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U.S. GDP Growth Revised Downward

Aired December 22, 2009 - 14:00:00   ET


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Put the champagne away, no economic cheer this season, in the U.S., or in Britain.

Back on track, Eurostar is running again. Thousands of passengers are still left hanging.

And the 11th day of Christmas, a taste of Scotland, as we track down bagpipers piping.

Still a bit chesty and throaty, but I'm Richard Quest, and for the next hour, I mean business.

Good evening. Good to have you with us tonight.

It was seasonal feast for the economists, but Tuesday's big numbers looked distinctly under cooked. Official statistics showed that the U.S. didn't grow as fast as we thought in the latest quarter. While Britain's economy was still shrinking.

The numbers give off `til the end of the year and round off what has been a very difficult 12 months. We know, for instance, that the U.S. is out of recession, but the numbers we have seen show a different picture in terms of the strength of the recovery. U.S. growth has been revised downwards from 2.8 to 2.2 percent. Their consumers, apparently, are spending less. Even so it was the U.S.'s best quarter in two years. There were also some interesting aspects inventory build up and reductions, all of which gave a 2.2 percent, which is perhaps disappointing as we look forward to the first quarter of next year.

But this one, perhaps, is still the most disappointing of all, the major GH economies. The U.K. had a quarterly number which had been minus 0.3 and was revised upwards, so the trend is in the right direction. But the U.K. in the quarter, was still the only major economy mired in deep recession. And of course, with budget deficit at more than 12 percent there are serious issues to be debated and tackled.

Anyone looking sign that economies are returning to normal would still have to look pretty hard after those figures. So, I spoke to Gilles Moec, an economist with Deutsche Bank. And when you look at the numbers, I asked him, whether that U.S. one particularly, wasn't a bit of a disappointment.


GILLES MOEC, SR. EUROPEAN ECONOMIST, DEUTSCHE BANK: Actually there was something a bit surprising with the speed and the magnitude of the recovery in the U.S., even if we knew there was a tremendous amount of stimulus in the system. Still the idea that we were close to 3 percent was a bit -was probably a bit too much after such a sharp recession.

So, basically, what it tells us is that the difference between what is happening in the U.S., what is happening on the euro area side of things is not that different. And from a certain point of view it is reassuring.

QUEST: Why are things getting better so slowly? And why is that - I mean the one question, more than anything, the people ask me, and I don't know the answer, necessarily, is why can we not get a V-shaped recovery? Bearing in mind the huge amount of stimulus, unprecedented stimulus, that has gone into economies?

MOEC: There was a level of stress just six months, nine months ago, which was probably unprecedented. Actually, to have the kind of growth we have right now is -if I told you six months ago, yes, we will have GDP in the region of 2 to 3 percent in the U.S. by the summer of 2009. You would have told me, no, that is impossible because things are just too depressed.

So, it is much better than what we could have hoped for, just six months ago. But it takes an awful lot of time to recover from what has just happened. For instance, just one thing, business investment cannot recover in a speedy process right now, when you think of the level of capacity utilization, right now, in the world economy, it is extremely low. Companies have simply slashed investment programs in the midst of the crisis.

QUEST: And if we look at the U.K.'s number, where it was a slight improvement, I mean, you could arguably, remember the improvement arguably was a third in terms of the low number, but actually is meaningless.

MOEC: It goes in the right direction, but actually there is something rational about it. If you look at all the countries in Europe, which had a negative GDP figure for the first quarter, they were always the same kind of countries. Countries which had built up huge financial imbalances before the recession started.

QUEST: Well, I'm of the opinion that misguided, that next year might be better, than most of us are forecasting. Most people like yourself are forecasting. Am I just a misguided fool?

MOEC: Actually we are forecasting some fairly good numbers for next year. The stimulus is here to stay, at least for next year, especially in the U.S. It is not that clear in Europe but it is clear in the U.S. We should have gradually a positive contribution, or a continuation of the positive contribution from inventories and we also have the recovery of the banking industry with probably a positive credit impulse.

QUEST: Traffic lights, you are new to this, but you get the idea. Economy, trans-Atlantic economy, please? Let's forget about Asia for the purposes of this. The trans-Atlantic economy, in 2010, red, amber, or green?

MOEC: For 2010, red -uh, green, sorry!


MOEC: Interesting slip of the tongue.

QUEST: Yes, for 2010, you are right. And that is where we stay in 2010, is it?

MOEC: 2010, yes. 2011, I would be a bit more pessimistic, amber for 2011.

QUEST: Let's stick with green, for the festive period. Many thanks indeed.


QUEST: Now, there we have the green light, which of course was flashing, but let's manage to turn it off for the time being.

On Wall Street, reaction to the GDP revision was mild. In fact, stocks are higher, thanks to another economic report. Brining Susan Lisovicz, from the New York Stock Exchange.

Good evening to you, or good afternoon, Susan. I know volumes are extremely thin. And I know people are just about heading off to the long weekend, but what have you got for us?

SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: Well, we have some news, although, you are correct. The market is open, but nobody is home. It is seems that we have half a billion shares traded here, with less than two hours to go. That is quite tepid, indeed.

But the news is, it is good. It is encouraging. Existing home sales by far the broadest part of the U.S. housing market, surged nearly 7.5 percent in November. That was basically triple what Wall Street was expecting. So what, that most of it was on the low end. I think it is important to note that fully one-third of those transactions were distressed sales, foreclosures. But the fact is, the housing market showing signs of life, with a good deal of help from Uncle Sam, too.

And then, GDP - GDP revised lower, but still growth at 2.2 percent. After four quarters, four consecutive quarters of declines, Richard.

QUEST: Now, hang on a second. Looking at that housing and that home sales number, it is a bit like the cash for clunkers number that we saw earlier in the year on auto sales. Let's see if those home sales strength continues once the stimulus is taken away.

LISOVICZ: Well, it is an excellent point. I mean, I think, that you borrow from Peter to pay Paul, and you know what happens is, Peter gets rooked. So, yes, I would like to see what happens in December and January and February. Typically, those are pretty slow months to begin with.

But you know another thing that was happening is that mortgage rates are real low. I don't know about you, Richard, I think you should be thinking about a ski house in the Rockies, or maybe a pieta tare (ph) in New York. Because mortgage rates are low. You don't often find that, you know, you have the strength of the euro backing you.


QUEST: You can't get one. No, no. Hang on. Hang on, Susan. Mortgage rates may be very low, but that is only justifiable if you can actually get one of those mortgages. And as you know, one of the biggest complaints is the money isn't being lent.

LISOVICZ: Well, I did get a home equity loan last year and I'm convinced those people did not know who I was or who I worked for. But I just happened to have an excellent credit, Richard. Maybe you might consider paying your bills on time.

QUEST: I can see she has the jewelry out again. We've got the Lisovicz gold, which means, that clearly gold is doing quite well.


Susan, I'll speak to you tomorrow. Many thanks. Susan Lisovicz, at the New York Stock Exchange.

Right, excuse me.

Here in Europe the main stock markets ended in the plus column for the second day in a row. Trading was thin again. It is typical for the few days running up to the holiday. In London the energy sector led the pack, Cairn Energy claimed more than 6 percent, Shell was up more than 2; OPEC met earlier today and decided oil output at its current levels would remain.

Elsewhere, auto makers, Peugeot and Renault gave the 40, in Paris, a boost. Similar story in Frankfurt, where in this case it was Volkswagen, BMW, and Dunlop (ph).

So, the news headlines now and Becky Anderson is at the CNN News Desk.


QUEST: Now, here in Britain, one weather story has loomed above all others this week, the failure of one of the most advanced train services in the world. It was all because of snow. The Eurostar is back on the rails. There are a lot of passengers waiting for their train to come in. We'll have the latest on that in just a moment.


QUEST: Welcome back.

Now, for this part of our program, the story of planes, trains, and automobiles, or in this case it is going to be trains, planes and automobiles as we go the wrong way around. This is the story of motorists stranded in Britain. Hazardous undertaking as freezing weather has swept the country. Thousands of drivers were stranded for many hours in their cars. Just look at those lines. I was listening on the radio this morning. Some people saying it was taking six or seven hours to make journeys that normally took half an hour or 20 minutes.

Freezing weather overnight, that also led to problems in the air and at the airports. Partly during the day, Gatwick was shut, London Luton was closed overnight. This was all as a result of delays on the runways and things haven't -had they improved during the course of the day, but frankly they still have a long way to go.

So, if you couldn't get to the airport, because of the traffic, and once you got there the plane wasn't going, so you might have taken the train. At least, Eurostar did start running again. The first trains between London and Paris ran, the first trains for several days after that spectacular collapse because of the snow. It still meant there are many tens of thousands of passengers stranded on one side of the English Channel, or the other. Eurostar say they are doing their best to clear the backlog. Morgan Neill, as we reported all day, from St. Pancras.

MORGAN NEILL, CNN INT'L. CORRESPONDENT: Richard, the last trains have not left for the day and even though trains today were running at only about two-thirds capacity there is a huge difference in what you can see here, in London, St. Pancras Station, compared to what we have seen over the last couple of days. The first trains started going out around 7:30 this morning. And there is still a big backlog of passengers for Eurostar to get through. Nevertheless we are starting to see signs of relief.

Now, in the midst of all of these problems they have had, really a PR disaster, we asked the CEO of Eurostar, Richard Brown, about what all this could mean for his future.


RICHARD BROWN, CEO, EUROSTAR: I have concentrated exclusively on getting the service back. Helping our staff look after passengers, finding alternative arrangements, setting up the independent inquiry, we had a board meeting especially for this yesterday, and laying plans to get the service back to normal. I think all of our passengers would expect that is what we and I should be doing at Eurostar at the moment.

I fully accept Eurostar let people down. I have apologized and go on apologizing for what happened, but the priority now is to get the service back, and then to look at what happened before.


NEILL: Now, of course, Eurostar has been in the headlines here in the U.K. as well as in France and Belgium, really across Europe for all the wrong reasons over the last couple of days. It has been certainly very poor publicity, not at all what they would want.

Adding to that a bit of a blunder. We saw an unsolicited e-mail advertisement go out on Saturday offering for the perfect present for your nearest and dearest, and experience they will never forget. Well, there is no arguing with that is there? But certainly not what they had in mind when they came up with that advertisement.

Now, passengers, of course, have been complaining. They have been complaining both about the initial trains that were not able to make it through the tunnel. But more than anything what we have heard them complaining about is the lack of information. Information about when they could get to their final destination. What alternative methods they had to get there. And compensation among other things.

Now, we talked to one -there was one passenger who today related how it was decided who would get on some of these first trains.


UNIDENTIFIED MALE: Depends on how many people are in front of you, really. And whether they have priority, whether they have been here since the first day when Eurostar stopped. If you have tickets ongoing you are in priority listing. So, it is very difficult to know when you are going to go.


NEILL: So while many passengers seem relatively willing to forgive the mechanical problems, the apparently the powdery snow that got into the trains engines and condensed and then caused an electrical short, not as many willing to forgive that lack of information here, Richard.

QUEST: Morgan Neill, reporting from St. Pancras Station and putting into perspective the issues of Eurostar. In just a moment our "Job Questors" The long and winding road to success, as we find out how these two hopefuls got on in their final interviews, "Job Quest".


QUEST: Now the part of our program where we look at the experiences of job seekers around the world. It is "Job Quest" and we are in the final two weeks as we follow our "Job Questors" in their efforts to find employment.

Tonight Lisa Matheson's video diary; she is headed from Atlanta, cross-country to Washington State, in the Pacific Northwest. She went there for an interview. Also we follow Rodrigo Medina and his crucial fifth interview for a sales position in Barcelona, in Spain, our "Job Questors".


ANNOUNCER: Last week, on "Job Quest".

UNIDENTIFIED FEMALE: Initially did you have management responsibilities.

UNIDENTIFIED FEMALE: I used to, I would oversee the call center in the fulfillment house, so I was sort of managing, I was managing the processes. They did, I suppose.

UNIDENTIFIED MALE: I have had some interviews with some insurance companies, but there again, the problem with the insurance job search, once they look at my background and find out that I have credit issues, I have bankruptcy, or judgments or liens, it doesn't go any further.

UNIDENTIFIED FEMALE: Today I went to a salon in Atlanta, to put a polish on my image and got a new haircut. So, I'm really glad that I did it, because I really fee a lot better about who I am and what I have to offer now. And so, hopefully, new employers will like it as well.

Since I last spoke, of course, got the second interview with the power company in Washington State, and this morning I'm packing up to getting ready to head out the door, get on the airplane and head out to Washington.

I have to go to gate A22, to go to Dallas, where I then connect to Salt Lake City, and then on to Southeast Washington State.

It has been a really long travel day. And I've been on the road or in the air since 7 a.m. Eastern Time and it is now about 7:00 o'clock p.m. Eastern Time. It is a completely different world. It is like landing on the moon. It is flat and deserty, and lots of rocks, but it is very beautiful.

I'm getting ready for my interview with the energy company in Washington. And I think it is going to go well, hopefully. And so, I'm ready. I am confident, a little bit nervous, but confident.

Rush our looks a lot different in the Tri-Cities area than it does in Atlanta. This is a much more desirable commute.

Hi, Mom, I was calling to tell you how the interview went. And overall I think it went well. I think that I was able to effectively convey that I am a good fit for the position and that I'm definitely interested in it. And there is a lot of positives. You know, there are negatives, you know, of course it is 3,000 away from family and you know, I have the condo consideration. But in terms of a job and the team, I think it is a good match.

RODRIGO MEDINA, BARCELONA: So this is going to be my fifth interview and final interview with this German company. The position is regional manager. So I'm just getting ready for the interview right now. This is actually an interview I got through the headhunter, I went to a couple of months ago. So it has been a two-month process to get to this final interview.

And I have been lucky enough to be one of the four persons who is going to be at this interview today. I will just see how it goes.

It is like getting ready for big football final. A bit nervous, but I need to confident when it comes time for the interview. We'll see how it goes.

(CHIRON): Three days later.)

MEDINA: Today I received feedback from the interview, the final interview I had on Monday. And the feedback was not very positive. It seems like they choose another candidate for this position because he or she had more experience in the field, in the sector.

So, how do I feel right now? I honestly feel really drained. I put so much hope and effort into this process that as of today I am really, really drained.

It takes -all these interviews takes so much out of you, because you prepare them so well, you focus so much, you try to give your best and at the end the result is not what you wanted.

This whole situation, the last year, has affected my personal life, greatly. My wife and I have been planning to have a baby for the last year or so, and we have put that plan on hold because of my work situation. And this can no longer be. I'm 30 now, we have been together for four years, we are so ready to have a baby and we can no longer put it on hold a part of our happiness because of a job situation.

So, I need to create - I need to create my life, I need to create my own destiny and I think I'm a smart enough guy to do so.


QUEST: The very telling stories of our "Job Questors". Next week, as we come to the end of the year, we followed so many people on "Job Quest" but we are bringing it to a close at the end of next week, at the end of the year. A fascinating look today, I thought today's actually, frankly, was one of our very best "Job Questor".

We go on the road in just a moment for a slice of country life. Charles Hodson has that.

CHARLES HODSON, CNN INT'L. CORRESPONDENT: And I'll be continuing my series from rural southwest England, talking to a specialist builder who is amazed at how busy he is.

QUEST: Charles takes us to a corner of England that he calls home. Charming English country homes, and how they are fairing.


QUEST: Good evening.


This is CNN.

New rules from the U.S. Government on the amount of time that passengers can be stranded on planes sitting on the runway. The U.S. Department of Transportation is tired of

Many thanks for joining us as we head toward the festive period.

It's also a time when we do a lot of book squaring. We clean up our portfolios and we see exactly where the damage has been done.

If you're long or shot on the Dow, this is what you're looking at tonight -- a gain of 50 points, or right about .5 a percentage point, 10462.

I just want to put that into a little bit of perspective. It's the third straight day of gains. Home sales, which were surprisingly strong -- they were the best that they've been in about two or three years -- and that was counter balanced by Q3 GDP -- to throw some jargon in, revised down at an annual rate of 2.2 percent, as against 2.8.

But -- but the core point I want to make to you at this point is that at its low point in March, that number was down right about 6500. So the gains are there. They are cemented into the market for at least the rest of 2009.

One man who's been an ever present witness to the roller coaster that we saw in the markets over the course of the year, our friend, David Buik, at BGC Partners. If there's a man that we need when things are moving fast, Davis is the man.

We caught up with him to find out if he thinks we're in for a smoother journey next year.


JIM BOULDEN, CNN CORRESPONDENT: So, David, are we coming to the end of this year and everyone's mind is on the -- the end of the year and on Christmas, how would you describe the markets, the stock markets, in 2009?

DAVID BUIK, BGC PARTNERS: Well, this seems unreal, Jim, doesn't it?

I mean when you think that we've been to hell and back...


BUIK: ...since January, when the stock markets were just above their lowest points in October of 2008.


BUIK: And since then, we've had something like a 30 percent rally in European markets.

BOULDEN: It was like 2008 wasn't the worst. We thought 2009 could be terrible. And then we bounce off in March and every week it seemed to me someone said, oh, the markets are getting overheated, they're over frothed (ph), it's going to be a correction and that correction never came.

BUIK: I think when you actually work out the magnitude of the fall, not only in stock prices, from September 2008, but also you can almost record it after the 15th of September, when Lehman Brothers went down...


BUIK: ...the world's economy fell off the cliff. It didn't come down gradually, it just went perpendicularly down. So we fell probably at a disproportionate rate to how bad economic activity was.

Thank goodness for our central banks. Governments, of course, will claim all the credit. Nonsense. They deserve very little. But I must say, no amount of praise for Ben Bernanke and for Dr. Mervyn King and also for Jean-Claude Trichet...


BUIK: ...for the way they've handled (INAUDIBLE) and also keeping the banks going.


BUIK: We owe them our lives.

BOULDEN: It's a quantitative easing here in the U.K., where the central bank just basically made...

BUIK: Money.

BOULDEN: -- they printed money, put it in the system for the banks to then lend it or, in some cases, hoard it. But it made the banks' shares rebound.

BUIK: Absolutely. Well, also, it instilled what was the missing ingredient -- confidence.


BUIK: And when the confidence came back, people said these stock markets are too low. Now, you can say it's created a false market, but the fact remains is because confidence has been restored, we've seen this colossal rally right across the spectrum and it doesn't matter whether it's bank shares and those people who probably weren't on board for that first six weeks from the 9th of March may have missed out.

But it's things like the pharmaceutical sector, oil, mining -- they've at least recovered.

BOULDEN: As we walk around this Christmas market on Oxford Street, this Parkview Christmas Market -- a German Christmas market, of course -- are -- do you think people, over December, are going to be spending more because their confidence has returned?

And are we going to see things like retail sales picking up?

Are we going to see consumer spending picking up?

And is 2010, economically, going to be better, irrespective of the stock market?

BUIK: Two observations. I think because, in the U.K., we don't have a balanced economy like Europe does and the current government nailed its flag to the mast and saying we're in the financial sector...


BUIK: ...right from 1997. And my word, for 10 years, how it paid them to be that way. But, of course, they've neglected manufacturing output and industrial production to such a degree that the U.K. hasn't gotten a balanced economy now. And it probably will take longer than Germany or France to recover.

BOULDEN: Of course, here on Oxford Street, the names of very famous stores -- Debon (ph) and John Lewis...

BUIK: Marks & Spencers.

BOULDEN: Marks & Spencers and -- you know, that -- that's a barometer for so many...

BUIK: But this is...

BOULDEN: -- things.

BUIK: But this is not U.K. PLC.


BUIK: This is thank you very much, our European friends, for our very weak pound coming over and pounding the streets of Oxford Street and Bank Street to pick up their presents.

BOULDEN: So, let's look at the markets in 2010. It's never easy to predict...

BUIK: Yes.

BOULDEN: -- but will we have to see them coming off the buoy a little bit?

BUIK: I'm very confident about emerging markets. If you look at China, providing it doesn't overheat in the next few weeks. I'm very comfortable about India. I think Russia offers a little bit of value. If we can sort out the political problems, that offers value. South Africa offers value and so does places like Brazil.

In the mature parts of the world, I think you have to be careful and you have to be selective of your stocks. Personally speaking, because we've had no kind of measurable correction since, really, March -- a couple of tiny ones, a couple of 2 percenters, but they certainly petered out -- I'm quite confident about the end of 2010 and I think I would probably start to become involved in, you know, German and French, U.K. and the stocks, perhaps by the late summer.

The U.S. is a different kettle of fish.


BUIK: I'm very upbeat about the United States' economy, but I probably would stay a little bit clear for the time being of the retail sector.

BOULDEN: Well, why don't we do our little bit for the U.K. economy, even though we're here in a German market in Oxford Street.

Let's do a bit of Christmas shopping, shall we?

BUIK: Right.

BOULDEN: Thank you very much, David.

BUIK: A pleasure.


QUEST: Nice to get -- it would be interesting to see what they finally bought from that Christmas market.

Here in Britain, forecasters, as we've been hearing, making gloomy noises about the economy, even as it looks like it's going to emerge from the recession. The picture will vary from one place to another. But let's continue our series of special reports from rural England, where Charles Hodson finds out how the housing market in his area has shrugged off the worst.



CHARLES HODSON, CNN CORRESPONDENT (voice-over): In rare December sunshine, specialist Conservation Builders are restoring a Victorian folly (ph). Somerset's many picturesque old buildings are usually constructed with traditional materials, like lime-based mortar. The skills needed to maintain them are at a premium. And after some difficult months, this conservation builder has been busy since March and is booked up until June.

ZACHARY TRUMP, CONSERVATION BUILDER: I must say, in all honesty, if I didn't read a newspaper or turn on the television, I wouldn't think we are in a recession due to the amount of business we have been getting this year and due to the scope of next year.

HODSON (on camera): Not that where Somerset has been immune to what's been happening on housing markets globally. This development of nine properties on the edge of my home village of Stegunba (ph) was started in 2007, just as the property crisis was breaking.

Two years on, most of these homes are still unoccupied.

(voice-over): But West Somerset has a secret weapon. There aren't many jobs here and it's off the beaten track as far as tourism goes, but it's pretty and city dwellers come here to find the romantic country cottage of their dreams.

KEVIN PRESCOTT, REALTOR: People love the area, with the Exmoor National Park, lovely coastlines. So people want to come here to retire. The people that are here, they -- they don't need to sell. They're not moving for job reasons. So it is a lifestyle move. So, hence, the property market does remain very resilient in -- in these difficult times.

HODSON: Prescott says the local residential market fell by about 10 percent in the recession, less than elsewhere in Britain and it's now recovering. But a walk around local towns reveals a continuing crisis in commercial property. A leading local property owner says it's not about recession, it's long-term and irreversible.

DAVID GUIDDON, COMMERCIAL PROPERTY OWNER: In the country, we depend very much on a lot of local retailers. As they age and as they reach retirement, then there's an element of retailers actually leaving business. Throughout the country, we're seeing the impact of the Internet, the impact of supermarkets selling nonfood goods, broadening their ranges, increasing their floor space. And that's impacting right across the board, not only in the small retailers, the -- the independent retailers, but also a lot of the multiples.

HODSON: The outlook for most local builders and for the broader economy is daunting. The U.K.'s recovery is feeble and unemployment is still rising. Even realtors -- professional optimists, say prices will stagnate in 2010.

PRESCOTT: I do think that it will be a fairly difficult time again next year. I don't think it will be a lot different to the year we've had. I think there will be some peaks and troughs, like we've had this year. But generally, I think that we will see some movement again in property. But I think the prices will remain fairly steady around here.

HODSON: This may be a fine place to retire to, but the property market tells its own story -- doing business here is more and more of a struggle.

Charles Hodson, CNN, West Somerset, England.


QUEST: The best form of economics reporting is to bring people to where you are yourself, as Charles has done.

We've been counting our way through the 12 Days of Christmas.

But what if everyday looked like Christmas?

Come with us after the break to the city that has a seasonal feel no matter the season.


QUEST: Welcome back.

You may never have been to Ewu in China. The odds are some of your Christmas decorations most certainly have. What Detroit is or was to the car industry, Ewu is to the seasonal goods sector. That's a posh way of saying what we buy over the Christmas and festive period.

Our Asia business editor, Eunice Yoon, went there to find out if the Christmas spirit has survived the economic blues.


EUNICE YOON, CNN CORRESPONDENT (voice-over): It's a cacophony of Santas. Imagine listening to this...


YOON: ...nearly every day of the year. That's life for many in this corner of the globe -- and we're not talking about the North Pole.

(on camera): Christmas trees like these will be brightening up homes all over the world. The managers of this market say over 80 percent of all Christmas decorations are bought and sold in Ewu.

(voice-over): This town in China is home to the biggest wholesale market in the world. Traders come from all over to stock up on stockings, tinsel, ornaments and paper Santas sold by people like Mu Hiangsha (ph). Mu depends on Christmas celebrations, though her understanding of the Christian holiday is more practical than anything else.

MU HIANGSHA (through translator): Christmas means I get more sales and more money.

YOON: Sellers and buyers say the down economy this year has dampened Yuletide spirits.

PRADEEP BOKARIA, BUYER: (INAUDIBLE) in best business right now. That's why the economies everywhere are falling in the world.

YOON: Artificial tree maker Wu Jun says sales at her factory dropped by as much as 30 percent. To cope, she's turning to markets outside the United States and Europe, to Brazil and even China.

WU JUN, ARTIFICIAL TREE MANUFACTURER (through translator): It's getting trendy to celebrate Christmas here. You'll see a lot of shops, big shopping malls and hotels putting up huge decorations to attract people.

YOON: The gifts end up at this port. Hundreds of containers depart Ewu everyday, delivering their precious cargo to homes across the globe. Wu can't imagine her work without a festive event.

JUN (through translator): Without Christmas, I would have nothing to do.

YOON: And who wants to sit idle in Santa's workshop?

Eunice Yoon, CNN, Ewu, China.


QUEST: I have always, always wondered where all that tatt (ph) comes from. Now I know.

Guillermo is at the World Weather Center and where things are, I hope, getting a little bit quieter for you.

GUILLERMO ARDUINO, CNN METEOROLOGIST: They are. And, also, I'm going to try to give you Christmas Day and Christmas Eve forecasts for Europe and North America, if I have time. But let's see, gradually things are improving, Richard.

There are areas in the north that we continue to see cold conditions and some rain, some precipitation, like Scotland will continue to see snow. Scandinavia here, Finland, parts of Austria here and Switzerland. And in Spain, we see very unstable weather conditions that are going to move into southern parts of France. It is not going to be as bad as what we saw last week or this past weekend.

London still the chance and -- this is a chance -- of some snow showers then everything turning into rain showers. Paris, mixed precipitation. Then Brussels, the same thing. That area in the north, you know, is still dealing with very cold conditions, instability and also the winds in Germany.

So it's not going to be beautiful, but at least we're not going to see the severe weather that we saw on the weekend.

Milano recuperating gradually. The same for Torino. But winds in Italy, anyway; winds in Germany, as well, in Berlin.

So this is a pattern. The jet stream is finally retreating and it's allowing this area, Richard, that actually has been hammered big time, in Romania, Moldova, Ukraine, Bulgaria, northern parts of Greece, into Slovenia, Croatia, Serbia. All those countries have seen a lot of snow. They are going to be the first ones to recover.

Now, these areas in the north are going to have to wait a little bit more, but it's not going to be terrible.

Well, let's see, Britain, as I was saying, in the north is where we will see most of the snow. Then in the south, you know, clouds are going to be there. Like in France, some storms in the south. But the north is going to improve very soon and the east is going to be much better. But Austria, Switzerland, Northern Italy with more snow.

Now, Christmas Eve -- so here you have it. Look -- the same pattern. Some humidity in England, some in France. Stormy here, improving for the (INAUDIBLE). Finally, they got a break because of this high pressure/

Now, see what happens on Christmas Day. This area of bad weather is moving into the east, so we will see an improvement in Spain. It's going to be cold in Britain. The snow will continue here in the northern sections and Central and Eastern Europe will have to brace for some rain.

OK, we'll see what happens.

But stay with us.

After the break, more QUEST MEANS BUSINESS.



QUEST: When you hear The Bach Choir singing like that, you know it's our 12 Days of Festive Christmas.

Before that, though, how about some of these pictures?

Forty-eight hours to go, this is the scene in Moscow -- Red Square turned into a veritable winter wonderland. Another wonderland of similar type, this time it's Malaysia in Asia. But something tells me that snow, perhaps, isn't the real McCoy, unlike what this poor policeman is suffering outside Number Ten Downing Street. That's the British prime minister's residence. That's the tree outside his home and that's the poor policeman -- well, he's freezing something standing outside the door.

Our festive 12 Days of Christmas is coming to an end. But we've got today, 11. And on the 11th day of Christmas, as part of our World At Work, we have pipers -- 11 pipers piping.



MARTIN MCKAY, PIPER: I travel with my bagpipes all over the world. And so I really have a mixture. And I don't really know where I'm going to be at any day, at any time. So it was crazy. But above all, it's about the music. It's about the history. It's about the art. And -- and it's a passion.


MCKAY: Today, I was called by the school here in London. I was asked to play the pipes and introduce the instrument to the children.


MCKAY: Hello everybody!

The children are of a young age.

Can I put my hat down, because I'm a bit hot?


MCKAY: Here, have a look.

And they have never really seen the bagpipes. So they're quite curious. So I think it's quite an educated moment for the kids.

Now, does anyone know where the bagpipes come from?


MCKAY: As you see them today, that's correct. This is what we call the great highland bagpipe. This one here is called the tenor, the middle tenor drone. And this one here is called the alto tenor.

The history of the bagpipes dating back 2,000 years, really. Some say that the Romans used to march to the bagpipes and Emperor Nero was king piper himself back in 54 A.D.

The pipes themselves, in today's form that we see the great highland bagpipes, started to gain an identity in around about the 16th and 17th century, with decorated drones here. It was an instrument that was taken around the world, obviously, by the British and introduced to the memories of the world. But we see them today as an instrument of Scotland, predominantly.


MCKAY: The pipes give you a most amazing sensation. When you play the pipes and you strike them up and your instruments in tune and -- and it's going really well, you can feel the hairs on the back of your neck and -- and you pull people to you. And the pipes have got this incredible ability to -- to draw people far and wide. They can bring all sorts of people from all sorts of cultures together and fuse it in one.


MCKAY: I'm -- I'm a very proud Scot. I was born in Edinburgh and they say you can take the boy out of Scotland, but you can't take Scotland out of the boy.

Many years ago, I was searching for a nice equilibrium in my life, a nice balance. And I -- I realized that point then, I must make this a professional living for me to really be one with myself.

I'm not making a million pounds out of this, but I am following a dream, if you like.



QUEST: All the stories from our festive World At Work series are now online. You go to our home page, at and click on the tap bar 12 Days of Christmas.

Now, when we come back in just a moment, a Profitable Moment that will actually tell you more, perhaps, about the traffic and travel problems we all face.

Why are we so surprised?, in just a moment.


QUEST: Finally, tonight's Profitable Moment.

Throughout the course of all of this week, we have been reporting, indeed, the misery that people have been afflicted as they've been trying to go about their business. Whether it's business or leisure, trying to get home for Christmas, Hanukah or whatever the festival might be, on the roads, in the air and on the rails, it's been one long tale of misery.

But what is it about holiday travel and traffic that means it always goes horribly wrong?

Now, I suppose you would say to me, it's obvious, Quest, millions of people all trying to get somewhere important for a particular date at the fastest pace they possibly can.

Well, you're right. It's a recipe for disaster. Planes, trains and motorways heaving to the doors. It only takes the slightest thing to go wrong and we end up with these scenes -- havoc across vast swaths of continents. It makes for miserable times for everyone concerned, especially those people that have to deal with the crises.

What amazes me, though, is that we continue to be surprised by this travel chaos. Look, face it, it happens every year. And each year as the snow falls or as the ice freezes, we look up in wonderment as though it's the first time it's occurred. None of which makes it easy on those affected.

So tonight, if you are stuck, if you are stranded or if you are simply snowed in, good luck in getting to your final destination.

And that is QUEST MEANS BUSINESS for tonight.

I'm Richard Quest in London.

I thank you for your indulgence as I'm getting over the last remnants of a chesty cough.

As always, Whatever you're up to in the hours ahead, I do hope it's profitable.

Christiane is next, after we have the headlines from the I Desk.