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Quest Means Business
E.U. Report Cards; Interview with Bob Parker; Interview with Richard Bruton; Aung San Suu Kyi Visits Thailand; Foreign Workers in Brazil
Aired May 30, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: It's Barrasso's big banking union -- tonight, director from the EU Commission.
It's still better in than out -- Ireland's jobs minister tells me the referendum should pass.
And diamond status -- why the queen is the ultimate business traveler.
I'm Richard Quest.
We have an hour together.
I mean business.
Good evening.
A sovereign debt crisis that refuses to die. And a banking crisis which is gathering strength. Europe's two-headed hydra terrorizing the stock markets tonight.
The Dow Jones Industrials -- take a look at the Dow in New York, now up nearly 1 percent, 123 points, since the very start, right out of the gate and right down the pan. Whilst in Europe, shares have been sinking similarly hard, up 1.75, 1.8. Paris down 2.25; 2.5 percent at Spain's ibex, where the problems of Bankia are threatening to contaminate the whole of Europe's banking system because of an indecision or an inability to put together a banking bailout for Bankia. We'll talk about that in a moment or two with Robert Parker.
Europe's struggling sovereigns cannot fix their failing banks alone. Together, they might just stand a chance. And only then if they sever the vital link between each national state and its debt-ridden institutions.
The European Commission's radical prescription -- it suggests banks should be able to draw directly on the EU bailout fund, as the president of the commission, Jose Manuel Barroso, explained.
(BEGIN VIDEO CLIP)
JOSE MANUEL BARROSO, EUROPEAN COMMISSION PRESIDENT: We intend to look at the further steps we need to take toward a full economic union to complete our monetary union. The Commission will advocate an ambitious approach. The building blocks could include, among others, a banking union with integrated financial supervision and a single deposit guarantee scheme.
(END VIDEO CLIP)
QUEST: So, the Commission also released its recommendations for each EU member state, a sort of economic report card.
Paula Newton is here with those highlights.
We -- it was long. It was detailed -- 1,000 pages.
PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: And it wasn't out on time, either, Richard.
QUEST: No, it wasn't.
NEWTON: And that should tell you something.
QUEST: That's should tell you.
Well, what -- what did it have to say?
NEWTON: Interesting, it was grim. And I'm going to underscore, these were recommendations. But going to Spain, it says it "lacks sufficient ambition."
What does that mean?
Unemployment will continue to go up. The banking system, as we've heard, remains fragile. Listen to this. Recession for Spain, they're predicting, until the end of 2013.
Now we go to France, not unscathed in this report. They're saying that they're not complying with budget deficit targets.
What does that mean?
They're at 4.4 percent of GDP right now.
The European Commission is saying, how are you going to get to 3 percent, and that's where we want you to be?
And, finally, even Germany -- Germany, what is keeping the EU together right now, they're saying that, look, some parts of the financial sector remain vulnerable. And on top of that, there is long-term restructuring that needs to be -- that needs to happen in Germany, even in their financial position (INAUDIBLE).
QUEST: We are several years after the recession. We are in the sovereign debt crisis.
And they -- what is this concept that they want to get to grips with on banking?
NEWTON: But also taking a page from Timothy Geithner -- never waste a good crisis. He's saying, look, you're going to do now, with a gun to your head, what you wouldn't do five or six years ago -- banking unions -- underscore the fact that Europe stands behind all the banks in the 17 Eurozone countries.
They're saying they're alarmed -- they're saying, look, if we don't do this, the markets will punish you.
QUEST: Germany vulnerable, France deficit targeted.
Is anybody going to take any notice of any of this?
NEWTON: Absolutely. And today we saw --
QUEST: Oh, come on.
NEWTON: Bankia, they're talking about perhaps having a run on the banks in Spain. That's serious business. This is being noticed in the United States. Timothy Geithner dispatched somebody from the Treasury --
QUEST: All right.
NEWTON: -- in Europe. This is a huge concern right now.
QUEST: No, the crisis is. But I'm talking about the -- this report.
NEWTON: Another -- how many -- how many summits have we had?
Richard, you've been to almost all of them. We're having another one in June. Talk to the politicians. Talk to France. Talk to Ann -- Angela Merkel.
QUEST: I'm going to talk to Bob Parker. Bob Parker, senior adviser at Credit Suisse, joins me.
Bob, when you saw this thousand page report come out this morning, did you just file it somewhere appropriate?
BOB PARKER, SENIOR ADVISER, CREDIT SUISSE: Afraid so. What it's come out with is, I think, a statement of what we already know. We know the German banks have been big buyers of Eurozone debt, so the comment that they're vulnerable, of course, is absolutely right.
We know that France, under President Hollande, is going for a growth agenda. And what that means is a delay in cutting the budget deficits.
We have known for many years that the Spanish savings banks, the caja, are exceptionally vulnerable to the meltdown in the Spanish real estate market.
QUEST: So getting a report like this is really just telling us that the house is on fire, thank you very much, lecturing the fire brigade?
PARKER: What -- what it's doing -- this report, basically, is highlighting the problems that we have all been talking about for many years.
QUEST: I want to show you bond yields today.
PARKER: Yes.
QUEST: If we take a look and see -- and I'll -- as we look at those yields, I can look -- spare -- I'm -- I'm going to work backward, in a way, from the bottom of the chart.
PARKER: Right.
QUEST: Germany one -- 1.25, just one of -- 1.27.
PARKER: A near historic low.
QUEST: Yes.
PARKER: In fact, I think it is a historic low.
QUEST: Pretty much.
U.S., 1.63.
PARKER: (INAUDIBLE).
QUEST: Which, on the 10-Year bond. Italy, 5.9. Spain, 6.66. Even the U.K. at 1.8, 1.78 or --
PARKER: Yes.
QUEST: -- or whatever. So this divergence, even for countries like the U.K. and the U.S., which are still running huge deficits, is quite extraordinary.
PARKER: Well, you have a very clear investor flight to safety.
Now, what does that mean?
That means, number one, buy the dollar, sell the euro. It means buy what are perceived as safe bonds -- Germany, the U.S. Treasury market, the U.K. Guild market, the Japanese government bond market; sell the peripheral bond markets.
QUEST: The -- the euro at 1.25, 1.26, if things are that bad, I mean when -- that's not a collapse. Even at 1.32 a year ago, it's not so -- it's only down 15 -- 10 to 15 percent.
PARKER: Well, let's not forget that since the euro has been created, its range has been .82 to 1.6. It started at 1.17. So, you know, we haven't got a collapse in the euro. But if one looks at the euro in the last few weeks, there has been a very clear acceleration in its decline.
QUEST: What are you writing to your -- to the -- to the fortunate people who pay large sums of money to hear your views --
PARKER: Well --
QUEST: -- that are going to get, I think, advice free from us tonight.
PARKER: Well, number one, on the foreign exchange markets, you have to stay long the U.S. dollar.
Number two, avoid government bond markets. You're not being paid for being in German bonds and the risk, I think, is still significant in Spanish bonds and other peripheral European bonds.
QUEST: I'm going to just pause you on that point, to equities. You say avoid government bonds.
PARKER: Yes.
QUEST: But you may have to go there to take risk off the table from equities.
PARKER: Well, what you can do in the bond markets is don't buy government bonds, but buy emerging government bonds, emerging debt. Buy corporate bonds. And there, the risk-reward, we don't have the problems the government bond markets have in emerging economies. We don't have the problems in the corporate bond market.
QUEST: So you --
PARKER: So, in a way, those (INAUDIBLE) --
QUEST: But rather than right than bunds or bonds or guilds, you would still prefer to go for high grade corps (ph) --
PARKER: Correct.
QUEST: -- and emerging markets --
PARKER: Absolutely. And we --
QUEST: -- even though there's a risk potential there?
PARKER: Well, there is a risk potential, but my argument is, if you look at the debt dynamics --
QUEST: Right.
PARKER: -- of most emerging economies, so I would regard them as a safer haven than European government markets.
QUEST: Equities -- we've got to keep some equities somewhere.
PARKER: Well, our positions are super defensive.
Now, what does that mean in English?
It means North American, large cap, Northern European. And on Northern European --
QUEST: Yes.
PARKER: -- let's not forget that Europe, Germany, the economy is reasonably strong. German exporters are doing very well from the weakness of the euro.
QUEST: A final thought, though.
If you had a pound or two, a dollar or a -- a yen or three, would you take a full risky punt on some of the peripheral debt --
PARKER: Only --
QUEST: -- if you didn't mind losing it?
PARKER: The answer is today, no. But I'd like to have that conversation with you in late June, because if the European Union comes up with a series of measures to fix the Eurozone crisis or at least reduce it --
QUEST: Right.
PARKER: -- then we could see better markets starting at the end of June.
QUEST: Now, what --
PARKER: That -- that conversation, you and I are going to have in three weeks, not today.
QUEST: OK. Good to see you.
PARKER: You, too.
QUEST: When we come back in a moment, Ireland's jobs minister weighs in on his country's high stakes vote. The country has a referendum, yes or no, to the fiscal compact. It's got huge implications for Ireland, if nobody else, after the break.
(COMMERCIAL BREAK)
QUEST: In Ireland, voters go to the polls for a referendum on whether to back the EU's fiscal compact or treaty or whatever you want to call it. This is the agreement designed to impose strict new budget rules. It is the agreement that has sanctions involved, supervision, deficits, all of it.
The stakes are very high for Ireland if voters say no and the country could lose access to more emergency money from, of course, the ESM, the stability mechanism.
A yes vote could bring on even more economic hardship.
A short time ago, I was joined by the Irish jobs minister from Dublin, Richard Bruton.
And the first core question, with the referendum so close, how close is the vote?
(BEGIN VIDEOTAPE)
RICHARD BRUTON, IRISH MINISTER FOR JOBS, ENTERPRISE AND INNOVATION: Well, we can't be sure, obviously. A number of polls have suggested it's between high 50s to 60 percent for, and, obviously, 40 or less against.
You know, that's the sort of raising. But then there's been a high level of don't knows. So the government is certainly not being complacent about this. There's been a very strong information campaign and a very strong campaign led by Leticia Kent (ph).
You know, I -- I am confident that the people will support this as --
QUEST: Right.
BRUTON: -- as a very solid contribution toward stability in Ireland.
QUEST: You would have to agree, Minister, that even if you get this vote, to quote one of your MEPs, it's a reluctant yes. People are not going to vote for this fiscal compact brimming with love and joy.
BRUTON: Well, I think people recognize, in Ireland, that this is one pillar that the Eurozone needs to achieve its stability, but it's not the only pillar. And there is a very substantial agenda that needs to be developed further.
And among that is obviously the growth strategy, which is being pursued at the European Council, the development of a stronger bank resolution strategy.
So there are many elements that I think are -- need to be put together. But I think the Irish people are very clear that it's far more important for Ireland to be within that system, influencing the development of those further measures as we go along, rather than, you know, create the dramatic uncertainty for Ireland --
QUEST: Right.
BRUTON: -- if we opted out of this treaty.
QUEST: Today we got the economic forecasts and the -- the 1,000 page document from the commission, which went into individual countries, not those countries that are in the program.
But if we take a look at the -- the rather poor state of the European Union and the Eurozone economies, there's not a lot for people to be cheerful or grateful for at the moment.
BRUTON: No, clearly, Europe is going through a very difficult crisis and it needs to develop strategies to respond to that. And this fiscal treaty is one of those.
But I think what today's report on Ireland showed is that we are hitting all of our targets. We've undertaken very dramatic structural reform. We've become much more competitive. We're attracting much higher levels of international investment than we were.
So from an Irish point of view, we are seeing that, you know, we are starting to build the recovery we need. Clearly, not -- a long distance to go yet, but are -- are promising signs there for Ireland --
QUEST: But --
BRUTON: -- and I think that's what we need to build on.
QUEST: Do you worry now that a Spain, an Italy, a Portugal, but particularly a Spain at the moment, can undo much of the work in terms of shoving the rest of the Eurozone back down again and what growth there is evaporates?
BRUTON: Well, I think we have seen, over the last 12 or 18 months, that, you know, European recovery has faltered and that it has been buffeted by markets and market opinion.
QUEST: Right.
BRUTON: And I think this -- this treaty is one element of responding to that.
Clearly, there is other elements, for example, in bank resolution, that we do, within Europe, need to develop a stronger strategy.
So, yes, obviously uncertainty in the market can create difficulties for economic recovery. But I think we are starting to see in Europe the elements, the toolbox being developed that's needed to respond to that. And there's much more work to be done in the coming months.
QUEST: Ireland's jobs minister, Richard Bruton, talking to me earlier.
And now tonight's Currency Conundrum.
And the question is, in which year did Britain convert to a decimal currency?
Was it, A, 1952; B, 1964; C, 1971?
The years for decimalization in the UK.
And these are the rates. The euro slipped 1.24 to the dollar, its lowest point for nearly two years. Rising Italian borrowing added to Spain's banking problem. Those are the rates.
We'll take a break.
(COMMERCIAL BREAK)
QUEST: Aung San Suu Kyi has received a rapturous welcome in Thailand on her first trip abroad in 24 years. The Burmese pro-democracy leader was mobbed by Burmese migrants, some of whom had waited many hours to glimpse her.
Miss. Suu Kyi will address the World Economic Forum, taking place in the Thai capital on Friday.
Today, Kyi offered hope to thousands of Burmese that they may soon be able to return home.
CNN's Andrew Stevens now reports from the town of Matai, near Bangkok.
(BEGIN VIDEOTAPE)
ANDREW STEVENS, CNN INTERNATIONAL CORRESPONDENT (voice-over): An emotional and uplifting moment for a migrant population living in Thailand with little hope in their lives. The woman many here describe as a savior, Aung San Suu Kyi, came to their town to listen to their issues and offer her support.
It was a day many have dreamed of. And for some, it was overwhelming.
"I was so happy that I cried," she told us.
"We are living in Thailand and we are working and we are struggling and we want to go home."
"Some people are living here 10 or 20 years. And this is like our savior come to see us."
Some 2.5 million Burmese are estimated to live in Thailand, most as economic refugees. Aid groups say they are treated as second-class citizens, in many cases, preyed on by corrupt officials, forced to live hand to mouth. And they gathered in their thousands, singing the Burmese national anthem --
(SINGING)
STEVENS: -- chanting her name, Daw Suu, Mother Suu, to welcome the person that they hope can one day bring them home to a better life.
(on camera): We are now waiting for the imminent arrival of Aung San Suu Kyi. And the crowd has been building all morning. And the people I've been speaking to have very simple wishes. They want democracy. They want independence. They want jobs. And they want to go home.
(voice-over): After waiting for hours in the blazing sun, the crowd erupted as she appeared on the balcony of a community center to make a brief speech.
She would not forget them, she said. She would fight for their rights and to work towards making it possible for them to come back home.
With that, she turned inside to get a clearer picture of the lives of her compatriots.
(on camera): Upstairs here, Suu Kyi is now meeting leaders of the migrant community and also workers, and hearing some of the stories, some of the problems they face daily.
(voice-over): And then deviating from the script, she spoke about what she'd heard.
AUNG SAN SUU KYI, LEADER, NATIONAL LEAGUE FOR DEMOCRACY: Of course, in such short meetings, I cannot really learn what all their problems are, but some of them are to do with the fact that the laws of this land, which do provide protection for workers, are not always observed.
STEVENS: From the relative calm inside to the tumultuous crowd waiting outside, hoping for one last glimpse, as she made her way to her car for the trip back to Bangkok. Brief though it was, her visit made a powerful impact. It was too much for some, but for most, a glimpse of a much brighter future.
Andrew Stevens, CNN, Mahachai, Thailand.
(END VIDEOTAPE)
QUEST: The whole question of those who migrate for security reasons is one part of the story.
But what about when people go overseas for economic reasons, for a better way of life?
When economic times become hard in their adopted country and things look better at home, then, of course, even those who originally left ahead home, too.
It's one of the experiences now being seen in Brazil, as our correspondent, Shasta Darlington, reports.
(BEGIN VIDEOTAPE)
SHASTA DARLINGTON, CNN INTERNATIONAL CORRESPONDENT (voice-over): A banker, architect and Internet entrepreneur -- white collar workers from around the globe are pouring into Brazil. But 20, even 10 years ago, not even Brazilian professionals stayed home.
Jonathan Assauge's (ph) family migrated to Miami in 1992.
JONATHAN ASSAUGE: Initially, it was tough. And my parents decided that the business that it made sense for them to open was like a 99 cents store.
DARLINGTON: Now, he's back in Sao Paolo.
ASSAUGE: The immediate reaction in my mind was, you know, all this hard work that my family did to come over here, you know, all that we fought for and now I'm going to go back?
Like it's going to break my mother's heart.
DARLINGTON: A Harvard Business School graduate, Assauge tried to develop a start-up in Silicon Valley, but finally concluded Brazil's booming consumer market made more sense.
This year, the country overtook the U.K. as the world's sixth largest economy, fueled, in part, by domestic consumption.
Since returning last year, Assauge has launched an online eyewear business.
(on camera): The number of Brazilians returning home has doubled over the last decade. And they're not alone. The number of legal foreign workers has also jumped 57 percent, many of them white collar migrants.
(voice-over): Josh Livingstone, a native New Yorker, moved to Sao Paolo with an international bank. He found a vibrant banking industry and expat community.
JOSH LIVINGSTONE, BANKER: But it's just a lot more exciting. You -- you sort of feel the energy. There's a lot more going on in terms of mergers and acquisitions, which is where I work.
DARLINGTON: On the down side, he says prices here are nearly 20 percent higher than Manhattan.
For many in Portugal and Spain, where unemployment has hit record highs, the attraction is obvious. The construction industry is booming and qualified labor often hard to come by.
That was enough to convince architect Miguel Feranno (ph) to abandon the comfort of his parents' home in Seville, Spain.
"I took a risk and I came," he said. He landed a job in an architectural firm on his first day, but he's had to make sacrifices. In the apartment he shares with three Brazilian architects, Serrano uses the maid's room.
"I just use it to sleep," he says. "You can't do anything else in it."
He's adapting to the big city and assures his family he's just happy to finally have a steady job.
Shasta Darlington, CNN, Sao Paolo.
(END VIDEO TAPE)
QUEST: In a moment on QUEST MEANS BUSINESS, we're preparing to update you around the business world. Investors fear for the company that gave us the BlackBerry. RIM, Research in Motion, is playing catch-up and having to do it pretty quickly.
In a moment.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest.
More QUEST MEANS BUSINESS in a moment.
This is CNN and on this network, it's the news that always comes first.
U.N. monitors patrol the streets of Damascus, as world leaders and diplomats are grappling with how to stop the bloodshed. The British ambassador says the U.N. Security Council has tools at its disposal to make an impact, he says, that simply making statements will accomplish nothing on the ground.
Syria's ambassador to the United Nations spoke a short time ago about the massacre in Houla.
(BEGIN VIDEO CLIP)
BASHAR AL JAAFARI, SYRIAN AMBASSADOR TO THE UN: So this crime, as I describe it, was a heinous crime, appalling crime, unjustified and unjustifiable. And those who perpetrated this crime should be held accountable and brought to justice, to the Syrian justice.
The national commission of investigation in Syria will terminate its investigation tomorrow or after tomorrow. And then you will hear, all of you, about -- you will hear the results of this investigation. And all of us will know for sure the identity of the perpetrators.
(END VIDEO CLIP)
QUEST: Liberia's former president, Charles Taylor, has been sentenced to 50 years in prison by the U.N.-backed court for war crimes. Taylor was found guilty last month of aiding and abetting rebels in a campaign of terror in neighboring Sierra Leone. The 64 -year-old Taylor says that he will appeal against the sentence.
Britain's Supreme Court has refused to stop the extradition of the WikiLeaks founder, Julian Assange. In a surprising move, the court is giving his lawyer only two weeks to file an appeal, arguing that the case has been decided on the wrong grounds. Assange is wanted in questioning in Sweden in connection with alleged incidents of sexual assault.
Rescuers have pulled a survivor out of the rubble in the Italian village of Cavezzo. Much of the town was destroyed in Tuesday's 5.8 magnitude earthquake. Authorities said at least 17 people were killed. The quake followed an even more powerful one in the same region nine days ago.
President Obama has called Mitt Romney to congratulate him on winning the Republican nomination. The two men now go head to head in November's general election to be president. Mr. Romney easily secured the necessary 1,144 delegates to secure the nomination, which will formally take place later this year.
(MUSIC PLAYING)
QUEST: We know the problems of the Eurozone and we know how bad they are and how they might get worse. The question is the economic storm that is wreaking havoc on Wall Street. The Dow Jones currently up just about 1 percent. Alison Kosik is live with us from the New York Stock Exchange. We're down about 1 percent, give or take some change. How much of this can we blame on the Eurozone crisis?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: You know what, you can blame all of it on the Eurozone crisis, Richard. You know, think about it. We live in a global economy. And a significant fiscal crisis in Europe is going to affect the U.S. economy, which is already in a very fragile state.
Look, the European Union is the number one trading partner for the U.S. American companies, they rely on European customers. So if the entire Eurozone falls into a recession, that's going to hurt U.S. businesses that sell their stuff overseas. You know, we already have started seeing this. I don't know if you remember Ford and General Motors.
Weakness in Europe hurt their results last quarter. Also, all this uncertainty in Europe, it's making companies more reluctant to spend, and we saw this with Cisco, when the technology giant reported its results. The CEO of Cisco, John Chambers (ph), he said that Europe's -- the jitters from what's going on in Europe were really holding back companies from investing in I.T.
So you see how this domino effect is working out here. And of course, this spook (ph) that you're seeing happened to the market today, why investors are being spooked today had a lot to do --
QUEST: OK.
KOSIK: -- with Spain.
QUEST: And Alison, Tim Geithner, U.S. Treasury Secretary, has dispatched the -- I think -- I forgot the woman's name, but I think she's the undersecretary for international affairs -- it's a very hush-hush shh- shh trip. She's not giving any interviews that we're aware of anyway. But is this an indication, going to Paris, to Berlin, to London, of just how worried they are?
KOSIK: It is. You're talking about Lael Brainard. She's the Treasury Department's undersecretary for international affairs, yes. So what "The Wall Street Journal" is reporting, that, yes, the administration, the Obama administration has sent her to Europe to talk to officials in Greece, in Spain, in France, in Germany to try to get them to get a handle on the crisis.
You know, the thing is, though, the U.S., Richard, it doesn't get to call the shots with this one. But what it's trying to do is influence the outcome, which has a direct effect on the U.S. You know, the Obama administration clearly getting worried about what's happening in Europe, is directly going to affect as -- it already has. It's going to directly affect the U.S. even more, Richard.
QUEST: Alison, you summed it up perfectly. Doesn't get to call the shots, but is seeking to influence the outcome. You heard it from Alison Kosik in New York. I can even tweet that one later -- @richardquest, by the way, is the tweet.
Look at that number. RIM, Research in Motion, you and I know it better as the maker of BlackBerry, which had a bleak session, bleak times for BlackBerry. The share price down 7.8 percent at $10 and change. It's fallen behind in the smartphone game. We know this. It's now paying JPMorgan and RBC Capital of Canada to help it reshape its strategy. Job cuts are on the horizon.
Another stock that you'll want to look at, Facebook. Its stock slipped deeper below the $30 mark, having dropped about 10 percent yesterday. Now it's off 2 percent, $28 and change. In just 12 days, shares of Facebook have lost more than a quarter of their IPO $38 price. Maggie Lake is in New York to talk about this.
Maggie, we're going to split them in half. Research in Motion, BlackBerry, there are investors -- very disgruntled investors say don't just put up and shut up, but sell up.
MAGGIE LAKE, CNN CORRESPONDENT: Oh, absolutely, Richard. And you wouldn't be surprised why. This stock four years ago was $140. It's trading just above $10, a spectacular fall from grace. Listen, we know the problems, the phones, they're not popular. They had problems and delays. But still some people are hoping. Listen, they still have a big business. They still have a lot of cash.
Maybe they can get it together, maybe they can set things right. Today, not only are they hiring those bankers, they're warning this week, rather, that they're going to have an operating loss, and analysts really surprised by that. They did not expect them to start losing money so quickly. It shows just how fast this business is deteriorating, very concerning to Wall Street. Have a listen to what this analyst said, how he described it.
(BEGIN VIDEO CLIP)
SCOTT SUTHERLAND, WEDBUSH SECURITIES: They talked about high churn with the U.S. subscribers. That has definitely been what we believe is the higher margin, higher profit part of their business.
Even though they're replacing those subscribers with international subscribers, those international subscribers are at much lower value and profitability. And I think that is hitting their profitability just as much as lower device (ph) sales.
(END VIDEO CLIP)
LAKE: So if you want to make a deal, Richard, you have to do it from a position of strength. Now that we see that RIM's core business is deteriorating, it leaves open the question who wants to buy them, even if they put themselves up fully, which they really haven't done yet, who's going to pick up this business?
On top of that, you've got to worry about key talent leaving. So very difficult situation for RIM right now.
QUEST: Well, as long as they still have that keyboard and the robust email, people like -- no, it's true. People like myself will always still have the BlackBerry in the briefcase. I mean, there's just -- I'm not -- it's not an advert for them, but it -- Facebook, Maggie, I feel like you've got the kiss of doom story today, when we were getting out the stories.
LAKE: Yes --
QUEST: Research in Motion and now Facebook. What's going on?
LAKE: Yes, I did get the dogs today, Richard. Facebook is a little bit of a different story, though, because I think you'd be hard pressed to say that all of the selling pressure is really about the fundamentals of the business. Yes, there are risks. We've been talking a lot about them, concerns about mobile advertising.
But it seems that a lot of what's happening now is really momentum trade, right? You've got that botched IPO. You add the pressure to the downside, coming against a backdrop where risk is off for investors across the board. They're sort of putting money in under the mattress so you don't have those sort of longer-term investors willing to step in.
So you've got the shorter term momentum people. If you come in and make a trade, and every trade it makes you money, you're going to continue to make that trade until there is a major roadblock in your way.
So there are some people are saying, listen, this thing's probably got some more downward momentum to go, and maybe not until we see their next earnings report in some details about what they're doing, about how they're addressing these problems. Are we going to get a real --
(CROSSTALK)
-- (inaudible) this stock?
QUEST: I'm going to have to get (inaudible) interrupting you, Maggie, need to interrupt you about some news and pictures we need to bring in. Maggie Lake is in New York.
Look at these pictures coming to us now. They are the French journalist Romeo Langlois on Wednesday, being released. It's a move that comes after negotiations involving government officials and the Red Cross. Langlois is a war journalist for the French international journal, "France 24."
He was taken -- is reporting alongside soldiers in April when he was taken. Four people were killed and six were wounded in an ambush. Now this week, it was the Red Cross officials said that the Colombian defense ministry would cease all military operations ahead of the release.
This is all part of a document signed by International Committee of the Red Cross representatives along with the government there. It's a cease-fire in the area that's been announced and will last until Thursday.
And I suppose the cease-fire, the ceasing of military activity, the quid pro quo, FARC announced it would release Langlois today, and that is what we are seeing at the moment, pictures coming in to us now of that. We'll have more details on who, what, where and why. We'll bring it to you.
The economic climate may be gloomy, the weather is wonderful, and Greece is still a big draw for many holiday makers. Travelzoo's Steven Dunk justifies. (Inaudible) after the break.
(COMMERCIAL BREAK)
QUEST: This week's "Business Traveller" update, the economic and political uncertainty in Greece is driving tourists away in droves from certain countries. Look at the numbers, revenues from tourism dropped by 15 percent in Q1.
Now you may not be surprised by that number. The country's May elections, the pace of reservations for some of the top Greek holiday spots slowed by half. According to some authorities in Greece, 50,000 bookings were canceled.
The sad part, of course, is Greek livelihood depends on tourism. Industry accounts for one in five jobs and almost 18 percent of Greek GDP. Economists are expecting things to get worse in the second half of the year.
But if you don't choose the euro as your currency, then Greek holidays are starting to sizzle as a bargain. The website Travelzoo is reporting U.K. bookings of package deals to Greece are at nearly 30 percent of the passport (ph). Now Steven Dunk is the managing director of Travelzoo, joins me.
Steven, this is a peculiarly British, I suppose, or maybe even Swiss, anyone non-euro related, isn't it?
STEVEN DUNK, MANAGING DIRECTOR, TRAVELZOO: Yes, I mean the advantages are obviously the pound, for example, is much stronger against the euro, making things much cheaper. I think in Britain, particularly, we have a propensity to sort of just go on holiday.
We still want to do it and we will go through the city and maybe go to somewhere like Greece. But the walk we're seeing, though, is just huge bargains. I mean, the bargains I -- like I've never seen in the last five or six years.
QUEST: We know that the islands are pretty much unaffected.
DUNK: Yes.
QUEST: Certainly in terms of riots or violence or anything we've seen in the capital (inaudible) Square. But who wants to go on a holiday in a depressed environment, where frankly speaking, even on the islands, the waiters are almost out of a job. The pensions are in trouble. Doesn't that take its toll?
DUNK: I think it probably does to an extent, but I think that we still want to go on holiday. And if you can get a great deal to some of these places --
QUEST: Are we seeing those great deals?
DUNK: We are, definitely --
QUEST: Give me examples.
DUNK: -- so I just looked on our website before I came out. A week with flights and accommodations, three-star in a hotel on the mainland, 206 pounds. We're seeing --
QUEST: About $350.
DUNK: Yes. We're seeing things like all-inclusive weeks at four- and five-star hotels for between 300 and 400 pounds.
QUEST: This all-inclusive, basically where you get your food, your meals included?
DUNK: And your drink.
QUEST: And your drink, very popular now, even for those who would previously have gone. Why are we wanting to go all-inclusive?
DUNK: We know how much we're going to spend.
QUEST: Really important.
DUNK: Which is very important, particularly in these times where perhaps people's budgets have been cut, be able to have some idea of what the cost is going to be, is really, really good.
I think in somewhere, for example, like Greece, because nobody knows what's going to happen with the euro, actually this is another insurance policy, if you like. You can safeguard. You know that you're going to be able to -- you don't have to have your credit card out to go out for dinner.
QUEST: The moment you see those prices moving again, come back and talk to us. We want to hear more about it.
DUNK: Definitely.
QUEST: (Inaudible).
DUNK: Thank you very much.
QUEST: Many thanks indeed.
Now when it comes to the ultimate "Business Traveller," there is one who surely has achieved not just silver, gold or platinum, they are, of course, the diamond status in honor of the impending Diamond Jubilee.
So join me over here. We've decided to take a look at the travels of Her Majesty the Queen. And the travels of Queen Elizabeth II, in 60 years, the Queen has had 261 official visits to 116 countries. Now the Queen doesn't even have a passport. But when she does travel, this is one of her -- this was from her first commonwealth tour in 1953. It's a BOAC Stratocruiser Canopus. Look, Canopus.
On that particular trip, she went 43,618 miles. I wonder if any of you actually traveled on one those. Jubilee years are particularly busy for the Queen; 56,000 miles were traveled in her Silver Jubilee. So that made her silver medallion, and there's she seen with the Lord Mayor of London, Sir Robin Gillett (ph).
Later in the week, I'm going to show you my own Silver Jubilee souvenir which hangs proudly in my flat. And then on the Golden Jubilee, she did 40,000 miles. This is the Queen in Australia, in Brisbane in 2002. Interestingly, the first walkabout from the Queen was in Australia, and since then she's been on at least 50 of them.
So if one is a little parched after all that traveling, Her Majesty certainly -- and maybe the rest of us -- would like a pot of tea. The dos and don'ts of the finer points of tea for two (inaudible).
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QUEST: Time for the answer to our "Currency Conundrum". In which year did Britain convert to decimal? The answer is C, the 15th of February, 1971. It was nicknamed "D-Day." During the switchover, some retailers like Fortnum & Mason had dual pricing for a period.
I can honestly say I don't necessarily remember yesterday, but I certainly remember decimalization. Fortnum & Mason is famous for its Royal blend of tea, and a jolly good too thing -- a jolly good thing, too.
You can never (inaudible). This will play the national anthem for the next few hours. Its said wherever the Queen may be in the world, she always stops for a cup of tea. So how does one make a cup of tea fit for Her Majesty? Does the milk go in first? Does the tea go in first?
And when you come to actually drink it, where should the little finger actually be? Clearly, it had to be a trip to Fortnum & Mason to find out more.
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QUEST: If we are going to talk about tea, then there is no better place than the Diamond Jubilee Tea Salon, opened by Her Majesty the Queen earlier this year here at Fortnum & Mason's, The Queen's grocers. This is the perfect place to get to grips with the dos and don'ts of a cuppa.
Tell me a bit about the history of tea.
MARGOT COOPER, FORTNUM & MASON TEA SPECIALIST: We've been selling tea in this country since about 1710. Then it was something that really only the Royals were drinking. So it was very, very expensive. There was also a huge black market for tea, would quite often be adulterated with other things, sometimes lead and poisons and all sorts of terrible things.
QUEST: What should I have?
COOPER: I think I would recommend the Jubilee blend.
QUEST: Of course.
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QUEST: The question that you wanted to know, which goes in first, milk or the tea?
COOPER: The answer is it doesn't make too much difference.
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COOPER: It goes back to when we had very bad crockery cups, which if you put hot tea into them, they would probably break. So people would put the cold milk in first and then after, the tea afterwards, so that the tea wouldn't quite be hot.
QUEST: We do have the question of which comes first, the chicken or the egg, and in this case, which comes first, the jam or the cream?
COOPER: I would go with the cream and then the jam.
QUEST: Oh!
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QUEST: Absolutely not.
COOPER: Well, the other way `round means you can get more cream on, which is obviously also --
QUEST: Have you ever tried to spread jam on cream? All right. You're going to do your --
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COOPER: It's OK. I'm going to pass you a spoon for your jam.
QUEST: (Inaudible) which is already put me right. There's me, shoving the knife in.
You may be right.
I think it's improved with the cream on (ph). To the Queen.
COOPER: The Queen.
QUEST: (Inaudible) this.
COOPER: We do. We sell around 200,000 kilos a year.
QUEST: We will work out how many cups of tea that actually makes later.
Tea is taken seriously at Fortnum & Mason, for it is one of nature's greatest gifts. We believe it deserves to be given respect, to be enjoyed in surroundings that are comfortable and convivial.
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QUEST: Now, that's the loose stuff tea. We promised to find out exactly how many cups of tea Fortnum & Mason sells with its 200,000 kilograms or something, and I am a man of my word.
Join me at the superscreen. So 200,000 kilograms a year, we talk one teaspoon per person, three grams each. The old rule of one per person and one for the pot, and it comes up with the 66,666,666. That is how many cups of tea Fortnum & Mason sell or make each year.
Weather forecast time now, Jenny Harrison at the World Weather Center.
JENNY HARRISON, CNN METEOROLOGIST: Hey, I'm --
QUEST: Nice cuppa -- go on.
HARRISON: I'm just trying to drink the cup of tea. Sorry, I wouldn't --
(CROSSTALK)
HARRISON: -- for a bit longer.
QUEST: And now you are -- listen, you know the only (inaudible) weather news that we have to get to, but you know what we need to know today.
HARRISON: I do know what we need to know today. I need to put my cup and saucer down. I can't break this. Belongs to the boss' secretary, so - -
QUEST: For goodness sake, she can't walk and drink tea at the same time.
HARRISON: You know, I can't -- I have -- no, I've got to be very careful about that. I know. What you want, of course, is that Jubilee, Diamond Jubilee forecast, don't you? And you are in luck. We have been looking at that. Of course, we're not just talking about one day, we're talking about Saturday, Sunday, Monday and Tuesday.
But you can certainly see for the last few hours, it has been fairly unsettled across the northwest, the U.K., across into France and also some thunderstorms, believe it or not, into the line of the Alps. But this is a forecast Thursday and Friday. It is, I'm afraid, a little bit cooler. In fact, it's going to be a little bit cooler (inaudible) for the next few days.
Maybe the chance of showers as well, but Saturday it should be a lovely day. Now on Saturday, that is the day that everybody's going to be heading to Epsom Downs. Now hopefully none of this will be in the forecast. It should be, as I say, a fairly cloudy day, but there is the chance of one or two showers. You can see from heavier thunderstorms have been rolling across into western and central France.
But let's head to London, first of all, and then head out of London to Epsom Downs. This is where the Queen will be on Saturday for the Epsom Darby. (Inaudible) on the Epsom's Darby. That's what we call it in Britain. And you can see that as we're going through the day, it should be fairly good. We've got quite a bit of cloud in the morning, and it should clear to be a sunny afternoon.
But you'll notice (inaudible) the temperature there, 18 degrees Celsius. So not as warm as it was certainly last weekend. And in fact, that's the general theme across northern Europe. We have got this cooldown coming down, courtesy of this cold front, which is sweeping through.
More of those scattered showers and thunderstorms. The warmth (ph) continuing into the southwest. It really is cooling off across the north and then let's just end this well with a look at conditions for the French Open. So again, the chance of showers Thursday and Friday. Saturday should be a better day, Richard.
QUEST: I'm going to argue to this (inaudible). Jenny Harrison, go back and have your tea before it's cold.
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QUEST: (Inaudible) moment after the break.
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QUEST: Tonight's "Profitable Moment", of all the numbers thrown at us today by the European Commission -- and there were certainly a lot of them -- one stood out to me in particular, 1,000. That's roughly the number of pages it took them to tell us something that was painfully obvious to anyone.
Now, yes, believe it or not, the Eurozone is apparently in some sort of economic trouble, and the individual companies are where the trouble really lies. We're still being told the economic imbalances are not yet excessive.
But I ask you, (inaudible) what exactly is the point in these mammoth ventose publications? We already have reports from the IMF on the OECD, from national authorities, ECB does report. Do we need another one to confirm the obvious? It's a case of a little less conversation, a little more action. That's what's needed from the commission in times like these.
Now I have enough trouble negotiating the commission's website without then reading something that, frankly, tells you and me what we already knew. There's trouble and they still are not on top of the crisis. And that is QUEST MEANS BUSINESS for tonight. I'm Richard Quest. Whatever you're up to in the hours ahead I do hope it's profitable.
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QUEST: Colombian rebels have freed the French journalist Romeo Langlois. He was kidnapped about a month ago while reporting alongside soldiers. The move comes after negotiations with the Red Cross and Colombia's government.
In the last hour, Syria's permanent representative to the United Nations Bashar al-Jaafari has said there will be an investigation into the massacre of Houla. There has been growing international fury over the killings that left more than 100 people dead (inaudible) half of them children. (Inaudible) military intervention in Syria has been thwarted by Russia and China.
Liberia's former president, Charles Taylor, has been sentenced to 50 years in prison by the U.N.-backed court for war crimes. He was found guilty last month of aiding and abetting rebels in a campaign of terror in neighboring Sierra Leone. The 64-year old said he will appeal against the sentence.
Britain supreme court has refused to stop the extradition of WikiLeaks founder Julian Assange. In a surprise move the court's given (inaudible) two weeks to file an appeal, arguing the case has been decided on the wrong ground. He is wanted in questioning in Sweden in connection with alleged incidents of sexual assault.
Those are the stories we're watching. This is CNN. Now Christiane Amanpour.
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