other irregularities."
The company is part-owned by the British financier Nat Rothschild, and also Indonesia's Bakrie family. Bumi's value has almost halved in just the last week alone.
Defense ministers from the UK, Germany, and France are expected to scrutinize the proposed merger of the British defense giant BAE Systems and Airbus owner EADS later on this week. The deal needs approval from all three governments to get the go-ahead.
There are fears in the UK that the merger could put a strategic company under foreign control, also thwart some of its contracts with the Pentagon as well.
Let's have a look at how the US markets are faring in this first trading session of the week. As you can see, it's more or less being dragged down by the kind of picture that we're seeing in Europe as well today, but not all that much, down about 24 points on the Dow Jones Industrial Average, or about 0.2 percent, just shy of that at a level of 13,555.
Up next, a wallet-free day. We test the tap and pay approach and hit the shops with just a phone.
DOS SANTOS: Google shares are at an all-time high three days out from the company's 14th birthday whilst shares in this company are now trading at a price of $748, topping the record that they set back in November 2007.
Google has added about 13.5 percent to its value so far this year, buoyed by the success of its Android operating system. It held 68 percent of the global SmartPhone market in the second quarter of the year.
That's four times the market share held by Apple, which has just had a record of its own this weekend. Let's remind you that Apple actually sold out of its new iPhone 5 in just three days, that eagerly-awaited latest SmartPhone of theirs. Five million of these items were bought over the weekend, making it the fastest-selling iPhone ever to be launched so far.
It still wasn't enough for Apple investors, though, because shares were down around about 1.5 percent in today's session. And all this week on QUEST MEANS BUSINESS, remember that we're going to be taking an in-depth look at mobile phones generally, how they've changed and also how they've changed us.
So, they've transformed our lives, fundamentally altering the way we approach all sorts of things, from relationships to business, health, education, even to buying a cup of coffee. CNNMoney's Laurie Segall left her wallet behind and put five pay day phone apps to the test.
LAURIE SEGALL, CNNMONEY TECH REPORTER: Many people are saying one day your SmartPhone could completely replace your wallet. Well, how close are we to that actually happening? So today, I am officially ditching my wallet and using my SmartPhone to pay.
So, we are starting our day out with cereal here at Duane Reade, and if I want to pay with my mobile phone here, I can use Google Wallet. Let's test it out.
Whoopsy-daisy. All right. So, I'm selecting my card here, and I just hold it against --
UNIDENTIFIED FEMALE: No, it's backwards. It's backwards.
SEGALL: Oh! No cards enabled. So, now I'm enabling it. So, now I can just hold it against here --
UNIDENTIFIED FEMALE: That's it.
SEGALL: All right. Thank you very much.
SEGALL (voice-over): Google Wallet only works on Sprint, Virgin Mobile devices, and the Nexus 7 tablet.
SEGALL (on camera): So, next stop, morning coffee. And here, they use a service called Level Up that's going to allow me to pay with my SmartPhone.
UNIDENTIFIED FEMALE: You put your phone right here.
UNIDENTIFIED FEMALE: And then Level Up will scan the bar code.
SEGALL: So, I just bought a coffee.
UNIDENTIFIED FEMALE: Yes.
SEGALL: Great. All right, thank you.
SEGALL (voice-over): The mobile payments base is projected to be $171 billion business this year, and it's on the rise. So, what does the future look like? We asked one of the major players.
JACK DORSEY, CEO, SQUARE: If you're paying with your name, well, you don't need your phone or your wallet at all.
SEGALL (on camera): So, I should be able to pay using Square just by telling you my name, right?
UNIDENTIFIED MALE: Yes.
SEGALL: OK, so, I'd like to get a scone, please.
UNIDENTIFIED MALE: OK.
SEGALL: And my name is Laurie.
UNIDENTIFIED MALE: All right, your name is Laurie. All right, I see you right there.
SEGALL: So, my picture just shows up.
UNIDENTIFIED MALE: Yes. All right? You're all set.
SEGALL (voice-over): I learned ahead of time that you have to have a tab already open on the Square app, so it's not totally phone-free tech just yet. Last stop of the day, Home Depot. The store recently launched a partnership with PayPal.
SEGALL (on camera): With the new system, all I need is my mobile phone number. I don't actually need my physical phone to pay for this plant.
UNIDENTIFIED MALE: All right, you're going to be paying with your PayPal?
SEGALL: Yes. So, this is a PIN I set up beforehand.
UNIDENTIFIED MALE: It's been accepted.
SEGALL: So, I just paid for this plant, and I didn't have a SmartPhone, I didn't have a wallet. All I had was my mobile number and a PIN.
DOS SANTOS: It's all too easy, isn't it? A little bit dangerous for the wallet, I might say, as it's quite easy to spend what you have or don't have in your pocket. Well, as Laurie Segall just showed us, payments by mobile phone is becoming increasingly popular these days.
In fact, according to the research from Gartner, mobile payment transactions worldwide are expected to reach -- get this -- $171 billion by the end of this very year. That represents a 61 percent jump from 2011.
Also, Juniper research predicts that by 2014, this so-called tap-and- go payment technology will probably reach about $50 billion worth of transactions globally, and one in five SmartPhones will actually be adapted to have the technology for it.
When it comes to geographical prowess, well, Japan currently leads the world in mobile phone technology, especially for commerce, 47 million Japanese have phones with this kind of tap-and-go technology, and some of them even use it for vending machine purchases, as you can see here.
The top mobile commerce retailers globally are currently Taobao, Amazon, and also eBay. Forester research expects this mobile commerce industry to reach about $31 billion by the year 2016.
Now, if you're on Facebook, Facebook could be tracking what you decide to buy. The social network wants to know if its adverts on its site are actually working, so what it's done is it's teamed up with a company which can track the spending habits of millions of Americans.
Datalogics can match loyalty cards to Facebook accounts like, for instance, our very own QUEST MEANS BUSINESS account here, meaning that if somebody decides to buy something in the store after seeing an ad for it in Facebook, well, Datalogics will know about it.
The results so far? Well, in about 70 percent of marketing campaigns monitored, companies earned about $3 for every dollar that they actually spent on Facebook. Facebook's investors might be pleased with these kind of results, but privacy groups aren't pleased at all.
Dave Morin was an early member of the Facebook team. He left in 2010 to develop a company called Path. This is a social network just for mobile phones. Dave Morin joins me now, live from San Francisco.
Great to have you on the show, Dave. But first of all, you've had your own problems with privacy.
DAVE MORIN, CEO, PATH: Good to be here.
DOS SANTOS: Haven't you? You launched this particular app for mobile phones, and what you ended up doing is downloading, some might say accidentally, some might say deliberately, the address books of people. Now, you've apologized, but why did that happen?
MORIN: So, one of the key features of the social network is helping people to find their friends, and one of the ways to do that is to ask the user to upload their address book and then match it against all the other people that already on the network. It's a practice practiced by virtually every social network in the world.
The particular way that we had implemented it, we found that consumers just didn't understand. And so we had to go and redesign it and work with Apple to create a new UI around how privacy should work for address books - -
DOS SANTOS: So --
MORIN: And I think we're in a good place, now.
DOS SANTOS: Sorry. You said that consumers didn't understand. My understanding was that consumers suddenly realized it and weren't happy because they hadn't been asked whether their whole database of their contacts on their phone would have been downloaded or not. You say they didn't understand. Why?
MORIN: I think that the way that this -- these features usually work is you essentially ask the user if they would like to look in their contacts and match that to understand which of their friends are on the social network.
And the thing that consumers weren't aware of was that we were uploading the address book to our servers and doing the matching there rather than doing it on the phone itself. And so, really, it was a mostly a technical misunderstanding. And so, what we had to do was spend a bit more time explaining that this is how it works.
And we actually even went further after we went through the process to not just redesign the UI, but also to actually go and fully encrypt the data before we send it up to our servers. And so, we're now actually leaders in this space where before you even send the data to Path, we actually encrypt it.
So, even if something were to happen, your data would be completely safe. And so, we take that responsibility very seriously, mostly because we're -- we are a social network focused on privacy, so --
DOS SANTOS: Well, Dave, this is what I wanted to get to. Is there a risk here that mobile telephony combined with social networking, et cetera, is just outsmarting the user a little bit here? How do you navigate that if you're already trying to program for the next big thing, invest for the next big thing, but you want to make sure that the communication is clear, as well.
MORIN: Well, I think that mobile is one of the biggest technology opportunities of all time. Mobile devices are -- for the first time, we're far beyond a computer being on every desk. There's now a computer in every pocket.
Effectively, life has become the platform for software developers. And to the user, a mobile device is basically a remote control for your life. You can click a button and open it up and usually you push one or two buttons and something magical happens in your life.
It could be anything from companies like Halo in London, where a cab shows up to the spot that you're standing to companies like ours, which are building super personal very private social network where you can share just with your family, just with your close friends, and share types of information which you may not have ever shared before.
For example, on Path, people -- our third most popular type of content is actually users sharing when they go to bed and when they wake up in the morning, which is something that you generally don't see shared on any other network, but because of the very personal nature of the mobile device, you're starting to see new types of content being shared.
DOS SANTOS: Gosh, that's interesting stuff. Thanks so much for that. Dave Morin there from Path, joining us from San Francisco live.
Well, for more on how mobile devices are fundamentally changing our world, just log onto our website. We'll be exploring this issue all this week on QUEST MEANS BUSINESS.
Time now for a Currency Conundrum, though. In 2007, Iran announced that it would feature what on a new 50,000 rial bank note? Would they be featuring A, flowers and birds, did they day? Was it B, the Iranian nuclear energy program? Or C, the famous landmark, the Azadi Tower? We'll have the answer later on in the program.
Well speaking of currencies, worries about the health of the eurozone and the single currency itself are dragging on both the British pound and also the euro, dragging them both down against the greenback. The dollar is currently down against the Japanese yen.
DOS SANTOS: The future of car racing could be urban, electric, and practically silent. That's the vision of the new racing championship called Formula E.
Now, this is the prototype Formula E car. Organizers say that they'll be able to reach a speed of around about 220 kilometers per hour. Compare that to a regular F1 car, which can reach about 300 kilometers per hour, and they're not doing too badly, are they?
Also, when it comes to the engines, this is the catch, though. They only have a 25-minute battery life, and that means that drivers will have to change cars midway through the race.
However, because electric cars and electric engines are just so much quieter than combustion engines, Formula E organizers say that races can actually held inside city centers. In fact, Rio de Janeiro has said that it will actually host the first one of these Formula E races in 2014. Something we'll have to look forward to.
Alejandro Agag is the CEO of Formula E. He told me what the championship means to show that electric cars can be part of people's lives also both on and also off the race track.
ALEJANDRO AGAG, CEO, FORMULA E: The people don't see electric cars yet as an option for their daily lives. And we want them to see the cars racing. Racing fast, racing competitively, and have fun watching them. And then, they will understand that they can have an electric car in their daily lives.
DOS SANTOS: I suppose one of the issues here with this Formula E initiative is it's sort of rebranding an electric car, making it a little bit sexy. Because most people would think an electric car doesn't go very fast. It's rather quiet, which is totally the opposite of what you'd probably want from Formula 1 racetracks. What's going to give it the umph?
AGAG: We don't compare it with other competitions, such as Formula 1. We would be to Formula 1 as snowboarding is to skiing. We are both in the snow, but we are different. We want the electric cars to be perceived by the people, like you were saying, as fun. As sexy. As something fast.
So, we will reach that through technology. The development of batteries, the development of the electric engine. There is an electric car that has gone up to 350 miles per hour. This has been in the Utah Salt Desert. In the city, we will race at about 150 miles per hour, which is, let me tell you, that's very fast for a city race.
DOS SANTOS: Now, you may convince the public, but you've got to convince some pretty important race car drivers to join this team to get the kind of marketing campaign rolling. How successful have you been at that so far?
AGAG: We've been actually very surprised, because we announced the championship only a few weeks ago, and we've got calls from very, very key -- important drivers in different competitions, very curious about our concept. We think we will be able to attract those drivers.
And you were saying about marketing. We think we will be able to attract big companies to support this kind of sport, because this is something where companies that have -- or put in environment and sustainability on top of the agenda will be -- will feel very comfortable. It's a perfect match for those kind of companies.
DOS SANTOS: What about financing all of this? Formula 1 is notoriously lucrative, but it's pretty expensive to put on. You have some experience in the world of Formula 1 and fast car racing, et cetera. How are you going to fund this?
AGAG: We are very aware of the costs and the investment needed to finance a project -- a global project like this. We believe -- and we are already experiencing the interest of big corporations, because we offer a different and a very unique angle.
We are going to be the only sponsorship property out there that is going to really make a change. We believe we are going to have a contribution on the number of electric cars driving -- being driven around the streets in the cities.
And that's a real change in terms of city pollution, in terms of environment and sustainability. So, we believe that companies will join us in this effort and will make the championship viable and profitable.
DOS SANTOS: Coming up next on QUEST MEANS BUSINESS, the personal tip which forced an entire electronics company to shut down one of its factories. We'll take a look at exactly what happened at Foxconn's plant in China last night.
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): U.N. Arab envoy lead Lakhdar Brahimi says that the civil war in Syria is getting worse. He briefed the United Nations Security Council on the situation earlier and reported on his recent meeting with the Syrian president, Bashar al-Assad. After the meeting, he told reporters he would return to the region, but he doesn't have a plan of action at the moment.
The Iranian president, Mahmoud Ahmadinejad, has accused the U.S., Britain and France of violating the basic rights and freedoms of other nations. He made the comments at the United Nations' debate on the rule of law. The general debate at the U.N. starts on Tuesday.
A former police chief in the Chinese city of Chongqing is beginning a 15-year prison sentence. Wang Lijun was found guilty of bribery, abuse of power and defection. A few months ago, Wan fled to a U.S. consulate, where he revealed details about the murder of a British businessman who was killed by the wife of a now-disgraced regional party leader, Bo Xilai.
Some of the 21 survivors of Sunday's avalanche in Nepal are telling horrific stories of their ordeal. One American says that he tumbled around about 300 meters down the Manaslu mountain before he finally stopped. A French climber says that he fell nearly almost as far and found himself neck deep in snow, wearing only a T-shirt. So far eight people are confirmed dead and three are still missing.
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DOS SANTOS: Technology manufacturer Foxconn is temporarily shut one of its factories in China after a dispute in a dorm room triggered a riot involving thousands of workers.
(BEGIN VIDEO CLIP)
DOS SANTOS (voice-over): CNN has obtained these exclusive images of a scene outside the factory this morning. The Foxconn workers sent these photos to us on condition that we would not identify them. As you can see, hundreds of police officers were drafted in to calm the situation. By the time these were taken, order had been restored and the streets were secure.
(Inaudible) Jaime Florcruz now reports on the night before, though, several people were arrested and others taken to hops.
JAIME FLORCRUZ, CNN CORRESPONDENT: Some 2,000 workers at a Foxconn factory in central China rioted Sunday night and forced its temporary closure. In a company statement, Foxconn described the incident as, quote, "a personal dispute between several employees that escalated into a long and ugly disturbance involving thousands of people."
One eyewitness said rioting workers trashed the factory workshops, prompting local police to come in and take control. Some 40 people were taken to the hospital and several others were arrested.
Foxconn is one of the largest suppliers for Apple, assembling iPhones and other products. At the Taiyuan facility, it employs 79,000 workers. But it's not immediately clear whether Apple products are produced there, too.
Foxconn has been criticized for operating factories under allegedly harsh working conditions, including unsafe facilities and long working hours. Two years ago, its factory in southern China saw a spate of suicides attributed to such complaints. Foxconn has pledged to remedy these complaints in due time.
A worker at the Taiyuan plant said the factory is now closed and police are patrolling the area. Foxconn said the factory will resume production a day from now -- Jaime Florcruz, CNN, Beijing.
(END VIDEO CLIP)
DOS SANTOS: To kiwi or not to kiwi, that is the question that many people have been asking themselves over the last two weeks. Well, Brazil's finance minister so far has condemned the United States for rolling out more quantitative easing.
Guido Mantega is convinced that it'll do nothing for the United States and will probably damage global trade. In fact, he's labeled it the start of a currency war. Not the first time the Brazilians have said that. Now, currently, there's some pretty mixed views about America's so-called third round of quantitative easing, or QE3.
So far, the World Trade Organization says that it's extremely welcome. Let's have a look at exactly who's been saying what and what the numbers really tell us about quantitative easing, starting off with the WTO, as I was saying.
The WTO reckons that QE3 is helping at a time when the outlook for global trade is weak at the moment. In fact, it's just cut its forecast for 2012 when it comes to global trade expansion. So as you can see there a level of 2.5 percent for the year. That's a sharp drop from this organization's previous estimate.
Since global economies are just so interlinked these days, the WTO hopes the measure to try and boost growth in the world's largest economy, the U.S., will hopefully have a knock-on effect for everybody else. At least that is the theory.
Here's the contrarian, though. The Dallas Fed chief, Richard Fisher, is not quite so convinced. He's, in fact, a well-known inflation hawk who consistently warns about the risks of too much economic stimulus.
(BEGIN VIDEO CLIP)
RICHARD FISHER, PRESIDENT, FEDERAL RESERVE BANK OF DALLAS: It is our firm belief and it is my firm belief that monetizing deficits -- which we were -- have been doing by buying Treasuries and taking further accommodative action -- is just stalling behavior that will actually incent people to move.
(END VIDEO CLIP)
DOS SANTOS: Fisher argues that it's up to fiscal authorities, the politicians, in other words, and not the Fed, the monetary authorities, to get the economy moving again.
On the flip side, though, is Bob Parker, senior adviser at Credit Suisse. He gives QE3 his own tick of approval.
(BEGIN VIDEO CLIP)
BOB PARKER, SR. ADVISER, CREDIT SUISSE: We've got a major problem with the lack of demand in the global economy, the consumer not spending, companies not investing. So that's been the message. I mean, you could argue, actually, that that message has been a similar message from investors such as ourselves.
And the response to that message, when in many countries we have political gridlock and inevitably fiscal policy has to be tightened, the only policy response is one of very low interest rates and to pursue quantitative easing.
(END VIDEO CLIP)
DOS SANTOS: It's a mouthful, isn't it, quantitative easing. But here's the question: how much QE is too much QE? That's the kind of thing I asked Anthony Chan from JPMorgan Chase's wealth management. He says at the moment policymakers have got it right.
(BEGIN VIDEO CLIP)
ANTHONY CHAN, CHIEF ECONOMIST, JPMORGAN: One of the things to keep in mind is that monetary policy, whether it be through regular conventional channels or quantitative easing, has long and variable lags.
So I think that policymakers have to be cognizant of the fact that they can't wait until inflationary pressures have really escalated. And they can wait until the signs are outright that we have too much quantitative easing, because by then it will be too late.
However, given the fact that we still have a significant output gap, given the fact that unemployment rates are still sharply higher than potential, I think that we certainly have quite a bit of runway ahead of us before we have to worry about whether there is too much quantitative easing.
So I think at this point, I think that policymakers are playing it right. But that's not to say that they can put the economy on autopilot, because that's always a dangerous thing to do when it comes to monetary policy.
DOS SANTOS: Let's talk about Europe. We had -- the last week was a rather pivotal week for Europe. And now we're gearing up for another particularly pivotal week for Spain, which is arguably the elephant in the room.
How do you see this situation playing out?
CHAN: Well, I think there's no doubt that at some point Spain is going to have to make the move and certainly ask for some assistance in the interest of continuing to generate stability in the region. I think the European Central Bank has taken the first important step of arguing and, in fact, offering to support peripheral country debt and, in particular, to maintain those spreads vis-a-vis Germany at acceptable levels.
I think that was an important first step. But obviously that comes with conditionality. And I think that as we start to continue to move on the path towards greater stability, strong steps will have to be taken. Some of them more unpleasant than others, but I think it's just a matter of time when those next steps taken place.
And in fact, financial markets certainly have been hearing quite a bit of noise that the moment is near, at which point Spain will, in fact, ask for some assistance and sign that memorandum of understanding.
(END VIDEO CLIP)
DOS SANTOS: JPMorgan's Anthony Chan, speaking to me earlier about quantitative easing.
And speaking of quantitative easing, I should also mention that just a couple of hours ago, delivering a speech to an influential Washington think tank, the head of the International Monetary Fund, Christine Lagarde, welcomed quantitative easing.
Coming up after the break, I'll have the answer to another conundrum, today's "Currency Conundrum," plus Iran's president launches a bitter attack against Western sanctions and urges -- and launches an urgent plan to revive the country's frail currency (ph).
(BEGIN VIDEO CLIP)
DOS SANTOS (voice-over): Time now for the answer to today's "Currency Conundrum," earlier in the show I asked you this question: in 2007, Iran announced that it would feature what on a new 50,000 rial banknote?
Well, the answer to this was B, an atomic symbol representing its nuclear energy program. The country is fiercely proud of this program, which it insisted solely for peaceful purposes of providing its citizens with nuclear energy.
(END VIDEO CLIP)
DOS SANTOS: The West is not so convinced, though, and its ongoing sanctions are just wreaking havoc with the Iranian currency, the rial. Its street value has now dropped by more than half just in the last year alone.
And in an attempt to try and prop it back up, well, Iran has announced new foreign exchange centers so that it can try and get access to outside currencies. In fact, the new center offers U.S. dollars at 2 percent the street rate for U.S. dollars over there in Iran.
It's not the first time that Iran has tried to do something to prop up its currency. Back in January, the government actually tried to close the unofficial market by announcing an 8 percent devaluation of the official rate. It also promised to stamp out the black market as well. As you can see here, stamping out black market traders who would trade dollars and rial.
Those attempts, though, have been proving basically futile, because the rial's official value has fallen nearly 13 percent just since the start of the year. It's currently trading at about -- around about 12,260 towards the U.S. dollar.
Now the new foreign exchange center appears to have replaced a previous proposal for a currency trading program. That idea was actually slammed by the private sector, who said that this kind of scheme would simply introduce yet another rate for the rial and act as a new channel for corruption. So it is a very contentious and also complicated situation that they have here.
Now Iran's president has condemned the United Nations for these kind of sanctions which are at the heart of its currency issues and other economic problems. Richard Roth is at the United Nations, and he joins us now from New York with a look at what Mahmoud Ahmadinejad may say and has said so far.
(Inaudible) he's a firebrand talker, Richard. But realistically, if you look at his economy, it is being pummeled.
RICHARD ROTH, CNN CORRESPONDENT: Yes, his nation is at the center of a lot of (inaudible) problems in the world here. The Iranian leader, Ahmadinejad, has been speaking already to the general assembly at a conference about the rule of law, something that the members of the U.N. are not always adhering to. This was yesterday at U.N. headquarters.
The secretary-general of the U.N., meeting with Ahmadinejad, already the secretary-general warning the Iranian leader to tone down his rhetoric, said it could be inflammatory. Not sure he's going to change that type of language on Wednesday when he speaks to the general assembly. He didn't change it on today when he blasted major powers of the Security Council.
(BEGIN VIDEO CLIP)
MAHMOUD AHMADINEJAD, PRESIDENT OF IRAN (through translator): We have business that some members of the Security Council, with legal rights (ph), have chosen silence (inaudible) the nuclear warheads (inaudible) regime while at the same time they impede scientific progress of other nations.
(END VIDEO CLIP)
ROTH: Now among those listening in the audience, were some member countries who did not like what was said. It's possible one or two walked out. Afterwards, the Israeli ambassador told reporters what he thought of the Iranian leader's remarks.
(BEGIN VIDEO CLIP)
RON PROSOR, ISRAELI AMBASSADOR TO THE U.N.: This is an insult and an injury to intelligence and an audacity to have someone who's (inaudible) holocaust denier (ph), and who denies his own people basic rights, tortures and really does every -- denies every basic rule of law in his own country, to stand in this family of nations.
(END VIDEO CLIP)
ROTH: In his remarks, the Iranian leader blasted Security Council members for not moving with resolutions against, in effect, Israel, calling it a fraud regime. The Iranian leader will be speaking on Wednesday late morning. And if there are remarks about Israel or about 9/11 that are seen as inciteful (sic) and condemnatory, there will be walkouts from the U.N. General Assembly hall, Nina.
DOS SANTOS: Yes, not the first time we've seen that one. Ahmadinejad has taken to the stage. Thanks so much.
Richard Roth there, reporting from New York on the UNGA.
We'll be back as QUEST MEANS BUSINESS continues after this (inaudible) weather forecast. (Inaudible) stay tuned.
DOS SANTOS: Hello and welcome back. You're watching QUEST MEANS BUSINESS. As demand for luxury travel slowly makes a comeback, high-end hotels have been thinking up ever more inventive ways of trying to attract business.
In fact, New York's Waldorf-Astoria has opted for honeybees, 250,000 of them. It means fresh and sustainable honey is always offered there. And as Maggie Lake now reports, it's also a win for the bees and the local environment, too.
(BEGIN VIDEO CLIP)
MAGGIE LAKE, CNN CORRESPONDENT (voice-over): The Waldorf-Astoria hotel, a New York landmark, host to celebrities, diplomats and world leaders, but there's a new guest, a queen that's creating quite a buzz.
Fifty hives have been installed on the 20th floor of the Waldorf, part of a project by new chef, David Garcelon to bring the freshness of local farming directly to the hotel.
LAKE: Now that's what you call a view. This rooftop space was used mostly for fashion shoots before. Now it's been turned into a farm of sorts. In addition to the beehives that are over there, you have these huge planter boxes that are going to grow vegetables for the chefs to use downstairs. Organic farming -- that's what's in vogue now.
LAKE (voice-over): And while the models may be gone, proper attire still matters.
DAVID GARCELON, CHEF, WALDORF-ASTORIA HOTEL: Just pull that down. There you go. And zip up there.
LAKE (voice-over): As we slip into our beekeeping suits, Chef David tries to put to rest my fear of bees.
LAKE: Does it hurt?
GARCELON: Yes, you know, if you don't -- especially if you don't pull the stinger out. But the more you get stung, the more you get used to it, so it doesn't hurt as much.
LAKE: Are you hearing this piece? Are you buying this? You get used to it.
GARCELON: There's nice capped (ph) honey on there.
LAKE: That's (inaudible) honey?
GARCELON: Yes, that's not even full yet -- full yet, yes, (inaudible) --
LAKE: (Inaudible) full yet?
GARCELON: Yes. Yes. (Inaudible)? Did you think you'd ever be doing that?
UNIDENTIFIED MALE: (Inaudible).
LAKE: No. I actually think I'm frozen (inaudible) right now.
LAKE (voice-over): The Waldorf hosts more than a quarter of a million bees, a situation Chef David says benefits both the bees and the city.
GARCELON: It helps pollinate trees and plants all over the city. It's educational for the -- our chefs that, you know, we're all learning about beekeeping and where one of our ingredients comes from. And, you know, it's fresh. It's fresh, it's local.
LAKE (voice-over): Convinced about the long-term benefits, New York City dropped an 11-year ban in 2010, and now it's harvest time at the Waldorf.
The hotel doesn't sell the honey. It's exclusively for guests, used in everything from cheese plates to appetizers to ice cream.
GARCELON: Well, you know, I think it's always great when ingredients are fresh and when they're -- and when they have a story behind them. So there you go, it's a mini-cone of honey ice cream. So you know, when you can tell the guest this came from our roof, then so -- try it. Cheers.
LAKE (voice-over): Maggie Lake, CNN, New York.
LAKE: That's delicious.
(END VIDEO CLIP)
DOS SANTOS: Well, the bees haven't been having a very easy time here in northern Europe. The weather's actually been very wet and windy here in London. The big question is how long will this kind of miserable weather last?
It is certainly the first few days of fall. You can certainly feel it here. (Inaudible) Jennifer Delgado's at the CNN International Weather Center.
I know it's a big ask, Jen, but is fall going to be quite this bad so far?
JENNIFER DELGADO, AMS METEOROLOGIST: Oh, my God, I can tell you, it's going to be bad across the region. As we go through the next three days, you're right, very wet out there, very windy and we have this big low.
You can kind of see for yourself exactly what I'm talking about. Just to the north of Belgium, it's going to continue to kind of sit and spin over the next couple of days. And then we have another low just right on top of Russia. So this means bad weather pattern.
But look at the radar, lighting up at this hour, so heavier rainfall came down through London, Birmingham, right now through Manchester. You can see spreading through western parts of France, you can see including parts of Paris. Now some stronger storms moved out of Switzerland into Austria, into Germany. You get the idea. Traveling is going to be a mess out there.
In addition to the heavy rainfall, look at some of these winds. Anywhere you're seeing in red, we're talking wind gusts in excess of 80 kph.
When you get all those heavy rainfall and then you can see strong winds, that can lead to a front of some of these power lines going down as well as some of these trees, especially if we get more of this rain to kind of sit and spin on top of part of the U.K. as well as for the western part of France. Anywhere in red, this is where the bad weather is going to be.
This will last through midweek and Spain, Portugal, you're going to be looking at some of that rain. But the severe weather threat, as we go through Tuesday morning, sets up like this from parts of Germany into northern parts of Italy.
We see the possibility of some of these storms out there, of course, these autumn storms could produce some isolated tornadoes and of course some strong winds can lead to some damage across parts of the U.K. as well as for anywhere you're seeing in yellow. East of the Adriatic Sea, it's just bad out there. And it's going to be bad. That's all I have is bad news.
DOS SANTOS: A week for the Wellington boots --
DOS SANTOS: -- thank you so much, Jennifer Delgado, joining us at the CNN Weather Center.
Now just going back to the topic of social media and all things mobile, let me just bring you up to date with what Facebook's shares have been doing, because they shared 10 percent on announced that today after a financial weekly suggested that they could have been overpriced.
In the latest edition of "Barron's," Andrew Barry (ph) wrote, quote, "Is the stock a buy? Well, the short answer is no," end quote. He said that the outlook for Facebook was becoming increasingly uncertain. Shares (inaudible) those kind of losses that we saw a little bit. But they're still down around about 81/2 percent and way below the price that they IPOd at.
We'll be back after the break with more.
DOS SANTOS: Christine Lagarde of the International Monetary Fund is warning of an even slower recovery than expected. Policymakers, she says, must stick to their promises.
(BEGIN VIDEO CLIP)
CHRISTINE LAGARDE, IMF MANAGING DIRECTOR: Promise, the promise du jour, the promise. "I have miles to go before I sleep, and I have promises to keep." That's a line by the poet Robert Frost. Trust; the promise du jour, the promise. Policymakers have actually made important promises. And I would like to focus today on how those promises can be kept and why they must kept.
(END VIDEO CLIP)
DOS SANTOS: Lagarde also mentioned that the American poet Robert Frost, later again in the speech Frost wrote "The Road Not Taken" as well. And Lagarde says that we have an opportunity to take the right road, the road to global recovery. But we must walk together.
And on that note, it's time to say goodbye. That's it for QUEST MEANS BUSINESS. I'm Nina dos Santos in London.
DOS SANTOS: Welcome back. Here's a look at the main headlines we're following this hour.
U.N. Arab envoy lead Lakhdar Brahimi says that the civil war in Syria is getting worse. He briefed the U.N. Security Council on the situation earlier and reported on his recent meeting with the Syrian president, Bashar al-Assad.
Iranian President Mahmoud Ahmadinejad has accused the United States, Britain and France of violating the basic rights and freedoms of other nations. He made the comments at the United Nations' debate on the rule of law.
A former police chief in the Chinese city of Chongqing is beginning a 15-year prison sentence. Wang Lijun was found guilty of bribery, abuse of power and defection. A few months ago, Wang fled to a U.S. consulate, where he revealed details about the murder of a British businessman.
That's it for me. It's time now for "AMANPOUR."