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QUEST MEANS BUSINESS
Future of Europe; Greek PM to Meet With Troika; German Court Decision on ESM Due Wednesday; French, Italian Economies Shrink; Difficult Issues; Future of Italy; Italy's Economic Widows; Support for ECB Plan; European Markets Slip; Soros Fund Chair Says Germany Should Lead or Leave Eurozone; A Model Economy; Dollar Holding Steady; All Eyes on Fed; Solving Mystery of US Economy's Struggle
Aired September 10, 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: The future of Europe. Tonight, we begin a special week of coverage on the debt crisis and what happens next.
They survived 2008, and tonight I ask Israel's finance minister how he plans to weather another European storm.
And call it comfort eating. Londoners are dining out on a crisis.
I'm Richard Quest. Together, I mean business.
Good evening. Crucial meetings underway across Europe this week. We've said it before and it might seem like we're saying it again: it appears to be make or break time for the EU and the eurozone. And whether or not we talk about just one particular country or the zone overall, this week --
QUEST: -- we'll be focusing on the continent's future, the tough decisions, and their consequences. And we're seeing the rocky start to this critical week. Think of it almost as control-alt-delete. After the summer, now the decisions have to be taken. And if you join me over in the library, you'll see what I mean.
Let's start with Greece, and where Greece is concerned, it's talks between the Greek prime minister Samaras and the troika, and the troika, which of course is the IMF, the EU, and the ECB, has rejected part of Athens' austerity plan.
Now, it needs to accept this for Athens to get the next tranche as part of bailout program two. Samaras is due to meet Mario Draghi in Frankfurt tomorrow. Greece, despite Italy and Spain's problem, Greece probably still remains the number one wobble at the moment.
The German Constitutional Court is in emergency session at this hour. It is listening to an appeal even before it's given its decision, which is due on Wednesday, on the constitutionality of the bailout fund, the ESM. We're expecting a decision of that on Wednesday, as I say.
But now, in response to a lawmaker's petition, the court has said it will hear his objection. It's expected to decide tomorrow whether it will still give its original decision.
Gloomy growth numbers from Italy in France. The Italian economy shrank 0.8 percent in quarter two previously. That's worse than expected. France also set for a contraction. The central banks expect the economy to shrink in Q3 as well. France and Italy both giving grave cause for concern.
Indeed, as we survey the future of Europe and the very real, difficult issues, let's talk to Jacek Saryusz-Wolski, a member of the European Parliament, who played a key role in negotiating Poland's entry into the EU. Poland, not a eurozone member. But he says that disturbing double standards are emerging within the block, and he joins me now, live from Strasbourg.
Sir, the -- we are at a moment, whether you're in the zone or out, but something has to be done. We can't muddle through to the end of the year as we have done for the last 18 months, two years, can we?
JACEK SARYUSZ-WOLSKI, MEMBER, EUROPEAN PARLIAMENT: Terribly long week ahead of us, as you said. But we are on the right track. The problem is that the solutions have to be found immediately for Greece and that will be by the end of September. Hopefully, I think that the Constitutional Court will allow for the ESM to function.
But then, the final architecture tool takes some months until December, which we did mention, to finalize the words on the banking union.
QUEST: The --
SARYUSZ-WOLSKI: And the first design will be given by Barroso here in the parliament also on Wednesday. A very threatening moment when we will have the Constitutional Court verdict and the first design of the banking union ahead of us.
QUEST: You see, that's the problem, isn't it, sir? You've got many plans and prospects and designs on the table, but there's all an element of conditionality.
For example, Spain and Italy can have bond purchases in secondary markets, but only if they go to the ESM. The ESM is conditional on the German Constitutional Court. And then, we get the bizarre natures of the troika. It's getting complicated and difficult.
SARYUSZ-WOLSKI: Well, the situation is difficult, but not hopeless. If all the elements of the situation come closer, if the Constitutional Court of Germany says yes, and then the banking union merges, and hopefully will not divide union but rather allow to cut down this vicious circle between sovereign debt and banking crisis, then we might be on a good track to review the crisis further away, at the turn of 2012 and 2013. Although, as you know, recession now is, especially in the eurozone, blame of countries is very great.
QUEST: The difficulty is, if we compare the handling of this crisis, and I know that it's 17 sovereign, 27 with the whole lot, compared to the US, there needs to be more leadership. And I ask you, where do you think that leadership needs to come from?
SARYUSZ-WOLSKI: Well, usually the question being asked in America -- and I want to remind that it took much longer for America to get where it is today -- is to look for leadership in Paris or in Berlin or somewhere else.
But our answer here in the parliament is that the leadership should be European Commission and European Parliament, which means institutions and bodies which belong to all the 27 members, and they should be given the lead, and we call that committee method, which means we do not exclude anybody, but everybody participates on an equal basis.
QUEST: Do you think there is yet a consensus, finally, sir -- do you think there is a consensus on the transference of more power to the European institutions at the cost of national governments?
SARYUSZ-WOLSKI: There's no full consensus yet, but it is coming. There's more and more consensus and certain decisions have been taken which would not have been taken without the crisis two years ago, let's say. So, we are heading towards the consensus on more transfer of sovereignty or shared sovereignty, if you wish, to tackle the crisis.
QUEST: Jacek Saryusz-Wolski, thank you for joining us from Strasbourg tonight. The announcements and decisions that we've been -- just been talking about, will shape the future of the continent. And each day on the program, we're focusing on a different eurozone crisis, its role in the debt crisis and where it is headed. Call it -- excuse me -- if you like, the Future of Europe.
This is the scenario, and if you look at the different countries, which rarely -- which are really at the center of it. And today, we focus, indeed, on Italy.
Now, Italy's recession is deepening. We already know that the crisis toppled the former prime minister and, of course, as a result of economic problems, the goal has been to lower the bond yields in Italy as such, to get them below 6 percent, get them below 5 percent if they can.
To do that, Italy is probably, possibly, maybe, will have to apply for a bailout. It will have to do so to the IMF, the EU, and the ECB. And to do that will involve conditionality. The very thing that Mario Monti says he doesn't want to have. But he's going to have to if he wants the return of the ECB buying Italy's bonds.
And in the middle of this, of course, you have the relationship between Monti and Merkel. That relationship is crucial. So, I give you on day one of coverage, the issue of having to deal with applying for help, followed rapidly by the issue of buying of bonds, and finally, the issue of the relationship with Germany. Three key areas that, as the week goes on, you will see moving forward.
For many of those living in the deep recession and austerity, the future is difficult, and some are simply finding it too hard to continue. Italy, as we're talking about, experiencing a wave of suicide linked to this hardship. Our Senior International Correspondent in Rome is Ben Wedeman, and he met some of those left behind.
(WOMAN SPEAKING ITALIAN, CRYING)
BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): Tiziana reads aloud the final lines of the last note written by her husband of 27 years, Giuseppe. Six months ago, Giuseppe doused himself and his car with gasoline and lit himself on fire outside a Bologna tax office. He died nine days later.
"I found a receipt among his things," Tiziana recalls, "he had bought on my birthday. And this is what really hurts: he bought two 15-liter jerrycans and a funnel, 30 liters of gasoline."
Giuseppe, a bricklayer, committed suicide when he was unable to pay a tax bill. Perhaps out of pride, perhaps shame, he never mentioned anything to his wife.
"He was a good person," she says. "He wasn't given the chance to redeem himself, because that's what he wanted to do. If Giuseppe had had the chance, he would have paid his debt."
For decades, it was common for Italians to avoid paying their full taxes, but with the financial crisis, tax collection has become more aggressive. Mounting tax troubles and financial hardship have driven some to take their lives.
Although statistics are hard to come by, one Italian small business association claims suicides related to economic hardship are twice what they were ten years ago.
WEDEMAN (on camera): Every day, Italian newspapers are full of stories about the spread, interest rates, stock markets. But oftentimes forgotten in this story are people like Giuseppe Campaniello, an ordinary person who cracked under extraordinary circumstances.
WEDEMAN (voice-over): Another was 59-year-old Rome businessman Mario Frasacco, who shot himself in the chest last April. His daughter, Giorgia, worked with him and knew he was having financial difficulties, but hadn't the slightest hint he was contemplating suicide.
"The day before he killed himself," she recalls, "I said good-bye to him as I always did before going home. He was smiling, joking. I never read in his eyes any discomfort that would lead to this. After five months, I can't find a justification for what he did."
The factory, which produced aluminum fittings, is padlocked, its ten workers now unemployed. Giorgia blames a government determined to maximize revenues and cut spending regardless of the human cost.
"It's as if this government is an extraterrestrial," she says. "It doesn't take into account the problematic situation of the people, and it does nothing, despite the constant appeals for help."
WEDEMAN (on camera): He was in the burn unit for nine days, right?
WEDEMAN (voice-over): Tiziana, who grew up in Australia, agrees.
WEDEMAN (on camera): After your husband died, did you get any sympathy or understanding or assistance of the state.
TIZIANA MARRONE, GIUSEPPE CAMPANIELLO'S WIDOW: From nobody. I've got my family, I've got my friends, I've got journalists. I've got -- people that don't know me. From these people, I've got -- they understand what I'm -- (speaking Italian)
WEDEMAN: Going through.
MARRONE: Going through. But the government? They feel -- nobody. They don't care about us. They don't care about us.
WEDEMAN (voice-over): But when her anger rises, she switches back into Italian.
"Who will hire me at 48 years old, nearly 49? Who?" she demands. "Where can I go? Should I become a prostitute? Because that's where they're taking us to. Or should I commit suicide and just get out of the way and be one less problem for the government?"
Tiziana has joined with other women whose husbands took their lives to form a group called Le Vedove Bianche, the White Widows, to show that in this long, drawn-out economic crisis, the cost cannot be calculated on a tax form.
Ben Wedeman, CNN, Torrevecchia Teatina, Italy.
QUEST: The situation in Italy. And we'll be back in a moment.
QUEST: Mario Draghi has received a vote of confidence from Larry Summers. The former US Treasury Secretary is backing the ECB president's plan to buy up eurozone government bonds, and support also came from the chairman of Goldman Sachs International, who sat down with CNN's Nina Dos Santos.
(BEGIN VIDEO CLIP)
PETER SUTHERLAND, CHAIRMAN, GOLDMAN SACHS INTERNATIONAL: At least now we have an instrument that provides a backdrop of support and solidarity for the whole project, which I think is very important in terms of providing assurance that the euro is going to be there ad infinitum. It is going to be the currency of Europe.
LARRY SUMMERS, FORMER US TREASURY SECRETARY: I'm encouraged by what Mario Draghi did last week, the set of commitments he made to support the nations that are in the most difficulty on the basis if rigorous conditions. Yes, I think that is a sign that the European situation may be coming under some control.
(END VIDEO CLIP)
QUEST: On that note, it's been a down week -- start to the week for the market -- excuse me -- the Europe FTSE and the DAX slipped into the red at the end of the session as Lendcorp shares fell more than 2 percent after it confirmed its later offer for Xstrata will be its one and only and final.
Staying in the Future of Europe, and George Soros says Germany must lead or leave the eurozone. He says it's option, either is better than persisting on the current course, where Germany is doing the minimum necessary to keep the zone together.
(BEGIN VIDEO CLIP)
GEORGE SOROS, CHAIRMAN, SOROS FUND MANAGEMENT: I think Germany should either lead -- in developing of a growth policy, a political union, and the burden-sharing. Accept the cost of leadership or leave to an amicable arrangement that would preserve the European Union.
(END VIDEO CLIP)
QUEST: So, the greater the good of the international economics are now speaking out quite openly. Jacob Frenkel, for instance, former Bank of Israel governor, and now chairman of JPMorgan Chase, who believes Germany has earned its place as Europe's strongest economy through structural policies. On the shores of Lake Como, he told Nina Dos Santos, euro states like Italy should imitate German policies, not criticize them.
JACOB FRENKEL, FORMER BANK OF ISRAEL GOVERNOR: He's clear, both globally as well as intra-Europe that excessive deficits and surpluses in the common account, unless they are temporary, they create debt, and that creates vulnerability.
But I will say that when you look at the entire eurozone as a whole, it is Germany that gained productivity. It is Germany that improved its structure, and therefore, it is the strongest country economically, but not because somebody gave it something for nothing.
They worked hard with the policies, and now they get the benefit. And I think that's a model that other countries should imitate. If you do the structural policies in time, your economy will be so much better.
One of the problems today in Europe is that Europe as a whole has lost competitiveness, but within Europe, Germany gained competitiveness. Italy lost competitiveness. If they are going to fit in the same bed and move together as a union, they will need to do something to make sure that countries like Italy do not continue to lose competitiveness.
They will need to improve their economic structure, they will need to have greater flexibility, they will need to have more research and development, and that's the secret to it.
NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT: We are in Italy, in fact, and the sun might be shining, but obviously, there's plenty of big clouds on the horizon as September gets going.
There's a real prospect here that countries like Italy and Spain, if market confidence continues to collapses and bond markets could be priced into bailout territory and have to ask for money. The stigma attached to having to ask for aid would be enormous for these countries, wouldn't it?
FRENKEL: It might be, but the cost of not asking for program can be so much bigger. And I would not say that the stigma is for asking for aid, that's not the way to describe it. But rather to describe it, what do we need to do in order to adopt a serious economic program?
And if adopting serious economic program means asking for financial support and being monitored, that economic policy that is committed is implemented, in the longer run, it's a big plus.
QUEST: Jacob Frenkel talking to Nina Dos Santos, and you're hearing the top economic minds on this program tonight, bringing to you on QUEST MEANS BUSINESS.
A Currency Conundrum for you, now. The US Treasury will spend $747 million on printing new dollar bills this year. Which type of bill is the most expensive to print? Is it the $1, the $20, or the $100 bill? I like that one. Which is more expensive -- forget the value of it -- which is more expensive? The $1, the $20, or the $100? Answer later in the program.
Now the rates. The dollar's holding steady against European currencies. The pound's unchanged at $1.60, and similar for the Swiss franc. Those are the rates --
QUEST: -- this is the break.
QUEST: The ECB has acted, now it's the Fed's turn. The US Fed starts its policy meetings on Wednesday, and investors are wondering if another stimulus package will be the result.
QUEST: They've -- very quiet day, just off 3.5 points, it was up 3 a short while ago, and now it's back down to 3 again. So, you're getting an idea. Markets are sort of off four-year highs at these levels.
In the past half hour, US Congress has officially gone back to work. The Senate and the House each began a new session at the top of the hour. This is what the scene was like in the House. There'll be more political backstabbing on the economy. There is almost no incentive to do a deal at the moment.
And in fact, as the backstabbing continues, it takes real detective work to work out who killed the nascent recovery that was doing so well as the country came out of the economic recession. Maggie Lake is our Sherlock Holmes, looking for clues.
UNIDENTIFIED MALE: It's all over. Good-bye, Margaret.
MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT (voice-over): The play is called "Perfect Crime," an intricate whodunnit that literally begins with a bang.
UNIDENTIFIED MALE: Oh! Damn!
LAKE (on camera): In this off-Broadway production, the race is on to find the cold-blooded killer of W. Harrison Brent, who lives in Connecticut with his wife. In real life, another mystery has been unfolding for months: the case of who or what killed the US economic recovery.
LAKE (voice-over): Just like in this show, there's no shortage of suspects for what's stalling economic growth.
UNIDENTIFIED MALE: I know you killed them.
UNIDENTIFIED FEMALE: Why do you think that?
LAKE: Suspect number one: Europe.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The biggest headwind the American economy is facing right now is uncertainty about Europe.
LAKE: American firms have seen European sales plummet amid fears that a Greek default could spark another global banking crisis.
Suspect number two: Congressional gridlock.
JACK LEW, WHITE HOUSE CHIEF OF STAFF: If Congress had passed the proposals the president submitted, there'd be a million more jobs today.
LAKE: New stimulus the Democrats say could have created jobs has been shot down amid Beltway bickering.
SEN. JOHN MCCAIN (R), ARIZONA: They believe that government creates - - and spending creates jobs. We believe business and growth creates jobs.
LAKE: Suspect number three: runaway national debt.
REP. JOHN BOEHNER (R), SPEAKER OF THE HOUSE: This $16 trillion worth of debt serves like a wet blanket over our economy, scaring employers of all size.
LAKE: Fiscal uncertainty is a key reason why companies aren't hiring, and the fiscal cliff of automatic spending cuts and tax increases that could hit next year is terrifying firms.
And suspect number four: energy prices.
MICHAEL GREENBERGER, PROFESSOR, UNIVERSITY OF MARYLAND: The ever- accelerating gasoline prices. This will break the back of the recovery.
LAKE: High gas and heating bills act like a direct tax on consumers, taking away money that would otherwise be spent at restaurants and stores.
UNIDENTIFIED MALE: There's no such thing as the perfect crime. I could've told you that.
LAKE: But one thing is certain: US growth has fallen from over 4 percent last year to under 2 percent today, amid one of the weakest post- war recoveries on record.
LAKE (on camera): On stage, all of the suspects seem to have airtight alibis.
UNIDENTIFIED MALE: It wasn't me, I was at the country club.
UNIDENTIFIED MALE: I only kill unemployed husbands.
UNIDENTIFIED FEMALE: I was giving a speech at the British club.
UNIDENTIFIED MALE: I was busy being shot.
LAKE: So, what do you think, Detective Asher, you have a pretty good idea who did it?
UNIDENTIFIED MALE: Oh, yes. I've got a real good idea who did it.
LAKE (voice-over): In the end, this cop gets the culprit, but our real-life mystery may prove much harder to solve, because when it comes to who killed the recovery, all the prime economic suspects may be to blame.
Maggie Lake, CNN, New York.
QUEST: Brilliant! Who killed the recovery? Maggie Lake on the stage in New York.
After the break, an economy with challenges like no other. Israeli finance minister joins me. We're going to talk investment, Europe -- oh! - - and Iran.
QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN and, on this network, the news always comes first.
(BEGIN VIDEO CLIP)
QUEST (voice-over): An opposition group says more than 100 people have been killed in Syria today. This amateur video appears to show a tank exploding in Aleppo. U.N.'s human rights chief is putting to an (ph) International Criminal Court to take action and says executions and torture are becoming the norm.
Iraq's Sunni vice president is rejecting the death sentence he received in absentia. Tariq al-Hashemi is appealing for calm after a wave of attacks on Sunday left 94 people dead. Al-Hashemi is in Turkey. He refuses to return to Iraq.
The Afghani prison at the Bagram Air Base is now under the control of Afghan authorities. It was handed over by the U.S. military as part of an agreement the two countries signed back in March. U.S. will retain control of hundreds of prisoners, including those (inaudible) considers high value detainees.
A bomb squad that's searching the home of the couple killed in the French Alps last week have given the all-clear. Police say some suspicious items in the home were not at all dangerous, and neighbors have now been allowed to return to their homes.
(END VIDEO CLIP)
QUEST: Britain has honored its athletes from this summer's Olympic and Paralympic Games. The athletes were part of a parade from St. Paul's Cathedral to Buckingham Palace. Britain's Olympic team came in third in the medal standings with 29 golds. The Paralympic team also came in third with 120 medals.
Now Israel's finance minister says the country's economy is ready to bounce back from any geopolitical crisis. Yuv'al Steinitz is in New York, where Rupert Murdoch opened a conference aiming to win new investment in Israel.
Now the minister joins us live from our studio.
Minister, we have quite a lot of ground to cover. Well, let us begin, of course, with, as our theme tonight on our program is Europe and what's happening in Europe, Israel weathered the economic crisis remarkably well in the 2008-9 period. Now as I look at the Israeli economy, besides security issues, your biggest problem is Europe.
YUV'AL STEINITZ, ISRAELI FINANCE MINISTER: Europe is a big global (inaudible) for the rest of the world and also to Israel. (Inaudible) of our export is to Europe. And of course we feel the impact of the European recession.
Still, I want to remind to our listeners that although Israel (inaudible) initial impact of the global crisis in 2009, unemployment got almost to 10 percent, in 2010, 2011 and even 2012, the Israeli economy is growing, has the fastest growing economy in the Western world. And we create more jobs than before.
The real secret of the Israeli economy is that we did manage to attract many new investments in the real economy. And the level of investment in the real economy jumped about 40 percent above the Greek crisis figures in three years.
QUEST: If we look at the -- I mean, interest rates have come down; the deficit, according to the IMF and your last article saw, they are concerned that the deficit will be too high. They are concerned -- I know you have a two-year rolling budget, which you consider the cornerstone of fiscal responsibility. But I put it to you, Minister, the risk for you is still on the downside.
STEINITZ: Well, of course. Look, my job is to be worried always. Actually, you know, it's not easy to be Israel finance minister because you have 8 million people in Israel, 4 million of them consider themselves as finance ministers. The other 4 million are too busy being defense minister or foreign ministers. But so it is in Israel.
But what we have done so far is to put many government incentives to attract new investment in Israel. The economy is growing and the reason I'm here in New York is to participate in a special conference focused on the Israel economy and especially, you know, investments opportunities in Israel.
Look, I think it's remarkable that despite the geopolitical conditions, the fact that Israel is in the middle of the Middle East for 64 years --
STEINITZ: -- many big international companies already invested in Israel; more than 100 big companies, like (inaudible) and IBM and (inaudible) has established (inaudible) in Israel and they think they are very satisfied (inaudible).
QUEST: Right. Let's just talk briefly and seriously, obviously, about Iran. Those investors, as indeed everybody watching, is deeply concerned.
Now I don't expect you to tell me in any shape or form Israel's plans, but the risk and the worries people now have of a preemptive strike by Israel against Iran and nuclear facilities, is growing.
STEINITZ: Yes. Look, I will make two comments on this.
First, I think it's up to the entire free world to put finally very clear -- (inaudible) ultimatum to the Iranian (inaudible) either change your behavior or (inaudible) will be seriously considered.
This is high time, never before in our history, in the world history, has religious regime, a fanatical religious regime has its hands on nuclear weapons. And this is a threat not just to Israel, but also to Europe, to United States and the rest of the world.
But with regard to economy and with regard to investments, we have very clear (inaudible) to investors. For decades --
STEINITZ: -- Israel expects many threats and still foreign investments in Israel, in the high-tech industry in Israel, in other industries, is growing. And most investors are usually very, very satisfied. And this is so for decades. The Israel economy is very, very flexible --
STEINITZ: -- resilience amid crisis and we have shown in the past that even in difficult times, we know how to initiate a speedy recovery in the Israel economy.
QUEST: Let me ask you, then, do you and do your cabinet colleagues feel constrained at the moment in potential Israeli responses to Iran, because of the U.S. presidential election? Options that you might wish to consider are not available because of the political process in the U.S. at the moment?
STEINITZ: Well, actually, I know that it's interesting, but I cannot get into details. We have the right to defend ourselves by all means against the regimes that is speaking about annihilation of the Jewish state of Israel.
But as I mentioned before, I think it's very important to emphasize that this is a global problem, a global threat, not just to Israel, to Israel, to the Middle East, to Europe and to the United States of America. And I think that those sanctions, I think the sanctions (inaudible). Finally, the sanctions (inaudible) sanctions are really about to cripple the Iranian economy.
STEINITZ: But sanctions are important, but they are not sufficient. If somebody likes the Iranians leading to change their behavior, only a very clear ultimatum is (inaudible) timetable will cause this regime to reconsider its position.
QUEST: Minister, a good discussion on economics, Europe, Iran -- it's not often that we have to cover so many issues on a business program in one interview, but we thank you, Minister, for joining us from New York, the Israeli finance minister.
I had to say sort of 4 million people all wanting to be the finance minister, while the other 4 million are kibitzing from the sidelines, wanting to be the foreign or the prime minister, to say nothing of everybody thinking they are the central banker.
When we come back in just a moment, it's a million meals (inaudible) and then served up by (inaudible) as the founders of the restaurant guide join us for a taste of London. It's QUEST MEANS BUSINESS. We're live in London. Good evening to you.
QUEST: Zagat has released its latest survey of London restaurants. Nearly 10,000 people participated. They munched through more than a million meals over the past year. That's almost 3,000 meals each day.
Now as you can see on the specials list in Chez Quest, 40 percent say London's dining (inaudible) is better than it was a year ago. Now we calculated a standard three-course dinner would cost an average of $102 in the top 10 in the list. Italian food came out on top and 25 percent of people said that Italian food, which of course has been the focus of our program tonight, is their favorite cuisine.
So those are the specials.
Joining me in the dining room tonight is Nina and Tim Zagat, the cofounders and co-chairs of the survey.
We'll get to that in a minute. All right.
Let's (inaudible) -- you've been surveying the London scene for many years.
NINA ZAGAT, CO-FOUNDER, ZAGAT SURVEY: Right.
QUEST: What's the biggest change that you've noticed in these austere times? Because it's also, of course, what the hell is happening elsewhere in Europe.
TIM ZAGAT, CO-FOUNDER, ZAGAT SURVEY: Well, I think London has seen food get better and better. There's some dips, but the restaurant industry, which used to be a joke 20-25 years ago, is now one of the best in the entire world.
QUEST: Do you think that we're seeing people tightening the belt, cutting back -- I know we are, because we're all doing it, those of us who live here are cutting back. So how do you reconcile what's taking place, do you think?
N. ZAGAT: Well, what we've seen this year is that people are really optimistic about the restaurant industry here in London. And that's exciting.
T. ZAGAT: There's been obviously a slow period this summer. But when 40 percent of the people think dining is better than it was a year ago, and only 3 percent think it's worse, that tells you a lot.
When you see openings, much more openings than in the past year or two, when you see the quality of the top restaurateurs from both London and abroad, who are investing really each one investing millions of pounds in each restaurant.
QUEST: One of the critics about the guide this morning was less than charitable in suggesting that your -- the people -- and I know you don't write this thing; it's people who actually write in, people who wrote, suggesting that perhaps some of the newer, more funky, more hip places -- maybe not the sort of places, you know --
N. ZAGAT: Well --
T. ZAGAT: The only person that can be, at least I believe, was wrong on just about every fact possible. And I would have been embarrassed to have written what she wrote. But look in that guide, you can see that there are funky places. We went to a Pitt Cue (ph) today for lunch, $28 for food, new -- no decor, in the basement, but absolutely fantastic food for 20 pounds.
N. ZAGAT: And our number one newcomer.
QUEST: Your number one newcomer.
When we look at Europe at the moment -- just because you've got guides elsewhere, when you look at Europe at the moment, and you see the austerity and you see the difficult times, what happens next when it comes to (inaudible)? Are people cutting back? Are they going for cheaper food? Are we just sort of making do?
T. ZAGAT: I think the industry -- and this is true in the United States as well as Europe -- is responding by trying to do more with less. in other words, less expensive restaurants, simpler restaurants, no fancy silver, no fancy crystal, but concentrating on giving good food. And there are more of those restaurants here and abroad than ever before.
QUEST: You've been eating in London over a few years, haven't you?
N. ZAGAT: Yes, of course.
T. ZAGAT: Too many.
T. ZAGAT: Too many.
QUEST: Best times as ever, do you think, at the moment?
N. ZAGAT: I think we've had exciting food here. We went to Pitt Cue Company, which is our number one newcomer. We went to the second newcomer, Dabbous, also an industrial-type setting --
T. ZAGAT: Simple.
N. ZAGAT: -- very simple. But delicious food. And a high food rating.
QUEST: Well. You're not going to join me on that one? Well, all right.
Feel free to join in.
N. ZAGAT: OK.
QUEST: Time, gentlemen, please, as they say here.
All right. Now as we get ready to order some dinner, the U.K. says goodbye to summer; much cooler weather rolls in this weekend.
Karen Maginnis, I cannot believe that we're already -- I -- this morning, I'm looking at getting my overcoat out.
KAREN MAGINNIS, AMS METEOROLOGIST: I know. And I've seen a number of our correspondents wearing scarves and coats, because those temperatures are going to be below normal in a season -- or the past season (inaudible), where the temperatures were exceedingly hot.
We saw lots of 30-plus degree readings across Europe. Staggeringly hot, but look at some of the temperatures we've seen just for Monday. They were in the upper 20s, mid- and upper 20s from Vienna and Berlin, Prague, Warsaw, 25, 28 degrees.
Well, say goodbye to those. Most of those temperatures start cooling down from U.K., then across France, eventually moving a little bit further into central Europe, gradually toward eastern Europe. But look at these temperatures in Berlin, by Thursday, only a high of 17 degrees.
And temperatures in the U.K., as much as 10 to 15 degrees below what they have been. And that is going to be accompanied by a little bit of rainfall. We've seen that in Glasgow, Edinburgh, also into portions of Belfast and into Dublin as well.
Some pretty heavy storms have arrested (ph) across the Alps, and that looks to be a significant event that takes place over the next 24-48 hours. Here's the system rolling in, is that ridge of high pressure further east. It's going to erode a little bit and allow some of the cooler air to gradually make its way across Europe.
All right. We're taking a look at Central America, specifically Nicaragua. Chinandega, that is an area about 135 kilometers to the north of Managua. It has been erupting and they're saying that high sulfur levels there and ash are -- could produce some acid rain. So we'll continue to monitor this. Our meteorologist, Mari Ramos, is from this region.
And in Pakistan, exceedingly high amounts of rainfall already reported 78 fatalities, more rainfall expected over the next several days, in some cases, they've already seen well above the rainfall totals they normally see for an entire year, Richard. Back to you.
QUEST: We thank you for that. I say we thank you, but of course, you know what I mean, as the colder weather arrives. We will talk more about that.
France's supertax storm is intensifying. Why the country's richest man is suddenly not so keen on being French.
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QUEST (voice-over): The answer to tonight's "Currency Conundrum," which U.S. dollar bill is the most expensive to print for the Bureau of Engraving? The answer is B, the $20 bill. It costs 9.2 cents per note to print. It's 11/2 cents more than the $100, 4 cents more than the dollar bill. And the reason, the quality of paper is different and the amount of ink used is also higher.
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QUEST: Francois Hollande says there will be no exceptions to the 75 percent supertax on people earning more than a million euros. That's about $1.3 million.
In a television interview, the French president said higher personal taxes would plug a third of the $42 billion budget gap next year. He expects higher business taxes and deeper spending cuts to account for the rest. And raising the highest tax rate to 75 percent he thinks will be a temporary measure. He expects the economy to have recovered within two years.
The supertax has some of France's highest paid celebrities, sportsmen and others threatening to leave the country, and Jim Clancy now tells us France's richest man is denying reports that he's applied for a Belgian passport to avoid paying tax.
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JIM CLANCY, CNN CORRESPONDENT (voice-over): The French dailies are furious, "Get lost, rich idiot," the headline screams in Monday morning's "Liberation," a national outcry after Bernard Arnault, the country's richest man, revealed he's applied for Belgian citizenship. Many believe Arnault is trying to avoid a new tax on the country's super-rich.
French President Francois Hollande is urging Arnault to show some patriotism.
Many French thought he was abandoning his nationality. He's just made the needed rectification.
Also, I think we need to call on patriotism at this time when we ask for an effort for a recovery. That's what I do. When one says that we will have to get to work to get ready to fight against unemployment, against debt, well, each one of us has to take part in this.
Arnault is the chairman of luxury conglomerate LVMH, Louis Vuitton, Moet, Hennessy, with $41 billion, "Forbes" magazine ranks him as the world's fourth richest man. Arnault says his seeking Belgian citizenship has nothing to do with higher taxes.
He's been a vocal critic of Hollande's tax plan, though. Arnault is also a close friend of former French President Nicolas Sarkozy, who lost last year's election to Mr. Hollande.
Reaction to the controversy on the streets of Paris has been mixed.
UNIDENTIFIED MALE: It's an insult made to the French, to France. It means we don't have the right to have a political changeover. It's shocking. It has always been shocking. This has always existed and will never change.
UNIDENTIFIED FEMALE: Listen, I believe him when he says he, too, wants to participate in the national effort. We contribute to curb the debt. So it doesn't shock me.
CLANCY (voice-over): Mr. Hollande insists his plan for a 75 percent income tax on those making more than 1 million euros a year is needed to help cut France's massive public deficit.
Despite his plans to add a Belgian passport, Arnault says he will remain a tax resident in France. But it's worth noting, the last time France had a socialist president, back in 1981, Arnault emigrated to the U.S. -- Jim Clancy, CNN, Atlanta.
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QUEST: When we come back, there is a "Profitable Moment," the future of Europe as we consider and start our week of coverage.
QUEST: Tonight's "Profitable Moment," all this week we are looking at the future of Europe and the crisis in the Eurozone. We're taking stock of where we are, and we're giving you some idea of what will happen next.
Now tonight, we looked at Italy, one of the largest members of the Zone, and a country which has to decide if and when it is going to ask for a bailout. It is only been asked for the bailout, of course, that the ECB will buy Italian bonds, bringing down the yield.
Well, let's hope Mario Monti doesn't wait too long. We're well past the time when an ounce of prevention is better than a pound of cure. Now it's keeping the patient alive. It's mind-boggling still that the Great Recession started and finished more than three years ago. The Eurozone's in a double dip and partly because the leaders can't sort out the sovereign debt crisis.
As we'll show you this week, progress has been made but it has been neither fast nor far enough. The big decisions remain to be taken and implemented. And as financial strains show, the single market's fractured and in need of repair.
The future of Europe is our theme this week. Let's hope we have one.
And that's QUEST MEANS BUSINESS. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable.
QUEST: An opposition group says more than 100 people have been killed in Syria today. This amateur video appears to show a tank exploding in Aleppo. U.N.'s human rights chief is pushing the International Criminal Court to take action. She says executions and torture are becoming the norm.
Iraq's Sunni vice president is rejecting the death sentence he received in absentia. Tariq al-Hashemi is appealing for calm after a wave of attacks on Sunday left 94 people dead. Al-Hashemi is in Turkey and refuses to return to Iraq.
A bomb squad searching the home of the couple killed in the French Alps last week have given it the all-clear. They say items at the home were not dangerous after all.
Britain has honored its athletes from this summer's Olympic and Paralympic Games. They took part in a parade from St. Paul's Cathedral to Buckingham Palace in London. Britain's Olympic team came in third in the medal standings with 29 golds and the Paralympic team also came in at third with 120 medals.
You are now up to date with the stories we are watching. So next on CNN, to New York, live, "AMANPOUR."