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Quest Means Business
Debate Over Banking Mistakes; Verizon's Partnership With Apple
Aired January 11, 2011 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, ANCHOR, QUEST MEANS BUSINESS: It's a Diamond in the rough. The Barclays chief exec gets a parliamentary grilling.
IPhone gives AT&T some competition and hooks up with Verizon.
And when the chips are down the CEO is removed; that's what happened at AMD.
I'm Richard Quest. We have an hour together. Yes, I mean business.
Good evening.
This is no time to say sorry. Bob Diamond says the banks have now shown enough remorse for their failures during the financial crisis. The Barclays chief exec spent a tough two and a half hours in the hot seat in front of a committee of U.K. lawmakers. The committee is investigating banking competition, although they spent much of the time focusing on bankers bonuses. Bob Diamond, who is rumored to be in line for a payout of more than $12 million faced confrontation, provocation and sometimes derision. Here is how Mr. Diamond responded.
(BEGIN VIDEO CLIP)
BOB DIAMOND, CEO, BARCLAYS: It is not OK for taxpayers to have to bailout banks. Banks should be allowed to fail.
UNIDENTIFIED MALE: What I'm asking you, Mr. Diamond, is are you grateful to the British public?
DIAMOND: Can I ask you one question?
UNIDENTIFIED MALE: Can you answer that question?
DIAMOND: I-I-
UNIDENTIFIED MALE: I ask the questions, you give the answers.
DIAMOND: But you-
UNIDENTIFIED MALE: Are you grateful to the British public?
DIAMOND: Part of what you said-
UNIDENTIFIED MALE: Are you grateful?
DIAMOND: We are very grateful to the central banks. We are very grateful to everyone. We are very grateful to every one that has helped the financial system to-
UNIDENTIFIED MALE: The British taxpayer?
DIAMOND: We're thankful for everyone.
I haven't been offered a bonus and that is a decision that the remuneration committee will be taking over the next few weeks.
Lending is what we do. The United Kingdom is our single most important market. We like to lend. It is our business. It is what we do with our customers and clients.
Our best business is doing lending with our corporate clients in the U.K., small businesses and large businesses. We have seen demand reduced. We have seen our approval rates stay stead or increase; 85 percent of small business loans are being approved. Which is equal to or slightly better than it was before the crisis.
There was a period of remorse and apology for banks. I think that period needs to be over. We nee d our banks willing to take risks, confident, working with the private sector in the U.K., so that we can create jobs. We can improve the economic growth.
I really resent the fact that you would refer to this as blackjack or casino banking, or rogue trading, and I've give the reasons why I resent that. I think it is wrong. I think it is unfair. I think it is a poor choice of words.
You're not a big fan of Barclays, are you?
(LAUGHTER)
UNIDENTIFIED MALE: I'm a big fan of getting answers from you.
(END VIDEOTAPE)
QUEST: You only ever get the last word from a politician. That was the MP John Mann, who got the last word in, in the Bob Diamond confrontation.
It may be too late for apologies, but the U.K.'s chancellor of the exchequer, the finance minister, has hinted that Britain's banks need to show more restraint. George Osborne says banks ought to agree to increase lending and cut bonuses or the government will look at all possible options to curb extravagance.
Angela Knight is chief executive of the British Bankers' Association.
Angela, we have a lot of ground to cover.
ANGELA KNIGHT, BRITISH BANKERS' ASSOCIATION: We do.
QUEST: First of all, do you agree with Bob Diamond that the time for remorse, the time for wearing hear shirts, by the banks, is over?
KNIGHT: I think we certainly have done a lot about not only apologizing, but actually resolving some of the issues that caused the problem. We can't deal with them all, because some are outside out control, some were in the hands of the regulators, some were with the central bank. Some of them we have actually got themselves.
And remorse is right. And we're not running away from being sorry, but we have got to look to the next step, the future. Doing the things that banks do, lending money, helping the economy recover; and in our sense, in the U.K., also looking internationally as well.
QUEST: Now, we can't escape bonuses on this question. And the chancellor said-it is a very firm warning tonight, from George Osborne, that in the event of excess, there will be a claw back, there will be some form of provision. Are your members getting that message tonight?
KNIGHT: Yes, but don't forget we have claw back already. I think people don't realize just how tough the U.K. regime is. Do you know we have to agree (ph) bonus targets for all our key people with our regulator? If-
QUEST: Yes, but know-
(CROSS TALK)
KNIGHT: Let me finish, because it is different to last year.
And if you are paid a bonus, against those targets, a majority of it is locked up for several years, subject to claw back. And anything that you get now, well, that is mostly in shares, and any cash you pay in tax, anyway.
QUEST: Or the bank pays on your behalf, as of course, what happened last year.
KNIGHT: That was in a different position, because that was under a special type of bonus tax. This is now our ongoing regime, which is in a wholly different place, complicated, but it does mean, firstly you are not going to pay so much in bonus; secondly, what is given is locked away in shares. And thirdly, the taxpayer gets its slice, in cash, almost before anybody else does.
QUEST: But I think what people say, and you've heard this-and I've heard you answer this question.
KNIGHT: Yes.
QUEST: A thousand times, but I put it anyway. I think it is when you get any bonus that is in seven figures, people say-or six or seven figures- anything people say, that is egregious.
KNIGHT: That is where the question starts to be raised and I don't quite agree with you. And I know how it seems, I'm-look, I'm a human being. I'm a taxpayer. I live in this country. We have two industries in this country. One is a large domestic banking industry and the other is a large international banking industry. Now we can move away, and we have done, from the international standards that, they're tighter, they're different, they are actually much more constrained.
If we are going to play internationally, we have to be able to do a lot of things which is favorable (ph) to our (ph) people, otherwise we loose the jobs, we loose the business, and actually we loose that big contribution to the public service which is the tax that sits on the back.
QUEST: Let's go back to the chancellor, (ph) though. When George Osborne warns the industry, regardless of what rules there may be for claw back and so forth, he is basically saying to you, if your members do not get the message, don't go too far. Have they got that message?
KNIGHT: Of course, they have. You may have heard it for the first time on the floor of the House of Commons, today. We have heard it several times. We have understood that. And it is part of a whole other set of things which the banks need to and are doing; getting closer to the customer, where there are lending issues, instead of just a straightforward reject. Let's see if we can't unpick that, sort it out. Let's remember we have a greater societal impact as well. It is all of a piece. Now there are the politics of it, which I heated, which take placed in the public domain, and of course, we have a very, you know, aggressive political system here and so you get those sorts of debates, you get those sorts of answers. But because that happens in one place, on one day, because of one set of conditions, does not mean that the banks are not there, at the table, as well. We are. Good industry and we need to keep it here.
QUEST: And we'll have you back here to talk about it again.
KNIGHT: With pleasure.
QUEST: Meany thanks.
KNIGHT: Thank you.
QUEST: As we look and cover this from different angles, David Buik gives us an inside view of the banking world from his office at BGC Partners, the brokerage. I asked David, a friend of this program, and always robust in his own views, he could probably give the parliamentary committee a run for their money-I asked him how people in the dealing room view the bonus issue.
(BEGIN VIDEOTAPE)
DAVID BUIK, SR. ANALYST, BGC PARTNERS: Treat it with revulsion and utter contempt. And it is a pity because we haven't really had a proper explanation of why it has come about, and how it has come about. But I think that if the general public knew that people who earn that kind of money, right across the spectrum, not only in banks. It is less than 1 percent of the population, perhaps the thing can be put into perspective. We are, of course, going into a period of austerity. It does seem awful that people are going to be drawing gargantuan sums of money, after what happened to us two years ago. But again, something that politicians have conveniently forgotten to say, that the money that was appropriated from the taxpayer, to the banks, the bad boys have been kicked out of town. This is a new brush. This is a clean piece of paper and the show is back on the road.
QUEST: Would it-this might be naive, David. But would it make much difference if the banks said to the traders, and said to your colleagues, you are not going to get but bonuses until this crisis is over, until the public feels more comfortable about it.
BUIK: If the rest of the world was going to do that, then it would make immense moral sense to me. But the rest of the world is much more savvy than that.
QUEST: They're not going to move to other jobs.
BUIK: No, they don't have to. The fact is that all that has to be moved is capital. And it is very easy for a bank to say, right, we'll focus X billion pounds worth of capital in London. This is an unattractive place to do out business, so we will refocus that capital to another center. The balance sheet remains the same, pro tem, but in the fullness of time that balance sheet becomes smaller, because international business goes elsewhere.
QUEST: Let's talk about Bob Diamond, when he said-Diamond said, that the banks should be allowed to fail. I mean, that is a truism. Nobody would disagree with it. The difficulty, of course, is in the execution. Which banks should be allowed to fail, and under what circumstances?
BUIK: Any bank, under any circumstances.
QUEST: You believe that?!
BUIK: Yes, I do.
QUEST: You believe Lloyds should have gone?
BUIK: Not now. I believe if it were to happen again it should go.
QUEST: Yes.
BUIK: The circumstances were that we had a profligate government, that allowed banks to lend indiscriminately, allowed them to build up their balance sheets to humongous sizes, without understanding regulation or without understanding risk. That was almost criminally negligent. The situation haw now changed. Much more capital would be appropriated to each bank. The FSA, under the auspices of the Bank of England, are now (UNINTELLIGIBLE) with the situation knowing, and the quality of risk management will improve. Because balance sheet will halved, because of the amount of capital that is put in. You will find that it will be much, much harder to lose money to the degree that perhaps it was before.
QUEST: So, but to the fundamental point, well, if those capital limits do come under pressure, and eventually the bank-as indeed, you are saying it would-the banks should be allowed to go?
BUIK: Absolutely. There is no reason after what the whole world has been subjected to, two years ago, that there should ever, ever be a repetition of that occasion. It was a disgrace.
(END VIDEOTAPE)
QUEST: That was David Buik joining me earlier.
As Bob Diamond was speaking Barclays shares were among the best performers on the FTSE today. If you come over to the library, you will see what I mean. There was a gain of 5.5 percent, a strong performance for Barclays, at 292.00. You remember, I bought some Barclays at 60 pence each, I think I bought 1,000 of them. So later in the week, we will follow, of course, what happens. And maybe by Friday I'll work out how much profits, or whatever it is. And it will be the tease and the biscuits are on me, this week. This is the highest point for some 2 months.
This is what happened on the euro markets. London's gain was up 1 percent , or just give or take. Frankfurt and Paris, similarly showed good gains. Tech stocks doing well. Some banks, too.
If you go to the United States you'll see that the Dow Jones, currently, very little change. But comfortably over 11,000, which is a position which-well, it is obviously more than nearly. It is heading towards 12,000. It is a comfortable start to the trading day. Now, one share of particularly interest is AMD, Advanced Micro Devices. It is the rival company to, of course, Intel. It makes computer chips. That much you know. But the price if down 8.3 percent; the shares have fallen very sharply.
And it is all because they fired the chief executive of AMD. It is after last week's electronics fair in Las Vegas, they decided the CEO has gone. We'll explain why, after the break.
(COMMERCIAL BREAK)
QUEST: It was by any stretch of the imagination one of the worst kept secrets in the tech world. It was confirmed a few hours ago that the U.S. telecoms company, Verizon, is getting the iPhone. Until now, only the cell phone company was with AT&T for the iPhone. They had the exclusive rights to it; now Verizon joins the fray, and possibly more further down the road. Richard Roth was watching the announcement in New York. Richard joins us now.
Expected, but interesting none the less, Richard.
RICHARD ROTH, CNN SR. CORRESPONDENT: That's right, and of course, you never know what happens with relationships, but the exclusivity between Apple and its iPhone, and AT&T, well, there is another customer out there. And it is Verizon.
Now, AT&T will still be selling iPhones also, but here inside the Time Warner Center, inside the Rose Hall, the big announcement between Verizon and Apple. Steve Jobs was not here. Some people thought he might be. The chief operating officer was here for Apple. But the big announcement made by Verizon's president.
(BEGIN VIDEO CLIP)
LOWELL MCADAM, PRESIDENT & COO, VERIZON WIRELESS: Today we are extremely gratified, and I can't think of a better word, to announce that early next month the iPhone 4 will be part of the great Verizon Wireless portfolio of products.
Now, in our view our announcement today is bigger than any single device, even one as iconic as the iPhone. What we're really excited about is the great partnership between two technology giants.
(END VIDEO CLIP)
ROTH: Verizon let reporters and financial analysts play with the new device, which looks pretty similar to the AT&T iPhone. We asked one research analyst what the significance of the deal was, here in the United States.
(BEGIN VIDEO CLIP)
MICHAEL GARTENBERG, TECHNOLOGY ANALYST: Verizon customers who have been waiting and praying and holding back their purchase for an iPhone until it came to their network, have something to be really happy about. It is going to be an instant hit, because there is so much pent up demand here.
And more importantly, it is going to give Apple more carrier presence in the U.S. beyond AT&T. So this takes an existing product and opens up a lot more customers to it.
(END VIDEO CLIP)
ROTH: The Verizon and Apple deal is non-exclusive, it is multi-year; Apple is expected by some to make deals in connections with global carriers in South Korea, China, and elsewhere. Here in the United States people can go into their stores, February 10th to start buying it. Apple perhaps is looking for more business, Richard, knowing that it has been facing increasing competition from Google's Android device. So it is more interesting, skirmishing, and selling and battling in the smart phone market, Richard.
QUEST: Richard Roth, in New York. Many thanks.
There have been surprised departures as we stay in the technology world, at two companies, in Silicon Valley. Bob Muglia, the head of Microsoft server division, is leaving the company. The chief exec, Steve Ballmer says new leadership is required. There is speculation that Ballmer and Muglia disagreed on Cloud computing strategy at Microsoft.
But the big talking point, the chip manufacturer, Advanced Micro Devices, Dirk Meyer, has stood down as chief exec. And that comes as a shock to some. He had only just unveiled new products at the Consumer Electronics Show last week. Shares had risen when he was in charge. The question is whether he jumped, was he pushed, and if so, why? What is going on at AMD? More questions than answers. Perhaps Larry Dignan can help us with some of them. The editor-in-chief at the Web site, ZDNet; he joins me now from New York.
Larry, only a few months ago, they were praising the way he had turned the company around. He had handled the crisis. (UNINTELLIGIBLE) So, why was he booted out the door?
LARRY DIGNAN, EDITOR-IN-CHIEF, ZDNET: The whole thing is a little bizarre. And you see it in the stock reaction today, because everybody kind of thought Dirk Meyer was doing a decent job. He saved the company from the brink, brought it back. They had new product cycle. But it seems like the board wanted more growth. And they probably wanted a mobile strategy. Because Intel and AMD are a bit in the crosshairs, as the devices go more mobile. And they are probably looking at Dirk Meyer and saying where is the strategy? And maybe he didn't have a good answer.
But overall, it is kind of jarring, though, because AMD is a distant number two, and if you are an AMD chip buyer, you are probably wondering who is coming in and what the strategy is. Clearly the strategy they have wasn't enough. So, you know, my guess is that AMD is going to take a few more knocks from Intel.
QUEST: And as it takes more knocks, the core point, of course, is- because as you say, it is a distant number two to Intel. The chip market is dominated by Intel, but it is still there is a competitive element within it, particularly in the futures of it. So, AMD has to move very fast, surely, to put-I mean the replacement they put in will not suffice.
DIGNAN: Yes, well, there are two elements here. One, is the AMD is competing with Intel. And AMD will always be around because if you are an IT buyer, you need somebody to keep Intel honest, right? So AMD is always going to be in those accounts, they may not be chosen. But the bigger picture is, what is AMD's answer for smart phones, tablets, mobile devices? And in that realm they are kind of competing with Qualcomm, and other players like that. So, you know, on the one side you are getting pummeled by Intel. And then on the other side you have to worry about a mobile strategy. So, my guess is that is why Meyer was tossed.
QUEST: All goes to prove that it is brutal in the C suite in the corporate world of America.
Larry, many thanks, indeed. We look forward to having you on the program to help us make sense of these difficult issues.
Now when we return in just a minute, no such staff difficulties in the latest episode of "The Boss". Our fly on the wall series we discover how Richard Braddock is able to remain a team leader, while still managing to lead his company from the front.
(COMMERCIAL BREAK)
QUEST: Now as a manager you are as good as your people. Those words, of course, come from one of our bosses, and it is from Richard Braddock in New York. He is the chief executive of the online grocer, FreshDirect. And one of the three leaders that we have been following for our series, "The Boss".
Richard rewards his employees for their hard work and for another successful year at fresh direct. In this edition of the program not only will we meet Richard, but Michael Wu will take us in Hong Kong, where he is checking out a new range of signature produce to accompany the complete revamp of one of the stores.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: Previously on "The Boss", Michael Wu shared his insights with students from Hong Kong University.
MICHAEL WU, CEO, MAXIM'S GROUP: The message I gave them, which is very important, is that there is no short cut in life.
UNIDENTIFIED MALE: And in New York, Richard Braddock taste tested FreshDirect's produce.
RICHARD BRADDOCK, CEO, FRESHDIRECT: Everyone around that table could talk about their unit, in terms of what happened yesterday, and what they are doing about it tomorrow.
(CHRISTMAS MUSIC)
BRADDOCK: This is our creative guy.
UNIDENTIFIED MALE: Back in December Richard threw a party for many of FreshDirect's 2,000 employees.
BRADDOCK: I never knew this guy was such a great motivator as that.
UNIDENTIFIED MALE: As the CEO Richard has every reason to celebrate, his company has had a profitable 2010, growing by more than 20 percent. Richard is proud of his team and what they have achieved.
BRADDOCK: We expect a lot of them, and we need to have a happy employee base. And when they are doing well, we need to reward them fairly.
You have really helped us here. You are doing great.
UNIDENTIFIED MALE: Richard makes time to mingle with his employees. He wants to know how they feel 2010 has gone. For them, this is a time to hear directly from their boss.
UNIDENTIFIED FEMALE: Even though he is our CEO, he really is a team player at the same time.
UNIDENTIFIED FEMALE: At a lot of companies you don't actually get to see the CEO. And so to have him here, and involved, and a part of the day- to-day activities is just wonderful.
UNIDENTIFIED MALE: For Richard, this is about celebrating hard work. It is also about reflecting on his job as "The Boss".
BRADDOCK: As a manager I believe you are as good as your people. You basically don't expect to do everything yourself, or even most things yourself. You try to get people around you who share your dream and vision about the business and who produce. And that is what we're good at.
UNIDENTIFIED MALE: As the party heats up, Richard picks up the mike and he rallies his team.
BRADDOCK: We have had such a great year. And we are really starting to put this company on the map. Everyone in this room, I know, is working incredibly hard to do it. And I'm really proud of all of you for what you've done. And I hope you all feel some of the pride that I think we all share for what we are becoming.
(APPLAUSE)
UNIDENTIFIED MALE: As he works his way around the room, Richard is confident 2011 will be a profitable year. And as the CEO, he knows it all begins with him.
BRADDOCK: Because everyone is trying to make us better, every single day. And you can't be a good leader if you can't be a good listener.
UNIDENTIFIED MALE: In Hong Kong, Michael Wu is doing his own bit of listening. He is meeting with his team from Canteen (ph) Restaurant to find out how his eatery is fairing after a complete renovation.
WU (SPEAKING CHINESE, TRANSLATION ON SCREEN): How many seats have you got in here?
UNIDENTIFIED MALE (SPEAKING CHINESE, TRANSLATION ON SCREEN): about 150 or so.
UNIDENTIFIED MALE: Canteen's first branch opened in 1999. But after 11 years was closed for a complete make over. For Michael, it is essential to keep his brands fresh. And with more than 70 of them under his belt, that is a constant challenge.
WU: A brand for us, probably, lasts for about five years. And we feel that we need to give it rejuvenation to make it look fresh, to let the customers think that there is something new.
WU (SPEAKING CHINESE, TRANSLATION ON SCREEN): So the theme is quite soft and mild, with a rather high-end image. I think it is quite suitable for the business district. It's of a high-class, right?
What are the views from our customers?
UNIDENTIFIED MALE (SPEAKING CHINESE, TRANSLATION ON SCREEN): Generally, they feel more comfortable.
UNIDENTIFIED MALE: For Michael, renovation is more than just restoring and remodeling. It is starting over. And that means introducing new signature products.
WU (SPEAKING CHINESE, TRANSLATION ON SCREEN): Roast pork, barbecued pork, chicken. What is this? Is this duck or goose?
UNIDENTIFIED MALE (SPEAKING CHINESE, TRANSLATION ON SCREEN): Goose.
FOSTER: Michael likes what he hears from his team. The canteen has been performing well. And, as the boss, he's confident the renovation will pay off.
WU: The sales of this store has gone up 10 percent since the renovation. And it will go up even more because the main entrance is blocked. And once that opens up, we expect it will be 20 percent more than before.
FOSTER: Next week on The Boss, Richard Braddock warms up to a new food line. And in London, we catch up with Sarah Curran. She plays business role model for "Marie Claire" magazine.
(END VIDEO TAPE)
QUEST: The Boss. And there's a chance to catch all the episodes from the very beginning. The Boss is at 18:30 in London, in half an hour leading up to this very august broadcast, QUEST MEANS BUSINESS. You can watch the big boss and lots of it.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And here, the news always comes first.
So let me tell you, Australia's floods are going from bad to worse. Three quarters of Queensland has now been declared a disaster zone, with evacuations underway in Brisbane. Authorities are warning its 30 suburbs are at risk. Water is threatening 6,500 homes. On Monday, a flash flood swept through the town of Toowoomba, killing at least 10 people. Nearly 80 others are still missing.
Doctors in the U.S. state of Arizona now say Congresswoman Gabrielle Giffords is holding her own after being shot in the head on Saturday. Giffords is in critical condition. She can not breathe on her own. Six of the victims of Saturday's shooting are in the same hospital. Six people were killed. A 22-year-old suspect has been charged with murder and attempted murder and is in custody.
At least five people have been killed in clashes in the Ivory Coast, as the political stand-off there continues. So far, African mediators have failed to bring an end to the dispute over the presidency, but they're set to return to the Ivorian capital within days. The incumbent, Lauren Gbagbo, is refusing to give up power and the rival, Ouattara, has -- was declared the winner of the November run-off elections, but refuses to negotiate.
Lawyers for the WikiLeaks founder, Julian Assange, say their client could end up in U.S. custody at Guantanamo Bay if he's extradited to Sweden. That's according to papers his attorneys have released. Assange is wanted in Sweden over allegations he sexually assaulted two women. There was a procedural hearing in London today. The main extradition proceeding will take place next month.
Goldman Sachs is ringing in the changes in response to last year's lawsuit, when the investment banking was sued by regulators for fraud. Goldman is now promising to be more transparent. The bank says it will be more open about how it makes money and it's vowed to put client interests ahead of its own.
Maggie Lake has been following the developments and is in New York for us -- well, I suppose the only surprise is that they weren't already putting clients' interests before their own and not being transparent.
But we know that from the SEC investigation and the fines that they paid.
MAGGIE LAKE, CNN CORRESPONDENT: Yes, well, although Goldman never admitted any wrongdoing, they just agreed to settle. Listen, 67 pages, Richard, a little nighttime bedtime reading for you. They weren't required to do this by law, but they said, clearly, they were worried about their reputation and they understood that changes need to be made.
And it's significant. Listen, this is a firm that has long been known for its secrecy. Analysts really couldn't figure out, most of the time, how they were making their money. And they say that it's time things are going to change.
This is in response, in large part, to the public hearings, the Congressional hearings, you'll remember, that we covered so closely last spring, when there were so many questions raised about Goldman's conduct. And Goldman itself, as you mentioned, laying out pretty clearly what everyone had been saying, that clients are worried that they are putting themselves first, that they're worried about their own accounts, that they don't understand or they're not very clear about what their role is in some of these transactions.
So Goldman says in response, after this long study, that they are going to change the way they do business, starting with -- and this is very interesting and it is a significant change -- they're going to be more clear about where their revenues come from and how much money they make trading for their own accounts. That has always been the question that people were really fascinated by. It was never very clear in black and white.
Now, it's going to be, starting with the earnings report that's due out next week.
They're also going to report results from more business segments. They're going to split it up a little bit more clearly. And this is interesting. The firm also says it's going to put a renewed emphasis on suitability, asking, even if they can create these complex instruments, should they be doing it.
And if they do decide to do it, are the clients sophisticated enough from it?
QUEST: All right...
LAKE: This stems from a lot of the talk that even though some of these structured finance products had no societal benefit, that they were just sort of creating this casino...
QUEST: All right -- all right...
LAKE: -- for high net worth individuals. So now they're saying they're going to take a closer look at that.
QUEST: You're getting a head of steam up there, Maggie.
LAKE: Yes.
QUEST: I need to jump in and ask a very simple question -- is this is a whitewash?
LAKE: I don't know if it's a whitewash, but they're not changing the way they're doing business, Richard. This is a -- certainly a P.R. exercise. They're saying we're going to tell you more, we're going to be more clear about it, but we're still going to do what we always did and what made us that much money. How that sits with you depends on whether you see this as a whitewash or not.
QUEST: Maggie, lovely to see you.
The first time I've seen you in the new year, so allow me to wish you a Happy New Year.
LAKE: Thank you.
QUEST: We have plenty of battles for you and me to do over the course ahead.
Now, high unemployment, rising food prices for so many countries, that is the sad economic picture. In Tunisia, it's become a recipe for violence. We need to bring you an update, because there are contradictions about the number of people who have been injured and the rioting that's taking place.
We'll update you from North Africa after the break.
(COMMERCIAL BREAK)
QUEST: You don't need me, perhaps, to state the obvious, but I shall anyway. Rarely has the job market been this tough. One in 10 Europeans are out of work. The situation certainly isn't that much better in the U.S. There are plenty of places in the world like Spain, where it's a great deal worse. If you are looking for a job, you're against some very stiff competition.
How to stand out from the crowd and get some advice on this.
Well, first of all, the obvious -- define and quantify your skills. This is if you want to get the job you really want. Think about the best way to explain your skills and how it will benefit the company that's interviewing you.
But there's more. Show how your skills will make the company more creative.
So far so good.
But you've got to get to the people who make the decisions. So use every route available -- recruitment agencies, digital job boards, word of mouth. Concentrate on reaching the decision-maker, the person who's going to offer you the job that you want.
There's probably a golden rule and it is very simply this -- prepare, prepare, prepare and then prepare, prepare again. Research the company, what's going on in the industry, find out about who's interviewing you. It's easy these days with the Internet and the fundamentals you should know about.
This is all good stuff. I wish that I could say I came up with it. I didn't. It's all contained in a book that you want -- might want to read if you're looking for a job. The author is James Caan, who left school at 16, made a fortune in a recruitment en -- agency, first finding the Alexander Mann Group and then co-founding the head-hunting firm, Humana International.
I began by asking him how he helps seek -- job seekers to get better jobs.
(BEGIN VIDEOTAPE)
JAMES CAAN, AUTHOR, "GET THE JOB YOU REALLY WANT": What I really do is take somebody through a journey by sharing with them how some of the smartest people that I've met, how they've successfully secured the job they really want. And what it explains is there is really an art to it. And it's an art that most people don't understand.
QUEST: But you've got to get your foot in the door for -- well, first of all, there has to be a job.
CAAN: Clearly.
QUEST: But, secondly, you've got to get your foot in the door and you've got to get noticed.
CAAN: Yes.
QUEST: And that seems to be the hardest part, in many ways.
CAAN: Well, I think, and the book absolutely goes into great detail of how you get your foot through the door. So, for example, in today's world, just because you see a job advertised and you e-mail your CV, you are one of thousands of people in the current market. You are not going to be noticed.
QUEST: But the entire structure of corporate HR and recruitment divisions is designed for process, not personalities, to prevent you from shoving your C.V. in the hand of the chief exec.
CAAN: No, it's not, because you can shove the C.V. under the C.V. -- or under the nose of the CEO. So, for example, only two weeks ago, I had a call from reception and said, somebody just hand delivered a personal and confidential letter for you, shall I bring it up?
So I said, sure. And she brought an envelope up and it was somebody who had applied to me for a job and put the C.V. and he hand-delivered that.
Now, because I don't receive a lot of, you know, hand-delivered letters, I get thousands of C.V.s, but I don't get hand-delivered letters. So what that's telling you is if you think outside the box, you can buck the system.
And the book is designed to show you how you get around all of those issues.
QUEST: What's the number one trick that people have to do or number one skill?
CAAN: I -- I think a lot of it is preparation. I think the biggest single factor that I see time and time again, people just do not prepare. They do not research. They don't understand enough about the opportunity, enough about the organization, enough about what the company does.
QUEST: Am I old-fashioned in that I believe people have to dress properly for an interview, and preferably have clean shoes?
CAAN: The shows is imperative. And (INAUDIBLE)...
QUEST: (INAUDIBLE)...
CAAN: And I...
QUEST: (INAUDIBLE).
CAAN: No, no, no. I -- I absolutely go into a lot of detail...
QUEST: Yes.
CAAN: -- because in the world of employment, there's no question, first impressions count.
QUEST: Yes.
CAAN: When you walk through that door, I can't help it, but I have an opinion. So I -- I explain in the book. So, for example, if you were applying to Google, you know, Google is a very casual environment. You walk into reception and there's somebody on a hammock swinging on a phone, you know, doing a deal.
You walk into IBM, it's blue suits, it's white shirt and it's red tie. Understanding the culture of that organization and being appropriately dressed, I think, is fundamental. If you walked into Google dressed like IBM, you probably haven't quite made the right impression.
QUEST: When did you last apply for a job?
CAAN: What am I doing here?
I'm -- I'm being interviewed, aren't I?
(LAUGHTER)
CAAN: So, in a way, I think the skills of interviewing, I think you deal with on a daily basis. And I think people look at interviews as sometimes intimidating. But to me, an interview is like a business meeting. You are there presenting yourself. You are the candidate and you're there to sell.
QUEST: Somehow I think I'm the one who's being interviewed and I'm -- have I got the job?
CAAN: For those reasons, Richard, I'm out.
(END VIDEO TAPE)
QUEST: Now, let's head back to Tunisia, which I was talking about earlier. Economic crisis has turned to political disaster in Tunisia. Social -- schools and universities are closed. There is chaos on the streets. The numbers are a bit uncertain. It's believed 20 people have already died in protests against high unemployment and rising food prices. Some groups fear the death toll is even higher.
Rima Maktabi joins us now on the line from the capital.
Are things quiet at the moment?
Because we've heard reports of riots. We've heard reports that things are getting worse again.
RIMA MAKTABI, CNN CORRESPONDENT: Yes. Richard, things are a little bit getting worse in the suburbs and in the rural areas. Today, we went to the south of Tunisia, which was a drive of four hours until we got there. Towns and villages there, they had a lot of angry youths, enraged, aggrieved over the people they lost, friends and family members, during riots and demonstrations.
When we arrived to the village or town of Gastreen (ph) in the south of Tunisia today, there were five people buried in the morning.
Today, I heard also -- and we have confirmed -- news that there were riots in one of suburbs close to the capital, Tunisia -- the capital of Tunisia, which is Tunis. The major cities have been relatively OK. They've witnessed demonstrations, but not severe clashes with the police like we see in the south and some cities and towns in the north -- Richard.
QUEST: Rima, there is a dispute. The authorities say talk of 40 or 50 dead is untrue. They are calling that into question.
Whatever the number is, who is agitating this?
What role are the unions playing?
MAKTABI: Well, the union sources are saying that the dead so far is over 50 people since the unrest erupted mid-December. This is, according to the government, is an inflated number. Irrelevant of the accurate numbers, the unions have been a little bit behind these movements, but all of the political parties here, the opposition, the government, the unions, they all say that this problem has been building over the past 10 years and it's spontaneous and it's because of the high level of unemployment. Fourteen percent is the average of un -- unemployment. And it goes to 25 percent among graduates.
Each year, Richard, this country graduates 80,000 students. Only one third get jobs and become employed.
QUEST: Rima, we will leave it there.
Rima joining us from Tunisia with the latest information there.
Events come to a head so dramatically in Tunisia, as Rima was just saying, all of a sudden it's the students who seem to be rioting and the death toll rises.
Earlier, I sat down with "MARKETPLACE MIDDLE EAST'S" John Defterios.
The core question, when we have something like this happening out of the blue, is why now?
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN CORRESPONDENT: Well, this is amazing, Richard, because Tunisia is considered as a model reformer -- 5 percent growth over the last 10 years, a president who's been in power for the last 23 years, President Ben Ali.
The president has been in power for the last 23 years, President Ben Ali and following the textbook reforms all along the way, opening up to foreign direct investment, an agreement with the United States for trade going back to 1993; one with the European Union in 1995.
But at the heart of this there's a problem with unemployment. Still very high in general, at 14 percent. But that mass -- a real problem with youth unemployment, which is probably double that level right now. And this is where it percolated up from society.
QUEST: Youth unemployment is not unusual in the region, though, is it?
DEFTERIOS: No, it isn't.
QUEST: So -- so why Tunisia?
What's gone wrong there?
DEFTERIOS: Well, I think the -- the question is why has it not happened in other places?
And that's what we should watch out for. It's called, in a sense, the retrenchment from globalization, because the opportunities right now are not trickling down fast enough, despite the reforms in a place like Algeria and Tunisia for the last decade.
Let's listen in.
(BEGIN VIDEO CLIP)
JEREMY GREENSTOCK, FORMER BRITISH AMBASSADOR TO UN: I've thought for some time that the theme for the next generation is the relationship between governments and their own people in the Middle East and, indeed, elsewhere. But in the Middle East, it's crucial because many of the peoples of the Middle East feel that they're being held back from the opportunities of globalization.
(END VIDEO CLIP)
DEFTERIOS: So Jeremy Greenstock, as you know, a veteran of the Middle East and former ambassador to the UN, he points out this retrenchment of globalization. The World Economic Forum, in its Global Risk Report for 2011, lists it as one of the top five issues, and, of course, a key issue for the Middle East because of the -- the very fast growth rates.
QUEST: It is understandable, isn't it, that places like Tunisia and maybe Egypt and other countries that have taken part in globalization and are now saying, hang on, we're not seeing the benefits. The people there are saying we've done what you asked.
DEFTERIOS: Yes, absolutely. And I call this a bulge group in the mid-level per capita income brackets. You have Tunisia ranked 82 in the world at $9,500. That's not bad, because of all the reforms. And then it spreads to Algeria, Morocco and Egypt.
And that is where the concern is in the Middle East, because of the very high...
QUEST: What is the concern there?
DEFTERIOS: -- birth rates...
QUEST: What is the concern?
DEFTERIOS: Well, it's the elements. These people have access to the information now and access to the Internet, but they're not happy. And this is where the al Qaeda forces come in and the Muslim Brotherhood. And that's the danger and this is what Ambassador Greenstock was talking about right now, about this retrenchment from globalization. They're restive right now. And the opportunities are not trickling down fast enough. In some countries, the reforms started too late.
QUEST: John Defterios from "MARKETPLACE MIDDLE EAST" on Tunisia.
The weather forecast and a Profitable Moment all still to come on QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: So there is lots of miserably bad and downright dangerous weather in the world at the moment.
Guillermo is at the World Weather Center.
Where do you wish to begin?
GUILLERMO ARDUINO, CNN METEOROLOGIST: In Britain, because things are not that bad right now. So I want to start with the better news. So when we look at the radar in here, we see Ireland -- Northern Ireland under some bad weather. Now, at times it's really -- it's really bad. But I was looking for observations. The only one that I got was low key (ph) with some rain. That's about it.
Now, France has a lot of rain, especially in the eastern parts. And that tells me that Germany is seeing some bad weather, too. So when I'm looking at the observations there, Vestaland (ph) is where we get some snow.
Now, there is something of concern and we need to talk about this. It's not only the winds that I have behind me, but also that temperatures are going up right now in the west.
Have you noticed that?
Let's roll an iReport that we're getting from Koenigswinter. And it's an area of Germany where we have the River Rhine that is going up in -- in levels.
Do we have it, Mark?
Do we have the video?
No, we don't have it. I wonder why. I just put it in.
Probably I put it on another show.
So we have floods in Germany. And, you know, this is very important. It is going to happen. And you're going to start seeing pictures coming from there of floods in Europe, because the temperatures go up with the influx of warm conditions. And with so much snow that we had before, that turns into water and it overloads the rivers.
Look at Germany.
What's going to happen into Wednesday and Thursday?
Temperatures are going up significantly. It's a very small area of Europe where we get cold conditions. So we're concerned about that.
Also, look at this. The rain is falling. We had ice before because the temperatures went down after the snow and the rain, then they went down, ice. And, finally, when it warms up, we get the flooding, because it melts away.
So that is what's going on now. Twelve degrees in London. That's a big change. Eleven in Paris is the high for tomorrow, Wednesday. And we have problems at airports with the winds, as I told you, Richard. So Paris all over the -- the north and the west. So the weather is getting better but the winds are here complicating plans -- back to you.
QUEST: Guillermo, many thanks, indeed.
ARDUINO: OK.
QUEST: And be careful where you put that video.
ARDUINO: I know.
QUEST: Shame on you.
All right, this week, Q&A is back, every Thursday. Ali Velshi and myself talk about what you want us to talk about in the realms of business travel and innovation. Go to CNN.com/qmb and send me a Tweet with the hash tag, cnnq&a.
I'll have my Profitable Moment right after the break.
(COMMERCIAL BREAK)
QUEST: Now, tonight's Profitable Moment.
Earlier, I referred you to an article that talked about the loneliness created from technology. We're all familiar with the syndrome. We text someone when we could just as easily make a call. We send an e-mail to a person we can see across the office and we spend hours on Facebook, MySpace and Twitter, rather than going out to meet friends and family.
Today, too many of us live our lives vicariously through the screen. The turn of events, some say, is inevitable. To accept that, though, is a sad state of affairs. It is not inevitable. Letting technology ruin our face-to-face relationships is a disgrace. We must be the masters of the gadgets, not the servants of the microchip.
And that's QUEST MEANS BUSINESS for tonight.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I do hope it's profitable.
"WORLD ONE" starts right now.
END
