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Quest Means Business
New York Markets Rocket on Warren Buffett's $44 Billion Bet that Burlington Northern Is a Futuristic `Green' Play
Aired November 03, 2009 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ADRIAN FINNEGAN, CNN INTERNATIONAL ANCHOR, QUEST MEANS BUSINESS: Buffett's best, the Oracle of Omaha gives the economy a huge vote of confidence.
Seismic changes for Britain's bailed-out banks. Lloyds and RBS are cut down to size.
And global employers swing the axe. The economic downturn claims yet more jobs.
Hello, I'm Adrian Finnegan in for Richard Quest. This is QUEST MEANS BUSINESS.
Hello, good evening.
He's calling it an all in wager on the economic future of the United States. Warren Buffett's Berkshire Hathaway firm is making its biggest transaction yet. But for all his confidence there is one area of the economy still causing concern, and that's employment.
Three major companies have today announced plans to cut thousands of jobs from their workforce. Tonight, we'll be speaking to the chief executive of Manpower, a leader in the employment services industry.
And we'll have the latest from our "Job Questors" as they hunt for work.
Now, though, the big story that is rocking the business world today: That massive purchase by a man who knows a thing or two when it comes to investments. Warren Buffett is committing a total of $44 billion to pick up the remaining stake in railroad giant, Burlington Northern. CNN's Maggie Lake joins us now, live from New York, to tell us what this could signal for the U.S. economy at large.
And, Maggie, it took him, what, something like 10 days to pull this massive deal together?
MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: Only Warren could do it this way. In fact, he's been speaking about it and giving everyone a little bit of a sneak peak behind the scenes.
And you know, a couple of meetings, a couple of telephone calls and a handshake, not many people in the business world who can do something like that. And not many people who can move entire markets with a decision to do a deal.
We know that Wall Street likes deals, but this day was really shaping up to be a pretty nasty looking sell off until that news of the Buffett deal came through. And then futures turned right around. We still had loses at the beginning of the session, but as we are speaking, Adrian, it actually looks like the market is trying to move into positive territory. Certainly the S&P 500 already there. Why? Because Warren Buffett is coming out, as you said, saying this isn't just about the company, this is an all-in wager on the future of the U.S. economy. He believes it will be prosperous again.
And there is also another reason that people pay attention to what Warren does. You know, this is not the first time he's making sort of a broad confidence statement. During this entire financial crisis and the road to recovery, as rocky as it has been, that we're on, if you think back and remember back, through the height of last year, when confidence was very shaky, Warren Buffett came out and said that he was going to make a purchase of Goldman Sachs, when they were really with their back up against the wall, looking for some funding. He struck a deal with them, that gave him the right to buy Goldman shares at $115, their warrants (ph). His actually, on the share. Guess what? Goldman shares actually trading around $170 right now. Again, so that was back in September.
October of last year he put $3-billion investment in GE. That share price is actually lower, but it is paying a 10 percent dividend to him. Not bad. And again, later in October he wrote and op-ed piece in "The Journal" or "The Times", I cannot remember which, but is said, "buy American, I am. And in fact, since then the Dow up more than 14 percent, the S&P up more than 18 percent, or 14 -I'm not sure, our graph is a little bit different than my notes here. But you get the picture.
So, you know, the pay offs have been pretty good and that's just during this crisis. As you know, he's been around for a long time and really turned into quite a business legend with is acumen. So, he's certainly making a difference in the market today.
FINNEGAN: Yes, I mean, he's no spring chicken anymore. I've heard people wondering aloud today whether Warren Buffet is losing his touch. I mean, come on, we're talking railroads here. And outdated, old world economy industry.
LAKE: Right, except for not according to Warren Buffett. Some people, in fact, you are right Adrian, are saying this might be his last big deal. But he certainly seems to be pretty clear about why he's doing it. He does not see it as outdated at all, though it certainly is the image that is generated. In fact, he is saying, this is a clean energy, in a way, kind of bet. And he points to the fact that you can move a lot more stuff around on rails. They have gone through big changes. They have gotten a lot more productive. They give off less pollution. They consume less energy. They don't contribute to highway congestion. They do not rely on those costly fuel bills that are bound to go up as the global economy recovers.
In fact, there is a great statistic he's throwing out there today that is saying you can transport 1 ton for freight, 423 miles, on a single gallon of diesel. That is very attractive, considering if you compare that to what you can do with trucks or flying, if you start to see gas prices, fuel prices going up again.
Once again, while no one else is really there; making a long-term bet that that is going to be a really cost-effective way to move things around when the economy starts to recover. And he's not the only one who is sort of poking around in that area. Certainly, now that he's made the announcement a lot more investors are looking at railroads. So, some say it is his last deal. Some say it is his last great deal. We'll see.
FINNEGAN: Absolutely. The best of luck to him. Maggie, many thanks. Maggie Lake, live in New York.
By the way, CNNMoney.com's Poppy Harlow is due to be talking to Warren Buffett. In the next couple of hours you can see that interview at CNNMoney.com, once it happens.
Now, two of Britain's biggest banks, as we told you yesterday, are set to be radically reshaped. It is official now, Lloyd's Banking Group and Royal Bank of Scotland are trying to set things straight after coming close to collapse last year and both will be drastically slimmed down. Lloyds is making Britain's biggest ever cash call. In return, each will get more support from the U.K. government. As CNN's Jim Bolden reports, it is all intended to help British borrowers.
(BEGIN VIDEOTAPE)
JIM BOLDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): Two big British banks, both hit hard in the credit crunch, but each taking a different road to recovery. Lloyds Bank is going to the market in hopes of raising more than $30 billion in new capital.
SHANE O'RIORDAIN, LLOYDS BANKING GROUP: We look forward to the future with confidence. We have a clear business plan. We know where we are going. And we are delivering exactly in line with what we had promised the city, only a few months ago.
BOLDEN: One shareholder that has already pledged to buy billions of dollars of new Lloyds shares, the U.K. government.
ALISTAIR DARLING, U.K. FINANCE MINISTER: To protect the value of our shares we've decided to take up our share of this new capital, investing 5.7 billion pounds, net, of an underwriting fee.
BOLDEN: The more troubled of the two banks, the Royal Bank of Scotland, is in no shape to sell new shares. Instead, it will pay an annual fee to the U.K. government, which will ensure more than $300 billion worth of RBS toxic assets. That is less than initially projected, meaning taxpayers are not exposed as much to risky assets. The government will also inject a further $40 billion into RBS, meaning it will now own more than 80 percent of the bank.
The opposition party says, RBS is the biggest bank bailout in the world.
GEORGE OSBORNE, SHADOW FINANCE MINISTER: It results in a bailout that is bigger than that to Citigroup, bigger than that to the Bank of America. Indeed, all into a bank, who we must remember, the former chief executive of which was knighted for banking services by the prime minister of this government.
BOLDEN: In return for this state aid RBS and Lloyds have agreed to forego any cash bonuses this year for top staff, and delay bonuses for board members for three years. They have also agreed to be broken up. That demand coming from the European Commission competition authorities. Each will shed branches, plus various mortgage arms, and insurance companies bought up during the credit bubble.
ANGELA KNIGHT, BRITISH BANKERS ASSOCIATION: It is entirely correct that the European competition commissioner has the decision about what a competitive market looks like, when state aid has been used, as it has here, Germany, France, Netherlands. And we've seen decisions rolling out over a period of time.
BOLDEN: The government says the sale of hundreds of branches will lead to new smaller banks being created, increasing competition. Critics want to make sure all of this leads to banks lending more money to consumers and small businesses. After all, Britain is still in recession. Jim Bolden, CNN, London.
(END VIDEOTAPE)
FINNEGAN: Well, not surprisingly, the banking shake up is raising questions, yet again, about the health of the sector. That is putting investors on edge. If you need further evidence of that uncertainty, take a look at these banking stocks. In Britain, the Royal Bank of Scotland, down today, 7 percent. At one stage, during the day, it was down over 10 percent. HSBC down 3.26 percent, Barclays down very nearly 2 percent today.
In Germany, Commerzbank down over 4 percent today. Deutsche Bank, too, down over 4 percent. And in Switzerland, UBS, down 5.76 percent. It posted a third quarter net loss today of $542 million and blames accounting charges for keeping it in the red today. Credit Suisse down very nearly 2 percent today.
Those banking stocks weighing heavily on all of Europe's main markets. Take a look at Tuesday's closing numbers. Here in London, the FTSE fell just over 1.25 percent. The Xetra DAX in Frankfurt lost roughly a similar amount. The Car Currant in Paris slipped by 1.5 percent, and in Zurich the SMI ended the day down 1.25 percent.
Well for investors here in the U.K., and indeed, across the continent, that financial shake up is a reminder that these big banks are not out of the woods yet. Take a listen to what David Buik, of BGC Partners, had to say when I asked him what he makes of the government's announcements that RBS and Lloyds Banking Group are to be broken up.
(BEGIN VIDEO CLIP)
DAVID BUIK, BGC PARTNERS: It is probably one of the worst leaked rumors that turned out to be absolutely true, whether it was the government or the Treasury, we'll never know. What I think we all find deeply depressing about it is that this has got the hallmarks of the European Unions bullying tactics.
And more to the point, Neelie Kroes' stiletto heels dug deep into the backbone of the banking system, which is deeply depressing and has resulted in precipitating a change in the banking rules and also the division of many banks and the delusion, in view of the fact that the government expects that it will, of course, deliver more competition. In itself, to answer it in a phrase, errant nonsense.
FINNEGAN: All right. So, why is it such bad news? Expand upon that for us. I mean, let's take RBS, for example.
BUIK: Well, RBS obviously had greater problems than Lloyds. And at this juncture I would very much like to say that I think it is Wynn Bishoff (ph) shop and Eric Daniels deserve 11 out of 10 for having the foresight and ability to be able to raise such a huge writes issue, even though it required the help of the government to get themselves out of the asset protection scheme. Congratulations, well done, the share price is now above the pencil line (ph).
But in the case of Royal Bank of Scotland, I'm afraid the news is grave. The additional capital of 25.5 billion pounds, which has been injected into the bank, now takes the government stake up to 84 percent. And with that they are forced to sell something around $312 branches of either Royal Bank of Scotland, or Nat West, together with direct line and also with Chetshul (ph) Insurance, and also with Green Flag. These are all very high-earning assets of the Royal Bank of Scotland, and will, of course, affect their earnings power dramatically.
I think this is a sad day and it means, I believe, that it will be somewhere between three and five years before the Royal Bank of Scotland is out of the clutches of the government.
FINNEGAN: And all of that, I suppose, explains exactly what is happening on the markets today. They take that the same view as you, David, they don't like it.
BUIK: Gordon Brown and Alistair Darling were very quick to come up with remedies for Lloyds and HSBC, and then, of course, the Royal Bank of Scotland. They may have been quick with those decisions but slow out of the traps. And as a result of which they should have had the foresight to make the decisions about fresh capital being required.
It is, of course, Adrian, in my opinion, and absolute disgrace that we're a year down the line and G20 is still no nearer coming up with regulation on a global basis, which of course, they will never achieve with unanimity of thought process.
FINNEGAN: All right. So, as far as the QUEST MEANS BUSINESS, traffic lights are a concern, David. I have feeling given all of that, you probably what, plumb for a red?
BUIK: No, but for Mr. Wynn Bishoff (ph) and Eric Daniels have done a fabulous job, it would have been red.
FINNEGAN: Right.
BUIK: But as a result of that it is amber.
(END VIDEOTAPE)
FINNEGAN: David Buik, there. What did he say, "a sad day", "Neelie Kroes' stiletto heels", that's the EC commissioner, "dug deep into the backbone of the British banking industry."
Now, let's get you up to day with what else is making news around the world. Max Foster joins us live from the London Newsroom.
MAX FOSTER, CNN INTERNATIONAL NEWS ANCHOR: Adrian, we begin with the war crimes trial of a former Bosnian-Serb leader. Radovan Karadzic says he needs more time to prepare his defense, as he made his first appearance at the trial at the Hague.
Karadzic says his fundamental rights have been violated. The judges will issue a written ruling later in the week on how to proceed. Karadzic faces charges of genocide and crimes against humanity for his role in the Bosnian war.
In his first public appearance since winning his second term in office, Afghanistan President Hamid Karzai pledged to fight corruption. The independent election commission called off Saturday's scheduled runoff and declared Mr. Karzai the winner, after challenging Abdullah Abdullah -- challenger Abdullah Abdullah dropped out on Sunday. Mr. Karzai also said he plans to form a unity government and even invited the Taliban to join under certain conditions.
The Czech president has signed a crucial treaty reforming the European Union. The Czech Republic was the last hurdle for the Lisbon Treaty, which dramatically changes how the 27- nation block is run. The treaty creates positions for an EU president and a foreign minister, it also calls on member states to react jointly to any attack or natural disaster.
Equatorial Guinea has pardoned a former British military officer and four South African mercenaries jailed for plotting a coup. Last year Simon Mann confessed that he tried to oust the nation's long-time ruler, back in 2004, but denied being the plot's leader. He also claims the son of former British Prime Minister Margaret Thatcher participated in the plot.
Those are the headlines, Adrian. Back to you.
FINNEGAN: Thanks, many thanks, indeed.
Now, all over the world thousands more workers are facing the pain of redundancy. Just ahead, we'll speak to the chairman and CEO of Manpower. And we'll hear first-hand, how our job seekers are getting on in "Job Quest". We'll be right back. Don't go away.
(COMMERCIAL BREAK)
FINNEGAN: Thousands more jobs are disappearing around the world this Tuesday, as three major global companies slash their workforces. It is all part of a bid to make them sleeker, more efficient and more profitable.
Here they are: Johnson & Johnson, it plans to cut 6 to 7 percent of its workforce and to cut 8,000 jobs worldwide. All, it says, part of a cost savings plan and as a result it expects to save between $800 and $900 million this year.
That is a scant consolation to people whose jobs are going.
HSBC, Europe's biggest bank, said today that it was going to cut 1,700 jobs here in the U.K. It is the second time this year that it has slashed its British workforce. It says that it is streamlining its retail banking operations.
And Nokia Siemens, the mobile network equipment maker, says it is going to lay off 5,700 workers globally. That is 7 to 9 percent of its global workforce. It is the second round of job cuts since their joint venture and they are aiming to slash costs by some $740 million. The company, of course, has been hit hard by falling sales.
Well, later this week we'll get a sense of how the U.S. economy is faring when unemployment figures officially come out. Jeff Joerres is the chairman and CEO of recruitment firm, Manpower. He joins us now, live from Milwaukee, in Wisconsin, to put some context onto all of this.
Jeff, great to talk to you again. You have been talking a lot today about harnessing the potential of the contingent workforce. I want to know, from you, what a contingent workforce is, and I want to quote you as well. I heard you saying, "what began as a financial and economic crisis has evolved into a workforce crisis." What did you mean by that?
JEFF JOERRES, CHAIRMAN, CEO, MANPOWER: Well, there is a couple of things. One is we are at the point in the cycle, so you are kind of on the bottom, starting to kind of move up from a demand perspective. The economies, we saw the PMI data come out in Europe, U.S., manufacturing starting to come up. That is really when you would want to use contingent staff, because you are not quite sure about how robust your demand is, how certain you demand is. So, really it is just his beginning of the cycle.
So, when I use that as a back drop, and then talk about really it being the crisis is now a workforce crisis, what it is, is companies have decimated in many cases their workforce and now as they start to see demand come back it is not going to be that easy to hang up your shingle and say, I'm ready to hire again. Employer brand, what they think about the downsizing, the sackings, the redundancies, all of those things, I think, are now going to play a big part in how competitive companies are when they try to bring back better talent, talent with more specific kinds of skills than they have in the past.
FINNEGAN: All right. So this contingent workforce is going to be vital, then, to the recovery. Are you satisfied that companies have their act together as far as their attitude to the contingent workforce is concerned?
JOERRES: Well, in the survey and the report that we came out, it was quite interesting. Most of them considered to be, "oh, by the way". In other words, some seasonal help and when I need help, which is very interesting, because we have a chance to look at some of the biggest companies in the world that are using it very strategically. The know-how to engage the contingent workforce, whether it be an independent contractor, through a recruitment firm, or whatever. And it is those companies who have practiced this strategic use of these non-traditional ways of creating agility, flexibility, and an inflow of talent, that are really going to have a competitive advantage over the next two years, to three years.
FINNEGAN: A lot of people now then are part of what you describe as the contingent workforce. They are working for agencies like Manpower, which of course, is one of the biggest. I mean how are agencies attitudes towards this contingent workforce? Are they treating them right, do you think?
JOERRES: Well, I mean, every agency is a little different. I think in an industry, in general, we have a -- maybe a little bit of a challenge in that there are tens and tens of thousands of agencies that turn into maybe see these (ph) brokers to others. What we do is we employ all of those people and as a result, what we do in selection, assessment, what we do in benefits, paid time off, holiday time, is some of the best in the industry. And as a result, our costs are a little bit more but we're able to really treat that person as an employee and we are the employer, as a result we get a better match with our clients.
FINNEGAN: Jeff, it is always great to talk to you. Many thanks, indeed, for your insight. Look forward to speaking to you again soon. Jeff Joerres, the chairman and CEO of the recruitment firm, Manpower.
Well, two people who know exactly how it feels to be looking for work are, of course, our "Job Questors" Today, Rodrigo Medina shows us just how small business in Barcelona are suffering. And Les Young, in Atlanta, learns a new angle on networking.
(BEGIN VIDEOTAPE)
FINNEGAN (voice over): Last week on "Job Quest":
UNIDENTIFIED MALE: Do you ever feel like just throwing the towel in?
LES YOUNG, JOB SEEKER: No, can't throw the towel in. You can not throw the towel in. That's an impossible. Can not do that.
UNIDENTIFIED MALE: What keeps you driving.
YOUNG: The thing that keeps me driving is that there is a light at the end of the tunnel.
RODRIGO MEDINA, JOB SEEKER: My first interview position (ph) was that they were looking for some with more experience in the pharmaceuticals sector, which I don't have. But we'll see.
So I've been on the computer for four hours, so what I'll do now is show you a bit of my neighborhood, so you can see how many businesses have closed due to the crisis.
OK, this is number one. This is a cafeteria half a block from my place. And this place closed about seven months ago. It was usually always full.
This used to be a business, too, which closed about a year ago. And they are closed, too. So this is number two. It has been about a minute since we left the bar, so is number two.
OK, so another half a block and we'll see a newsstand, who is looking for a new owner. OK, this is another business. This used to be a cafeteria about a year ago. And as you can tell by the graffiti this one, also out of business. So, this is number six.
OK, so right now, we are about a couple of blocks away from my place. And we are entering one of the trendiest neighborhoods in Barcelona. It is called Born, and if you compare it to a major, it would be something like the Soho, in New York, or the La Marais, in Paris.
And there is what used to be an office and now they are renting the space. So that would be number seven, I think. OK, this looks like a great location. Like I said, we are still in Born, one of the trendiest neighborhoods in Barcelona, where this is empty. So this is business number nine.
We have been walking for about half an hour now, and we have seen 29 businesses that are closed, which is about a business per minute. These probably means not only 29 places that I used to go into and shop into, and drink coffees in, but it also means more competition. Because people that work in these businesses are like me, in the streets looking for jobs.
UNIDENTIFIED FEMALE: Les, welcome tonight.
YOUNG: Well, thank you.
UNIDENTIFIED FEMALE: Glad you are here.
YOUNG: Thank you. Glad to be here. Going to learn some new things this evening?
UNIDENTIFIED FEMALE: Yes.
YOUNG: How you doing?
UNIDENTIFIED MALE: Good, how are you?
YOUNG: I'm good.
(INAUDIBLE)
YOUNG: I'm a coach/trainer, I should be looking to speak with youth and help them with their communication, their leadership development.
Gentlemen, Les Young, good to meet you.
UNIDENTIFIED MALE: Good to meet you, too. Now, I'd like to use the how can I help you approach? How can I help you? And, then, maybe in turn we can help each other in our job search?
UNIDENTIFIED MALE: Well, what kind of job are you looking for?
YOUNG: Well, Charles I'm looking for something in the way of coaching and training with youth or adults.
How you doing?
UNIDENTIFIED MALE: Hello, Les.
YOUNG: How are you?
UNIDENTIFIED MALE: I'm good. How are you today?
YOUNG: Good, good, good. You got the same spiel?
UNIDENTIFIED MALE: No, I don't have the same spiel. I think what you are trying to do is good idea. A lots of students, or kids, lack that ability to have public speaking.
YOUNG: They do. They do.
UNIDENTIFIED MALE: They definitely could use the practice, going into the real world.
Right, right. How can I help you? We can network. We can meet other contacts. You can help me with contacts. I can help you with contacts.
YOUNG: How are you, Ma'am?
UNIDENTIFIED FEMALE: I am great. I'm Abbie.
YOUNG: Abbie? Nice to meet you, Abbie. OK, simple approach. How can I help you, or how can we help each other?
UNIDENTIFIED FEMALE: Yes, I'm looking for a clerical position.
YOUNG: Clerical?
UNIDENTIFIED MALE: How many in the room here are in a job seeking, job searching mode today? OK, the majority of the room.
When someone helps us. When someone makes an introduction for our own benefit, we tend to take ownership of the new relationship with a net weaving philosophy, your only questions are going to be, is this person interesting and someone who I'd like to get to know better? And secondly, in the short period of time that I've gotten to know them, do they seem like they are a giver and not a taker?
YOUNG: This is great. A lot of the concepts he has there are similar to the ones that I've learned at some other networking events. And that is, reciprocity, that's giving back. So that its not that you are always taking, taking, taking. When you are asking for referrals for a job lead or for a job interview, a job position.
(END VIDEOTAPE)
FINNEGAN: Networking, so important. So, often it comes down to not what you know, but who you know. And we'll catch up again with Les and Rodrigo, next week, on "Job Quest". Up next, tonight, though on QUEST MEANS BUSINESS, interest rates are going up again, Down Under. We'll take a look at how Australia's economy is powering out of a downturn.
(COMMERCIAL BREAK)
FINNEGAN: Australia's economic recovery is getting stronger. That's the verdict from the central bank, which today raised interest rates by a quarter of a percent, to 3.5 percent. It is second time in two months that the Reserve Bank of Australia has lifted the cash rate. And it may well not be the last time this year. According to some market watchers another rise is likely in December.
Well, Australia's Finance Minister Wayne Swan, told Channel 7 that the move should not come as a surprise. The head of the Australian Chamber of Commerce, though, took a more cautious approach.
(BEGIN VIDEO CLIP)
WAYNE SWAN, FINANCE MINISTER, AUSTRALIA: Interest rates can not stay at 50-year emergency lows forever. And it is dishonest for anybody to claim that they can stay.
GREG EVANS, CHAMBER OF COMMERCE: This should be the last before Christmas. And then the Reserve Bank should wait and see, to actually see what the real strength in the economy is.
(END VIDEO CLIP)
FINNEGA: Well, the rate rise did not do much to lift stocks in Sydney. The benchmark S&P ASX 200 drifted lower on Tuesday. Volumes were low as traders took the day off to have a flutter on the Melbourne Cup.
In Hong Kong, the Hang Seng ended down by little under 2 percent. Property shares fell there. The Shanghai Composite beat the trend for the second day running, closing up more than 1 percent. There was not trading in Japan today because of a public holiday.
Well, Asia's economies are getting a big helping hand in the form of government stimulus packages, of course. The extra cash is encouraging people to go out and spend money.
Take a look at the this, for instance -- China. They've got $585 billion in stimulus money washing around the economy. Domestic cumption -- consumption, rather -- as a result, has really rocketed. An exit strategy is almost a part of that stimulus package, the money earmarked for a two year period only.
Take a look at the Japan, where at least $150 billion has been injected into the economy. Japan also has a recession, but just last week, its finance minister dismissed talk of stopping the stimulus any time soon, though it's thought the Bank of Japan is keen to have an outline strategy.
Finally, India -- they've got $4 billion worth of stimulus. And in India, they, too, have not yet put in a place -- put in place a time frame for an exit strategy.
You're with QUEST MEANS BUSINESS from CNN.
In a moment, young, free and unemployed -- there just aren't enough jobs to go around for the under 30s in the Middle East. We'll explain, next.
(COMMERCIAL BREAK)
FINNEGAN: Hello again.
This is QUEST MEANS BUSINESS from CNN, live in London.
I'm Adrian Finnegan.
Or at least I think I'm live.
Let's just recap what's happening on Wall Street right now for you. The Dow Jones -- it seems that investors are not impressed today with -- with what's happening as far as banks are concerned. A lot of worry about the financial sector once again, despite Warren Buffett's massive deal that he pulled off today. The Dow Jones is down about 19 points right now on Wall Street, at 9770.
Now, more than 70 percent of the Middle East population is under the age of 30. But the region doesn't have enough jobs for this rapidly growing demographic.
CNN's John Defterios takes an in-depth look at the problem.
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN CORRESPONDENT (voice-over): A youth roundtable discussion in Amman, Jordan. The subject of today's debate -- how to find a job. The simple answer -- it's not easy. That is why Jordan's ministry of labor is out to train as many young workers as possible.
FURSAN HAMID, JORDAN CAREER EDUCATION FOUNDATION: We target youth because we believe that people that are unemployed, especially will -- will be like facing a lot of frustration because they graduate, it's either they graduate or not. So they feel that they should find a job.
DEFTERIOS: Throughout the region, it is simply known as "the bulge." New entrants join the labor ranks in record amounts. In Jordan, that number was 70,000 last year -- many of them college graduates. The challenge, labor officials say, is that there is a huge mismatch of what students are being taught in the classroom and what is needed in real life.
HISHAM RAWASHDEH, JORDAN EMPLOYMENT CENTER: The freshman graduate, especially from the universities, usually lack the skills needed by employers, especially the practical skills.
DEFTERIOS: Governments like Qatar have opened new hubs of higher learning, but vocational skills needed in manufacturing or health care are in short supply. The reality, officials say, is that governments are fighting a losing battle due to record birth rates throughout the Middle East.
MARWAN MUASHER, WORLD BANK: The biggest challenge is not the global financial crisis. The biggest challenge is the youth, throughout the region, of about 70 percent of which is below 30 years of age, there are huge numbers of people trying to enter the workforce each year without the skills needed for (INAUDIBLE).
DEFTERIOS: And the World Bank says the region needs to create 100 million jobs between now and 2020 just to tread water.
(on camera): There has been a population explosion in the region over the last decade, rising 40 percent during that time. As a result, there's a lot of pressure on government and society in general to create jobs. Youth unemployment remains stubbornly high, at around 20 percent.
(voice-over): Traditionally, the deep-pocketed Gulf States bowed to that pressure by creating government jobs, even when they were not needed.
TAREK SULTAN, CEO, AGILITY LOGISTICS: The public sector is employing people and it may be employing them for their own reasons, creating unnecessary employment. And it makes it difficult for us to then propose for them to work in the private sector, because they actually have to work and, you know, spend, you know, a nine hour day actually doing something productive.
DEFTERIOS: Tarek Sultan is the chief executive at Agility, a Kuwait- based global logistics company with 34,000 employees in 120 countries. He says even during this downturn, the company is searching for qualified people eager to work.
SULTAN: It's difficult to get people excited about working in the logistics field. But we would like to see more engagement by the GCC nationals and -- and have larger participation in -- in what we're trying to achieve.
DEFTERIOS: And a larger Middle East market in which to create jobs. A region of more than 300 million people looked promising on paper, but business leaders contend that there are many barriers for inter-Arab trade, and, therefore, faster economic growth.
IMAD FAKHOURY, CEO, AQABA DEVELOPMENT CORPORATION: It's going to take a lot of political will and a lot of -- a lot of economic will to -- to improve the integration of the region, to allow us to reach those higher growth rates.
DEFTERIOS: And while governments work on the politics of integration, the youth bulge continues to expand.
John Defterios, CNN, Amman, Jordan.
(END VIDEOTAPE)
FINNEGAN: Now, if you're planning your 2010 vacation, how about a trip to Iceland?
Now, it may be chilly, but the savings you'll make could give you a warm glow. Just ahead, we unveil the world's best value for money destinations, where you can give your wallet a rest, too.
(COMMERCIAL BREAK)
FINNEGAN: Hello again.
Now, if you're planning a holiday, there are some places in the world where your money will go a lot further these days. Hard economic times for the locals can mean big savings for travelers.
Travel guide publisher Lonely Planet has a list of the top 10 destinations for bargain hunters.
And would you believe Iceland is at the top of the list?
It's been hit very hard by the credit crunch, financial meltdown there of the three major banks that collapsed. The value of the currency, the krona, has fallen through the floor. And it's very cheap to visit at the moment. So if you fancy a -- a trip north, that's the place to go.
How about Las Vegas, though?
Discounts in the desert -- the Lonely Planet says that Las Vegas is offering a lot of bargains right now to lure tourists in. You can even haggle over the price of your hotel. Provided you don't spend too much at the casinos, this destination could be good for your pocket.
And what about London?
Would you believe London is on the list?
The pound is weaker, meaning that everything here right now looks like a bargain.
Hah -- provided you get paid in euros and not dollars or pounds, that is.
So what does it mean to businesses to be in The Lonely Planet guide?
Is it worth it?
I took a copy of the book out onto the streets of London to find out.
(BEGIN VIDEOTAPE)
FINNEGAN: So, according to "The Lonely Planet," London is now a much better value city to visit, both for foreign tourists and for us Brits, apparently. And if you're listed in "The Lonely Planet" as a business, well, that's only good for your bottom line.
This place is in, right in the heart of Soho. It's called Sacred. Here's the listing in "The Lonely Planet." It says: "The spiritual paraphernalia and blatant kibiana (ph) don't seem to deter the smart Carnaby set from lounging around this eclectic cafe. It must be something to do with the excellent coffee, appealing counter food and deliciously filling cooked breakfasts. Try the scrambled eggs with salmon and goat's cheese," it says.
Umm.
Well, let's go in here and find out whether being in here really does make a difference to your business.
We're with Tubbs (INAUDIBLE), who is the -- the proprietor of this fantastic place.
Tubbs, thanks for having us here.
How important is it to you, as a business, to be in "Lonely Planet?"
TUBBS WANIGSEKERRA, DIRECTOR, SACRED: It's really, really important because, as a business, we don't have the time. So that being in these guides, it's -- it's such a great honor, in some ways, because, you know, for us, the small business, to be in these guides are great, especially the translated versions. We find tourists come in, they (INAUDIBLE), Eastern European, where is (INAUDIBLE)?
And they literally walk in holding this. And that's great.
FINNEGAN: You've had a great year this year in particular, in the middle of a recession.
I mean how much of that is down to -- to guides like this?
WANIGSEKERRA: I wouldn't say it's completely down to the guides, but I think the -- the whole atmosphere of people in the U.K. has been to stay in the UK. And we're finding a lot of people from outside of London are coming here (INAUDIBLE) holidays. And then you also find a lot of Europeans are coming here because of the euro. So it's been a lovely double whammy for us.
FINNEGAN: Well, I have to admit, that really is great coffee. I'm not surprised he's doing so well. And, of course, if "Lonely Planet" is helping Tubbs bring in all these customers from all around the world, his neighbors around here must love him.
Or do they?
Are people ignoring the other establishments and heading purely for Sacred?
Well, you just don't know. According to Tubbs, people around here are doing well, except that their business models are different from his. They've got higher overheads, particularly the bars who are serving alcohol.
So, anyway, well done, "Lonely Planet."
Back to the office for me.
(END VIDEOTAPE)
FINNEGAN: And well, how about that, a business that's bucking the recession?
Now, earlier today, I sat down with Tom Hall.
You saw him very briefly in that report. He was there killing time before he had to come into the office to talk to me. He's the very latest editor at "Lonely Planet".
I asked him if he was surprised that London had made it onto his list.
(BEGIN VIDEOTAPE)
TOM HALL, TRAVEL EDITOR, "LONELY PLANET": As difficult as it might seem to believe, London is about 25 percent cheaper for visitors from overseas than it was at the same time a couple of years ago, which means that, really, people who have overlooked it and said too expensive hotels, restaurants too pricey, I'm going to go somewhere else, should really look at the British capital for a break right now.
FINNEGAN: OK. The same reason, I suppose, Iceland, which is having terrible problems with its currency at the moment. That's remarkably cheap for people to go to.
HALL: It's certainly similar. People who have deferred journeys to dream destinations like this should really be thinking about doing it at the moment.
FINNEGAN: But, then, looking at your -- your 2010 best value destinations, there on the bottom, Las Vegas.
How -- how can that be -- be good value?
I mean, surely, Las Vegas costs a fortune for anyone who's -- who's traveling across the Atlantic anyway.
HALL: What we're seeing at the moment here is that Las Vegas has a larger number of hotel rooms, but it isn't necessarily filling at the same rates that it was in the past. Now, you can spend a fortune in Las Vegas, and that is still true. But if you're a smart traveler, go there for a few days. You might be able to haggle over the price of your room and maybe stay somewhere you wouldn't have been able to before.
FINNEGAN: What are people telling you about their inclusion in "The Lonely Planet" guide and what it means for their businesses?
HALL: Well, people are always very pleased to be included in "The Lonely Planet" guide and I would imagine other guide books, too. But -- and deciding what to put I can be a bit of a balancing act. You have to work out whether if you put a small independent cafe in, whether they're going to be able to cope with the numbers of people who come in.
On the whole, people are pleased. But it has to be done responsibly, I think, and think about the consequences.
FINNEGAN: So it's a responsibility for you, but I mean how do you come up with the businesses in the first place?
Do you go out and road test all of them before they go in?
HALL: Yes. All -- like other guide books, we'll visit absolutely everywhere and -- and decide what gets included. Now, of course, they can't stay in every hotel, they can't sleep in every bed.
FINNEGAN: Yes.
HALL: And -- but they can certainly talk to other travelers, find out what is going on, find out what people like and -- and make a decision based on that.
FINNEGAN: As far as these tough economic times are concerned, I mean who's -- who's faring worst right now, do you think?
HALL: I think it's difficult times for people who are catering to business travelers and also for people who are trying to get people to spend quite a lot of money up front. So, you know, maybe luxury tour operators and -- and places catering to business travelers.
But if you are offering a unique product, something that's distinctive, you can't find anywhere else, at the right price, I still think you could be having very good times.
FINNEGAN: Really?
Even if it's -- even if it's expensive, it doesn't matter if -- if you've got to pay through the nose?
If it's the -- the right product at the right price?
HALL: Well, yes. I mean there's an area of the market which is insulated from economic troubles. But it doesn't mean that people are profligate with money. I think right across the -- the spectrum of travelers, people are looking for the right deal. And they're increasingly aware of good bargains and how to get good rates. And, you know, the Internet has changed that and guide books have changed that.
FINNEGAN: Did you -- do you find, though, that there's any competition among not only businesses, but tourism industries around the world to get into guides like "Lonely Planet?"
HALL: Certainly when we produce a book like this in travel, which recommends activities and trends from all around the world, people do get in touch and say, how can we get in next year or if we have been in, can we get into different categories?
So it is competitive and -- and I would say, you know, the way to do it is just to make sure you offer something that the people can't get anywhere else. And that's the surefire thing to get people talking.
(END VIDEOTAPE)
FINNEGAN: And that was Tom Hall, the travel editor at "Lonely Planet".
Now, as you'll know if you've been following my Tweets throughout the day, Central London was jam-packed with people earlier this evening. Traffic banished because they turned on the Christmas lights there. I say they -- the cast of "A Christmas Carol," the new Disney movie, were in town to -- to switch on the lights. We had Jim Carey switching the lights on just around the corner from our bureau here in Central London on Oxford Street. And, well, at least it wasn't raining, thank goodness.
The premier of the movie is tonight. All the stars went off to Leicester Square and they're sitting in the cinema right now watching the movie.
But earlier in the day, it looked like it was going to be a bit of a washout.
Jenny Harrison is at the CNN World Weather Center and can tell us more about the weather generally in -- in Europe.
But first, the latest on the typhoon -- hey, Jen.
JENNY HARRISON, CNN METEOROLOGIST: Hello, Adrian.
Yes, you're right, it looked like there wasn't any rain in sight in London, but there's plenty of rain in sight elsewhere. And I will, indeed, start with the remnants of what was, of course, Tropical Storm Mirinae -- for a time, a typhoon, as it actually came onshore. Still, a lot of time, generally, across the region, but the worst is definitely over.
But look at these rainfall totals, because we are really getting up there -- 368 millimeters to Quy Nhon. That is here. And then we've got Nanchang further to the south. The smallest amount of rainfall is actually further to the northeastern stations. Hue and Da Nang is where we saw the least amount of rain. But, of course, we have seen some flooding. And there's still more rain in the forecast.
You can most of it, of course, will be impacting costal areas, but it will be nowhere near as heavy as it was. And the accumulations, of course, will be that much lighter.
But even so, I say that much lighter, further to the north now, in fact, around Hue and Da Nang, we could be seeing 15 centimeters of rain on top of what you have already seen over there, as well.
The winds, of course, dying down, but still pretty strong, generally, across much of the South China Sea and along the south shores of Hainan Island.
Then we head to the north of Asia and quite a different story. We've seen this cold air come down over the last few days, really frigid Siberian air. And look at the overnight low temperatures, because we keep saying record lows, but believe it or not, last night was another record -- minus 19 in Vladivostok. And that, as I say, it's very cold, especially for this early in the season.
But it isn't going to stay quite that cold as we go through the week. In fact, temperatures probably up a good 10 to 12 degrees by the time we reach, say, the end of the week. The snow is mostly to the north over the next couple of days. Elsewhere, we've got relatively clear skies, apart from the (INAUDIBLE), of course. Still quite a bit of rain. More rain, as well as across much of the Philippines. And then also through the Bay of Bengal, across into India and Sri Lanka. No letup in the rains there for you.
So one or two delays at the airport. Long delays, but for the usual reasons, at Kuala Lumpur. There are 90 minutes in the evening hours. And another day with very strong winds in Wellington, as well.
Then we head to Europe. Now, we're in a bit of a stuck weather pattern at the moment, which is why we keep seeing all this rain coming across, certainly, into the UK.
You see that speckled cloud there?
That indicates showers. So that's a little bit better. More in the way of shower activity, rather than heavy rain. Two systems -- another one developing in the east. And then now this one could produce some severe weather across into parts of Greece, but also in particular Turkey, and then, eventually, the Middle East.
But look at the line of thunderstorms that's been moving through Northern France and the Low Countries in just the last few hours.
We might see a little rain across into the UK, but it certainly caused some flooding across into Grampian -- 59 millimeters of rain. The winds are very strong, particularly across into Copenhagen. They'll be easing off in the next 48 hours, but there are warnings in place, you can see, because of those two systems.
We will continue to keep up updated, as, indeed, Adrian Finighan will, in just a moment when we return from this very short break. (INAUDIBLE).
(COMMERCIAL BREAK)
FINNEGAN: Well, it's been a tough year for handset maker Sony Ericsson. But the company is hoping that its new XPERIA X10 will turn things around, particularly after Sony's Walkman Phones failed to woo consumers. You'll have to wait until early next year, though, to get your hands on one.
I hate it when they do that.
Some of those things I saw at Mobile World Congress in Barcelona are only just now coming onto the market, and that was back in February.
Well, CNN's Andrew Stevens spoke to Sony Ericsson's new president, Bert Nordberg, about the new phone and his future plans for the company.
(BEGIN VIDEOTAPE)
BERT NORDBERG, PRESIDENT, SONY ERICSSON: I think we're sharing the XPERIA X10 as the sort of a flagship model for what's coming from Sony Ericsson. And it's a very, very powerful entertainment and communication device that we are releasing. And I think it's sort of the start of the new Sony Ericsson and the way forward we'll begin to show to the market.
ANDREW STEVENS, CNN CORRESPONDENT: So what -- what makes this the new way forward?
What have you incorporated here that you want to tell your consumers and would-be consumers that we're back, if you like?
NORDBERG: Well, I think we -- we have combined a unique user interface that we have developed in Sony Ericsson with Mediascape and Timescape, together with (INAUDIBLE) Ecosystem and all the Google applications. And so this is the day we deliver. So we'll get a very lot -- very, very many things.
And then, of course, you can't release a phone if it doesn't have a better camera, a bigger screen, a better picture quality, which we claim that we have.
STEVENS: You're going to miss the holiday shopping season, which is, obviously, a key for companies like yours.
Why is that?
It doesn't launch until the first quarter.
NORDBERG: I think there's sort of a -- we have done a lot of negotiations with operators and we have decided that the -- the first shipments is going to be in the first quarter. If we ship in Q4, it's going to be a very low volume. And we decided to wait until Q1.
STEVENS: OK. I just want to ask you a broad -- more broadly about the conditions -- economic conditions for you and the industry.
Indeed, when do you think you will be back at pre-crisis levels?
NORDBERG: Yes, yes. No, I think as soon as possible. We have announced a transformation program that I am actually doing as -- in speaking up a little bit. We will finalize that program as soon as possible. And then, in a company like ours, you cannot -- you can't save yourself through success. And it's like driving a car, you need both petrol and -- and brakes. And the brakes are there. And now we need to show the new products and the new portfolio, which looks very good for next year, which is some of the petrol into the system.
(END VIDEO TAPE)
FINNEGAN: That was Bert Nordberg, the new president of Sony Ericsson, speaking there with Andrew Stevens.
You're with QUEST MEANS BUSINESS from CNN.
Stay with us.
Right after the break, we'll be back with an update of what's happening right now on Wall Street.
(COMMERCIAL BREAK)
FINNEGAN: Let's take a look at what's happening on Wall Street right now. Stocks fluctuating in the session today. Technology stocks down after an analyst downgraded a chip maker. And that offset in gains we've seen by Warren Buffett's -- we've seen caused by Warren Buffett's announcement that he's taking over a railroad company in a massive deal in the States. The Dow down 49 points right now.
And we saw a broad sell-off this session in Europe. The financial sector the main culprit. Banking stocks way down. London's FTSE ending sharply lower today. Frankfurt's Xetra DAX almost off by 1.5 percent. And the Paris CAC down by a similar amount today. Zurich's SMI also bank, heavy, of course. That closed deep in the red today.
And that is it for the Tuesday edition of QUEST MEANS BUSINESS.
Thanks for watching.
In London, I'm Adrian Finnegan.
As the man himself would say, whatever you're up to in the hours ahead, I do hope it's profitable.
Christiane Amanpour is up next on CNN, right after the headlines from Hala at the iDesk.
END
