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QUEST MEANS BUSINESS
Crisis in Greece; Dow Down Sharply; Interview With Anna Wintour
Aired June 15, 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, CNN ANCHOR, QUEST MEANS BUSINESS: From economic to political crisis, Greece could end up with a grand coalition and we are awaiting a speech from the Greek prime minister.
Wall Street worries. The Dow is down sharply. That is the number.
And designs on digital. Anna Wintour of "Vogue" tells us why new media is the vogue.
I'm Richard Quest. We have an hour together. I mean business.
It looks like the final act of a great Greek tragedy.
Good evening. Tonight the leading actor is threatening to quite the stage. In the streets there is a chorus of discontent from a crowd of more than 25,000. And hovering in the wings is the extras, the troika is preparing to bring the curtain down one way or another.
Thousands of people in Greece, in Athens, took their grievances to the streets of the capital on Wednesday. Some threw petrol bombs. Police returned fire with tear gas. The last protests came on a day of strikes by Greek labor unions. Public services and transport networks are at a standstill though the airports remain open.
Protestors had planned to form a human shield around the Greek parliament where inside lawmakers debated more austerity measures; a condition of the latest batch of aid from the troika, of the ECB, the EU, and the IMF. The Prime Minister George Papandreou has apparently offered to resign and form a national unity government if he is seen as the problem.
We are now monitoring events in Greece, in Athens. And we are waiting for the prime minister to address the Greek people. When that happens we will bring that to you as soon as he starts speaking. For the moment let's consider the events on the streets of Athens. Elinda Labropolou was with the protestors and sent this dispatch.
ELINDA LABROPOLOU, CNN INTERNATIONAL CORRESPONDENT (on camera): People have gathered from all parts of Greece and from all walks of life outside parliament today. They are here to protest against a new round of austerity measures that is likely to see more job losses and more tax increases. But people here say that they are very disappointed with the government. They are very disappointed with what is going on and they are very disappointed with what lies ahead.
One of the protestors, I spoke to her earlier, is Ansi Garni (ph). She is a bank employee and she says that she fears for the worst for the future.
How are these measures affecting you Ansi Garni?
I think we affect me no matter what the social class to which you belong. Especially economic crisis has changed our lives. There are people who barely can stay (UNINTELLIGIBLE). It is very (UNINTELLIGIBLE) today especially if you are a young (UNINTELLIGIBLE) much younger man, who studies (ph).
(CROWD NOISES, POLICE WHISTLE)
(UNINTELLIGIBLE) in order to be a better member in this society. So, it is very difficult. Everything is just going in a way that is (UNINTELLIGIBLE)
(CROWD NOISES, POLICE WHISTLE)
LABROPOLOU: Unemployment has risen by 40 percent in Greece in just one year. And on top of that the government is now saying that they are looking into a new memorandum. So people in the square here today are wondering is all their sacrifices, all their time they are putting into this, is this paying off? Elinda Labropolou, Athens, Greece.
QUEST: Now as we wait for the prime minister to speak, let me take you to Athens live and the pictures outside the parliament building of what is taking place. A scene of large-scale protests; clearly a very heightened, fervored atmosphere, as people are waiting. Lots of cheering- well, not so much cheering as chanting, I should say. And we will of course, get the reaction from the streets as well as hearing what the prime minister says as that happens.
Solving Greece's problems is like trying to undo the proverbial Gordian knot. If you join me in the library, you will see exactly what has to be done. The issue: We already had 13 months after the first bailout package announced, a raft of austerity measures that were designed to put Greece in a position of going back to the markets by 2012. That is clearly not going to happen.
The 10-year bonds and notes of Greece are well over 17 percent. So the public sector pain does involve more cuts. Perhaps cutting the shrinking sector of the public by 20 percent. There will be more tax rises and asset sales, $41 billion seems to be the number that people are h heading towards. The measures are being demanded by the so-called troika. That is the Eurozone, the IMF, and the ECB. In return, they will release $17 billion, 12 billion euros, of more cash.
Now the original hope had been because of the need for more cuts, and because things were not going terribly well, and Greece's is missing the austerity targets, this wasn't going to be paid, not without more of that. So a new bailout plan is being put together. But as you know, of course, that is maybe too little, too late, because a catastrophe is coming close, Greek credit rating is down at triple C levels, on certain markets, on certain ratings agencies.
And the question has now just become whether default, voluntary, involuntary, profiling, credit event?
Jan Randolph is with me to talk about that; the director of sovereign risk at IHS Global Insight.
What does the market want to hear from the prime minister tonight?
JAN RANDOLPH, DIRECTOR OF SOVEREIGN RISK, IHS GLOBAL INSIGHT: Well, one, that they are going to implement the budget, the new austerity budget. Everyone is relying on it to raise some of these extra funds, apart the shortfall, because the market is simply out there. That was the mistake in the design of the bailout.
QUEST: You see, that-let's just back up on that. When they-in the bailout of March, April of last year, we had hoped that by now things would be going back to normal. But what went wrong?
RANDOLPH: Well, they programmed-they had anticipated the markets would come back and provide some financing. They are simply not there and so that shortfall has to be made up. It is now being made up, partly by newer (ph) and harsh (ph) austerity, but also new loans from the officials. But more importantly Berlin wants the private creditors to stay on board.
QUEST: Right. Now, this new austerity plan, more savings, more cuts, more savings, higher taxes. At the same time you've got this default program, or potential that comes in. So it is getting very messy, I suppose is what I'm saying.
RANDOLPH: It is like walking two tightropes. We've got a tightrope on the financing side.
RANDOLPH: And there is a tight rope on the policy side of actually implementing, you know, cuts to get that budget deficit down, but much more importantly, to restructure the entire Greek economy, because they've lost competitiveness. And everyone knows that is about three or four years. And basically they went to financing to match that three or four year program.
QUEST: If they get the financing, does rescheduling, reprofiling of the debt, have to take place. Everything I read says, you know, anything else is just in the proverbial wind. Because Greece has got such a massive amount of debt that can never be paid back.
RANDOLPH: Well, whether debt is unsustainable or not is a variable concept. But under current circumstances and conditions it is just too heavy. There will be some kind of restructuring, either sooner or later, voluntary or otherwise, it will happen over the next five years.
QUEST: If they don't-if it becomes involuntary, and we look back at the experience of say, Russia in 1998, or Argentina in 2000 and 2001. They came back to the markets, what, within four or five years. Would the same happen here, do you think?
RANDOLPH: Yes, I think so. There are always new creditors out. There are new investors out there that would be attracted to high interest rates despite the bad history. I mean, one thing we have to understand here, in 2013, the Germans have come up with this plan with its ESM (ph). It is basically a debt guillotine for commercial creditors. Now, commercial creditors are in a funk because they can see this. And basically what the Eurozone are saying, if you engage with us on a voluntary rescheduling, you will get preferential treatment when the debt guillotine comes.
QUEST: This (UNINTELLIGIBLE) of course is the idea that the pain has to be shared. At the moment, in Greece, and in the Greece scenario, the pain isn't being shared. Except for the people who are bearing the pain are the Greek people, for the moment.
RANDOLPH: Yes, you are quite right. It is a matter of principle here. Burden sharing, but Berlin actually accepts this, that there should be burden sharing. It provides the right kinds of incentives for private lenders. And they are actually bringing it forward through this voluntary arrangement. But it is going to happen in 2013.
QUEST: There is no question now, in the markets' view that Greece will reschedule or reprofile or whatever language you want to do, in your view?
RANDOLPH: I mean, whether it is soft, sooner or later, it will happen. It is simply a question of the right thing to do, burden sharing. Providing the right incentives going forward to prevent future crisis.
QUEST: Does anybody wonder, how much more can the Greek economy take, in terms of austerity? I mean, it is growing again after a very nasty end- of-year recession, last year. It is just about growing.
RANDOLPH: Well, it was unplanned inventories going up.
RANDOLPH: I mean, it is technically growth, but it is not real growth. What we expect to happen, even on a positive scenario is that with the lower real wage rates there will be an external adjustment.
RANDOLPH: Exports will pick up and eventually with privatization you'll get new investment, raising productivity, you'll get a gradual turn around in the economy.
QUEST: I just to quickly ask about this privatization.
QUEST: It is fire sale, basically, whether it is Ireland, Greece, Spain, they are flogging stuff of. They are going to flog stuff of.
RANDOLPH: Well, it is one way to reduce your debts. You know? You sell your assets. I mean, the IMF has identified 300 billion euros worth of assets. And they have 300, just over that, in terms of debt. They could actually wipe all their debt out. The trick is how do you convert that 300 billion in to something-into cash, basically. So you can help bring down the debt. But you know they have been foot dragging on that privatization. That what is really worrying.
QUEST: Many thanks, indeed for joining us. Many thanks indeed.
Now, let me just update you with the Dow Jones. We do need to tell you-
(DESK BELL CHIMES)
QUEST: -what the markets are doing in New York. The Dow is down 168 points, 11,907, we are under 12000. Down 1.4 percent. I suspect, as we'll discover during the course of this hour, what is taking place in Greece is- well, I suspect having something of a drag on that along with economic news of the U.S. markets.
In a moment we are in St. Petersburg for the showcase of Russia, which is hoping to keep up appearances. And an economic forum with potential trading partners, to discover what is on over there, after the break.
QUEST: Vladimir Putin says he wants Russia's economy to become one of the worlds' largest, even as it is playing catch-up from the financial crisis. The Russian prime minister was at a conference of the ILO in Geneva, the international labor organization.
Putin said that although the economy was only two-thirds recovered it could still make giant strides over the next decade. Russia was badly hit hard, by the crisis, losing almost 8 percent of GDP in 2009. Last year GDP was up by 4 percent.
The country wants to make a big impression this week. Its economy is on show to the world from Thursday at the St. Petersburg economic forum. Now, Russia is hoping to prove it is up there with the world's most dynamic emerging markets. As John Defterios reports, though, look a little bit closer and the reality may be a touch less impressive.
JOHN DEFTERIOS, CNN FINANCIAL CORRESPONDENT (voice over): If one were searching for a company with an emerging market DNA Russian helicopters would certainly tick all the boxes. It is the BRIC countries, Brazil, Russia, India, and China, that keep the blades rotating for its CEO; 40,000 employees strong, the company competes with the likes of Boeing and EuroCopter.
DMITRY PETROV, CEO, RUSSIAN HELICOPTERS: Traditional markets are the BRICs countries, India, China, and Latin America. We are India's main supplier and almost all the helicopters that they have are produced by us. Usually we are the No. 1 in China.
DEFTERIOS: But among the bricks, which now include South Africa, Russia has a bad wrap for its business climate.
(On camera): Russia is enjoying the long white nights of summer, but it is not considered a bright light when it comes to its emerging market peers. In the latest World Bank global competitiveness report survey, it is at the bottom of the pile of the BRIC nations. Near the bottom of the G20 rankings and also of the broader industrialized nations of the OECD.
(Voice over): But those grades don't deter global companies wanting to plant a flag in Russia. PepsiCo's purchase of WimDen (ph), a Russian fruit juice and dairy giant for $5.4 billion, is a high profile example of a push to get in now. Investors are drawn to this vast market of 142 million consumers. Russia is also the largest oil producer at more than 10 million barrels a day. But that has meant an over dependence on the energy sector.
SERGEI VOLOBOEV, CREDIT SUISSE: Being sensitive to change, the structure of the economy, to invest in alternative sectors. To a certain extent to try to hold back growth of the traditional sectors, is both politically and technically difficult.
DEFTERIOS: The two leaders of Russia, who at times vie for power, are well aware of the shortcomings. On their near term to do list, privatizing 900 state-owned companies, in the next three years; cutting one in five federal workers, and redirecting energy funds to rebuild Russia. A lack of investment has left a creaking infrastructure. From power generation to transport, Russia is in need of a business class upgrade.
The president of Austria sees this an opportunity and recently toured the country with 140 Austrian CEOs, to drum up contracts.
HEINZ FISCHER, AUSTRIAN PRESIDENT: I believe that Austrian firms will get in the near future even more tasks, because they are behind, as you said, and they need acceleration and they relied to European technology, including Austrian technology.
DEFTERIOS: Russia needs to think big to deliver first class results. It is hosting both the 2014 Winter Games in Sochi (ph) and the 2018 World Cup. But analysts say it also has to accelerate reforms to create a favorable climate for small and medium size enterprises. RPM is a car service center in Moscow. It's co-founder shares a common refrain.
VSEVOLOD CHEREMNYKH, CO-OWNER, RPM (through translator): With all the big costs of rent, employees, equipment, and insurance payments our state increases the stress level so that profitability of your company should be high to stay in business.
DEFTERIOS: The leaders are rolling out the welcome mat to international investors, but they wan to be certain some remnants of the past are not being swept under the carpet. John Defterios, CNN, St. Petersburg.
QUEST: Russia wants to woo foreign investors during the week's forum. And one country, as you have already heard, has a warm relationship. And that, of course, is Austria. It is the 12th largest investor in Russia. And last month it sent a 140-strong delegation of business leaders to explore doing more deals in Russia. John Defterios, again, in St. Petersburg, spoke to Austria's president, President Heinz Fischer, and asked him what visits like that could do for both countries' economies?
HEINZ FISCHER, PRESIDENT OF AUSTRIA: I know that some European countries because of their history are very suspicious or have reservations vis-a-vis Russia. We have trustful relations and we believe that they can be expanded, economically, politically, strategically.
DEFTERIOS: What is the biggest opportunity for Austrian companies? Is it the infrastructure build out? The power grids need investment? The roads and the rails need investment? What is the scale that we are looking at?
FISCHER: It is infrastructure, you are right. It is also health services, hospitals. It is tourism. The other direction it is energy.
DEFTERIOS: I find it quite fascinating that Austria has been able to sign on to two different gas pipeline agreements, with Nobuko, and also the South Stream Pipeline from Russia. How did that go over with Mr. Putin or Mr. Medvedev in terms of sharing the resources between the two structures?
FISCHER: Well, they also are surprised, or they say, is that really necessary. But we say-I said, personally to Medvedev and to Putin-yes, it is necessary. Our experts say that the demand for energy in the coming 10, 20 years will develop in such a way that we need South Stream and that we need Nabucco.
DEFTERIOS: It is a huge market. Better than 140 million consumers and, in fact, the largest economy outside the World Trade Organization. It is time to anchor Russia into the WTO?
FISCHER: Well, the negotiations are on their way. Of course, the European interests have to be taken care of. But we believe that cooperation is useful for both sides and Russia, inside, the WTO is reasonable.
DEFTERIOS: Some believe that Russia because it has been having discussions with the WTO since 1993, doesn't really want to be a member, that it has more clout outside the WTO.
FISCHER: I don't think so. I think they also have interests on sort of integration and coordination and cooperation, this is the policy of Medvedev. And he is quite clear on this.
DEFTERIOS: You raise an interesting point, Medvedev or Putin, does it really make a difference in 2012, from a European perspective who actually leads as president?
FISCHER: Good question. Medvedev probably is the-he's the younger, he is more modern. He is easier to talk with; but Putin is more straightforward, more tough. If you give clear answers he likes it. You can have a very good discussion with him if you have clear positions and he has clear positions.
QUEST: That is the president of Austria talking to John Defterios in St. Petersburg. And all this week, we'll be having coverage of the St. Petersburg economic forum.
I need to update you for the markets in New York and for good reason. As you can see on your screen, with a full now 174 points off the lows of the day. It that had been more than 190.
The reasons are not only what is happening in Greece, but also there are some serious concerns. There were economic numbers from the U.S., regional manufacturing was a little bit weaker than expected. Consumer inflation, that was a little bit higher than anticipated. And a capacity utilization, cap ute, number that was OK, but clearly still shows the U.S. economy is weather some pretty heavy storms. So, now you see we are off down 183 on the Dow Jones. And we will let you know, obviously, that moves in any sizable direction we'll bring that to you.
After the break, fashion, royalty, and now the winner of a wedding. In an exclusive interview, the American "Vogue" editor in chief Anna Wintour tells us about taking the 119 year old magazine into the Digital Age.
QUEST: When American Vogue Editor in Chief Anna Wintour accepted the Webby Award for the best fashion web site this week, she made one thing clear. Sometimes geek can be chic. She is also shown us that it is better to be powerful than punctual. Launching in September of last year, Vogue.com, was a real late comer to the online age. Now, as CNN's Felicia Taylor found out, in this exclusive interview. The Anna Wintour iconic publication, this may be the future because digital is definitely in season.
FELICIA TAYLOR, CNN FINANCIAL CORRESPONDENT (voice over): She is the visionary queen of the fashion world, dictating trends and style across the globe. And now "Vogue" editor and chief, Anna Wintour, is setting her sites on expanding the digital realm. This week, Vogue.com won the coveted People's Voice Webby award for best fashion Web site.
The style icon sat down with me to discuss how the famous glossy bridged the digital gap.
ANNA WINTOUR, EDITOR-IN-CHIEF, VOGUE MAGAZINE: I think what we bring to the web site is really what we bring to the print version of "Vogue", which is our access and our authority. Very tough editing, I mean, there are a lot of Web sites out there that cover fashion and style and celebrities and culture, all the things we do at Vogue.com, but we are in a very particular about who we feature and who we choose and who we put up on the Web site. So I think all that is coming through too, as one who looks at the Web site and the numbers are also indicating that.
TAYLOR: And some interesting things that you have done is added, you know, Twitter and Facebook pages, and interviews with some of the editors, which is truly innovative. What is new and next for Vogue.com?
WINTOUR: Well, I think that any kind of things that we own, like we started after the 11th CFDA Vogue Fashion Fund, which really has changed the landscape of American fashion. We have supported young designers who we believe in over the years. And this is the kind of access that we are going to use on Vogue.com following these young designers as they go through the fashion fund, and eventually ending up at the dinner in November, when we unveil the winners. And that is really something that no other Web site can have that kind of access or authority or behind the scene footage that we can on our Web site.
TAYLOR (voice over): Do you think that there is always going to be a place for a glossy magazine, or are we about to really see the advent of the Internet as being the more important place where eyeballs go?
WINTOUR: Well, I think the Web site compliments the print version of the magazine and visa versa. I think they both offer very different experiences to the reader. I mean, one is fantastic visual experience, where you look at the kind of photography and read the kind of articles that you really can't see anywhere else. And it is something you can carry around with you and enjoy for months at a time. And I think you go to the Web site for a very different experience. Instant information, access, I mean, who was wearing what at the Tony's last night, what we saw at a resort show this morning, and it is already up on the Web site. So, it is much more instantaneous, but still edited, you know, with a Vogue eye and the Vogue access.
TAYLOR: Yet some have criticized Wintour for coming a little late to the Internet party. And even she admits the relevancy of the Web has become increasingly more important for business.
WINTOUR: I remember when we first tried to get seats for people at the shows. The Internet people were put in like the 20th row, if they were lucky at a Chanel show. And then we were told things like you an only put five looks up. Because we don't want anything to be copied. And then you fast forward to today and whatever reason, if we don't put up a collection on the Web site, they are calling us up to complain.
So, obviously, we learned with the Internet explosion. I mean, we were as naive as everyone else. But, you know, we saw it grow. We saw it grow when we were at Belle.com. And then when we brought it off onto our own Web site, it was even more of an engrossing and interesting experience.
TAYLOR: So, you mention style.com, and currently their readership is greater than Vogue.com. How do you intend to bridge that gap, so that you also have the same number of eyeballs at Vogue.com.
WINTOUR: We launched the site in September, so we are a relatively new site, but we fully intend to get our numbers up, you know with in the next couple of years. We have access and authority and ability to connect with everyone within the industry and you know, whoever we call will pick up the phone.
QUEST: Anna winter talking about Vogue's strategy and how late to the party but what they have learned. What we are learning is that it is all about capitol, preservation at the moment. Thad news I'm afraid. We are now at 198 off the Dow. We'll are under 11,900. I suspect if I carry on talking much more, we're going to go over 200 off, which would be the low point so far for the session. The Dow is up 1.5 percent. It's Greece. It's U.S. economic numbers. There's a whole potpourri that's all mixed up in that.
When -- there we are just -- I -- 200 off on the Dow Jones Industrials. It is clearly going to be somewhat of a bloody day on the markets.
A rising star in the U.S. Republican Party. He said he'll remain on the sidelines in the 2012 U.S. presidential race. It's an hour with the New Jersey governor, Chris Christie. It is "PIERS MORGAN TONIGHT" 30 minutes from now.
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And on this network, the news always comes first.
The Greek prime minister is asking the country's main opposition group to be part of a unity government and held to a deal over the debt crisis. And this is why. And the massive protests still underway in Athens over planned budget cuts. Tens of thousands of people have been rallying and rioting. Greece is in danger of defaulting on its debt and must cut costs to keep receiving international aid.
There's another big rally over austerity measures in Barcelona in Spain. Demonstrators have gathered outside the Catalan parliament to protest against the debt that's taking place inside on the 2012 budget. They fear it will mean further belt-tightening for Catalan. The clogged streets forced some lawmakers to enter the building by helicopter.
A Pakistani source says authorities there have arrested a person who rented a safe house to the CIA before U.S. Navy SEALs killed Osama bin Laden. A second official has also confirmed that Pakistan has detained several people who are suspected of giving information to the CIA before the raid took place.
NATO has now carried out 10 weeks of air strikes in Libya and the operation's commander says the Alliance can complete its mission without ground troops. In the meantime, media reports say Libyan rebels have captured three western villages on the road to Tripoli on Wednesday.
It's always very difficult when the market is in flood not to make too much of it or to instill panic and alarm at when something is falling fast. Today, the Dow Jones is off more than 200 points.
Alison Kosik is at the New York Stock Exchange -- now, if we accept, Alison, that we're about 7 to 8 percent down on our year high, give or take, what's driving today's fall?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Pick your poison, Richard. You know, as we've been watching this selling pick up steam, it really is a matter of picking what the problem is. Today, we got weak manufacturing data. There are those ongoing worries about Greece defaulting. And it's the hot inflation numbers that are a big concern, as well. We found out consumer prices jumped 3.6 percent in May, compared to last year. Higher food prices a big factor of this.
But the broader picture about this higher inflation is it's really a sign of a -- a slowing economy, with -- with manufacturing. And then we see inflation heating up. And that combination is really bad for -- for the economy, and, nevertheless, for the markets, you know, when you see that kind of combination. You know, get ready to hear that term, stagflation, tossed around, when we've got, you know, high unemployment, stagnant wages, high prices. You know, I don't want to be an alarmist, of course, but, you know, you do hear that kind of talk around here -- Richard.
QUEST: And Greece -- today, we're waiting for the Greek prime minister, due to speak to the Greek people with his proposed government of national unity. We often think of the U.S. markets as being somewhat parochial, concerned with their own events. But you are watching events on this side of the Atlantic.
KOSIK: Oh, yes. I mean the Greek crisis is -- is heavily impacting the markets. And we saw that when futures were tanking even before the bell rang. I mean, you know, you think about, banks here have great exposure to -- to Greece. Imagine if Greece defaulted.
Guess who would be hanging out with the bill?
You know, our banks here. So that is expressly why we're seeing the big worry here on Wall Street about the Greek crisis.
Now, one thing that I realized when I was talking with traders is they're not going so far to say that this is a correction. They're really reticent to use that word right now. They say that if the Greek crisis does find its solution, you're going to see the market pick up again. And that, in addition, the same thing goes for the debt crisis here in the U.S., once an agreement is reached on the debt ceiling here in the U.S., you're going to see the -- you're going to see a little relief in the markets.
KOSIK: But especially with the Greek crisis. That's why they don't want to say this is necessarily a correction, what we're seeing -- Richard.
QUEST: A quick question, Alison.
Bernanke's comments, basically, he fired a shot across the bows of lawmakers yesterday when he said, you know, don't tinker with the deficit.
But did anybody take any notice?
KOSIK: It makes -- it really makes you wonder. I mean he must be, what, at least probably the -- the -- the fifth high official to say we've got to get our debt crisis under control?
You wonder if anybody is really listening. I mean we heard, you know, Treasury Secretary Geithner say similar comments.
I think what you're really going to see is that this is, in fact, is that it's political season, that this -- this is really a political football that many people on Capitol Hill see it as. And I think in the eleventh hour, they're going to come up with an agreement. And I think you're going to see things end up on a -- on a better note -- Richard.
QUEST: Alison, many thanks, indeed.
Try not to do too much damage between now and the close of business in just over an hour.
I need to update you that because of what's happening in stocks,
And commodity markets, and we've also seen -- we're now seeing a falloff of 4 percent -- 5.8 percent in the fall of Brent crude, to $113 a barrel. The NYMEX is off 4 percent. So oil is down heavily. The reason is partly Greece, partly slowing down U.S. economy, partly a feeling that the bubble -- the commodities bubble has burst some 30 odd days ago.
Into that scenario, NYMEX and Brent are both down very sharply, indeed.
Now, he was once a surfer trying to capture his best maneuvers. Now his novel cameras are on sale around the world. Next, we'll look at the man who's breaking the mold of amateur video. (INAUDIBLE) is next, trying to get shot by these.
QUEST: Welcome back.
QUEST MEANS BUSINESS coming to you this evening.
We are waiting for the Greek prime minister to address the Greek people about his plans and proposals on what he wants to do with the economy and, of course, for the -- for the government.
We are -- while we do wait, we need to break the mold. Adventures like this could be some of the most exciting times of your life. They can also be terrifying and they can make you really wish, perhaps, that you've lost your life.
But, unfortunately, unlike a wedding or a party, they are difficult to capture. Now, 10 years ago, the surfer, Nick Woodman, came up with an idea for a durable, mountable camera that would help people capture memories like this hands-free. It's called the GoPro HERO and it's on sale in more than 50 countries. If you're a thrill seeker, it's broken the mold for your home movies.
(BEGIN VIDEO TAPE)
NICHOLAS WOODMAN, GOPRO FOUNDER AND CEO: Well, it was here on the California coast, I wanted to design a camera that I could wear while I was surfing.
So I came up with this idea for a wearable camera that you wear on your wrist that you could pivot upright to take a photo or now shoot video, but then let go of t if you needed, to, say, grab your surfboard and dive under the wave.
Well, this is the evolution of when we -- we moved the camera from being on the wrist to where we made it so that you could mount the camera anywhere and turn the camera around on yourself to capture yourself.
GoPro started to do well enough that I was fortunate to be able to pursue one of my lifelong dreams, which was to learn how to drive a race car. And in racing school, the school wanted to rent me a camera, but they wanted to charge me $100 for a half hour to rent this camera. And I thought, well, that's crazy. I've got one of my wrist cameras in the car. I'll go strap that to the roll bar.
It was the ultimate ah-ha moment where I realized, we've got to get this camera off the wrist and make it so that you can mount it everywhere and so that I can be the everything camera to document your passion no matter what it is.
People are using their GoPros to do everything you could possibly imagine, from the obvious, putting the camera on their surfboard, wearing it on their helmet or their chest while they're skiing, skydiving, to the non-obvious. People are making weather balloons and putting GoPros on them and sending them up into near space to capture footage of the Earth from near space. We saw it on CNN, actually, during the -- the broadcast of the rescue of the miners in Chile. And the camera was mounted on top of the rescue pod.
For me, for GoPro, breaking the mold is doing something different than what everybody else is doing. I think a GoPro camera captures somebody during their lives most exciting moments, most passionate moments. And so you can see it on people's faces. It's when they're most alive. And so that's a -- a wonderful moment in time for people to share with other people, be it their friends and family or people they don't even know.
To be able to share you and you in your world, when you're having the most fun and you're the most alive, that makes for great video. GoPro is the first company to solve the problem of how do you make it easy for people to capture footage during their favorite activities, where it's just too inconvenient to hold a camera and that no other camera company ever addressed that problem. And it was GoPro to solve the problem. I think that's breaking the mold.
(END VIDEO TAPE)
QUEST: Breaking the mold, indeed.
Now, Yotel is another company that's breaking the mold, this time in the hospitality and the travel industry.
If you stay in a Yotel, you don't get a room, you get pretty much one of these, as you can see on these pictures.
QUEST: Excuse me.
It's compact, it's comfortable, it's cabin-like. Yotel already has hotels at airports in London and Amsterdam.
And we need to now just pause there and immediately go to Greece, to Athens, and the Greek prime minister.
GEORGE PAPANDREOU, GREEK PRIME MINISTER (through translator): This is the responsibility of the government at the moment when the -- when the country was at the edge of an abyss and in bankruptcy.
We put upon our -- our shoulders the sins of others, with ded -- dedication. We have -- for 20 months, we are fighting for the salvation of the country. And we are standing and the -- and the prospects are open now to the new changes.
I want this attempt to help the feature -- help the future of the national attempt, Vitanski's (ph) national, it's not a political task. I have -- I have made constant proposals of cooperation with other political parties. Today, I gained a -- I brought new government proposals to the -- to all so that we can reach this necessary national accord.
I never exclude my own -- my own responsibility.
Despite my position, the opposition handled the whole of this attempt with -- not with -- not on the terms of political and responsibility before discussing the -- the essence, some terms were put on the table, because they keep into the -- they create in the country instability, though the major issue is to handle this public debt.
I've learned in my -- in my life to fight for the country, for the -- for the economy, for the people, for the values. Let's all people assume their responsibility in our actions toward -- in our responsibility toward the country. I will continue on the same way of carrying out my task, together with my political party, and with -- together with the Greek people.
Tomorrow, I will create a new government and then I will ask for a confidence vote from the government -- from the parliament. It's is the time of responsibility.
(END VIDEO CLIP)
QUEST: So, there we have the Greek prime minister -- the gist of what he said. Obviously, it seems as if there will be no -- there -- obviously, it seems there will be no government of national unity in Greece tonight. He talked about tomorrow -- that's Thursday -- creating a new government and seeking a confidence motion in that new government. He lambasted the opposition, talking about how the people weren't dealing -- not taking on their own responsibility. He said he'd never excluded his own responsibility but the opposition was not taking on the terms of political responsibility.
A difficult speech to understand at first blush, but it does seem that whatever negotiations were taking place today in Greece between the prime minister George Papandreou's party and the opposition have not come to fruition.
Just seeing the markets now and what they are doing. The Dow Jones is off 199, 100 and -- 200 points. It's where we've been. So as of yet, there's no dramatic fall in that. We're seeing if there's any other developments.
When we come back, we'll get the thoughts of the market and we'll see what takes place.
QUEST MEANS BUSINESS.
QUEST: Let's return to the discussion we were having before Papandreou spoke concerning Yotel, the hotel -- or the company that's gotten many different varieties that's now going into the travel industry.
The hotel rooms that it's currently got are compact and comfortable cabins at airports in London and Amsterdam. But its first city center operation has opened in New York and it aims to do something different in hospitality.
Gerard Greene is Yotel's chief executive.
He joins me now from New York.
Gerard, cabins, as such, in airports, is fine. But you're going to have to do something a little bit different, aren't you, if somebody is going to be staying there for two, three, four days and beyond?
GERARD GREENE, CEO, YOTEL: Well, I think it's really about what you do in the space. I mean, there's lots of big hotels with big hotel rooms and you don't know where to store your luggage, you have a very small bathroom. So I think, you know, we've used aircraft designers and we've designed the space very, very smartly.
That being said, you know, we do have bigger rooms in New York. They're 170 square feet with windows.
QUEST: Who are you attracting?
Are you looking for backpackers, tourists?
I think that unless you're priced properly, you're -- you may find the business traveler not high on your agenda. Or maybe I'm just wrong.
GREENE: I think you're wrong, sorry to say. You know, I've been in the hotel -- we've been open for nearly 12 days and we have everything from, you know, business travelers to young couples from Denmark, from Europe. We've got people on family holidays. We've got people with their children.
So, really, you know, the idea is about trying to provide an affordable product...
GREENE: -- but a luxurious product, as well.
QUEST: You see, have you cracked the nuts of things like -- I know as a business traveler, even as a -- even as a con -- as a tourist when I'm there, I want Internet. I want a clean bathroom. I want a clean bedroom. I don't really want much more than that. And I think perhaps maybe that's what most travelers are telling you -- clean, comfortable, but certain necessities.
GREENE: No, absolutely. And -- and, you know, and at a great price in a great location. But, you know, you -- you've got to really get the hotel basics right. You know, there's so many hotels where, you know, the windows are noisy or the air ventilation is noisy or the wi-fi doesn't work in every corner of the room or the shower doesn't run properly.
So, you know, we've really, you know, stayed at 50 hotels in New York and we've taken all the worst things about hotels and we've just tried to solve all of these issues that, you know, travelers hate.
QUEST: And let's talk about the -- the Yo brand as such. You -- you -- well, it began, of course, in food. It's now moved to hotels.
How far do you think you can grab Yo and yank it further?
GREENE: Well, Simon Woodruffe is obviously the leader of Yo. You know, it's all about trying to provide an affordable product that's luxurious and it's a bit of fun at the same time. So you could apply that to, you know, as we said, food, hotels, travel, homes, you know, spas. You know, there are lots -- there are lots of other areas and we're already looking at a home product...
QUEST: All right...
GREENE: -- and we're already looking at a spa product.
QUEST: The final question, because I know viewers watching will want to know, what's your cheapest room and your most expensive room in New York?
Cheapest and most expensive, please.
GREENE: The cheapest room, well, the most affordable room is $149. And that's our standard premium room and...
QUEST: A night?
GREENE: Yes. That's free wi-fi, free breakfast...
GREENE: -- a monsoon shower.
QUEST: Yes, yes, yes, yes, yes.
GREENE: (INAUDIBLE) mattresses.
GREENE: Would we have a...
QUEST: And your most expensive?
GREENE: -- well, we have three VIP suites with rotating round beds, fireplaces, pool tables. And those are about $1,500 a night.
QUEST: Good grief, man, rotating beds.
What sort of thing -- what sort of bor...
QUEST: -- what sort of bordello are you running?
Many thanks for joining us, Gerard.
We appreciate your time tonight.
OK, as we have crossed the globe over this week and looked carefully, we've been bringing you the Chilean volcano. It is continuing to spew ash high into the Patagonian skies.
On the other side of the world, tens of thousands of stranded passengers are awaiting results.
Pedram is with us -- one thing we know from E-15 and the Icelandic experience, Pedram, is that these things can take days, if not weeks, to sort themselves out.
PEDRAM JAVAHERI, CNN METEOROLOGIST: Yes. It doesn't look better, either, Richard. You know, just the last observation check showed yet another plume going up some nine kilometers into the atmosphere, about the same elevation as, say, Mount Everest, from the actual initial area of eruption. It goes nine kilometers up into the atmosphere, gets up into the jet stream and up to some 20,000 feet we have ash advisories off the coast of South America and, of course, off the coast of Australia.
We've seen plenty of headaches down there and also on into New Zealand, as these plumes keep coming right out of the volcano, five, six, seven days later we get travel disruptions down the road, downstream. And that's the concern right now. This is not going to end, you know, unless the volcano becomes quieter and quieter.
And, unfortunately, in Australia, take a look at this. A storm system rolling on in at the same time. So strong winds, heavy rains, put in some volcanic ash, bad news all the way around. And some 100 plus millimeters of rainfall in Southeastern Australia just in the past 24 hours. And weekly totals of over 500 millimeters of rainfall.
So, yes, not good news, not just yet.
But something to perhaps take the pressure off, ease the moment out there. Take a look at this. We have a total lunar eclipse taking place right now. It's happening as we speak. We have live images coming out of Abu Dhabi to show you this unique moment.
And this is not just any total lunar eclipse. This is a central lunar eclipse. Basically, the moon enters the Earth's shadow at its central point and gives you a lunar eclipse that's not just a few minutes, but up to two hours in length in areas across South America, Europe, on into portions of Asia, the Middle East, India, you name it. Everyone pretty much outside of North America has a good shot of seeing this if you have clear skies. And, again, the moon entering the Earth's shadow as we speak. The last time we had something that had longevity as far as two hours of totality was back in 2000.
So here is your forecast and the conditions out there, Richard. We have some clouds pushing in toward portions of areas around England. So, unfortunately, it is starting to dim a little bit, but perhaps you can sneak a peak out there if you get a chance -- Richard.
QUEST: I fully intend to. I -- I could never remember with these things what goes and whether the moon goes or the sun or the other. I -- fascinating stuff.
QUEST: But I can never remember what happens where.
Pedram, we thank you for that.
When we come back after this short break, no Profitable Moment, because I need to update you on the markets.
QUEST: Finally tonight, I need to update you on the events taking place in Greece.
The Greek prime minister, George Papandreou, has addressed the Greek people and said that negotiations between his party and the opposition have been unsuccessful, that he would be forming a new government on Thursday and that his party, the Panhellenic Party, would be seeking a mandate before parliament, a vote of confidence, saying that that was his responsibility, others have not done theirs.
On the markets in New York at the moment, we are down 191 points, off 1.5 percent -- 11884. Oil has been down sharply. Brent off more than 5 percent, NYMEX down 4 percent. It's one of those days and happiness on the U.S. economy and happiness with what's happening in Greece, all put it together and it's a grumbling day in the financial world.
And that's QUEST MEANS BUSINESS for tonight.
I'm Richard Quest.
Whatever you're up to in the hours ahead, I hope it's profitable.
Piers is next.