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Quest Means Business

Bank of America Fannie Mae Settlement; Banking Rules Relaxed; Mediocre Day for European Markets; Google Exec's Trip to North Korea; Gadget Heaven; US Dollar Falling; Fashion Royalty; Chinese Journalists Protest Press Freedom

Aired January 07, 2013 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

MAX FOSTER, HOST: A $10 billion settlement. Bank of America strikes a deal which could strike out its quarterly earnings.

Google's chief executive begins a controversial mission to North Korea.

And from Duchess of Cambridge to style queen. "Vogue" examines the hemlines, the hats, and the hosiery which won royal favor.

I'm Max Foster, this is QUEST MEANS BUSINESS.

Well, it's taken five years and more than $10 billion, but Bank of America has finally settled the score with Fannie Mae. It's agreed to pay the mortgage giant $10.3 billion as consolation for leaving it saddled with tens of thousands of toxic loans and driving it to seek a government bailout.

This all stems from home loans first issued by a company called Countrywide Financial, originally worth almost $1.5 trillion. They were bundled into mortgage-backed securities and sold onto Fannie Mae. When the US property bubble burst, those loans turned bad, leading to massive losses.

Bank of America bought Countrywide in January 2008. In September of that year, Fannie Mae was bailed out and essentially nationalized. As part of today's deal, Bank of America will pay Fannie Mae $6.75 billion to buy back 30,000 bad loans.

Bank of America says this is going to have a major effect on their fourth quarter earnings out in just ten days' time. Alison is in New York. So, can they handle it, Alison?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: It seems like Bank of America can, because the reality is, Max, that it will have an effect on its fourth quarter earnings, but what Bank of America is going to do is just going to show this one-time pre-tax charge of $2.7 billion.

But Bank of America still says that it expects its fourth quarter earnings to be modestly positive. As you said, Bank of America has reached this $10.3 billion settlement with Fannie Mae.

So, what it means is that B of A will pay Fannie, the lender which is backed by the US government, to deal with these questionable home loans that it sold to Fannie during the housing bubble. And those loans, of course, led to those massive losses for Fannie and eventual government takeover in 2008 and an almost $120 billion bailout just to keep it functioning.

Here's the unfortunate thing for Bank of America, though, Max, is these loans, they were actually originated by Countrywide Financial, and B of A purchased the subprime lender to save it from collapse five years ago, and that puts it on the hook for any wrongdoing even though it bought it -- even prior to when it bought Countrywide.

Now, B of A did know that these settlements were coming, that they were inevitable, so what B of A did, Max, was set aside more than $44 billion in legal expenses, payouts, and reserves. That is partially the reason why you are seeing shares of Bank of America up slightly on the fact that there's a little more certainty for investors, as far as Bank of America goes. Max?

FOSTER: Pictures aren't as clear as they seem, because actually, some of these loans might pay off in the end, so it's not a complete write-off.

KOSIK: Exactly. But the way investors see it is this is just sort of one more big step for Bank of American to put this housing crisis mess and the mess with Countrywide behind it. It's really been this sort of albatross around Bank of America's neck.

FOSTER: Alison Kosik in New York, thank you very much, indeed.

Well, things got a little easier overnight for banks across the world, in fact, because as they got given more leeway to meet the upcoming Basel III regulations, there's pretty good response altogether.

This is all to do with forcing banks to put enough cash and other assets aside in the event of another credit crunch, and banks will get more time, now, to meet new regulations. The deadline's been pushed back four years to 2019. Banks will only need to -- perhaps to reach 60 percent of the final target by the original date of 2015 now.

It'll also be easier for banks to reach that target. That's because regulators are relaxing the rules on which kind or what kind of stocks and bonds count toward it. So, banks can now rely on assets with lower ratings than before.

Well, that was very good news for European banks on an otherwise mediocre day for the markets. Barclays, Credit Agricole, Credit Suisse, they were all up 3 percent or better. Spain's Bankinter was up more than 9 percent. That couldn't prop up the broader markets, however. Each of the big four finished in the red.

So, with these rule-changes and the settlements in the US, it's been a pretty 24 -- pretty turbulent 24 hours for all of those banks. But starting with Bank of America, I asked the analyst Ralph Silva about the significance of the Fannie Mae deal.

(BEGIN VIDEOTAPE)

RALPH SILVA, DIRECTOR, SILVA RESEARCH NETWORK: It's a huge amount of money, and it will actually destroy their quarters of profit, so they are going to lose some money this quarter, no question. Will they make money through the entire year? Likely they will, because they're doing fairly well, so it's not going to kill the bank, which is a positive thing.

But when we say they're getting a fine of $10 billion, let's be clear on that: is that $6 billion of that $10 billion is actually to buy back mortgages. In other words, they're buying back value. So, it's not the entirety of the money, it's just the entirety of the money at one shot, but they may get some of that back over the next few years, so that's --

FOSTER: Because some of the mortgages may come good.

SILVA: Exactly. Or a lot of the mortgages, depending on how long they hold them. Most of them will actually come good, depending on the patience of Bank of America, and Bank of America has a lot of patience, so the likelihood is that they will make money off of those mortgages if, in fact, they are as patient as they should be.

FOSTER: And separately, this $8.5 billion figure -- this involved more banks -- it's about claims of foreclosure abuses. Can you just explain what happened there?

SILVA: Yes, the foreclosure abuses is absolutely unacceptable. They were foreclosing -- they were literally kicking people out of their homes without due process.

FOSTER: After the credit crunch.

SILVA: After the credit crunch. Because they missed one or two months worth of payments. And yes, they were legally able to do that, but it was just -- it was wrong. And it was absolutely wrong to do it.

Now, the banks are arguing is that there were so many foreclosures that they just didn't have the people to take the process in the proper way. To be frank, that's not an excuse, and they deserve these fines, and these fines are actually very fair.

FOSTER: Does this draw a line under the credit crunch?

SILVA: We would hope it does. Unfortunately, I don't think it will. I think it draws the line under it for the United States, but it doesn't draw the line under it for other countries. We are going to see the same kind of problems in other parts of the world. But I think for the US banks in the US, I think it draws the line under this particular area.

FOSTER: Which is where it all started, so we're seeing the beginning of the end, I guess.

SILVA: We hope we're seeing the beginning of the end. We need confidence back in the banking industry. Until we've actually drawn the line under this, we're not going to see confidence build. Banks need to be trusted, we need to start that building process now.

FOSTER: Just a word on Basel III, a very dry subject for a lot of people.

(LAUGHTER)

FOSTER: What's the significance of what's happened, and is it good news for the banks?

SILVA: Well, Basel III, this particular regulation that actually insisted the banks hold a certain amount of money, is being -- it's more lenient. What in fact is happening is that the rules were set before the credit crisis happened, so the rules were inappropriate for the current economic conditions.

So, what the regulators are saying is, banks we're asking too much of you, we're going to give you a little more freedom. Why? Because they want the banks to put more money into the economy. So, it's the right thing to do for the economy.

Is it a little more risk for the banks? Yes. But it is a slight amount of risk increase, but the more money that goes into the economy, the better it is for all of us.

FOSTER: Potentially a very significant move, if you can -- get your head around it.

SILVA: It's hugely significant because, in fact, what we're doing is a radical change on the way banks actually manage their security line, their insurance policy. And that's changing radically.

But the reality is is that the banks are going to operate exactly the same way with these rules or without these rules, so the average customer isn't going to see any change whatsoever. Hopefully, however, more people will get loans, more small businesses will get loans, and that's good for everyone.

(END VIDEOTAPE)

FOSTER: Ralph Silva. Next, Las Vegas gets even more glittering lights. We'll look at the technology set to sparkle at this year's consumer electronics show.

(COMMERCIAL BREAK)

FOSTER: The chairman of Google and a former US ambassador to the UN have arrived in North Korea, according to media reports. Felicia Taylor joins us now from New York. And people are fascinated to know why Google is in North Korea.

FELICIA TAYLOR, CNN INTERNATIONAL CORRESPONDENT: Yes, well, that's the big question, Max. Why would Google go on this alleged humanitarian visit? Bill Richardson is there, and allegedly he is negotiating the release of a Korean-American tour guide who has been detained and arrested since last month.

OK. That's the official reason, and this is what Bill Richardson said earlier.

(BEGIN VIDEO CLIP)

BILL RICHARDSON, FORMER GOVERNOR OF MEXICO: This is a private humanitarian mission not connected to the US government. We're not representing the US government. The objective is humanitarian, to make an assessment of the economic situation in North Korea.

(END VIDEO CLIP)

TAYLOR: OK. So, then, why do you bring the CEO of Google with you on that humanitarian visit? It is allegedly a personal visit. Eric Schmidt has not made any formal statement. And then -- when Google is asked for comment, they say they don't comment on personal travel.

But then again, why is he also traveling with Jared Cohen, who is a former State Department employee who now works at Google. Officially, the State Department has said that this is ill-timed and they are not in favor of them traveling to North Korea.

You've got to remember, officially, North Korea is still at war with South Korea. They've also conducted nuclear testing, and that's why the State Department issued this statement, frankly saying that we don't think that the timing of this is particularly a good idea, but they are private citizens and making their own decisions.

So, you -- you have to wonder. Obviously, Google wants to have a huge presence in Asia. They have certainly opened servers -- or they were planning to open servers in Taiwan and Singapore this year. They do have a presence in China, with offices there. You can't access Google in China, but however, you can in Hong Kong.

And the new leader, Kim Jong-un in his New Year's speech to the nation -- to the country, rather, had said that he wanted to have more unification between the two Koreas, and also he was interested in increasing their technical and industrial presence. So -- I'm just saying, it's an interesting question as to why Mr. Schmidt would want to go to North Korea at this time.

FOSTER: It really is a mystery. And your job is to grill him when he gets back, Felicia. Get to the bottom of it.

(LAUGHTER)

(CROSSTALK)

FOSTER: Thank you very much --

TAYLOR: I intend to, and --

(LAUGHTER)

TAYLOR: -- question him intensely.

FOSTER: Now, the world's largest gadget expo is opening its doors in Las Vegas. For tech lovers, it's like stepping into Willy Wonka's chocolate factory, really. Some of the biggest tech companies on the planet are at the 2013 Consumer Electronic Show, showing off their new innovations.

Televisions will be hard to miss at this year's event, mainly because they're getting bigger and bigger. So, we're getting bigger for you. This one, unveiled by Vizio, has a new ultra-high-definition screen known as 4K technology.

As well as big companies, we've got small start-ups, like Pebble, which makes smart e-ink watches. Pebble got its start through crowd-sourcing site Kickstarter, which makes it quite interesting. Health and fitness is also taking a high-tech turn. This pulse and oxygen monitor attaches to your SmartPhone and has already been shown off ahead of the conference.

And like TVs, phones are also getting bigger. This one from Alcatel has a screen size nearly 13 centimeters, or 5 inches. Don't expect too much phone news, though. Some of the major manufacturers might hold back revealing their new handsets until the Mobile World Congress in Barcelona next month. We'll bring you details on that.

But Jim Barry is the Consumer Electronics Association's media spokesman. He joins us now from Las Vegas. Thanks for joining us. What do you think is going to make the headlines coming out of this? What's the best gadget, at least?

JIM BARRY, MEDIA SPOKESMAN, CONSUMER ELECTRONICS ASSOCIATION: Well, you've already mentioned a couple of them, Max, and this -- you're right that the show starts tomorrow, but today is press day.

And last night there was an unveiled event where we saw a lot of these things, peeks at them, including that ultra-HD that you mentioned, so the LG version, an 84-inch screen. They're very narrow, very thin, but also four -- at least four times the resolution.

By that we're meaning more pixels, picture elements. So figure that a high-definition set, which by the way isn't so bad, these have four or more times those pixels and that resolution. So, either very close up or very far away, you get a spectacular picture, and we're going to see that from a lot of companies here.

The other thing you mentioned, though, that there's a huge trend in the whole electronics business which is a transition from stationary devices, whether they're TVs or desktop computers, to mobile devices, tablet computers, SmartPhones, portable computers, ultrabook laptops and e-book readers.

So, we're taking our information and entertainment with us just about everywhere, and that's being reflected here at the show, as well, with a lot of these different devices that work with these mobile devices.

FOSTER: And also the uses of the devices. It's interesting to see this -- interest in health applications, isn't it? Is that a big recent trend, or has that been going on for a while?

BARRY: No, it's been -- a lot of things we see at the show are things that have been percolating for a number of years, and then begin to brew at a particular show. I've been coming to this show for over 30 years, and it's really interesting to watch these.

But there's a whole section called Living in Digital Times. And that -- part of that is the health and fitness and all the electronics, the digital health summit that goes on here. Remember, this is a huge conference as well as an exhibition. There'll be 150,000 people from all over the world. It's the biggest trade show of any kind in North America and the biggest annual innovation show in the world.

FOSTER: OK, Jim Barry, thank you very much, indeed, and good luck with the show. I'm sure we'll get some more headlines out of that as it goes on as well.

It's time for today's Currency Conundrum, meanwhile. The IMF is resuming talks with Egypt this week as the country struggles with a currency crisis. The Egyptian pound has lost nearly 4 percent since the 30th of December, and each of those pounds is making up from -- is made up of 100 piasters.

Our question to you is, where did that unit get its name from? Is it A, the name of the currency the Egyptian pound replaced? B, the Egyptian name for the metal the piaster coins are made from? Or C, the name of the town in which they are minted? We'll have the answer for you, of course, later in the show.

The US dollar, meanwhile, is falling against most major currencies this Monday. Right now, a euro buys around $1.31, down around a third of one percent, and the dollar is showing a sharper fall against the Japanese yen, down by more than half of one percent.

(COMMERCIAL BREAK)

FOSTER: Well, the transition if Kate Middleton from middle-class beauty to royal style icon and Duchess of Cambridge has been studied by billions, of course, perhaps never to the forensic level, though, taken by British "Vogue."

Next month's issue includes facts like this. The average number of teeth the duchess exposes when she smiles: 8.6 percent. Catherine's hair has been the topic of much conversation. "Vogue" tells us the average -- 8.6 teeth, I'm corrected on.

"Vogue" tells us the average length of one of her curls, though, is 25 millimeters. And for more formal occasions, she sometimes dons a fascinator. The average angle of said fascinators: 50 degrees.

There's a bigger picture here, though. The style obsession does translate into real sales. This is the Issa dress, here, or a similar dress to the one that Catherine wore when she made her announcement, her engagement announcement. And the dress has become a staple, now, of the collection.

It was re-cut in 2011, sold out in 24 hours. My Wardrobe says Issa sales are up 38 percent, would you believe on last season? The duchess favors these LK Bennett shoes. You may recognize, them, there's been lots of publicity around them.

LK Bennett reported a 17 percent increase in gross profits this year. Chief executive Robert Didier is pragmatic, though. He told British "Vogue," "It's wonderful that she likes our product, but we know that she could always move on."

Catherine likes to team her shoes with sheer and nude tights. Sales of sheer hosiery have soared 85 percent since August of 2011 when the duchess started this trend.

Emily Sheffield is the deputy editor of British "Vogue." She explained to me earlier why the Duchess of Cambridge's style is right on the money.

(BEGIN VIDEOTAPE)

EMILY SHEFFIELD, DEPUTY EDITOR, BRITISH "VOGUE": She's sort of extraordinary in the fashion industry because she's not just a run-of-the- mill celebrity, she's not a film star, she's not a model. She's something special, which is why I think there's so much interest in her.

She's not a princess yet, but she is the queen-in-waiting, and I think there is still -- whatever the anti-royalists say, there is still a huge amount of interest in princess style. And she is the living embodiment of it, and she is coming after Princess Diana, which the world was obsessed with.

So, I think you do have to take her incredibly seriously, because -- any outfit she wears, it's everywhere. It's all over the world, it goes mad on Twitter. And --

FOSTER: Do her clothes sell? Does she have a big impact financially on the industry?

SHEFFIELD: I think -- certainly, I believe some of the High Street brands she has worn have then done incredibly well in America. I don't think you've seen -- it's great branding for them when she walks out and she's carrying a Whistles bag and she's in a Reiss dress, but I don't think it's had huge impact on their actual day-to-day sales.

But recently, since becoming the duchess, you have seen her become much more grown up and elegant and refined, and she's wearing many more of our British brands, so --

FOSTER: She's championing --

SHEFFIELD: She is championing --

FOSTER: -- some designers.

SHEFFIELD: And from McQueen, so Sarah Burton and McQueen, who is also pregnant, so they're going to be helping each other, I reckon, through this sort of tricky period. Jonathan Saunders, Roland Mouret, Stella McCartney. She's been wearing them all, and wearing them also when she goes overseas, which is fantastic for the British fashion business.

FOSTER: There has to be some criticism, though, that unlike Diana, she doesn't take young, cutting-edge designers and promote their work and become -- I mean, Diana was a fashion icon, wasn't she? But Kate isn't necessarily.

SHEFFIELD: Well to be fair, Diana became a fashion icon after she was divorced. While she was married to Charles, if you look back at her outfits, actually a lot of them, especially in the beginning, were pretty dowdy and frumpy.

And I think Catherine's taking her role very seriously, and she has been championing young British designers who are not world-famous names. They're certainly well-known to us and those in the inner fashion circles, but I don't think that you could say that Jonathan Saunders and Roksanda Ilincic are huge worldwide names. So, I think she has been taking it very seriously.

FOSTER: How many of those figures are there in the world right now that can have a big impact just by going out in something?

SHEFFIELD: I think quite a few -- there are lots of pop stars -- Rihanna, for instance, or any of the big Hollywood stars. I think that red carpet effect is still huge. But she's something different. She's a sort of timeless elegance, and I think that's why everyone is so interested in here, and she's showing these clothes in a different way. A more grown-up, sophisticated way, actually.

FOSTER: And what was your conclusion about how you define Kate's style? Because a lot of people discuss it.

SHEFFIELD: I think it's become sort of elegant, refined, sophisticated, and grown-up. But she's -- she still puts that sort of -- she's got the youthful beauty, which adds a certain something to it.

(END VIDEOTAPE)

FOSTER: Meanwhile, with inauguration just days away, Venezuela's president is still nowhere to be seen. As the country waits for news on the health of Hugo Chavez, we are live in the capital next.

(COMMERCIAL BREAK)

FOSTER: Welcome back, I'm Max Foster. This is CNN, and this is the world's news leader with the latest headlines for you this hour.

US president Barack Obama has officially announced his picks for defense secretary and CIA chief. He's chosen former Republican senator Chuck Hagel for the defense job and counter-terrorism advisor John Brennan to lead the CIA.

Five men charged in the gang rape and killing of a young woman in India arrived at court today under heavy security. Chaos broke out when lawyers furiously objected to some colleagues who offered to defend the men. The judge ordered a media blackout and closed future hearings to the public.

More patriot missile batteries from NATO are on their way to the Turkish- Syrian border. Their contingent from the Netherlands began making its way there today and should arrive in a couple of weeks. They'll join teams from the US and Germany that are also taking part in NATO's mission to protect Turkey's border from Syrian air strikes.

Bank of America has agreed to a settlement worth more than $10 billion with the US mortgage giant Fannie Mae. The deal is reparation for bad loans which forced Fannie May to take a government bailout after the collapse of the housing market.

Lionel Messi has been named FIFA's player of the year. He becomes the first male footballer in history to win the golden ball four times in a row. The Barcelona striker broke the record for most goals scored in a calendar year in 2012. He beat his teammate, Andres Iniesta, and Real Madrid's Cristiano Ronaldo to the prize.

China may be facing its first ever strike of a major newspaper. Dozens of journalists staged a protest claiming an editorial had been rewritten to back up the government. As Jaime Florcruz reports, it all began on social media.

(BEGIN VIDEOTAPE)

JAIME FLORCRUZ, CNN BEIJING BUREAU CHIEF: Controversy started with a posting on Weibo, China's Twitter-like micro-blogging site, complaining that the local propaganda officials in southern Guangdong province had re- written an annual New Year's editorial without the knowledge of the editors.

Originally, it was entitled "China's dream of constitutionalism," but when it was published, it read, "Chasing the dream," which sort of echoed the official Communist Party line. So soon enough, the China social media saw postings condemning the censorship and expressing support for "Southern Weekly."

China's media over the past 30 years have changed, have become more robust and diverse, thanks to open door and reform. However, over the years, even the media has been allowed more space to do more -- different things and to do them differently, still government censorship has never stopped.

And most Chinese media groups are owned and run by the government. The Communist Party's propaganda department from Beijing, and through their local branches, regularly issue written and oral directives telling the media what to run and what not to run, in terms of the news.

And so, one can only imagine the frustration of China's journalists when they are faced with censorship.

(END VIDEOTAPE)

MAX FOSTER, CNN HOST: Well, with just three days to go until his inauguration, it's still not known if Venezuela's president, Hugo Chavez, will be well enough to attend. We're expecting an update on his condition anytime in the next few days and Paula Newton is in Caracas for us.

Thanks for joining us, Paula. (Inaudible) some suggestion that he doesn't even have to turn up to his inauguration. Have you got any clarity about that?

PAULA NEWTON, CNN CORRESPONDENT: No clarity at all, but they are saying -- they maintain, Chavez allies, that he doesn't have to be here, that they might postpone the date of the inauguration, that they might do something where he can somehow be sworn in, even in Cuba.

But right now, what is so bizarre, some of the information just coming out in the last few minutes, Max, is that, in fact, the government is inviting foreign dignitaries here on Thursday anyway to do what they say quote- unquote "to show solidarity with Chavez."

It doesn't mean Chavez will make it back from Cuba, but that there will be dignitaries here from Latin America to show that they support him and will support him in his next six-year term.

You know, what a roller coaster ride for people here, though, Max. They don't know. Is their leader on their -- on his deathbed or not? Still not a lot of transparency. But his condition, as you say, three days to go till this inauguration. And they still do not know if Chavez can be inaugurated. And if he is not, who will lead this country Friday morning? Max?

FOSTER: Presumably the business sector, certainly the international business sector, would rather not have him in power. So are they looking into that in some way?

NEWTON: Well, when you look at the bond market, Max, it's really been rallying here because they are factoring in a government that does not include Hugo Chavez. He really is seriously ill, although most people realize that, even if he does make some type of short-term recovery, the problem, though, that while this uncertainty is going on, Max, right now there is a lot of instability.

Inflation, officially, is running at less than 20 percent. But I can tell you a lot of the hard currency exchange is already on the black market and that inflation is running much higher. We are starting to see some shortages.

And there is a lot of apprehension here. People remember not so long ago, just over a decade ago, there were lineups even for gasoline, something that this country is well endowed with. It's one of the largest -- one of the largest oil reserves in the world.

The other problem here, Max, is what's going on in this market? And you have to realize that that market really relies almost solely on oil. There's no one, you know, watching, keeping your eye on the ball. And oil production continues to go down.

This government really so consumed with what's going on, with Hugo Chavez not really being able to keep up with the day-to-day ins and outs of what's going on with this economy, and that also frightens people here.

FOSTER: I know another story, big story there and in Italy, was this plane that went missing with the head of Missoni on board. What can you tell us about that?

NEWTON: Well, it's so sad, really, especially his family coming out with a statement today, (inaudible) saying that we're not giving up. In fact, there's, you know, talking to people that are close to them, saying, look, maybe they were kidnapped. Maybe somehow there was some kind of a, you know, a skyjacking.

On the other hand, they have not found wreckage. It's still just three days, not a large patch to look through. But on the other hand, the weather has been good. Most people believe that there was some type of catastrophic mechanical failure. And right now they're looking for the wreckage really.

At the same time, the family's saying, look, we're going to go ahead. They have a fashion show this weekend in Italy. They say that that will likely go ahead. This is a very close-knit empire, close-knit family, an iconic brand in Italy.

And you know, Vittorio's brother, Luca, he's a pilot. He's here in Venezuela. He's up in helicopters right now, looking for that wreckage. And this is a family that says that they refuse to give up hope on their brother.

FOSTER: Paula, thank you very much indeed. Back with you as we get updates on Chavez's health.

And actor Gerard Depardieu has bid adieu to France and bonjour to Russia. Now he might even have a job lined up. Details later.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

FOSTER: Well, one of France's most famous film stars is now a Russian citizen. Gerard Depardieu accepted his Russian passport from President Vladimir Putin, no less, over the weekend. As Matthew Chance reports of the star's defection is for tax reasons. He'll find it comes with strings attached.

(BEGIN VIDEO CLIP)

MATTHEW CHANCE, CNN SR. INTL. CORRESPONDENT (voice-over): After this friendly bear hug with Russia's president, Gerard Depardieu accepted the bizarre offer of a Russian passport.

It means the actor, who recently starred in a film about Rasputin, an eccentric Russian monk, could avoid paying high taxes in his native France against which he's been outspoken. It's also a way for Putin, say analysts, to strike a populist chord.

LILIT GEVORGYAN, IHS GLOBAL INSIGHT: This is against the background where you have feelings (inaudible), where you have young Russian professionals leaving the country, where you have the country sort of seeking an opportunity to showcase the best tax rates that they already have compared to the West and European economies.

UNIDENTIFIED FEMALE: (Inaudible).

CHANCE (voice-over): But, of course, the 13 percent tax rate on offer in Russia has strings attached. The welcoming party in the Russian region of Moldavia, average winter temperature -11 degrees Celsius. Depardieu showed off his new citizenship. But he would have to live in the country at least 183 days a year to qualify for the lowest rate.

The governor of Moldavia, best known for its Stalin-era gulags and where one of the members of the punk bank Pussy Riot is now in prison, says the French star could choose an apartment there or even a place to build a house.

(MUSIC PLAYING)

CHANCE (voice-over): But surprisingly, Depardieu isn't the only France celebrity turning to Russia for a new life. Sixties glamor icon turned animal rights activist Brigitte Bardot has threatened to follow in his footsteps, not over French taxes, but plans to euthanize two elephants sick in a French zoo.

Bardot says in a statement, "If those in power have the cowardice to kill the two elephants, Baby and Nepal...I have taken the decision to ask for Russian nationality in order to escape this country which is now just a cemetery for animals."

It is a strange decision, say critics, who argue Russia's regard for animal rights is about as low as its income tax -- Matthew Chance, CNN, London.

(END VIDEO CLIP)

FOSTER: Well, the London city job market is tighteningly wound. New positions shrank by 35 percent in 2012, according to recruiter Asbury Marston. The battered banking sector added only 800 new positions in December, roughly half the number from the year before.

(Inaudible) focused on cost cutting, more are using software to recruit and getting a job is all about (inaudible) the machines. They like action verbs that show the completion, creation, solution of a project. They're also just (inaudible) adjectives like energetic, independent, methodical. Choose your words carefully and you could seduce the recruitment robot, as Jim Boulden explains.

(BEGIN VIDEO CLIP)

JIM BOULDEN, CNN CORRESPONDENT (voice-over): Companies are being swamped by CVs or resumes. That's where applicant tracking systems or ATS software comes into play. It scans resumes looking for keywords like versatile and extroverted. Then there are action verbs like organized, sidelines, revamped, controlled, reduced.

Jobs website monster.com sells ATS software called Sixth Sense. It also detects if applicants are trying to trick the computer.

JAMES BRIAN, MONSTER.COM: Our software detects when people do what we refer to as keyword bombing. So you put skills altogether. In the old days, people even used to put it in white text in CVs, so you couldn't visually see it. But the machine would read it. So there's technologies to try and take that out.

BOULDEN (voice-over): Recruitment consultant Barbara Love says applicants have to highlight measurable specifics, not subjective terms, and not buzzwords.

BARBARA LOVE, RECRUITMENT CONSULTANT: I would say that today's CV was selling achievements as opposed to responsibilities.

ALEXIA JIMENEZ (PH), JOB APPLICANT: I said I --

BOULDEN (voice-over): Alexia Jimenez (ph) is looking for full-time work in digital media marketing.

JIMENEZ (PH): But I heard that they scan the CVs. And if you don't include important or relevant keywords, then yours might not be considered for the role.

BOULDEN (voice-over): We showed Alexia's (ph) CV to Barbara Love.

LOVE: I increased web traffic. You see, that's great.

BOULDEN: What she wasn't happy about was things cliche.

JIMENEZ (PH): OK.

BOULDEN: So key player is not a word the computer would pick up.

JIMENEZ (PH): OK.

BOULDEN (voice-over): There are other words, perhaps, not to use.

LOVE: I had a conversation with somebody about a year ago, who had in his profile that he had a Machiavellian management style. I thought it was hilarious and I said to him, you know, you can't say that. You really, really, really can't say that.

BOULDEN (voice-over): There are a few perhaps surprising words on the list.

BOULDEN: Even aggressive is on the list.

JIMENEZ (PH): Aggressive?

BOULDEN: Would you put aggressive on your CV?

(CROSSTALK)

JIMENEZ (PH): No, I don't think so, no. No, no, no.

BOULDEN (voice-over): If computer scanning bothers you, Monster says the software also acts as a data mining and tracking service.

BRIAN: So making that process happen quickly and electronically and efficiently is a really important part.

BOULDEN (voice-over): So your resume or CV is less likely to get lost or forgotten when another job becomes available -- Jim Boulden, CNN, London.

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FOSTER: Start seeing (inaudible) see those words in CVs across the world from this point onwards, perhaps you'll join us. We're going to have a look at the weather now .

Tom Sater is at the International Weather Center.

Hi, Tom.

TOM SATER, AMS METEOROLOGIST: Hey, Max.

Residents of Australia are no stranger to heat or bush fires. But in the last few days, the combination of the extreme heat and the fires are now becoming what they call catastrophic. A number of records are being broken.

First, let's talk about the heat. You know, it's just before the 4 o'clock hour in Perth, and it's still 30 degrees. They had a week in December which was the warmest week in the month of December in 116 years. But the heat is building and the interior sections to the east, the southeast, and when you start this low in the morning, you know it's going to warm up.

Take a look at some of these high temperatures from Monday. Oodnadatta holds really the country's record for the highest temperature ever recorded. That was 50.7 degrees; that was in 1960. They may break that in the days ahead.

These numbers are unbelievable. On, as a whole, the country, the average high on Monday was 40.1 degrees. That was a record. It's never been that hot on average since the record in 1976. We don't even have enough colors here to cover the extreme heat that they're going to find. And it's going to continue to build.

Now with that, the fire damage. The alerts, when they set out their fire alerts, they go from high, very high, severe, extreme and then catastrophic. In fact, authorities right now, the only option is to leave. These are uncontrollable, fast-moving, unpredictable fires, thousands of volunteers. You see all the fires and many more in just the last 12 hours.

But this is where we've had our problems, in Tasmania. In fact, in the areas of Dunalley over to Boomer Bay, in fact, this is where we've seen pictures such as this, the scorched buildings. They believe that the structures at least 100, including schools. There were, at one time, they believe, over 100 missing. Most of the authorities have found those people. They fled, friends and family.

The authorities in New South Wales now are saying that Tuesday could be a record for them, as the most dangerous fire threat day in history for them. And so as they prepare for the heat elsewhere.

As we take a look at what's going on elsewhere in the area, the temperatures are going to be well over 40 degrees. The record could be broken again, Oodnadatta, that's about 1,000 kilometers north of Adelaide. These are winds.

So you see how the winds were dying down, which is good news for firefighters. But they're going to be picking up in some spots, such as areas of Tasmania and off toward the east as well. So the fire threat, a big concern.

Sydney, Max, is expecting 43 degrees for a high temperature. That's only happened three times in their history. So no relief in sight. It's going to maybe cool down for one day --

(CROSSTALK)

FOSTER: (Inaudible).

SATER: -- and then the weekend gets hot again.

FOSTER: Hot again. OK, Tom, thank you very much indeed for that.

Now a simple coin could solve the U.S. debt ceiling debate, apparently. Whilst it might sound like a gimmick, the idea is actually gaining (inaudible). More after the break.

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FOSTER (voice-over): It's time now for the answer to today's "Currency Conundrum," the Egyptian pound is made up from 100 piasters. We asked where the unit gets its name from. Well, the answer is A, a piaster is the name of the currency of the Egyptian pound took place back in 1834.

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FOSTER: U.S. lawmakers continue the New Year in an all-too-familiar position, divided. It's this time over raising the debt ceiling. That's the legal limit of what the government can borrow. And Washington is already breached the limit. Congress has the power to raise it, but that depends on the two main parties reaching an agreement.

President Barack Obama has warned Republicans against dragging out the talks. He says that would be a dangerous game and the government's ability to pay its bills should not be a political football.

But the Republican leader in the Senate, Mitch McConnell, has ruled out any more concessions on raising taxes following the fiscal cliff deal that came just a few days ago.

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SEN. MITCH MCCONNELL, MINORITY LEADER: The tax issue is over and now it's time to pivot to the single biggest threat to our country, both in the short term and the long term. We now have a debt of $16.4 trillion. That's as big as our economy. That alone makes us look a lot like Greece. We have an incredible spending addiction.

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FOSTER: Well, over the weekend, Nancy Pelosi, the leader of the Democrats in the House of Representatives, raised the possibility of another way to avoid the debt ceiling issue, going down to the wire.

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NANCY PELOSI, HOUSE MINORITY LEADER: Well, you ask the Republicans, because we always pass the debt ceiling when President Bush was president as he was incurring these massive debts and the Republicans weren't saying boo at the time.

There should be -- this is a conversation where there should be no doubt. In fact, if I were president, I would use the 14th Amendment, which says that the United States will always be --

BOB SCHIEFFER, CBS HOST: You would just go ahead and do it? You --

(CROSSTALK)

PELOSI: I would just go do it.

SCHIEFFER: All right.

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FOSTER: Well, Paul Krugman has joined those calling for the U.S. to mint a trillion-dollar coin to solve America's debt ceiling problems. Nobel Prize-winning economist isn't alone. A White House petition now has more than 4,000 signatures. Brian Todd has more.

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OBAMA: Well, I want to welcome --

BRIAN TODD, CNN CORRESPONDENT (voice-over): The president says he won't negotiate with Congress over lifting the debt ceiling.

OBAMA: I will not play that game.

TODD: Republicans say...

MCCONNELL: The president may not want to have this debate, but it's the one he's going to have because the country needs it.

TODD (voice-over): So while they debate over a debate and race headlong into the debt ceiling, is there a magic bullet to solve the crisis? Try a magic coin.

Some economists, legal scholars, and now even a congressman are suggesting a $1 trillion platinum coin could be minted, and the government could use that to pay the debt, avoid default and preempt the debt ceiling crisis.

Democratic Congressman Jerrold Nadler of New York says, "I'm being absolutely serious. It sounds silly, but it's absolutely legal."

I spoke to economist Joe Gagnon.

Why do you think it's a good idea right now?

JOE GAGNON, ECONOMIST: Well, it's better than a government shutdown. It's better than defaulting on the debt. I mean, it's better than the bad alternatives.

TODD (voice-over): And technically, it does appear to be legal. Here's how.

TODD: The U.S. government can print new money, but under law, there's a limit to how much paper money can be in circulation at any one time.

There are also rules that at least limit the denominations that gold, silver and copper coins can be. But there is no limit on platinum coins. The president can issue a platinum coin in any denomination. Treasury can mint it and then just print on it $1 trillion. The president can then order that coin to be deposited at the Federal Reserve.

TODD (voice-over) Then, says Gagnon --

GAGNON: And the Fed would credit the Treasury's account. So when the Treasury writes checks to pay people, the Fed will cash them.

TODD (voice-over) -- and that money would never be in public circulation, so some believe it wouldn't cause inflation.

But Gagnon says it will only temporarily pay America's bills, won't bring down its massive debt long-term. That's also some conservatives' argument against it.

STEPHEN MOORE, COLUMNIST, "THE WALL STREET JOURNAL": I think this is waving pixie dust over the debt and pretending that the debt is going to go away by this, what I view as just another one of these Washington gimmicks. Minting new coins isn't going to do anything about dealing with that fundamental problem.

TODD (voice-over): And what if the coin got stolen? Remember this from Dr. Evil?

MIKE MYERS, ACTOR, "DR. EVIL": If you want it back, you're going to have to pay me $1 million.

TODD (voice-over): Apparently then the government could just mint another one. And by the way, none of this requires congressional consent. We've tried to see if this is something the president would actually consider. The White House hasn't gotten back to us -- Brian Todd, CNN, Washington.

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FOSTER: I'm sure they will.

But meanwhile, India was one of Asia's worst performing economies of 2012. Official forecast suggests it will grow at the slowest rate in a decade this year, too, at around 8.5 percent, although that's (inaudible) many Western economies, of course. But the country's government believes it can turn the situation around.

Andrew Stevens looks at why.

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ANDREW STEVENS, CNN CONTRIBUTOR (voice-over): It's the I in the BRIC countries: India, one of the emerging economic powerhouses, along with Brazil, Russia and China, except that this powerhouse has been running out of steam to the extent that there's now talk of it losing its BRIC status to another I country in Asia, Indonesia. But not if this man has anything to do with it.

Veteran economic reformer P. Chidambaram is six months into a new term as India's finance minister and he's deep into a new reform plan to open up the economy to foreign investment and get India's finances in shape.

P. CHIDAMBARAM, FINANCE MINISTER, INDIA: This will put us back on a high- growth path, a potential for growth, as I believe, 8 percent and above.

STEVENS (voice-over): Chidambaram, who has served as finance minister in two previous governments, took up the job once again this past July and a gridlocked parliament has now begun clearing a path towards more reforms.

STEVENS: Since September, really, you've seen the government begin to get its act together. It's undertaken a number of long-awaited reforms.

STEVENS (voice-over): The biggest turnaround so far, a parliamentary vote that allows the likes of Walmart into India's massive direct retail sector.

It's been a hugely divisive issue. Small retailers fear they'll be pushed out by the multinational giant and protests have fueled strong opposition in parliament. But Chidambaram has no doubt that the measure, which was finally passed late last year, will provide big improvements.

CHIDAMBARAM: Therefore, we think that FDI and multibrand retail, to the extent that it deals with agricultural produce, will bring efficiencies, will give better prices to farmers, better prices to consumers and build a supply chain which will reduce wastage.

STEVENS (voice-over): The reforms are unlikely to return India to double- digit growth levels of 2010, but they are underpinning a turnaround. Last year is now being seen as the low point of the economic cycle with growth of 6.6 percent now projected for next year by the Asian Development Bank.

But for Chidambaram, it's just the beginning of a reform agenda that will keep him fully occupied through 2013 and beyond -- Andrew Stevens, CNN, Hong Kong.

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FOSTER: Well, that's the story from India. We'll have a look at the global stock markets and how they're doing after the break.

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FOSTER: Updating you on a story that we brought you a little earlier, a controversial visit to North Korea.

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FOSTER (voice-over): This is video that we've received moments ago from there. It's of the chairman of Google. And you can see there just behind Eric Schmidt and former U.S. ambassador to the U.N., Bill Richardson -- and there he is. They're arriving in Pyongyang here. Sources told CNN last week that the trip was a private humanitarian visit.

It's thought that Richardson's objective will be to negotiate the release of an American prisoner who was captured last month in North Korea. But there are some questions about why Eric Schmidt is traveling there. We've had no confirmation from him or his company, but we hope to find out more when he returns.

That is QUEST MEANS BUSINESS. I'm Max Foster in London. Thank you for watching. After the break, we'll have the news headlines.

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FOSTER (voice-over): U.S. President Barack Obama has officially announced his pick for deputy secretary and CIA chief. He's chosen former Republican senator and decorated Vietnam War veteran Chuck Hagel for the Defense job; counterterrorism adviser John Brennan has been given the nod to lead the CIA.

Five men charged in the gang rape and killing of a young woman in India arrived at court today under heavy security. Chaos, though, broke out when lawyers furiously objected to some colleagues who offered to defend the men. The charge ordered a media blackout and closed future hearings to the public.

More Patriot missile batteries from NATO are on their way to the Turkish- Syrian border. A continuation from the Netherlands began making its way there today and should arrive in a couple of weeks.

Lionel Messi has been named as FIFA's player of the year. He becomes the first male footballer in history to win the golden ball four times in a row.

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FOSTER: Now we join "AMANPOUR."

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