Return to Transcripts main page
QUEST MEANS BUSINESS
Former Italian Prime Minister Gets One Year Prison Sentence; Stronger Growth in US; Wall Street Down, Europe Mixed; Anglo American CEO Steps Down; Women in Business; Euro, Pound Down; Outlook Monaco: Prince Albert II Talks Business
Aired October 26, 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, Berlusconi's vanishing jail sentence. He will serve one year, if any, for tax fraud.
A growth spurt. The US economy front and center as the presidential race is now speeding up.
And the latest female CEO to go. Cynthia Carroll steps down from Anglo American.
I'm Richard Quest. It may be Friday, but of course, I still mean business.
Good evening. Silvio Berlusconi has received a jail sentence for tax fraud. With two appeals likely and just months to arrange them, the former Italian prime minister may escape prison once again.
The case is all about Berlusconi's television company, Mediaset. Prosecutors say it avoided paying tax. It purchased film rights and then sold them within the group itself.
Berlusconi has told CNN affiliate TGCOM24 the decision was an unacceptable -- unacceptable -- political sentence, and he had been certain he would be acquitted.
His sentence has already been sliced from four years to one. Time's running out to actually lock up Mr. Berlusconi because of Italy's statute of limitations. The case dates back to 2006, and he is allowed two appeals. There's a good chance he won't serve a single day of the sentence.
Now, it's not the first time he's been jailed. So far, he hasn't done any time in prison. Let's go to our Rome bureau. Our correspondent Ben Wedeman is with me. Ben, let's -- we have to dissect this slowly. First of all, Berlusconi says that this is a political verdict and a political sentence. Is he right?
BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, certainly he has been the subject, Richard, of many -- as many as 30 criminal cases over the last 30 years, and oftentimes, he has said that the charges were politically motivated, suggesting that the Italian judiciary is highly politicized, and he being a very prominent figure --
WEDEMAN: -- on the right, he believes for that reason he has been the object of sort of a political vendetta over the years. Now, certainly he's taken advantage of legal loopholes, the appeals process, the relatively short statute of limitations in the Italian law.
In addition to that, over the years, while he was prime minister, he was very good at changing the laws that would --
QUEST: OK --
WEDEMAN: -- in order to benefit himself in his many legal cases. Richard?
QUEST: The question of -- now he's been convicted, and we know that there are those appeals, and we know there's the statute of limitations. In Rome tonight, in Italy tonight, does anybody expect Silvio Berlusconi will ever serve -- I can see you're already -- you know where this question's heading, and you're already shaking your head.
WEDEMAN: Because that's the one thing it seems Italians all agree on in this case, and that is whether for legal reasons or otherwise, Silvio Berlusconi will not serve a day or a night behind bars. And even the people who hate him viscerally do believe that he will take advantage of all of these possibilities to get out. Richard?
QUEST: OK. So, he many not serve behind bars, and he may have appeals, and he may have all these other things. But he's still been convicted. And as that might relate to other issues.
For example, travel, for example, if he was going to the United States or to other countries. Whatever it might be. Does that conviction still condemn him in the eyes of people? I can see the shaking of the head, again, going, Ben.
WEDEMAN: Well, basically, he's not convicted until he's gone through the appeals process. He has two opportunities to appeal the case. Until then, he will not be -- he's free. And this could go on for years. So, as far as he's concerned, nothing has really changed.
However, two days ago, he did announce that he would not be participating in the upcoming Italian elections, and part of the conviction, which of course does not stick at this point, is that he's not allowed to hold public office for the next three years. So, in a sense, politically, he's definitely on hold for the moment.
QUEST: All right. We have a second or two more, so we can just ask you this quickly: does the Italian justice system come out of this with any credibility? If he's convicted and there are appeals and he dies and then he never serves anything, surely it makes a mockery.
WEDEMAN: Well, most Italians have a very low opinion of anything relating to the state. The government, politicians, judges, lawyers, the whole thing, Italians are very skeptical when it comes to their sort of credibility.
QUEST: Ben Wedeman, good to see you. Have a good weekend. Ben Wedeman, our senior correspondent who is in Rome for us tonight.
The rocky US recovery is picking up steam. The government data shows GDP grew 2 percent in Q3, slightly more than economists were expecting, and far less -- this is the crucial point -- it's far less than the 3 percent most people believe you really need to have to make a serious dent in unemployment.
Look at those numbers. You go back to 09 when you had a 5.3 percent drop. But then you come right the way through, and what you see, of course, with these latest figures, the picture of the economy under President Obama's leadership is very nearly complete. The shift from contraction of more than 5 percent to growth of 2 percent.
It's not been smooth -- look at that bit in the middle, where we really did have a question of whether it was going to go into reverse. However, the jagged growth has continued.
Job creation has been equally tumultuous. The spike in monthly payrolls in 2010 completely reversed since then. Just look again at that - - and those are the two issues that we are looking at tonight.
Julia Coronado, chief economist for North America at BNP Paribas, always good to see Julia, especially at these moments, these crucial moments, Julia. First of all, were you surprised at 2 percent?
JULIA CORONADO, CHIEF NORTH AMERICAN ECONOMIST, BNP PARIBAS: I was definitely surprised at 2 percent. For us, the big surprise factor was the pop in government spending. So, there's a little bit something for everybody here. There's something for optimists, something for pessimists, and something for conspiracy theorists.
We know the government budget is shrinking, both the state and local and federal levels, and yet we got this enormous pop in government spending that added seven tenths to that 2 percent number. So, that was entirely unexpected. We had expected a more subdued reading as a result.
QUEST: Careful -- careful Julia! You are -- surely you are not suggesting that government spending increased in the months up to an election.
CORONADO: I know. It would be shocking, wouldn't it? In a country so pure as our own --
QUEST: Quite right.
CORONADO: -- it's unimaginable.
QUEST: Is it sustainable?
CORONADO: I think that --
QUEST: Is it sustainable, 2 percent?
CORONADO: Is it sustainable? Well --
QUEST: Because 1.3 to 2 percent.
CORONADO: So, we will see. It all depends on the outcome of the election, it depends on how that outcome leads to a resolution of the fiscal cliff. One way or another, we expect that the politicians at the end of the day will not drag the US back into a recession, that they will find a way to smooth out the fiscal consolidation.
But how we do that is important for both business and consumer confidence. If it's in a messy, cantankerous way, that's not good for business investment and hiring and consumer spending. If they do do it in a way that's relatively smooth, we get the grand bargain, then I think we can see some momentum pick up in 2013.
QUEST: I noticed in the numbers consumers -- basically, consumers also spent. There was a -- quite a strong component in this besides the government spending. So, personal consumption rose, as well.
QUEST: I find that interesting when you factor in the jobs question, and it does raise the issue, are people in America becoming more confident? They see job creation, or at least things aren't as bad?
CORONADO: We have seen all measures of consumer confidence improve in the last few months. So, they were knocked down again by some of the worries around the European situation, but it's bounced back pretty nicely. And we are seeing sensitive things like auto sales holding up pretty well.
So, the consumer spending number we saw today was solid. It's not roaring strong, but once again, actually, if you look at it on an annual basis, consumer spending has been just remarkably stable around 2 percent.
So, it's sort of a bedrock of growth for the US. Consumers have made massive adjustments, they're living more cautiously within their means, but they're feeling -- they're not so easy to knock off track.
QUEST: Excellent. Good to have you on the program and giving us this perspective. Julia, we'll talk more about this as we get towards the election. Many thanks for joining us.
Stocks on Wall Street, however, shed their early gains. This is the number. Don't get too excited, calm yourself, be calm. Look at that -- I'll move back so you can see. That's hardly a movement worth talking about today, just virtually unchanged, the Dow Jones.
But what is interesting is that we are hovering around that 13,000, which is starting to look a little bit precarious. The banking stocks have fallen, JPMorgan, Bank of America, each are down around 1 percent.
To Europe now, and the major indices ended the session in the black. Anglo American was top performer on the FTSE, gaining more than 4 percent. We'll be looking at that later in the program. Luxury makers were also up, Richemont up 1.6, LBMH in Paris. All the indices, though, are down for a week as a whole.
Next, the reason for Anglo America's surge. The chief exec, Cynthia Carroll, is stepping down. What does it mean for the company?
QUEST: QUEST MEANS BUSINESS.
QUEST: Cynthia Carroll is quitting as chief executive of Anglo American and says she'll remain in the role until a replacement has been found. And while she was appointed in 2007, Carroll was the first non- South African and the first woman to head the mining giant.
She's been under increasing pressure in recent months because of rolling wildcat mining strikes in South Africa and a dispute with the Chilean state miner Codelco. Anglo's market caps, fallen around $25 billion since Ms. Carroll joined the company, according to Macquarie Bank estimates.
Now, Cynthia's exit will leave -- when it comes to women, it will leave only two women in charge of companies in the UK's 100 FTSE.
They are Burberry's boss, Angela Ahrendts, who took the reins of the fashion group in 2006. That's Angela. And then, of course, Alison Cooper, chief executive of Imperial Tobacco since 2010. Marjorie Scardino is the chief executive of Penguin, and the "Financial Times" publisher Pearson. Now, she announced that she was stepping down as well.
This week, also, the EU dropped plans to impose a 40 percent quota for women on the boards by 2020. Now, when we look at all these women who are either leaving jobs, moving jobs, as she prepares to leave her position, Cynthia Carroll told reporters things aren't the way to go.
So, let's talk more about this and put it into perspective. Joining me now from New York, very pleased -- can you hear me? Kate White.
KATE WHITE, FORMER EDITOR-IN-CHIEF, "COSMOPOLITAN" US: Yes.
QUEST: Until last month, editor-in-chief of the US edition of "Cosmopolitan." Kate, what's gone wrong? These women are leaving their jobs. There doesn't seem to be the next generation coming through, or at least no strong women. Were -- what's happened?
WHITE: Yes, it's so scary to see, because we need those women. I think to some degree, we are invisible to powerful men in inner circles. We saw that with Mitt Romney having to -- talking about the binder full of women, that he had to ask where are the good women?
If you're in a leadership position, you should be nurturing those women, keeping tabs on them, bringing them into your inner circle. And if we're invisible, that's not going to happen.
WHITE: I also think it's really tough to be a successful woman and a mom, and companies have to do a better job --
QUEST: Oh! Hang on, hang on, hang on!
WHITE: No, no --
QUEST: I'm going to pause you there. I really --
WHITE: Oh --
QUEST: Let's just -- let's listen to what Mitt Romney had to say about "binders of women," and then we'll come back to your point about how difficult it is.
(BEGIN VIDEO CLIP)
MITT ROMNEY (R), US PRESIDENTIAL CANDIDATE: We took a concerted effort to go out and find women who had backgrounds that could be qualified to become members of our cabinet. I went to a number of women's groups and said, "Can you help us find folks?" And they brought us whole binders full of women.
(END VIDEO CLIP)
QUEST: OK. Why -- why was that so offensive to women? And bearing in mind, I've got three sisters, all of whom are professional, and I've got to be very careful or won't be able to go home.
WHITE: Well, I know why it was offensive to me. It wasn't so much the "binder" line -- and of course, what we found out later was, he didn't ask for those binders of women. Those binders were provided by women's groups to make sure women weren't shut out of the cabinet.
But what bugged me about it was, why doesn't he know where the smart women are. Why hasn't he been keeping tabs on them as a leader? As I came up through magazines, I knew all the smart people, I kept a roladex full of them.
QUEST: All right. Your latest book is, "I Shouldn't Be Telling You This: A Guide to Success in the Workplace for Women." Maybe because I work in a different environment here, but is it -- is it really that necessary in this day and age to have women having to be given that sort of advice? And what sort of advice would you be giving them anyway?
WHITE: Well, I do think studies show, for instance, that women are far less likely to negotiate for incoming salaries than raises than men, and in some cases, we're afraid that someone isn't going to like us if we negotiate too hard, and I think it's great for women to understand that the squeaky wheel gets the grease.
Also, women do not use sponsors as much as men do. It's not just about having a mentor, it's about having someone who will open doors for you.
WHITE: And we have to be aggressive that way.
QUEST: So, do you think those CEOs -- maybe not just those particular ones I mentioned -- those who got to the top in much more difficult times actually helped women to get on, or were they so unique that, frankly, nothing much has changed for women who want to break through, to use that horrible word, the glass ceiling?
WHITE: No, I think any woman who's out there and shows that she can do it is a fabulous blueprint for us. And no matter how -- whatever the circumstances were for her, she's inspiring to us, and we need women like that. And in this country, Hillary Clinton in her role has just been a fantastic role model.
QUEST: Kate, your book's called "I Shouldn't Be Telling You This." I think as a man, I've just about got away without causing serious damage, either to my health, my wealth, or my family relations. Thanks, good to see you. We'll talk again. Always wonderful to have you on the program.
WHITE: Thank you, Richard.
QUEST: We need to hear your views on this in the role of women in the workplace, @RichardQuest is the Twitter name, where you can join in our discussion, @RichardQuest.
Now, a Currency Conundrum for you tonight. Australia is launching its first-ever colored coin. What's so special, and what's it designed to commemorate? Is it Remembrance Day? Christmas Day? Australia Day? We'll bring you the answer later in the program.
The euro and the British pound are slightly off against the greenback, slightly. Japanese yen is gaining as much as two thirds of one percent. Those are the rates --
QUEST: -- this is the break.
QUEST: A small country that generates a great deal of money. Less than two square kilometers, it has a GDP of $5 billion. On CNN's Outlook series, we've been examining the business climate in Monaco.
We've been looking at the country's controversial taxation system. We've met Monaco's most influential business leaders and entrepreneurs. And we've looked at traditional industries. Today, Nina Dos Santos talks business with Prince Albert II.
NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT (voice-over): Monaco is a place that sharply divides opinion. It's a country that wears its wealth on its sleeve. Some revel in this ostentatious glamour, while others find it a little uncomfortable.
This polarization of positions presents, in business terms, certain challenges. Can a place famed for fun ever be taken seriously? I came to meet the man who, more than any other, will help determine its future.
DOS SANTOS (on camera): For the past 700 years, the Grimaldi family has ruled Monaco, and this is their official residence. I've come here to meet with the current ruler, Prince Albert II.
DOS SANTOS (voice-over): On the balcony of his palace, His Serene Highness -- that's his official title -- appears to be relaxed, in a mood to reminisce.
HSH PRINCE ALBERT II, PRINCE OF MONACO: And this is Monaco. And when my mother came here in 1956, there was only one building of over four stories. And since then, it's been 30 or more buildings that have surpassed that.
Now, we try to -- and of course, there are zoning laws here as well, and so we can't do just anything in any area. We try to limit the height as much as possible.
DOS SANTOS: Many visitors to Monaco intrigued by its history and, of course, by the story of Prince Albert's mother, Grace Kelly. But recently, the principality has become known for something else entirely: wealthy individuals who flock here because they pay no income tax.
DOS SANTOS (on camera): We can't talk about Monaco without mentioning the issue of tax. In the past, there's been a lot of back-and-forth about branding Monaco a tax haven.
PRINCE ALBERT: We have been labeled in our -- in last year's assessment as a tax compliant -- tax laws compliant country. And so, I think that issue is not relevant anymore. It does not apply to us anymore.
DOS SANTOS: Obviously, Monaco's more recent history -- it's famous for glitz and glamour. Is that a help or a hindrance in the business world?
PRINCE ALBERT: Well, I think it's both. It has certainly created and helped to create a positive image in most cases. But then, it also, unfortunately, has cast a more, let's say, frivolous side or tried to showcase a more frivolous side or less serious side.
DOS SANTOS: It must be quite challenging, though, to try and attract manufacturers when, of course, the space is at such a premium. You're less than two square kilometers of land we're talking about here. Where do you fit everybody in?
PRINCE ALBERT: It's a challenge, and I think we've become somewhat experts at finding new ways of fitting new buildings and new constructions in a very tight space. We are looking at other possible sites for a land extension. Not as extensive as Fontvielle, but big enough to accommodate not only housing and different other economic activities.
DOS SANTOS (voice-over): From his palace, Prince Albert surveys a principality with seven centuries of history. It's a unique corner of Europe that's had its fair share of controversial residents. In the 21st century, the prince wants Monaco to be known as a modern, diversified, and more transparent economy.
Nina Dos Santos, CNN, Monaco.
QUEST: For more information on Monaco and our special coverage this week, cnn.com/outlookmonaco. QUEST MEANS BUSINESS, back in a moment.
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.
Silvio Berlusconi has been sentenced to four years in prison for tax fraud. The former Italian prime minister was found guilty of avoiding tax bills at his TV company, Mediaset. Berlusconi is expected to appeal.
A local opposition group says a car bombing has killed more than 20 people and wounded scores more in Damascus in Syria. Opposition and rebel groups say a car packed with explosives blew up in an open square. There are some conflicting numbers. A major opposition group is reporting 10 dead in the blast. Many of the dead are believed to be children.
The US economy grew at a faster pace than expected in the last quarter, GDP, at an annual rate of 2 percent in the last three months. The biggest factor was more consumer spending and federal government spending, too. Analysts say growth is not yet strong enough to make much of a dent in unemployment.
Lance Armstrong seven Tour de France titles will not be reawarded to another cyclist, according to the International Cycling Union. Armstrong was stripped of the titles after U.S. doping authorities found he was part of a major doping conspiracy. Armstrong has now been asked to return all prize money won between 1999 and 2005.
"The New York Times" website has been blocked in China after it published an article on Chinese Premier Wen Jiabao. The article claims Mr. Wen's relatives control assets worth more than $2.5 billion. CNN's own reports on this story have also been blacked out in China.
(END VIDEO CLIP)
QUEST: Spain's unemployment rate has hit a record 25 percent, nearly 5.8 million people are unemployed and around a tenth of all households are without a breadwinner. Those stark facts don't really do justice.
Al Goodman is in Madrid for us tonight. Up 3 percent on last quarter, up -- Al, the numbers are terrifying and they are even worse when we talk about youth unemployment. How is it being seen in Madrid and Spain tonight?
AL GOODMAN, CNN CORRESPONDENT: Just piling on, Richard, more and more. Twenty-five percent, they finally got over that psychological barrier. Unfortunately, but for young Spaniards under 25 years old, 52 percent is the unemployment rate.
So you're just -- it just went up in all the categories -- construction, services, agriculture, all of these places shedding jobs. And you're seeing, really, the effects every day, protest practically every day in the capital.
And this day, a group of protesters went into Bankia. That's one of the most troubled banks, got into the trouble with the real estate debt. And they were in there protesting because Bankia and other banks have been throwing people out of their homes if -- because they can't pay --
QUEST: OK --
GOODMAN: -- their mortgages. And under Spanish law, you can be -- they don't just get the property; they can go after your future earnings, Richard.
QUEST: So on this issue, who's getting the blame? We know Rajoy is, even though recently elected, his popularity is rapidly unwinding. Is he getting clobbered because he continually adopts the austerity measures required by the union?
GOODMAN: No. It's not just Rajoy. And, actually, he -- his part won an important regional election just last Sunday. So he's able to say, look, even with the austerity measures, the tax hikes and all of these economic problems, I haven't paid for it at the polls.
But who's taking the blame? Banks are taking the blame. We've just had a man reportedly committing suicide before he was to be evicted; another man jumping off of a balcony before he was to be evicted.
And the entire political class, many people here saying the politicians, both in power and out of power, basically living off of politics, why can't they come up with some plan to turn this problem around?
QUEST: It's Friday, so we can take a wider issue with this, Al. You've lived in Spain for years. Is it your feeling, Al, as you travel and as you're there, that the fabric of society in Spain is somehow being either altered or unraveling as a result of this very deep crisis?
GOODMAN: Absolutely, and we were just in a village two hours west of the capital here this week, because we're doing a story about Spaniards moving back to the villages because they can't find work. You're seeing young Spaniards going abroad.
This is what happened decades ago in this country when Spaniards, because it was a poor country, they had to go abroad to find work. And you're seeing that again.
My pediatrician's -- my son's pediatrician says his daughter's going to go look for, you know, Australia as a doctor, so the entire boom years of the last 20 years, where you saw this country come up, up, up, is now really in danger of going down, down, down, Richard.
QUEST: Al Goodman, we look forward to seeing that report in some sense when -- next week.
Al Goodman is in Madrid for us tonight.
If you're traveling in the United States or to the United States in the near future, Americans on the East Coast, it's an anxious weekend. Hurricane Sandy's making its advance. Where it's going, where it's headed, Jenny Harrison's next.
(BEGIN VIDEO CLIP)
QUEST (voice-over): Time for the answer to the "Conundrum," why Australia is launching its first-ever colored coins. The answer, aha! We got you. It's Remembrance Day, which, of course, is November the 11th.
This is the coin. It's a special $2 coin with a red poppy in the middle, obviously to honor Australian soldiers. Canada's the only other coin, a country to have released a colored coin.
(END VIDEO CLIP)
QUEST: One of the most familiar companies in the whole of the United States -- ooh -- you don't need me to guess too many which one you'd like. I think I'll have that one afterwards.
It's Dunkin' Donuts, which this week announced it had quadrupled profits in the last quarter.
Here's what investors like, cold drinks, breakfast sandwiches, Baskin- Robbins ice cream. They were all up and it pushed profits up quite strongly year-on-year to around $30 million. But on the other side, this was all because as a result of same-store sales, which were stagnant to some extent at the lower end of forecast.
While you enjoy this interview with the chief executive of Dunkin' Donuts, Nigel Travis, I shall enjoy one of his donuts as he tells me about the numbers, whether they were good, bad or indifferent.
(BEGIN VIDEO CLIP)
NIGEL TRAVIS, CEO, DUNKIN' BRANDS: Well, I wouldn't say there's room for improvement. I think we've had very steady performance, two-year comps in the U.S., which is obviously the biggest sector, is up 8.8 if you look at it over three years, it's even higher.
We feel very good. We feel very good about the rest of this year and going into next year. So same-store sales, we feel very good about. And I think you will also see the international numbers will improve over the next 12 months.
QUEST: Where, at the moment, are you finding that it's particularly tough? Because the price point for your product may be on the low side -- couple of bucks, three, four, five bucks, whatever it is, the low end.
But it is highly discretionary and in really difficult times, people cut back.
TRAVIS: Well, Richard, I wouldn't say it's highly discretionary. I think, particularly when you live here in the Northeast, to most of America, coffee is something that you have to wake up and do every single morning. I'm delighted to say that millions of people do that every single morning.
And we're really pleased with the progress that we've seen on our traffic. It has grown every single quarter since we went public. So traffic growth is there.
We're also obviously a very much a value play for consumers, so I think if they are a little bit caught short in terms of what's in their pocket, they could always find the money for either our breakfast sandwiches, our beverages or, of course, our famous donuts.
QUEST: And what do people want most from your understanding, what is it now that's the big trend that people want?
TRAVIS: People want two things: they want speed and convenience. We offer that. And I think increasingly going forward -- and this is one of the things that was exciting about this quarter -- they're going to want to use their mobile phones.
They want to -- and we've launched a mobile app that I think is industry leading. It gives them the chance to do end gifting. It speeds up their transactions, because it effectively allows you to pay with the Dunkin' Card as you go through the drive-through or the front counter.
So people want that. They want convenience. We're famous for being a store that you can go in -- it's not pretentious; it's friendly and we're fast and we're making it even faster.
(END VIDEO CLIP)
QUEST: Get off. Leave them alone.
Chief executive of Dunkin' Donuts.
All right. Time for the weather forecast. We've been talking a lot about this hurricane and what's happening with this hurricane. It's time for us to get some perspective on it. There's only one way to really do this. I've always wanted to come and do this.
Jenny Harrison is at the World Weather Center.
JENNY HARRISON, CNN METEOROLOGIST: I am.
QUEST: I'm not just here, just to say hello. This hurricane that we're seeing -- like, I can't see it. Let's see it.
HARRISON: You want me to bring you something and show you?
QUEST: Show me the hurricane.
HARRISON: Yes, we know what's been going on. If you just move to your back a little bit, you can look; you can see it on the wall behind you here.
So this is it. And of course, been talking about how massive this storm is. And you can see that it's still impacting Haiti, the Dominican Republic, but the whole system, you said about concerns in the U.S. --
QUEST: Here. I've always wanted to have a go at this.
QUEST: It's all out over here.
HARRISON: It is. It's all over there. You can see exactly where it is.
QUEST: Right. (Inaudible) tell us how serious it's going to be, how big it's going to be.
HARRISON: I will. It's a massive storm indeed, Richard. And in fact, when you were talking about the wind field, too, and how that really is going to impact your travel and, in fact, just living in general across the mid-Atlantic, the north Eastern Seaboard, but just let's have a look at this first of all.
This just shows you the rainfall across the Caribbean in the last few hours. And look at some of the totals that have come down. We've seen the pictures; we've seen the widespread flooding. We've seen the trees that have come down because of the winds. But Haiti, the Dominican Republic, well over 200 millimeters, 380 in the Dominican Republic since Wednesday.
And it just gives you an idea, sort of the monthly averages, about 186. So this is why we have seen so much flooding, of course, and the dangers of that -- landslides, mudslides, but also look at this, roads that have given way and this is a concern going forward.
Even though the rain will be easing finally from here, probably about Saturday afternoon, still concerns as to what that really has done to the ground below. So right now, the winds have actually just come down. So it's at 121 kph, just hurricane status. This is the forecast track. It's moving a lot slower. Then it looks to pick up speed.
But look at this. It's what happens there after; you see the warnings, of course, in place, all the way along these coastal areas. Right now, it's in some very warm water, 26 to 28 degrees Celsius. It should pick up more strength and energy from these warm waters. Then it will be heading into the cooler waters. But something else is happening at the same time.
Look at this. It really does still look as if it is going to make landfall, certainly, across the northeast.
A few things are going on. This is why it could make landfall. We've got high pressure blocking anything from moving that way. To the west, we've got this trough and a front coming across. And this is going to help steer it back into the coast. But there's this huge area of uncertainty as to where it could actually make landfall.
But regardless of that, this storm system is going to have an immense storm field or, in terms of the wind field. And so this means we're going to have winds at around 110, 120 kph across a huge area all the way across the northeast. We're talking power outages. You've then got the storm surge. You've got rip currents. You've got inland flooding, long delays when it comes to travel.
And you can see this is a forecast track. There's the front that comes across. This is all going to merge together. We'll have some snow on the back side because of the actual cold air that's in place.
So this is why there's such huge concerns. This is the accumulation in the next 48 hours. The closer it gets, once it comes inland, those colors are going to get darker. So we're going to really monitor this closely.
Meanwhile, in Europe, it's cold here as well. Look at those speckled shower clouds to the north, very cold air in place. The first real snowfall as we go through the weekend. Temperatures right now just above freezing in the north. This cold air plummeting down across central, even into the western Med as we head into the next couple of days.
And have a look at the temperatures, Munich, at best, Sunday and Monday, 1 Celsius. That's the high temperature. The overnight temperatures may be as low as -10. And these are your temperatures on Saturday.
So, Richard, don't know which you prefer, whether you'd like to be in Europe, actually experiencing these sort of temperatures, or whether you want to be in the U.S. with Hurricane Sandy.
QUEST: Well, I'm looking at these temperatures over here and a bit over here. You've got -- you don't think I'm going to make this, do you?
HARRISON: Oh, I just wondered what you're going to put on it. Do you want the next graphic?
QUEST: I can -- oh, go on. What is the next (inaudible)?
HARRISON: Probably travel delays.
No, it's not. Look, there's all the snow across --
QUEST: Ah, there's all the snow coming across from the north into the south. I've always wanted to do this. I'm having my chance to do.
And that, as they say -- stay where you are.
HARRISON: I'm not moving.
QUEST: And that, as they say, is QUEST MEANS BUSINESS for tonight. I thank you for your time and attention and for joining us during the course of our week for our nightly digest. Whatever you're up to in the hours ahead --
HARRISON: Ooh, thank you.
QUEST: -- I hope it's profitable. See you next week.
DAVID MCKENZIE, CNN CORRESPONDENT: Hello and welcome to MARKETPLACE AFRICA. I'm David McKenzie in Luanda, Angola.
Angola is Africa's second largest producer of oil and it's brought massive revenues into this country once wracked by conflict. In this week's show, we talk to the president's son, who has launched a sovereign wealth fund which he hopes will help secure Angola's financial future.
But first, Luanda is the globe's second most expensive city. And housing prices, in particular, are astronomical.
(BEGIN VIDEO CLIP)
MCKENZIE (voice-over): Luanda: it's a melting pot of Brazil, Portugal and Africa, a city that lets it all hang out, where the poor hustle to get rich and the rich flaunt it. Petro billions flow in and construction can't keep up. A shabby flat will set you back $3,000 a month, but the truly wealthy aim a lot higher.
MCKENZIE: This is not a small apartment.
EDGAR SANTANA, REAL ESTATE AGENT: No, this is definitely not.
MCKENZIE (voice-over): Edgar Santana is an independent agent, showing a mouth-watering home for an eye-watering price.
This split-level penthouse, complete with helipad, will set you back $10 million cash.
MCKENZIE: How can people possibly afford a $10 million apartment in Angola?
SANTANA: I would say that's exclusive (ph) price for exclusive (ph) people. It's a unique category.
Our economy is booming so we have lots of demand. And in terms of supply, we don't have enough quality for those businessmen coming, major oil companies coming to Angola or even banks.
MCKENZIE (voice-over): Most of the materials for the building were imported. That explains some of the cost. But for luxury Luanda, Santana says people will pay just about anything.
And this one is already sold, he says. They just need to dust off the Jacuzzi.
MCKENZIE: And this apartment isn't even the most expensive one in the building. That goes to the one across the way. It sold recently for around $12 million. The only difference, they say, is the view.
MCKENZIE (voice-over): The building agent claims it's Africa's most expensive flat. Both penthouses were bought by Angolans. But the rest of Luanda lives in the shadow of the super-rich.
Most Angolans survive on less than $2 a day.
MARIA MATIAS, MAID (through translator): Water started running on Monday and we had no power for a month.
MCKENZIE (voice-over): Maria Matias works as a maid. She says life has gotten harder. The government hasn't helped provide jobs or housing.
MATIAS (through translator): When we were in school, we were always told that Angola was a very wealthy country with oil and diamonds. Now we see foreigners come in and take Angola's wealth instead of us getting opportunity or seeing the money.
MCKENZIE (voice-over): In a country supposedly awash with billions of oil revenue, that sentiment is a political risk for President Jose Eduardo dos Santos, long-time ruler of Angola.
Rights groups and economists accuse the government of rampant corruption. But they point to a heavy focus on development and social spending, more than 30 percent of its budget. And jaw-dropping housing developments like Kilamba 30 kilometers outside of Luanda.
MCKENZIE: Kilamba is based on a campaign promise. Before the 2008 elections, Angola's president pledged to the people a million homes for ordinary citizens. And Kilamba is an attempt to do that. They've built cities like this across the country, coming literally out of the bush. But from where I'm standing, Kilamba feels almost deserted.
MCKENZIE (voice-over): Sprawling highways without cars, schools with no pupils. Its initial phase has 20,000 apartments built by a Chinese company in under five years, using Angola's oil credit lines with China. Parts of Kilamba feel like a ghost town.
Manuel Da Rocha, economics professor at Angola's Catholic University, says the idea is misguided.
MCKENZIE: Is Kilamba a vanity project?
MANUEL DA ROCHA, PROFESSOR OF ECONOMICS, CATHOLIC UNIVERSITY: Yes, maybe. We think that Kilamba is maybe a political project. The housing there is very -- it's still very, very high in terms of costs. And I think there is a lot of difficulties to sell the apartments and the houses.
Without their Kilamba was a very good option to try to solve this (inaudible) problem.
MCKENZIE: It's obviously a housing shortage in Angola, but houses with no people doesn't solve the problem.
JOAQUIM ISRAEL MARQUES, PRESIDENT, KILAMBA ADMINISTRATION OFFICE: There are solving the problem, because people are moving in. It is three bedroom.
MCKENZIE (voice-over): The developers say professionals are slowly moving in to Kilamba and they hope the pace will pick up soon. They want to reach full occupancy in just one year.
MARQUES: Maybe will start (inaudible) you don't have any problem to relocate people and from there you develop all the fields.
MCKENZIE: To start from complete scratch?
MCKENZIE (voice-over): Angola's government has promised more housing for the country's poorest. But with no middle class to speak of here, and with entry-level apartments running at $120,000 each, Kilamba could become a $3.5 billion white elephant. But don't write it off just yet. Angolans are dreaming big.
(END VIDEO CLIP)
MCKENZIE: So Kilamba is one example of where this country's oil wealth is being channeled. After the break, I speak to the president's son about allegations of corruption in the oil industry.
MCKENZIE: The world financial crisis in 2008 hammered oil prices and plunged Angola's economy into crisis. It was a real wakeup call for the Angolan government. I speak to the president of Angola's son, who has launched a sovereign wealth fund, which they hope will help diversify Angola's revenue streams.
(BEGIN VIDEO CLIP)
MCKENZIE: A sovereign wealth fund, why now in Angola? Why do you want to push to that level in terms of increasing revenues for the country?
JOSE FILOMENO DE SOUSA DOS SANTOS: Well, we believe that it's a very good time now. The country has had around five years of steady growth, good growth.
And I think that we -- the government has come to a point and it's realized that it can't just accumulate reserves and that it should invest on many thing in these reserves and, if possible, to increase them. So it's really a turning point in many respects.
MCKENZIE: The sovereign wealth fund, as it comes online, what is your hope that it will, in terms of timelines, start actually having real benefits for the Angolan people?
DOS SANTOS: Well, we're hoping to have benefits for the Angolan people quite soon. We -- our approach is to focus on economic returns, but also on social returns. And we believe that the social returns should come first, because that's what people -- that's what impacts the lives of people most immediately.
MCKENZIE: Why is it important for you to place the money in this pot for investment rather than to distribute it immediately into development in the country?
DOS SANTOS: Well, that's a very good question. And you will notice that in terms of administration of its -- of its reserves and of the economy and society as a whole, the country is also improving.
And what we find is that even in the areas of social assistance, we need to improve in terms of administration. So what we aim to do with the sovereign wealth fund is to actually measure this type of investment, not in terms of financial returns, but in terms of social benefits.
MCKENZIE: And if someone completely disconnected with Angola sees that yourself (sic) is running this fund partially with a board of directors and you are the president's son, some alarm bells will ring in capitals around the world.
DOS SANTOS: Sure. When I studied at first, I was going to be an architect. But then I decided to be a -- to be a business man and study finance. And in the last few years before I took over this post, this function, I have been working as an investment banker. So I think all of the paths which I've chosen led to me being here. And I think that I am as good a candidate as anybody else.
MCKENZIE: So certainly your qualifications speak to that. But how do you get away from the perception that people might have that another member of the ruling family is running a fund worth $5 billion from the outset and that there might be something other than the wealth of the common Angolan at play?
DOS SANTOS: Well, what I can say for that is that we're taking all the steps to make all of our operations transparent. Our accounts are audited annually. We invest based on a policy which is publicly approved and publicized by the government. So there's really not a lot of room to do things which are not transparent.
MCKENZIE: Why is it so important to diversify the economy? Because you do describe the situation which, you know, more than 90 percent of the revenues that come in are from oil. That revenue will increase in terms of total. But looking long-term, what are your worries for diversification?
DOS SANTOS: Well, the main worries for diversification are bringing the efficiency that is needed to spend -- to spend these revenues wisely and making sure that the investments go to the right places, because it's very easy to have oil money and spend it. But it's very difficult to be able to have a positive impact and to improve people's lives on a daily basis continuously.
But here, if you look around, you know, the life, the life conditions of the people, you realize that a lot of investment is needed on improving the living conditions and improving the capacity of people to better their lives. So we found that it's a must to make this type of investment for the future.
(END VIDEO CLIP)
MCKENZIE: You can see all of our shows online at CNN.com/MarketplaceAfrica. And keep watching the show, because very soon, we'll have an exclusive look inside Angola's oil industry.