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QUEST MEANS BUSINESS
Toyota Orders 6 Million Recalls; Auto Recalls; Dow Rallies; Fed Minutes; IMF Warns on Fed Stimulus; BOE Test 1906 Test Papers on Show; Massive Web Security Breach
Aired April 9, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: What an end to a busy day, the market up very sharply. We will explain exactly why the Dow has risen more than 1 percent, as she hits the hammer on Wednesday, April the 9th.
Tonight, there's trouble at Toyota. The company follows GM. It's ordered a massive auto recall. Wait until you hear the numbers. You'll be asking yourself why.
Also, the Goldilocks recovery. The IMF tells me the Fed must get things just right.
And batten down the hatches. The internet faces a disastrous breach, and every one of our passwords could be at risk. So, what's gone wrong?
I'm Richard Quest. I mean business.
Good evening. The world's largest automaker is embroiled in a major safety scare. Toyota has ordered the recall of more than 6 million -- million -- vehicles worldwide. It's the latest big brand to suffer from a quality control crisis, and it comes hard on the heels of General Motors, with its ignition switch scandal. If you join me at the super screens, you'll see what I mean.
Twenty-seven Toyota models are affected -- twenty-seven -- and some of the cars are up to ten years old, and they're the names and the marks that we all know. Camry and Corolla. But just look at the range of all the problems that we're talking about.
So, you've got particular faults vary from model to model. You've got seat rails that can send the seat flying forward, dangerously. There's the potential faulty steering column. An airbag that could suddenly deactivate. Potentially faulty windshield wiper motors. Engine starters that could cause fires and risks.
Now, Toyota said it's not aware of any major accidents or injuries or fatalities as a result of all this. However -- however -- the engine starter glitch is thought to be behind two fires. So, you've got one, two, three, four, five issues on one company all announced at the same time.
As Toyota battles to fix its faults, General Motors has been fined $7,000 a day because it's late in handing over documents to federal officials relating to the ignition switch problem. We need to talk more about all these problems. The first question to Paula Newton. Good to see you.
PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: Nice to see you, Richard.
QUEST: Welcome back from Perth. The first question: why have they announced all of these faults at the same time? Surely you do it as each one happens.
NEWTON: Absolutely not. You do not want this to trickle out. You want all the bad news, you want it over worth, the way they've done it in one day. Also, you don't know what kind of pressure regulators had already been putting on them.
This recall is voluntary, but just last month, Richard, we had a $1.2 billion settlement with the US Justice Department, biggest of its kind in history, that was to settle all those recall debacles from four years ago. They are on what the Justice Department might say is probation. They've got to be careful here.
QUEST: But as I look at the list, they've obviously been saving them up to announce them at once. The seat rails are potentially faulty. The airbags. I understand what you're saying, that you want to get the bad news all done in -- just in one go. But to have them all in one lump doesn't look good.
NEWTON: It may not look good, because you see all these different models, all these different problems. But they were able to put that key line in there: so far, they say, according to them, no accidents, no injuries, no fatalities.
Unfortunately, Richard, when we look at the specter of those hearings on Capitol Hill with GM and all those recalls, motorists, vehicle owners are starting to make that link between my dealership calling me about my steering column and accidents that cause death.
And that kind of causal link is something Toyota now knows it cannot afford. With the last recall debacle, sales plummeted. They took their reputation, Richard, in 2009 --
QUEST: Now that was the --
NEWTON: That was the one about the acceleration.
QUEST: The acceleration, yes. Yes.
NEWTON: The sticky pedal.
NEWTON: They took their safety reputation and drove it into the ground. Guess what, Richard? Their safety reputation and their sales up again. They could not afford to have anything happen.
This looks better. It's a voluntary disclosure. They call people up, they see what's wrong with their cars, bring them in, get them fixed, get them back out.
QUEST: Is there any -- is there likely to be any liability as a result of this, that we know of?
NEWTON: You can certainly see some online chatter, a few people saying, "I had an accident, why did this happen? Why did this happen?" Not so much so far. But things -- once you have these recalls, people start to put two and two together, and they see what kind of litigation can follow.
This is not anywhere near the kind of scope that you're looking at from what happened in 2009, and that's what Toyota wants. They just want it -- they want to deal with it, they want it out of the way, let's move on to the next quarter.
QUEST: We should move on. Thank you, Paula. Many thanks, indeed. Now, it's the second recall this year for Toyota, and if you look at it over the course of the whole industry, 2014 is on course to be a record year for recalls. Again, back to the super screens and you'll see.
Just look at the wide range. They're in good company. All these brands have issued recalls this year -- GM, VW, Chrysler, Honda, Ford, and Nissan. And even if you strip out GM from the equation, you're still looking north of 11 million vehicles. And last year, overall, there were 22 million recalls.
In the US, the Kelley Blue Book provides market insights and forecasting within the industry. And to look at the impact on consumers and that industry, Alec Gutierrez joins me now. Sir, thank you. Good to see you. Appreciate it. The first --
ALEC GUTIERREZ, SENIOR ANALYST, KELLEY BLUE BOOK: Thank you.
QUEST: -- fundamental question: strip away the GM recall, is this year actually worse than previous years?
GUTIERREZ: Well, I think so far through the first quarter, we are on pace to surpass what we saw last year where, as you pointed out, we saw north of 22 million vehicles recalled. That's not to say that we necessarily keep this pace keep up. Things could slow down. It's very, very difficult to predict the flow of recalls, how many are coming at any given time.
GUTIERREZ: It's difficult to say if we're going to blow past that number from last year.
QUEST: Right. And as I look at the Toyota recall numbers, where you've got 2.3 million in North America, 800,000 in Europe, Japan's just over a million, how damaging do you think this is for Toyota?
GUTIERREZ: Based on what we're seeing and the data, quite frankly, we don't see this necessarily impacting Toyota from a consumer perception standpoint.
Although they did see a bit of a hit in terms of sales volume back when they had their unintended acceleration recalls in 2009 and 2010, a lot of that was related to the fact that they put a voluntary stop sale on Camry, Corolla, and some of their better-selling models.
GUTIERREZ: Once that stop-sale was lifted, volume did return. So, what we're seeing in the data, I don't necessarily see a longterm impact here.
QUEST: Is that because consumers are -- unless it's a major recall on the ignition switch, where there's a safety issue involved, do you think consumers are becoming -- or have become more accepting of recalls? They know that motor vehicles these days are extremely complicated instruments and things will go wrong?
GUTIERREZ: Yes, I think that's a fair statement. Not only have they become more accepting, it's almost viewed as a positive in that consumers see a manufacturer, like a Toyota, coming out and saying hey, you know what, guys? We found that there were a few issues with our cars, we're going to get it fixed, we're going to take care of you.
They view it as the automaker being proactive and looking out for the best interests of the consumer and the safety of that vehicle in the long term. So, that's, again, why we don't necessarily expect to see any significant blowback to Toyota.
QUEST: And yet, if you do get that safety question -- and the GM one, of course, is the definitive example at the moment. I mean, Toyota and the unexpected acceleration was bad enough, but now the GM one is there. That safety aspect still plays into the whole recall question?
GUTIERREZ: Oh, absolutely. I think when safety is a question, that's when these automakers really have to pull all the stops out and make a move as quickly and transparently as possible.
But interestingly, even looking at GM and knowing that this is a situation that's been in the works for ten-plus years, folks knew about it, they're just now reacting. This is almost what you'd consider a worst-case scenario from a brand perception standpoint.
And yet, we look at March sales in the US, and GM saw a 7 percent lift in retail sales volume on a year-over-year basis. So, even at the height of the media scrutiny for GM, with Mary Barra testifying in front of Congress --
GUTIERREZ: -- GM sales are still as strong as ever and outpaced industry growth last month.
QUEST: Quick final question: how did Barra do, in your view?
GUTIERREZ: I think she's got a lot to contend with. She did as good as anyone could expect. I don't think -- it's no surprise that there was no new information gleaned from there, so I think she did as well as she could, knowing that there are still investigations going on internally.
QUEST: Thank you, sir. Mr. Gutierrez joining us. Thank you, appreciate it. Many thanks, indeed.
Now, the IMF is warning that the Fed is playing a delicate game as it winds down its stimulus. Meet the man who's predicting a fairy tale ending. He's next, it's QUEST MEANS BUSINESS.
QUEST: Investors put some spring in their step as the Fed struck a dovish tone. Markets up and the earnings season is upon us. The Dow Jones -- look at that! Alison Kosik, 2:00 on the nose, Fed minutes. You don't - - if we can see that graph again in the other wall, you'll be able to -- we can talk more about. 2:00 on the nose, extraordinary.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Oh, yes. The Fed made no bones about it, saying that that 6.5 percent target rate was outdated. That was music to the market's ears. Yes, you saw stocks shoot up.
But don't be fooled. These swings, you know what? They're becoming a little commonplace these days, Richard. Just as much as the market came up today, it could very well go down as we get knee-deep into first quarter earnings season.
Because expectations are pretty low for the earnings season. Did you know that 93 companies in the S&P 500 have issued negative guidance on earnings this season? Only 18 have offered positive guidance. Some are saying maybe these companies are under promising to offer that upside surprise, but one thing they don't want to do, they don't want to disappoint, Richard.
QUEST: Ask and ye shall receive. The very question that I asked you to -- 93 warned against, only 18 in favor.
QUEST: Which doesn't bode well once the season's underway.
KOSIK: Exactly. That's what the worries are. The big banks start reporting at the end of the week.
KOSIK: We shall see.
QUEST: Right. I just want a quick one before we finish. Going back to these numbers, Alison, all right, so the Fed -- the markets, the markets up so strongly. What was it particularly of what the Fed said that they liked? Because frankly, tapering's going to continue. We knew qualitative -- it had gone from quantitative to qualitative, so what was it about what they said?
KOSIK: But the qualitative was still in question. But what the Fed did in its minutes was specifically say, 6.5 percent, that target rate, that target unemployment rate, was outdated, that they would no longer look at that.
That they would instead look at how the economy's doing. How are the jobs reports doing? How'd consumer confidence doing? It would be more quality than targeted to hard numbers, Richard.
QUEST: Good to see you. Thank you, Alison. Keep an eye on those numbers when we get through earnings season. We'll have more to talk about on that.
Janet Yellen has the backing of her colleagues to replace the Fed's economic goalposts, as we've just heard. In the past, the Fed has said it's goal was to reduce unemployment to 6.5 percent, get inflation down to 2.5 percent before raising rates.
Now, the minutes of the Fed that we just referred to and which you saw the markets being so bullish about, show that the Yellen plan to replace those targets with a broader dashboard, the so-called qualitative range rather than quantitative, won the support.
Officials are concerned that the US job market is still far from healthy. And some officials also expressed concerns about a potential slowdown in housing. China's economic deceleration is affecting the broader global market.
The International Monetary Fund is warning the Fed's playing a very delicate game in trying to slow its stimulus. In the latest global financial stability report, the IMF says timing is critical. The IMF's financial counselor, Jose Vinals, says the outcome could resemble something out of a fairy tale.
(BEGIN VIDEO CLIP)
JOSE VINALS, FINANCIAL COUNSELOR, INTERNATIONAL MONETARY FUND: I call this smooth exit a "Goldilocks Exit." Neither too hot, nor too cold. Just right.
(END VIDEO CLIP)
QUEST: So, if we're looking for the Goldilocks scenario, Jose Vinals joins me now from Washington. Where are you at the moment in the Goldilocks scenario?
VINALS: Well, I think we had a rather bumpy start in May, in late May, when the Fed started talking about its plans for normalizing its monetary policy, and communication was certainly not very clear vis-a-vis markets.
But things have gotten much better since September, and I think that the Fed has finally started tapering in a smooth manner. No surprises for markets. And so far, volatility has been rather subdued and the exiting process, at least the first stages, have been quite smooth. So, the start, now, of the actual tapering has been much better than the previous talk --
VINALS: -- of the future tapering.
QUEST: OK. So, the tapering is going OK from a financial stability point of view, but you know as well as I do that the tapering in some senses is the easy bit. Because all you're really doing with tapering is removing accommodation, and you've still got a lot of accommodation there.
It's when you actually start seriously tightening that the problems and the issues for emerging markets is going to come home to roost, isn't it?
VINALS: Yes. I think that the easier part is taking your foot off the accelerator, of the gas pedal. And the harder part is when you start pushing the brake. But again, that doesn't need to be too problematic if the brake is pushed on a rather gradual basis and on the back of a strengthening economy.
A bigger problem would be if you had to push the brake faster, because that is something which would lead to larger global financial spillovers.
QUEST: Do you see any worries that the -- we saw in the WEO yesterday, the World Economic Outlook -- do you see any worries from a financial stability point of view that different major blocs are really at quite tricky and different parts of the cycle?
Yes, growth is back in Europe, but the structural difficulties are still holding it back. The deceleration in China, but the faster growth in the United States.
VINALS: Well, I think that it is true that different parts of the globe are still moving at very different speeds. And the reason why we're talking about the normalization of monetary policy in the United States is precisely because growth in the United States is now stronger.
So, we're talking about exit in the US, and we're still talking about entry in Japan, we're talking about entry in Europe, and you have a very different world. Ideally, one would like to see all of these economies --
VINALS: -- normalizing their monetary policies, but unfortunately, that's not possible.
QUEST: Not only is it not possible, it's not likely. And not only is it not likely, as everybody tries to adapt their own monetary policy, far from a Goldilocks fairytale, sir, you might end up with another Grimm nightmare.
VINALS: Well, certainly there are challenges out there. But nightmares can be avoided if the right actions are taken. And I think that, while the Fed should do the utmost to engineer a rather smooth exit, I think that the rest of the world, and particularly emerging markets, should be prepared --
VINALS: -- just in case the exit is not smooth. But that's something that is for emerging markets to do.
QUEST: We'll talk more about it in the year ahead, sir. The Goldilocks scenario, not too hot, not too cold, just about right. Good to see you, Jose, thank you for joining us. Now, if you wanted --
VINALS: Thank you. Good to see you, too.
QUEST: -- a job at the Bank of England, here's something interesting. The Bank of England's top policymakers will announce their latest decision on interest rates on Thursday. No doubt, they will have been using the latest technology at the Old Lady -- the Great Lady of Threadneedle Street to crunch the numbers.
Sometimes you can't beat a bit of brain power. A century ago, that was all they had, without abacus and computer, perhaps. This is an exam paper for candidates who wanted to work for the Bank of England in 1906. It's courtesy of the bank. It's on show at the Bank of England's museum. We thought you might like to have a question or two.
Now, pay attention. In arithmetic -- now, in arithmetic, how much will 756 pounds amount to in three years at 5 percent per annum compound interest. Where is that question? And -- there it is. The next question, in geography, we'd like you to state in their proper order from north to south -- state in their proper order from north to south the countries of South America bordering on the Pacific Ocean.
State in their proper order from north to south the countries of South America bordering on the Pacific Ocean. Tweet me your answer @RichardQuest. The first correct tweet we come across, I might even find a CNN coffee mug to send you, @RichardQuest.
The proper order, north to south, the countries of South America bordering on the Pacific Ocean. And it's the countries as they were in 1906, not as they might be now. More after the break.
QUEST: Now, this is nasty. It could be the internet's biggest-ever security flaw, and it's only just come to light.
QUEST: Eventually, we'll have to change every password we know. We'll explain more in just a second. Because one of the biggest personal security flaws in the internet has been found. It affects two thirds of the web. It makes passwords and credit card details available to hackers.
The flaw is called the Heartbleed Bug. It's found in the open-sourced encryption technology, which shows on screens as a little padlock. It appears when you type in "H-T-T-P-S." Now, companies are responding. Canada's revenue agency shut down online tax services. It's described as a preventative measure. It's down to every website to fix the problem.
After that, users must change their passwords. Yahoo! says it's reacted and putting in place a software fix. Tumblr urges users to take the day off. It says this might be a good day to call in sick and take some time to change your passwords everywhere.
It's a massive undertaking and would provide -- which provides ways to skirt around national internet restrictions, says if you need strong anonymity or privacy on the internet, you might want to stay away from the internet entirely for the next few days.
Web development expert Sanford Dickert of Rawlings Atlantic joins me now from London. Is this hyperbole, or is it just -- or is it true? Is this really as bad as those quotes suggest?
SANFORD DICKERT, DIRECTOR, RAWLINGS ATLANTIC: It's not as bad as those quotes suggest. It's essentially the job of the server engineers to swap out the broken part. So, essentially, the open SSL.
Software itself was released with an exploit that people are taking advantage of. It's kind of like a slot machine. Every so often when they pull into it, they might get the password or they might get the server key. But for the most part, it's a needle in a haystack story.
QUEST: Right. Who is "they?"
DICKERT: "They" hackers.
DICKERT: So, essentially, if someone is trying to exploit the server, then the easy part about it is they can request from the SSL, the Heartbeat system that's actually causing the bug, asking for data that might be -- might be -- in the server memory.
If it happens to have your server session ID, which is your user name and password equivalent, or it has the server certificate, then it's possible to exploit.
QUEST: But --
DICKERT: But it's unlikely at times.
QUEST: Is this a bug that somebody's discovered, or is this something nefarious that's been planted and been created? Because that really makes a big difference in a way, doesn't it? Because if it's a bug that someone's discovered, then you -- people have to actually then be nefarious to take advantage of it.
DICKERT: Yes. And it's essentially a bug. The software itself has been evolving over time, and the version that this was released with, 1.0 and forward, this was an additional feature added to allow the server to respond to a request, whether or not it was awake or not, or alive or not. That's why it's the Heartbeat system.
That release was including this request. They didn't test this particular -- wait, what if I ask for more than I should be getting? And that's the bug. Someone might have found the exploit, and if they did, then it could be used for nefarious means.
QUEST: Give me some hard advice on whether I should now spend the next goodness knows how many hours changing every password to every bank account and every online this, that, or the other, and then having to do it all over again and again and again.
DICKERT: Well, unfortunately, what you're describing is good password hygiene. So, yes, you're going to have to do that anyway, because most people are using just that single word that they use as a password. But it's recommended to do words, characters --
QUEST: Oh, no!
DICKERT: -- any letters and numbers --
QUEST: No! No! No! No! This word, characters, letters, ampersands, equals --
QUEST: -- slashes. Every -- I can't remember them all. I spend most of my --
DICKERT: So, use a sentence. Richard, the easier way to do it, they allow spaces in passwords. They allow punctuation. Come up with a great sentence, come up with something that's related to the site, and then you have a unique password for every site using the same sentence.
"Mary had a little lamb." Change "Mary" to "Google" or "eBay" or whatever. That makes your password secure.
QUEST: Until you've got to put a dot or a symbol or something else. Then it's "Mary had a little lamb equals."
DICKERT: It is your choice. I like to use the exclamation point or the period.
(QUEST RINGS BELL)
QUEST: Thank you, sir. We can see you clearly --
DICKERT: My pleasure.
QUEST: -- on that one. Still to come on QUEST MEANS BUSINESS tonight, Greece reaches a milestone. It's a return to the bond markets, while unhappy workers are walking off the job. It's QUEST MEANS BUSINESS, good evening to you.
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. This is CNN, and on this network, the news always comes first.
Oscar Pistorius has taken the stand for the third day in his trial in South Africa. When he was questioned about his version of events on the night he killed his girlfriend last year. The prosecutor grilled him relentlessly and demanded he look at graphic photos of her dead body.
A teenage boy has stabbed at least 20 people at a school in the US state of Pennsylvania. Police say the suspect has now been arrested. Doctors say some victims are in a serious life-threatening condition.
The world's biggest automaker is recalling more than 6 million vehicles, 27 Toyota models are affected. Some cars are up to ten years old. They are marks we are familiar with, like the Camry and the Corolla.
Investigators appear more certain than ever that they're zeroing in on the missing Malaysia Airlines plane. Two new audio signals detected in the Indian Ocean have officials optimistic that they will find Flight 370.
Several companies are advising everyone to reset their computer passwords in one of the biggest personal security flaws the internet has found. The Heartbleed Bug affects two thirds of the web. It makes passwords, credit card details, and financial information potentially available to hackers.
This bit of news is most definitely worth a bell (RINGS BELL). Greece is making a return to the bond market while the company's union stage a crippling walkout. Needless to say, the bell was for the good bit which was the bond market, not the thing which is the walkout. On Tuesday, labor unions went on a nationwide strike to protest against Greece's austerity program. The leader of Greece's Communist Party says new bonds will do nothing to help the nation's workers.
DIMITRIS KOUTSOUBAS, COMMUNIST PARTY LEADER, VIA TRANSLATOR: Workers and the unemployed should not be influenced by the celebrations due to the return to markets or the possible growth that is apparently coming, because both will be at the cost of workers' labor rights.
QUEST: Jim Boulden joins us now live from CNN London. Jim, how is Greece going back to the markets when they're still requiring assistance, and the question is whether or not there might have to be a further bailout?
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Well, according to Greece there will not have to be another bailout. This will be the last one this year. So they want to go back to the market to show the IMF, to show the World Bank and show the European Union that it can do this. And if we pull up the ten-year bond yield for Greece over the last four years, you'll see the reason they think they can make what I would call a symbolic return to the market. Now look at where the where the ten-year bond was. We all - you know -- they haven't been in the market obviously since 2010. It went well over 30 percent which of course no government would actually offer a bond there. That's the ten-year, and you see it's been going down very steadily since 2012 when they had, you know, what was effectively a default. So, they're going in for the five-year bond, they hope to raise, what, about 2 and 1/2 billion euros tomorrow, Richard. And, again, it's symbolic. It's showing that there are people out there, even though this stuff is still junk, that there are people out there willing to take a risk on Greece.
QUEST: Right. And to put that into perspective, the current bond yield for Greece you were just saying was about 6 and 1/2 or something - 6 and a 1/2 -
QUEST: That compares to U.K. government bonds of 2.25 at the moment and U.S. at about 2.75 on the ten-year. So it's still elevated. Now, with - why - I mean I can see why they would want to dip their toe in the water and frankly of course Ireland did exactly the same when it went back to the market - dipped its toe in the water first.
BOULDEN: Yes, and Portugal.
BOULDEN: Yes, Portugal did the same thing. What Greece really hopes, Richard is that this bond will be just over 5 percent. They're talking about 5 and a quarter percent at the moment. That would be the interest rate, the yield. And there' s been some people out there saying just think tomorrow if we find out this time tomorrow that it was actually really close to 5, we won't know that of course. You have to see what the government has to offer to entice investors. But there' s talk in the market that some 11 to 13 billion euros will be offered for this 2 and 1/2 billion worth of five-years. So, if that happens, it'll show a lot of froth in the market, a lot of people interested, but others say no, they wouldn't go anywhere near Greece paper because we know about the default in 2012 and unemployment rate's very high. The budget deficit might be down, but the debt is huge, and they don't see a lot of progress coming out of Greece. So there are many people who will not take part in this bond auction tomorrow, Richard.
QUEST: It's going to be fascinating to see -
QUEST: -- the - what as the Andes (ph) call it, the cover ratio of how much was bid for those bonds.
QUEST: Jim, we'll talk about it tomorrow night. Looking forward to hearing the results -
BOULDEN: We sure will.
QUEST: -- once we get it. Now, Cyprus' finance minister says action should have been taken sooner to impose a haircut on Greek debt. CNN's emerging markets editor John Defterios asked Harris Georgiades how his country has fared since the crisis.
HARRIS GEORGIADES, FINANCE MINISTER OF CYPRUS: It's bad. And I have never tried to present a - or to paint a rosy picture, but we are in difficulty with the economy still weak, unemployment is high. But, yes, you're right. Not as bad as one would have expected. It's as if we're maintaining everything that was healthy, key productive sectors of the economy which are ropeteting (ph) as usual, and at the same time we're very actively dealing with the shortcomings and there were significant shortcomings we have to admit.
JOHN DEFTERIOS, CNN'S EMERGING MARKETS EDITOR AND ANCHOR OF "GLOBAL EXCHANGE" SHOW: In hindsight, was this caused though by the Troika putting the bail-in on the table the only solution or was it now a year into this process a big mistake?
GEORGIADES: I think the big mistake was not the March decision - the decision of the last year. I think the main decision was the fact that things were allowed to escalate. We should have seen action both on behalf of the Cypriot authorities and the European Union - well two years ago - more, we should have whole loads (ph) into a program soon after the decision to impose a haircut on Greek debt.
DEFTERIOS: One of the leftover bits of business is the non-performing loans that just sit in the banks. About 26 billion euros, almost 40 billion dollars - could you take the American approach and you do a set- side kind of dirty bank and put those bad loans in? Are you going to take a radical step like that?
GEORGIADES: Well, at the moment, the banks are trying to deal with the issue for non-performing loans internally and they wouldn't really like to speculate about a future course of action which would be different or more similar to what you describe. I would say all the possibilities should be on the table. Everything has become much more difficult and challenging and this is where both the banking sector and the supervisory authorities need to work in a coordinated effort to deal with this problem.
DEFTERIOS: Cyprus took a very hard line here in the negotiations with the European Union where they're drafting sanctions against Russian individuals to suggest don't go too far because you could actually damage our economy.
GEORGIADES: We definitely support a coherent, clear common stance on behalf of the European Union, and one which will be in the direction of safeguarding the prospects for stability and cooperation, and not essentially pushing towards the direction of a new Cold War.
DEFTERIOS: Was it a mistake for Cyprus to go into the Eurozone, looking at tourism, shipping services and offshore banking?
GEORGIADES: I will disagree, I think we still do have these unique selling points. The problems that the Cypriot economy was led into were very regrettable but it's not the currency to blame. If you are unwise, you can go basa (ph) in any currency.
QUEST: The finance minister. I wonder - well I'm sure - he would have been able to answer these questions without needing three hours. This is from the Bank of England's test. How much - where's the question number nine? How much will 756 pounds be in three years at 5 percent per annum compound interest -- not simple interest, compound interest - and the answer is of course 875 pounds and 16 pence. And the countries of South America which border on the Pacific Ocean, in 1906 from - in their proper order from north to south they were all joined in together - Colombia, Ecuador, Peru and Chile. And we have a winner on our tweet we'll be sending you - we'll be tweeting back to you - with the quite right results, and I have no doubt some of you are tweeting even now @richardquest to say that we've got it wrong.
Later in 1980s the bank also used these instruments to examine its perspective candidates. Nothing unsavory, this is rather painful actually. I don't know what to say. Their test predicts dexterity - to see how well you can count money. I assure you, give me the money, I'll be able to count it. Now we may be in the era of budget airlines, but the finishing touches are still important for many travelers. When we come back, how would you like a little lime in your drink? Well you may be out of luck because limes are expensive.
QUEST: This week's "Business Traveller" to bring you up to date with the developments that have taken place. The Global Business Travel Association says the crisis in Crimea should not impact business travel in the United States. The Association says U.S. travel spending is expected to hit close to $300 billion a year, and also American Airlines has unveiled major changes to its frequent flyer program. We'll be getting to grips with them in the weeks ahead. In some cases, travelers may have to use more miles to redeem free flights, the airline recently merged with U.S. Airways and it says wants to be more consistent above its combined networks. And also Virgin America has been ranked the number one U.S. airline for the second year running. JetBlue came in second, followed by Hawaiian, Delta and Alaska Airlines. Interestingly, Virgin America may perennially be at the top of the list, but it has only just made a profit for a full year.
Jenny Harrison is at the World Weather Center and joins us now. Mistress Harrison, good evening to you.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Good evening to you, Mr. Quest and I tell you what, let's start on what you asked me yesterday. You asked me about Abu Dhabi --
HARRISON: -- and conditions there as opposed to conditions in London -
QUEST: Before you -
HARRISON: -- obviously.
QUEST: Yes, before you get - the reason I was asking about Abu Dhabi, I'm glad you reminded me is of course Becky Anderson has moved to Abu Dhabi. The new "Connect the World" comes live from Abu Dhabi, and with that in mind, we needed to find out how Becky was handling the weather.
BECKY ANDERSON, CNN International's ANCHOR AND HOST OF "CONNECT THE WORLD SHOW": Well, Mr. Quest, a very good evening to you from Abu Dhabi where it is a very pleasant day. About sort of mid-80s during the day here at this time of the day in Abu Dhabi. We were in Dubai yesterday, halfway up the Burj believed to be tallest building in the world where it's even more pleasant at about 1,500 feet on the viewing platform there. It was a sort of balmy 77 or about 25 degrees. But if I do get into trouble in this summer heat, I have a little trick. Recognize this? (RINGS BELL). I stole one of yours, Waiter! I'll have a berry mocktail, please. Thank you. Cheers.
QUEST: Rush at (ph) the bell! What is that woman thinking of?
QUEST: The nice balmy weather there.
HARRISON: I tell you, I don't know what she's thinking of. And she's going to have a shock on Thursday and Friday because it's going to be 37 degrees Celsius -
HARRISON: -- clear, sunny skies. 37 of course as you know it's a degree off 38 which is 100 degrees Fahrenheit --
HARRISON: -- that's in the shade.
HARRISON: I know. And then in the overnight hours, temperatures are in the mid 20's Celsius whereas in London --
HARRISON: -- well guess what? All of this cloud, all of the showers been coming through - usual sort of weather and temperatures this time of year. So, at best, mid-teen by day, right back down to single digits in the overnight hours. So, yes, a bit of a - a bit of a shock though when it comes to the climate, but more scattered showers generally across eastern Europe, continuing through Thursday. And we've got some pretty good mild weather elsewhere and just isolated showers in the southwest. It is a bit cooler across the north, and of course we've been talking about these temperatures for the last few days. And if we look at Berlin in particular, temperatures are for the next few days back down to the average, Richard. It's about 13 this time of year. A little bit unsettled in Berlin, Munich and Frankfort. Munich actually a little bit warmer. Temperatures will be in the mid to high teens Celsius for the next few days and then Frankfort is cooler and there's quite a bit of rain in the forecast. Same in Bucharest as well - cloudy with some scattered showers and Warsaw you can certainly expect quite a bit of cloud over the next few days.
The temperatures are close to the average. Winds will be increasing as we head towards the end of the week. There's another system coming in from the northwest really just affecting those sort of western-facing areas. And then you can see all this rain, even still some snow in the forecast - just to the higher elevations. A quite wet snow this time of year. And when it comes to delays at all the major airports, well the reason I'm showing you this is because it's not often you get sort of three different graphics all with green boxes and clouds. So that just gives you an idea just how much sort of cloud and showers are coming across really pretty much the bulk of Europe. Not many places seeing clear, sunny skies for the next few days. And as for temperatures as we head into Thursday - 17 in London, 18 in Paris, so compare that 17 in London on Thursday to 37 Celsius in Abu Dhabi. I think Becky will need more than just a cocktail.
Meanwhile in the United States, things have been clearing out nicely in the last 24 hours, and in particular, if you just head a little bit closer to east of the southeast of course into - it will move on - come on, come on, come on, there we go - clear skies for Augusta, and so, Richard for the next few days, maybe just a shower again throughout this Wednesday. But for the next few days - oh, gosh, send those graphics - it is going to be fine and dry. Temperatures actually warming up as we get towards the end of the week. There it goes, a golf ball in the hole. There we go - 24, 26, 27.
QUEST: Seems like you've been a bit come - overcome - with emotion with all that off weather.
QUEST: Are you a lime or a lemon, woman, yourself in a drink?
HARRISON: A lime. Yes, a lime in my gin and tonic.
QUEST: You're lime, right, thank you very much, Ms. Harrison. You're out of luck by the way. When it comes to limes, things are very difficult because the cost of limes is soaring.
(SONG CLIP BY THE MUPPETS)
But he bought a coconut, he bought it for dime,
And if you had another one, he paid it for a lime.
He put the lime in the coconut, he drank them both up.
He put the lime in the coconut, drank them both up.
He put the lime in the coconut, he drank them both up.
QUEST: From Jenny Harrison to the Muppets. That's the famous song from the Muppets. In reality, several industries, not least of which the travel industry, are feeling the effects as limes are being squeezed. United Airlines says that it is currently flying (CATCHES LIMES) with only 15 - well, we'll leave it there. Says only 15 to 20 percent of its usual stocks of limes. Alaska Airlines says that it is removing limes all together from its cocktails because limes apparently - the local crop - has not been doing terribly well. CNN's Nick Parker explains what's behind the citrus spike. Two at once.
NICK PARKER, CONTRIBUTOR, CNN.COM INTERNATIONAL: In Mexico, they're almost a sacred institution. The mighty lime is used in drinks, food and well, just about everything. In recent months, a big fall in production has meant that limes in fields like these are in hot demand and prices have shot up. Juan Leana Malpica says he's receiving twenty times as much for his limes as six months ago. Prices do normally rise at this time of year, but there are more important factors.
JUAN LEANA MALPICA, LIME GROWER, TRANSLATED BY PARKER: There's a devastation caused by citrus disease he says. And there was climate change with the arrival of winter, there has been a cold snap in neighboring states. And what I feel is most devastating are the price speculators.
PARKER: He also points to recent insecurity in the state of Michoacan, a top lime producer. Those most directly affected are Mexican consumers.
Female, TRANSLATED BY PARKER: I normally buy two kilos this shopper says, but now I buy a half, and only use them for absolute essentials.
PARKER: Mexico is the world's largest lime producer and markets in the United States and Europe are also feeling the brunt. We're here on Manhattan's upper west side to gauge how some businesses are reacting to that price hike. Are you going to be paying more for your margarita?
JAY HOLMES, ROSA MEXICANO: Well, I can tell you this time last year, we were paying approximately $36 a case. Our first delivery this morning which was $110 a case. No, we've not passed that along to the guests and don't plan to.
PARKER: All the same, with so many items on the menu dependent on limes, the chain of 19 restaurants says it will have to pay an extra $650,000 this year if prices stay the same. This means a big pay day for those growers who have not been hit by shortages.
LAURO ARISPE CORTES, EXPORTER, TRANSLATED BY PARKER: Producers are going to invest their money in their own fields this exporter says, because that's the way of improving. You can fertilize better. The Mexican government is also trying to ramp out future supply by introducing new methods to produce limes all year 'round. The government and farmers expect prices to begin falling in May. Their concern is that the recent experience may test the loyalty of consumers and businesses. Nick Parker, CNN Tepalcingo, Mexico.
QUEST: Now, cities around the world will come alive to the sound of innovation later this year. That's not a sewing machine, it's the sound of an electric racing car - the new FIA Formula E Championship is about much more than just racing. After the break.
QUEST: The Formula E Championship is the first racing series for electric cars, and it kicks off this year in Beijing. The chief exec of FIA Formula E wants cars like this to drive innovation and change the perception that electric cars are slow and don't have much power and certainly don't have a lot of umph or sex appeal. Now, the CEO Alejandro Agag joins me now in the C-Suite. All right, you announced it last year, and now you've managed to pop it together -- how many teams is it?
ALEJANDRO AGAG, FIA FORMULA E CEO: There's ten teams.
QUEST: Ten teams. And you've got some particularly - I mean, Bronson's (ph) in there -
QUEST: Dicaprio's in there. Why is Dicaprio a team in there?
AGAG: Well, he's motivated by sustainability, environment and electric cars. And we're all about that.
QUEST: Right. But the thing about - the thing about Formula 1 is that throaty roar. It goes right into side you. You feel it, it's visceral. An electronic car going past might look like you're going to do the weekly shopping.
AGAG: You know, that's what we want to change. People think like you just said. But showing these cars racing and racing fast and with the top drivers around the world, we'll change that perception. And you saw this car when the cars will make a noise. Maybe not the traditional racing noise. We make more of pod race, a Star Wars, future which is what we're talking about.
QUEST: What speeds will they get up to?
AGAG: They can get up to 250/260 kilometers per hour. Acceleration, 0 to 100 in three seconds. So, very, very strong. In fact, let me show you something.
QUEST: All right. Go on.
AGAG: All right, but we're here. But if nobody would've done this, we wouldn't have the mobile phones we have today.
QUEST: Aw! It's an old friend, isn't it?
QUEST: And this was the first - hard to get - it's an old friend indeed. You remember these? Hello, Mother, I'm calling from the train station. Right.
AGAG: Yes, but now we're here. And this is what we want to do with electric cars - change the perception. People today see this. In two years, three years they will see this and they will buy this. And that's what we want - like this -
QUEST: OK, but how much of all of this electric the FE is designed to sustainability, to promote electric vehicles, and how much of it is a money-making venture - a Bernie Echolson (ph) - type money-making venture to try - I mean, what's the goal here?
AGAG: Well, the goal is to make a change. But if we may a little bit of money on the way it's also good, because ventures that are loss-making don't work long-term. We want to make a real change in technology. Brands or manufactures competing making new batteries, and fighting each other - big car manufacturers fighting each other - are the only way to make these batteries - do they weigh 200 kilos? - weight 20 kilos. When that happens, I guarantee you everybody will drive electric cars.
QUEST: So how do you make it sexy and not sewing machine?
AGAG: So, the way to make it sexy is to engage people in a different way. Our fans are going to be able to vote with Twitter for their favorite driver and that favorite driver will get extra energy during the race. That's the first time fans are going to be able to decide in the racing sport what's going on in the real action. That's how we engage their - our fans.
QUEST: Good to see you, sir. An old friend.
QUEST: A "Profitable Moment" after the break. I'm still on the train, Mother. Yes, and using one of those new phones.
QUEST: Not too hot, not too cold, just about right. This is the Fed's conundrum "Profitable Moment." Let tapering get too hot, and the whole economy of the U.S. goes hungry. Let it get too cold like this porridge, and just look at it - it becomes, well, rather unpleasant, increasingly hard for the markets to swallow. As Goldilocks herself found out, it's all too easy to pick the wrong bowl, and it's not just the Fed that's aiming for the perfect proportion and portions of porridge. At this stage in the recovery, it's about getting the right balance, just the right level of austerity for Greece, just the right level of inflation for Europe, the right level for the price of oil. And it's easily said because in economics, it's no fairy tale. And so, once the IMF economic ministers meet, they've got to make sure that everything is just right, because if they don't, I promise you, those bears outside will be back in from the cold. And that's tonight's QUEST MEANS BUSINESS. I'm Richard Quest. Whatever you're up to in the hours ahead, hope it's profitable. I'll see you tomorrow.