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QUEST MEANS BUSINESS
Japan's Nuclear Fallout; `New York Times' Builds Pay Wall; Future Cities
Aired March 28, 2011 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Tonight, Japan's nuclear fallout. Radiation fears grow.
It's a case of hey "The Gray Lady", "The New York Times" pay wall has just been built.
And friends, Romans, countrymen, restore your ruins, we're in Italy for "Future Cities."
I'm Richard Quest. We have an hour together-I mean business.
Japan's nuclear crisis is deepening and the company in charge admits there is a lot it doesn't know. There are more high-level doses of radiation have been found in the water near the Fukushima nuclear power plant. Contaminated water is now in a tunnel connected to reactor No. 2's turbine building. Tokyo Electric Power says it doesn't know how the tainted water got out of the building or whether it is seeping into the Pacific Ocean. We do know that water at the plant is 100,000 times more radioactive than normal. And that radiation has been detected in seawater.
Earlier I spoke to Martin Savidge in Tokyo and I asked him how serious is the situation?
MARTIN SAVIDGE, CNN INTERNATIONAL CORRESPONDENT: Well, the question is, Richard, where is it coming from? Now, of course, you've got a nuclear reactor onshore that is having all sorts of trouble, but the whole system is supposed to be contained so none of it would run off. Yet, apparently, that is exactly what is happening. And it appears that the operators of the plant, TEPCO, have no real clear idea how that radiation is getting from the damaged reactors into the ocean.
The theory is that they have been pumping so much water to cook the reactors and to keep the fuel pools filled to their top, that it is all overflowing and somehow it has found a channel to get into the ocean. They say that it is not supposed to be a real serious concern for humans, or for sea life, but it is a concern when they don't know exactly where it is coming from and how to stop it, Richard.
QUEST: Martin, does TEPCO have any credibility left?
SAVIDGE: Not with many of the Japanese people. In fact, the recent surveys of opinion polls that have been taken here in Japan. A majority of people say that they do not believe that the company has been forthcoming, and hasn't revealed everything they know. And, in fact, most people believe the situation is far worse than the company is letting on.
QUEST: As we look on the economic front, we know that this part of Japan is a relatively limited part of the wider economy. But those wider affects are now really being felt, aren't they?
SAVIDGE: Well, you are right. I mean, there are a number of levels in which this, I guess you'd call it economic shock, is going through the entire economy of Japan. Number one, you had the massive earthquake and tsunami. The amount of money that is being talked about there, as far as damage estimates, it is the largest natural disaster that the world has ever known, financially. Then on top of that you've got the nuclear problem and the question marks it raises about the future. Some of the areas that are affected there, the prefectures, some of the richest farmland to be found in all of Japan. Those products, that produce, is now being thrown away, it is taken out of the mix. That is another economic shock. And then on top of that all the dislocated people that now will have to find someplace else to live.
So it is one after another, after another, after another, here. Many of your major corporations that export to the world, have not been doing that, because the whole system came grinding to a halt. So, you can easily see that it is not just the natural disaster, but the multiple ripple effects that are going to be felt for some time, Richard.
QUEST: Finally, I do want to come back to this radioactive stuff, because you know, I'm thousands of miles from where you are, Martin. And I read in the morning newspaper, and you listen on the morning news, it just sounds extremely serious and worse-case scenario?
SAVIDGE: Nobody likes to wake up in New Hampshire, or on the East Coast of the United States, and find out that there is a little bit of Fukushima all around them. And yet that is exactly what is happening. Now miniscule levels, nothing that scientists say will do you any harm. But still, the fact that part of this plant, here, are ending up around the world, has a certain factor to everyone. We have a natural dislike for anything with radiation involved. And when we understand that this plant is not under control, when the officials say the worst may not be over, when they don't appear to be optimistic, nor necessarily in control of events, that is alarming to everybody. And I mean, even outside of Japan, Richard.
QUEST: Martin Savidge in Tokyo. Now, TEPCO, the company involved remains under enormous pressure. It shares fell nearly 18 percent on Monday. And their lowest level since 1977. There is talk of nationalizations, resignations and massive compensation costs. In the two weeks since the initial disaster we are only now just beginning to understand the full-excuse me-extent of the aftermath.
Blackouts continue in Tokyo. Bodies cannot be cremated because of the shortage of gas and a quarter of a million people are homeless. The government says the cost is $300 billion, at least. It is the world's costliest natural disaster. I'm joined now by Seijiro Takeshita, the director at Mizuho International.
With so much-well, where does one begin? But we must start-I think- with the wider economic impact of this.
SEIJIRO TAKESHITA, DIRECTOR, MIZUHO INTERNATIONAL: Yes.
QUEST: Look, whether Japan is the second or the third largest economy in the world is moot in the sense that it is one of the single most important economies.
TAKESHITA: Well, I think the problem is not only on the physical, stock side that people talk about. I think what we see from here onwards is the flow side of things, in other words, the distribution network that has been truncated very much, and also the power; as you have just been reporting, right now. So, 20 percent of power from that Fukushima plant goes to Tokyo Electric Power, which provides the Canto (ph) area, which is a vital part, which is the heart of Tokyo's-Japan's engine. And right now, it is alright, but as we go into summer we know that the electricity usage is going to almost double from here, onwards.
QUEST: So we have sort, if you like, Japan, a rough-the Islands of Japan. And we have this eastern seaboard part, that is badly affected, but from what your understanding is, what are the rest of the country, and the general ability for the Japanese industrial machine to operate?
TAKESHITA: Well, the core is the Tokyo area. And unfortunately there is a megahertz difference between Tokyo and Canto (ph), so we can't transfer-we cannot transfer, for example, Cansaga (ph) electric power usage into the Canto (ph) area. Now, this is a very big problem, because without the power, what can you do?
Now, we were able to claw ourselves back very strongly in Kobe or in Tuestu (ph) earthquake, but this time around things are going to be very difficult, because we don't have the power.
QUEST: So if that is the situation, obviously, first quarter GDP in this year, second quarter is going to be just-I mean, recessionary-I mean, the economy has ground to a halt.
TAKESHITA: I think we'll be seeing unfortunate disappointment coming through. Not only on the GDP figures, but the outlook of that as well. Seeing that the revival trend is taking a lot longer than many had expected.
QUEST: What are you expecting? When do you expect to see it?
TAKESHITA: I would say that we would see signs of a bottoming out, probably around this autumn, when we can basically cope with a supply and demand situation in the power outage side.
QUEST: And for a country that already has a budget-a budget deficit-a debt to GDP of more than 200 percent. Yes, historically, low bond rates at the moment, but where is the real problem? And when is the real problem going to arrive?
TAKESHITA: I would like to think that this would be a very good wake up call for the bureaucrats and also the politicians to basically refocus into a high multiplier economy. In other words, stop all these, you know, brown-nosing policies. All the Japanese right now are unified to fight against this condition, so basically reinvest in areas which has high multiplier to rejuvenate the area.
QUEST: Do you expect the transmission of-through the supply chain, to be as bad as people think? Whether it is Toyota, Nissan, Honda, Sony-or just the companies that I've never even heard of that provide the widgets and what its and chips, to everybody else?
TAKESHITA: Unfortunately, that will be the case particularly with things like automobiles, which is consisting of 30,000 parts and made of 80 percent automobile parts. So, they will be pretty much in a very, very strong jeopardy from here on. Which there will be more problems unfortunately, I think that will be rising for industries like that.
QUEST: And finally, we were talking to Martin, there, a moment ago, in Tokyo about this radiation. The health issues from this, now, there are conflicting views, some people say it is not going to be that bad, other people say it is going to be terrible. You pays your money, you takes your choice. But the people you are speaking to?
TAKESHITA: Well, I'd say they are showing an immense amount of solidarity and it is showing the positive aspect of Japanese collectivism. In other words, they are showing resistance against this move and for that reason I'm very proud of the way they are acting, which is totally the opposite of how some corporations and the government officials have been acting. Which they should be acting on a top-down basis, so there is very sharp contrast between the two I'd say.
QUEST: Many thanks, indeed. Pleasure to see you.
When we come back in a moment, all the news that is fit to print. The question is how much will you pay for it. The New York Times pay wall has just gone up, a few moments old. Will it hold? Or is there a back door?
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QUEST: There has been an important development in the online world in the last few moments. The pay wall has just gone up around "The New York Times" web site. As of a moment or two ago, one of the web's busiest newspaper sites is no longer completely free. CNN's Allan Chernoff explains how "The Gray Lady" is looking for some green.
ALLAN CHERNOFF, CNN SR. CORRESPONDENT (voice over): "The New York Times" is trying to harness a force that has been wrecking the newspaper business, free access on the Internet. Executives here plan to walk a fine line to generate subscription revenue from avid readers willing to pay while still retaining casual customers who boos advertising revenue with their clicks. After much research "The Times" believes that fine line is 20 articles every four weeks.
MARTIN NISENHOLTZ, SR. VICE PRES., NEW YORK TIMES: We are as confident as we can possibly be in a research setting. Obviously, whenever research hits the real world, there are changes.
CHERNOFF: Whatever the right number of clicks is, the times intends to become the largest general interest newspaper to emulate what business papers, "The Wall Street Journal" and "Financial Times" have done. Collect subscription fees from online customers.
JILL ABRAMSON, MANAGING EDITOR, NEW YORK TIMES: when I say it is a bet on the future, we want to maintain the most robust kind of newsroom, full of talented journalists. And in order to do that it seems sensible to begin asking some readers to pay for it.
CHERNOFF: As newspapers have given away their product for free online, paper subscriptions and advertising have dropped. The prestigious "Times" is no exception. It's online readership and web advertising have steadily grown. But that hasn't made up for the drop in print revenue. So the paper needs a second stream of online revenue. And executives believe now is the right time to start charging.
PAUL SMURL, VICE. PRES., NYTIMES.COM PAID PRODUCTS: A few things have changed recently. You know, one is that people are more used to paying for digital content with the advent of apps and apps store, and the ease of purchase through apps.
CHERNOFF (On camera): Still, "The Times" anticipates the vast majority of online readers will not reach the pay wall limit. It is, however, counting on the most devoted of those readers to reach for their wallets, just like they used to for the daily newspaper. Allan Chernoff, CNN, New York.
QUEST: Now this is what "The New York Times", if you wanted subscribe to it, looks like. The various options, TheTimes.com, smart phone, tablet. Lots of questions about this. They have even got a special offer. And of course, you do get the first 20 pages month free. What is a digital subscription? On and on, it goes. Now there will always be some way to smash through this sort of pay wall, whether it is "The New York Times", "The Wall Street Journal", or the "Financial Times". So Emily Reuben has been searching for ways to scale the ramparts.
(BEGIN VIDEO CLIP)
EMILY REUBEN, CNN INTERNATIONAL CORRESPONDENT: So how much of a barrier to content will "The New York Times" pay wall really be? Because we've been looking at "The Wall Street Journal", which also charges for its content, but here in London, we can view pretty much all of the articles for free. "The Financial Times" is another newspaper that charges for its content, they have a pay wall.
But if you copy and paste the headlines into a search engine, well, then you can read the article for free, there is no charge. And we've been able to do that for one or two pieces. However, there is a limit to the number of articles you can view for free on "The Financial Times". It is three, and then you are presented, again, with the pay wall. It is a pretty confusing picture. This is nascent technology for a new way that we can use papers, and there is clearly some way to go.
(END VIDEO CLIP)
QUEST: Emily Reuben there.
By their own admission it is one hell of a gamble by "The New York Times". Steven Brill is the founder of CourtTV and co-founder of Journalism, on line.
You take issue, first of all, I believe, to the very idea that we use the phrase, pay wall, but that is what they aren't they? They are walls around content?
STEVEN BRILL, CO-FOUNDER COURT TV, JOURNALISM ONLINE: No, they're not. I mean, if a newspaper simply put up a wall, and said, all right, you've come to our website, you have to pay us or go away, which is what some newspapers in the United States have done. That is a pay wall. What "The Times" is doing it more like a ramp. They are gradually getting their most loyal customers to day. And that has worked, and we have launched over 2 dozen newspapers in the United States with our company, and it has worked.
Those newspapers haven't lost a penny of advertising revenue, they haven't lost any number of unique visitors. And yet, they've gained an online revenue stream, and they have maintained their print circulation, because there is no longer a completely free alternative, so what "The Times" is doing is going work.
QUEST: So, we need to understand, then, what does work in an arena where there is free news, not least of which, from CNN.com and others. So, Steven, what works and what doesn't? What is the trick to this?
BRILL: The trick is asking the people who are most likely to pay, your most loyal readers, to pay something, as Jill Abramson says, in order to defray the cost of the quality journalism that you are supplying.
You know, the cable networks are a very good example of exactly that model. You know CNN exists on advertising revenue and on revenue from people who watch CNN, on cable, or on satellite.
QUEST: Right, but if, for example, but for example have you had clients who have wanted to charge or wanted to put pay walls of some description-ramps-whatever. And you said, "Don't do it. Your content isn't distinctive enough, people won't pay, it is not unique.
BRILL: Well, if it is not distinctive enough then they need to be in another business. But the fact is, you know, we have a newspaper in Scranton, Pennsylvania, and they're coverage of local high school sports, or of the city zoning commission, is unique, and people are proving willing to pay for it.
QUEST: To reverse the trend-
BRILL: It may not be unique the way "The Times" is unique, but it has, you know-it is distinctive. And it if it is not distinctive, then you have to go through you newsroom and say, why aren't we dong something that is distinctive?
QUEST: That is the core isn't it? You have got to offer something that is not found elsewhere.
BRILL: What I love about this is it puts the burden for journalism back where it ought to be, and that is in the newsrooms. If CNN wasn't doing something distinctive, if your show wasn't distinctive, then people wouldn't bother to subscribe to CNN on their cable networks.
QUEST: If we look overall, you know, I'm you know there is a generation now coming through, that is starting to get used to the idea you've got to pay for online content, online music, online movies, perhaps it was my generation, and our generation, that got everything free to start with. Do you think that is a trend that is going to continue? People will accept that there is no such thing as a free lunch.
BRILL: I think it is, and I think "The Times" is going to play a lead role in that. But the fact is, that if it is a trend that doesn't continue there isn't going to be journalism. It just-in the history of the world no significant newsgathering operation has ever existed purely on advertising revenue.
QUEST: Steven Brill, in New York. We are very grateful you came to talk to us tonight. Many thanks, indeed.
Now it is a struggle of colossal proportions. How Rome is saving its most famous landmark. It is our "Future Cities" and it is after the break.
QUEST: Now for thousands of years it stood as the proud icon of Rome. Well, you don't need a postcard to be able to recognize that as the Coliseum, the now, the Coliseum, has another battle on its hands. The battle against the elements. The weather has warn it down, pollution has dirtied its walls. But tonight's episode of "Future Cities", I went to Rome, to see how the city will save its most family monument.
QUEST (voice over): When falls the Coliseum, Rome shall fall; and when Rome falls, the world.
In 1818, the British poet Lord Byron, thought the Coliseum infallible. Now, though, more than ever the condition of this ancient arena, is cause for concern. Two millennia of natural disasters, weather and pollution, have leaf the Coliseum and the neighboring Roman Forum, in a fragile state. It is a sensitive spot here. After all, these relics are a vital pillar of the tourist industry. Every year historical sites bring 30 million visitors to the Italian capital.
ROBERTO CECCHI, COMMISSIONER OF ARCHAEOLOGY, ROME (through translator): Our country is visited by people from all over the world, simply because it has this heritage. So we should take this into consideration. If we think in terms of income, the value of tourism in Italy is 90 percent linked to this heritage. We don't take care of it, it is not looked after how it should be. And that is the main issue.
QUEST: If Rome's ancient buildings crumble so will its legacy. And with it a large chunk of the city's economy.
(On camera): In the days of the Roman Empire, the Coliseum's Travertine (ph) Stone was said to sparkle in the morning sun. Now, fast forward a few centuries, and suddenly you see the Coliseum is as black as an Italian espresso coffee. Getting rid of the grime of the years, will take many man hours, and probably cost an emperor's ransom.
(voice over): There is never an emperor when you need one. Today's leaders coffers are empty.
CECCHI (through translator): To think my budget for the entire City of Rome and Astia Antiqua (ph) is about 32 million euros. We needed 25 million just for the Coliseum. This explains the size of the financial situation we had to deal with. In this instance, the restoration was finance by private funds.
QUEST: This is where the bulk of those private funds will go, scrubbing the old stone walls, without damaging them. It is a delicate process that requires know how and patience. The dirt is first softened by spraying it with atomized water for up to six hours. Then a mild chemical solution is applied to remove grim. Cleaning the cracks and crevices is not easy. Certain spots can only be reached with a toothbrush. Beneath the Coliseum's arches surgeon like precision is needed to uncover artworks from a think blanket of soot. For the workers, dramatic results reward their passion.
EMILIANO AFRICANO, RESTORATION EXPERT: I love my work. I'm very happy to-that I can work in the Coliseum.
QUEST: Money will also go towards the Coliseum's Hypha (ph) Gym, it's underground liar. Here, beneath the arena's wooden floor, gladiators and wild beasts awaited their turn to fight to the death in front of a cheering crowd. The shafts in which gladiators and animals rose to the arena, are on display. Soon the area could be fully opened to tourists.
BARBARA NAZARRO, ARCHITECT: What is important is to let people understand in a complete way this monument. Coming down here is a good opportunity to understand how the show worked. So, I think it is very, very important to preserve the monument, because knowing is preserving.
QUEST: In Rome, preserving means the future, which is why the Ministry of Culture has introduced a regular maintenance program. For the first time, Rome's oldest inhabitants are being cared for strategically.
(On camera): And, much as we would take care of the elderly, here they believe if they have regular check ups and take care of the small problems, they'll prevent bigger ones later on.
(Voice over): The idea is resonating amongst Rome's politicians.
GIOVANNI ALEMANNO, MAYOR OF ROME (through translator): In a way we are the custodians of these monuments, not only for Italians, but for all the people of the world who must see how ancient Rome was. We must ensure that this is possible.
QUEST: Rome is beginning to understand. Maintenance expenses are a small price to pay to safeguard its legacy. Preservation is a state of mind.
QUEST: The fascinating tail of the Coliseum and its restoration, in Rome.
In a moment, misery for Merkel; Germany's chancellor see her party taking a pasting at the polls. What does it mean for Europe's paymaster? In a moment.
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QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS. This is CNN and on this network, the news always comes first.
And to our leading story tonight, we've already told you about what's been happening at the Fukushima nuclear power plant in Tokyo. Well, now there's a startling new discovery. Plutonium has turned up in soil samples at the site. But Tokyo Electric says the latest findings pose no risk to humans. It will increase monitoring, though, just in case.
Outside Moammar Gadhafi's compound, this scene aired on Libyan state TV, supposedly showing the Libyan leader inside the car as it's being mobbed by a crowd. Libyan rebels have been pushing westward after gaining control of key cities over the east of Tripoli over the weekend. The leaders of France, Britain, Germany and the United States have been discussing Libya at a conference call.
Medical sources tell CNN 121 people have been killed in an explosion in Southern Yemen. It happened at an ammunition factory that had been taken over by suspected al Qaeda militants. Another 45 people were injured. Security officials say the victims were mostly locals looting the factory.
For the first time since an Italian court lifted his immunity from trial, the Italian prime minister, Silvio Berlusconi, has been in court today. These are pictures taken after Monday's hearing. The ruling earlier this year now means the prime minister can face three corruption cases linked to his broadcasting empire and a separate trial in which he's accused of having sex with an underage dancer.
To business news again. And in Germany, a painful defeat for the chancellor, Angela Merkel. It was a decisive blow against nuclear power in Germany. Mrs. Merkel's Christian Democrat Party lost the key state of Baden-Wurttemberg in regional elections. It brings to an end nearly 60 years of state rule by the CDU. A coalition led by the Green Party will take over. And this man, Winfried Kretschmann, is poised to become Germany's first Green state premier.
Well, not surprisingly, Chancellor Merkel described the results as a deep wound and blamed the defeat on the debate over nuclear power, which began in the wake of the disaster in Japan.
Mrs. Merkel has placed all of Germany's 17 nuclear plants into a three month safety review. The other seven remain closed while it's carried out.
Nuclear power problems and an economy that's storming ahead, but elections that seem to be much more difficult.
I spoke to Hans Redeker of BNP Paribas.
I put it to him that these election results were a severe blow for Angela Merkel.
HANS REDEKER, CURRENCY CHIEF, BNP PARIBAS: Yes, you're absolutely right. In Germany, you have seen election results which are very displeasing for the government parties. But one has, as well, to admit that there were other reasons coming on top of the European situation making people to decide against government parties.
Call the situation in Japan, call the discussion concerning nuclear energy and all this has an impact.
QUEST: How serious an impact?
Is -- is it just disgruntled populations taking their wrath out on incumbent governments or does Chancellor Merkel really have something to be worried about?
REDEKER: Well, Richard, when you look at, in German politics, and you see that the Germans are behaving very differently when compared to other nations, it is always like we have very important government changes when these conditions are actually quite good. So, for example, recall 1969, when we moved from a conservative government to a social-liberal government.
So it looks like that we have very strong economic foundations. But then the electorate becomes very experimental. And so the election result might be seen, as well, in this context.
But there is, as well, another issue to -- to discuss here, and that is, indeed, the -- the European issue. And there's a -- a huge displeasement within the German population concerning the outcome of those meetings and, as well, the mixed messages they're receiving from the government.
It had been only a year ago when Mrs. Merkel was categorically ruling out any help for -- for Greece. And then the Greek -- the Greece aid have been developed. And then it went on and went on and the German...
REDEKER: -- position became weaker and weaker.
QUEST: But are they satisfied, do you think, and, indeed, those leaders, both from Germany and from France, who -- who have used the crisis as the price for getting greater cooperation and greater fiscal, if you like, unanimity, are they satisfied that they've got that yet?
REDEKER: Well, I guess that we all agree that to run a currency union, you need to have some sort of fiscal integration. Everything else remains very -- a very big experiment.
And in this sense, I guess we have done the right step forward in Europe. I was wondering that we didn't -- or we were not able to do that before. So we did require tries to go into that direction.
This is absolutely the right direction that we are taking in Europe. Everything which takes us into fiscal integration is a big step forward.
QUEST: All right, now, finally, then, if there is so much uncertainty -- Portugal's downgrade, banks get downgraded, further stress tests, Ireland going to the ECB -- why is the euro not literally being clobbered out of bed?
REDEKER: Well, we have, actually, to look at the international flows into the euro. And what we do see here is that central banks, global central banks, via their currency reserve reallocation, are buying into the euro...
REDEKER: -- and not only is that...
QUEST: Why, though?
REDEKER: Well, I mean nobody has an interest to create a second type of Lehman. So if Europe would fall apart, then, Asia would lose significant possibilities to sell their products in the European market.
So there is a -- there is a -- an interest into European stability. And that is the reason, as well, why the central banks are not only buying the euro, but, as well, investing some of these euros into peripheral countries.
QUEST: Right. So that -- if that continues, what you're saying, then, is that even if we have political turmoil and a couple of countries on the verge of bailout bankruptcy, don't sell the euro because it ain't collapsing?
REDEKER: Well, what I actually say is that everything has, obviously, a limitation. And when you look at Asian central banks and their belief that we in Europe run a liquidity problem, I think.
And I would say it is deeper than that. It is actually a solvency problem, I think.
So we haven't really discussed the solvency problem, I think, over the past weeks and months. And we might not do that even for the next weeks and months. But when the solvency problematic comes up, then, of course, the central banks might stop investing in the euro. But that is not yet the case.
(END VIDEO TAPE)
QUEST: All right, now these are...
QUEST: -- excuse me -- the markets that we want to refer to.
In Europe, let's begin, where we've had a fairly low key day. But that -- the numbers, perhaps, don't tell the fully story of what we've really seen. Obviously, the Xetra DAX suffering a little bit as a result of what's been happening economically and politically in Germany.
The markets were most -- two shocks in particular to draw your attention to.
Alcatel-Lucent, in the French market, which gained almost 8 percent, and Nokia, which was also up by 3.5 percent. Nokia a stock that has been pummeled in recent months.
But both of those stocks gained because Goldman Sachs recommended the stock and upgraded the outlook.
But otherwise, relatively quiet.
This is New York at the moment.
AT&T and Verizon, the two mega competitors in the mobile market, the Internet broadband market, the mobile broadband, they're amongst the best performers. Wall Street analysts have upgraded both of those companies' stocks. And the feeling is that AT&T is going to get its way in the deal that it's trying to do to buy T-Mobile. The gains are cautious.
Incidentally, "The Economist" only last week came out against that particular deal.
In the Middle East, here's an interesting one -- Egypt. The market is now open again. We saw very strong gains in the first couple of days. Now, slightly more muted. Dubai the same. Saudi Arabian stocks are down just a tad. And that's the interesting thing, because they're -- the Saudi stocks are off just after three sessions of gains.
But with so much turmoil in the region at the moment, the mere fact that we're not seeing bigger gyrations on these stocks is particularly interesting, as I discussed with "MARKETPLACE MIDDLE EAST'S" John Defterios, who joined me earlier.
And needless to say, we had to begin by talking about the Egypt stock market.
JOHN DEFTERIOS, HOST, "MARKETPLACE MIDDLE EAST": In fact, we saw a rally in the Egyptian stock market Sunday, the biggest gain in 15 months, of 5 percent. A similar gain this morning, a jump of 7 percent, before leveling off for the rest of the day.
This is, Richard, classic bargain hunting, to be candid, by institutional investors and also the access to government funds supporting some of the -- the companies in Egypt, as well.
QUEST: Because the Bank of Egypt, the central bank, has -- has moved very sharply, hasn't it, to -- to make sure there is liquidity in the market for -- for banks so they don't go bust?
DEFTERIOS: And that's the -- that's the case here.
But is this going to be something that's sustainable or not?
We're starting to see the first inklings of normality returning to the economy today. We saw a press conference being held by the military council. General Shaheen was saying that parliamentary elections will, indeed, go forward in September. Presidential elections will follow. And he said during the presidential elections that emergency law would not be in place, meaning it's going to be lifted at some time in the autumn.
QUEST: From your contacts and the people you're speaking to there, how much ordinary business -- trade, buying and selling of goods -- is going on?
DEFTERIOS: Well, I spoke to one CEO on the phone today and he was basically saying that his company in particular -- it's a diversified industrial group -- business is down 70 to 80 percent. So they're starting to retrench with their staff, hoping they're going to see some stability within a six month window. This is also a company that has hotel properties in the Red Sea. Occupancy rates, Richard, recovering from their lows of 10 percent during the heat of the crisis, now up only 30 percent, where it's still 50 below the peak.
QUEST: All right, now oil. As Libya continues, further unrest in Syria, throughout the region, even Jordan. So now oil, once again -- but, John, the price is not rocketing.
DEFTERIOS: Well, we're still at historically high levels. That's the reason...
DEFTERIOS: Well, Libya, production of 1.6 million barrels a day, down to 400,000 barrels a day. But a big question mark, what happens in the future.
DEFTERIOS: The Qatari government now acknowledging this national council in the east and saying they'll market the oil from the eastern province. Troops are going into Sirte, which is the -- the heartland for oil in Libya.
But what happens over the next two or three weeks is a big question.
Yemen security, we should keep an eye on, as well. It's the -- the passageway for the Gulf of Aden. And then, of course, on the sudden -- the southern flanks of Saudi Arabia.
QUEST: Yes, but this -- this prognosis that some scaremongers of that -- of $200 a barrel, we're not seeing that.
DEFTERIOS: No, that is not in the cards right now. I know some people are making that big play...
DEFTERIOS: -- if the security situation unravels.
But how does Syria play out going forward?
How does Libya settle down?
Does the Yemen security situation really unravel?
Let's not forget the U.S. staked a lot on President Saleh. He's now refusing to leave by the end of the year.
But it is a huge security question around Saudi Arabia, not knowing how Yemen is going to play out.
(END VIDEO TAPE)
QUEST: John Defterios and the situation in the Middle East.
Now, when we come back in a moment, how you can lead by example. It's a U.S. state where the governor wants to cut spending and reduce taxes and one mayor still manages to higher more workers.
How has he done the three card trick, in a moment?
QUEST: Tonight, how did a mayor in New Jersey manage to rehire a dozen firefighters that were laid off because of budget cuts?
It took a certain amount of ingenuity and a great deal of imagination.
Maggie Lake now reports on a deal that shows how governments and unions can work together in times of crisis.
MAGGIE LAKE, CNN CORRESPONDENT (voice-over): They filed into the Orange, New Jersey, City Council Chambers to wild applause -- 12 firefighters laid off in January in uniform once again...
UNIDENTIFIED MALE: Raise your right hand.
LAKE: -- and taking their oaths of office.
Among those back in action, Cleophas Bell. When we first met him back in January, he was worried about his future and how to care for his family after losing his job in a wave of budget cuts.
CLEOPHAS BELL, ORANGE, NEW JERSEY FIRE DEPARTMENT: Never in a million years did I think that I would be laid off because that -- that is one of the lures to the job is job security.
LAKE: Three months later, he and 11 other firefighters were all smiles and ready to celebrate.
ELDRIDGE HAWKINS, JR. MAYOR OF ORANGE, NEW JERSEY: This is a very, very proud day in the history of Orange. And it certainly sets a precedent in our city for what can be done in difficult economic times. And it also sets an example for what can be done throughout the state and throughout the country.
LAKE: In a year when budget-cutting battles between state and local governments and their unions have flared up in Wisconsin, Washington State and other parts of the U.S., and where 24 states have laid off workers to help balance their books, this agreement is a rare piece of good news and shared sacrifice.
The breakthrough in Orange came after firefighters agreed to new cost cutting concessions that not only helped rehire Cleophas and his colleagues, but paved the way for the hiring of 12 new firefighters under a federal grant. The promise of a larger force helped sealed the negotiations.
HAWKINS: And if you put in the work, you can get these grant dollars. And if unions are willing to bend, then you can get the concessions and bring people back to work. But more often than not, we're seeing municipalities come to an impasse.
UNIDENTIFIED MALE: It's about time.
UNIDENTIFIED MALE: The uniform fits you.
UNIDENTIFIED MALE: David, how much weight you gained, man?
LAKE: Orange budget woes and its negotiations with other unions are far from over. But for this afternoon, at least, the labor battles affecting Orange and the rest of the nation seemed far away.
BELL: I'm back in business.
LAKE: Maggie Lake, CNN, Orange, New Jersey.
QUEST: So to meet the two men featured in Maggie's report and how they were able to reach that deal, I'm joined by Eldridge Hawkins, Jr. The mayor of Orange, New Jersey and Cleophas Bell, the laid off firefighter who got his job back.
Mr. Mayor, let's begin.
The -- the deal you did were -- was in -- in some cases, in some ways, it was a magical trick, in a way, because you managed to get federal -- or you managed to get funds that won't last forever. So you're still, at some point in the future, going to be faced with this budget difficulty, aren't you?
HAWKINS: Yes. These are -- are budget concerns that do not just disappear or evaporate. But I think it's good old-fashioned teamwork and ingenuity that has enabled us to get the job done during what is pretty much the worst economy since the Great Depression.
We've been fortunate the unions and my administration have been able to come to successful terms, predicated, in part, on the union members deciding to sacrifice, in essence, to care more about those that were laid off than themselves, to give up a little bit of what they have to enable us to bring back those that were, in fact, laid off.
HAWKINS: And -- and piggybacking on that, we were able to make overtures to successfully obtain the SAFER grant, which gave us about $1.2 million...
HAWKINS: -- to hire an additional 12.
QUEST: All right.
Cleophas, when you knew you were getting your job back, I mean you must be very grateful to your other union colleagues who -- who did give- backs.
But how long will give-backs last, do you think?
BELL: Well, what -- what we need to do now, moving forward, is figure out how we can not make this happen again, figure out what measures we need to take as a union, as a municipality, that we won't have this -- you know...
BELL: -- get in this situation again, where public safety isn't compromised.
QUEST: Mr. Mayor, whichever way we slice it -- and what you're experiencing in the United States is being experienced in Germany, in Italy, in the United Kingdom. You're a -- you're aware of this.
But fundamentally, have you not put off the inevitable?
Taxes are going to rise, spending is going to have to cut -- be cut.
HAWKINS: Well, I think that you're -- you're absolutely right, taxes do continue to rise. But that's why we have to continue to manage the cities more -- more efficiently and look at more cost saving measures and, yes, even look to revamp the system, because the system, as it stands now, is not sustainable. Costs continue to rise, health care, pensions.
And one thing that will never change is that the city of Orange and any municipality or government, for that matter, cannot shut down. We must remain open for business, if you will...
HAWKINS: If residents are in need, they expect that emergency personnel...
QUEST: All right...
HAWKINS: -- will respond.
QUEST: OK, I'm trying not -- pardon the pun. I'm trying not to pour water on your fire in this respect. But I suppose fundamentally, look -- look, I can beat around the bush forever.
Mr. Mayor, you just delayed the inevitable. You're going to have to lay off people sooner rather than later.
HAWKINS: Well, certainly I -- I must concede that that is a possibility. But I believe that the hearts and minds of our unions are in the right place, as are the residents and that we will continue to be able to come to positive terms.
But, you know, that is not always the case. There are other members of our municipality or our employees that are still laid off...
HAWKINS: -- and we have to work on that, as well.
QUEST: Cleophas, let's just get a -- many of my viewers will just want to know about the difficulties, at the moment -- never mind the politician next to you -- the difficulties that ordinary working men and women are facing in the United States making ends meet.
BELL: It's definitely been a hardship for myself and for my family. And it's definitely something that needs to be addressed. We need to come together collectively, as unions, as elected officials and figure out positive ways to -- to make this...
BELL: -- to make this work. It's not an easy task. You know, I'm also a taxpayer and not -- it's not just the firefighters. So I understand there has to be shared sacrifice and it's going to take us working together to -- to make this -- to make this work.
QUEST: Mr. Mayor...
BELL: And it's definitely difficult.
QUEST: Mr. Mayor, finally...
QUEST: -- all right, Republicans, Democrats, federal, state, local -- are you sick and tired of political partisanship or are you looking forward to getting in on the fray?
HAWKINS: I -- I think that political partisanship is something that we have to look past, because the one thing that is an absolute truth in this economy is that it's not a Republican thing, it's not a Democratic thing. This is a dollars and cents and survival thing.
And until we decide to put the partisan issues to the side and really deal with what matters most, we are going to continue to have problems. I don't know anybody whose taxes don't go up because they're Democratic or because -- or a Republican. I don't know anybody who doesn't suffer from gang violence because they're Democrat or Republican...
QUEST: All right...
HAWKINS: These are real issues that affect real people.
QUEST: Mr. Mayor, Cleophas, many thanks, indeed, gentlemen, both of you, for joining us. And I suspect in the fullness of time, Cleophas is going to have the hotter job, putting out the fires than you will, Mr. Mayor.
Many thanks to both of you for joining us.
Now, as we continue this evening, taking to the skies -- Japan Airlines has emerged from bankruptcy. It's smaller. It's leaner. It says it's ready to do business.
The details, in a moment.
QUEST: JAL -- Japan Airlines was once the world's largest international carrier. Then it went bankrupt last year.
Today, it's announced -- there's the news -- emerged from the equivalent of bankruptcy or administration, as it's called there.
It we are a 15-month restructuring of JAL that was engineered by state-backed funds. Creditors were paid off. Billions of dollars worth of fresh capital was poured into it.
But the crucial part, of course, for JAL was the way it restructured itself as the airline. The new JAL shed more than 100 planes. It's retiring the largest -- part of its largest 747 jumbo jet fleet. And instead of flying to anywhere and everywhere, it is focusing more on Asia- Pacific. So 49 routes -- a massive chop from the global network -- Amsterdam, Milan, Sao Paulo, some of the places that you'll no longer see the rising sun of JAL.
Also, it's buying 787 Dreamliners.
It's also looking to cement its relationship in oneworld with its future planned. Interestingly, you'll be aware that oneworld fought very hard through American Airlines and BA. Oneworld worked very hard to keep JAL out of the clasp of SkyTeam and Delta. And now, of course, oneworld very much looking to strengthen and deepen that alliance with oneworld across its various Trans-Pacific routes.
As we continue to look, of course, on these issues, because if you are traveling somewhere, whether it's JAL, British Airways, American, I could go all through the lists forever.
Jenny Harrison is at the World Weather Center.
Jenny is the sort of woman who will -- who will know -- you know the old line, when you board a plane, do you turn right or do you turn left?
JENNY HARRISON, CNN METEOROLOGIST: I like to go left. I like to turn left, yes. You do, too.
QUEST: Now -- well, listen, hey, I -- you're not going to get an argument from me on that one.
QUEST: Jenny, stompingly gorgeous weather...
QUEST: -- over large parts of Europe.
Is this it?
HARRISON: Yes, probably, Richard. Yes. You know how the weather goes.
Actually, I have to say but another fine day in London. And I think some rain sort of middle of the week. The weekend, at the moment -- at the moment, looks pretty good, some nice sunshine. But you can see already on the satellite that a lot of cloud across central regions of the Med, another swathe beginning to put in from the west. And to the north, all of that cloud, because the temperatures are so low, we've been seeing quite a bit of snow, as well.
But look at the temperatures right now. This is with the wind factored in -- 15 degrees Celsius in Paris. Meanwhile, if you're in Moscow, it feels like minus seven degrees Celsius.
So there's the low producing the rain right now. That will continue to work its way eastward. Then those showers are pushing in from the west.
In the meantime, the central regions of Europe staying fine and dry, some nice sunshine. Still some pretty good temperatures, as well. Brussels, 17 degrees on Tuesday, clear, sunny skies. The average is 11, so very nice, indeed.
It does get a little bit cooler Wednesday and Thursday, with the next showers, which are, of course, pushing in already across the far west.
And a similar story in Paris, really, not a bad day on Tuesday. Again, temperatures well above average. But the rain pushing in and Wednesday and Thursday, it will feel cooler because of that cloud cover and the rain showers.
But there's that cold air still lingering across much of Scandinavia, pushing down into much of western areas of Russia. And that does mean we have got a few snow flurries into Moscow. But there are the best, sunny clear skies in the central areas of Europe -- Richard.
QUEST: We thank you for that, the best of the day.
Jenny Harrison at the World Weather Center.
When we come back in just a moment, we'll return to the gray lady and all the news that's fit to buy online.
A Profitable Moment, after the break.
QUEST: Tonight's Profitable Moment.
It's a simple fact of life -- we don't want to pay for something we used to get for free. Now in the online world, it's been one of the biggest hurdles to making online profitable.
Companies gave away the stuff and now they want to charge you and me for it. And yet, we obviously have no problem ordering online for physical items, which arrive through the front door. That's good old-fashioned mail order.
But something ephemeral which just stays in your computer?
Different matter. It's taken the music industry 15 years to get something approaching acceptance for downloading music and bang -- with newspapers now, there are many free providers of news, not least of which CNN.com. So if a newspaper is to charge, it had better be offering something above and beyond if it's going to get my cash.
And that's QUEST MEANS BUSINESS for tonight.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I hope it's profitable.
"WORLD REPORT" is next.