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QUEST MEANS BUSINESS
Sanctions Hit Key Russian Interests; US Stocks End Lower; European Stocks Mixed; Scottish Independence Question; Businesses Worried Over Scotland Vote; Economic Case for Scottish Independence; Brazil Election Race Tightens; Boosting Brazil's Tourism Industry; Pistorius Guilty of Culpable Homicide; PR Boost for Yahoo!; Crowdfunding for a Good Cause; Redesigning the Union Jack; Vinicius Lages is Reading for Leading
Aired September 12, 2014 - 16:00:00 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: The Dow is under 17,000, the market is deeply unhappy, the closing bell is ringing, there is much that we need to talk
about as the week -- only one gavel tonight, but the date tells it all. It is Friday, it's September the 12th.
It's a "hostile act." Russia responds to escalating sanctions from Europe and the United States.
It's a win for transparency, so says Yahoo! in its victory against America's National Security Agency.
And it's the future of the flag. Could we see the back of the Union Jack?
I'm Richard Quest. It may be a Friday, but of course, I still mean business.
Good evening. QUEST MEANS BUSINESS tonight comes to you from CNN in London. And Russia says it will not keep the West waiting for its response
to potentially painful new sanctions. Europe and the United States are trying to hit Russia's major banks, the oil companies, and military
hardware builders. The choking off the supply of money especially from European lenders.
And effectively, it's a very specific sort of credit crunch that's having widespread ramifications in Russia. The country's Foreign Ministry
describes the measures as an "hostile step." It's promising swift retaliation.
Ukrainian president Petro Poroshenko has welcomed the measures and says he's never felt closer to Europe.
(BEGIN VIDEO CLIP)
PETRO POROSHENKO, PRESIDENT OF UKRAINE: Ukrainian people have one of the most difficult exams in their lives to be European. Ukraine never ever
has such a level of support in the world in Europe, and this would be simply impolite not to grant us membership prospective --
POROSHENKO: -- it seems to me.
(END VIDEO CLIP)
QUEST: Now, in Moscow, stocks recouped some of Thursday's losses. The ruble continued its slide, hitting a new low against the dollar.
The new round of sanctions goes to the very heart of the Russian economy, and since we're in London tonight, let's show you exactly this.
If you look at the way in which the sanctions have been designed, for example, let's take this dart. It is the one that looks to go for
There is a 30-day limit now on loans from EU banks and institutions. Anything more, any bonds, any brokerages, any trading, any instrument to
those banks that are on the list with maturities longer than 30 days are no longer permitted.
Then -- so, that's the one that you have there. Then, of course, you've got the way in which certain banks, particularly Russia's biggest
bank, Spur Bank, has been specifically targeted. It's been added to the list.
Now, Spur Bank will no longer be able to get medium-term, long-term financing in Europe. It's part of the 30-day rule. And yet, Spur Bank
serves more than half of Russia's population, millions of customers abroad.
The full implications -- look, what's been done with Spur Bank and these other institutions is still hitting at the wholesale, at the
corporate level. But it won't be long before the interest rate differentials and the ripple effects start to go right down through the
And then -- so, you've got financial institutions, but this is a biggie as well. The oil industry. It's now losing access to finance.
It's getting bans on tech services to develop water and deep service for the infrastructure necessary.
And those companies involved, those, for example, like Exxon, which will also be feeling the pinch -- look at Exxon's oil exploration,
particular in these northern parts. The planned -- get in there properly and have a look -- and the oil exploration all around here.
Now, how can you take advantage of these areas, these parcels, if you are not allowed to get drilling rights, if you are not allowed to use
equipment and services. Rosneft Oil, Exxon's oil exploration joint venture is worth half a trillion dollars and is key to boosting output, provides
critical revenue for the country.
Elizabeth Rosenberg served as a senior advisor at the US Treasury Department. She helped put in place sanctions in Iran, Libya, and Syria,
amongst others. Now she joins me from Washington. Elizabeth, when I look at these sanctions that we are talking about at the moment, and I see the
sort of targeting, do you think they're going to work?
ELIZABETH ROSENBERG, FORMER SENIOR ADVISOR, US TREASURY: Well, they'll definitely have a significant effect. They will strike directly at
Russia's banking sector, its prospects for medium and long-term energy development, as well as potentially in its arms sector and ability to
cooperate with companies outside of Russia in the future. Whether or not it changes President Putin's decision-making nexuses, yet to be seen.
QUEST: And yet, the highly-technical nature, particularly on the banking sector, this 30-day no maturity beyond 30 days, there will be
people in Spur Bank and the other institutions that are now going to have to rethink the medium and long-term financing of the bank. In other words,
they'll be ending up going to the lender of last resort, the Central Bank of Russia.
ROSENBERG: That's right. That's right. So, without access to EU and US capital markets in order to raise funds, they'll look internally to the
Russian Central Bank. It's possible they might also be interested in looking east towards Asian financiers. But likely, as you say, the Russian
Central Bank will be the primary focus for them looking forward.
QUEST: How much more pain can the Russian economy take, do you think? I realize you're an expert in sort of the sanctions and the -- you're an
expert in inflicting pain, if you like --
QUEST: -- rather than the other side of gauging the pain. But from your understanding of this situation, how much more can the Russian economy
take before it really starts to feel it?
ROSENBERG: I think it can withstand further pain. These sanctions are painful, but they are no crippling, and they do strike at the heart of
the Russian economy in the sense that they go to some of its key industries, its energy industry, for example.
But it hasn't collapsed the economy. Growth has slowed to near zero. Inflation is not where it ought to be. But the effect of this can
certainly be stronger, the effect of US and EU sanctions in the future, which I think the -- which Russia can withstand.
QUEST: Tit for tat. President Putin says you won't have to wait too long for when the Russia response. Where do you think they're going to hit
back at the EU and US?
ROSENBERG: Well, it's hard to say. And they have a number of options, just as the EU and the US have options for how they could crank up
sanctions further in the future. So, we've seen Russia and -- Russia impose restrictions on itself in terms of the imports of foodstuffs that it
will bring from abroad.
It's possible they could look to further limit imports from abroad to deny European, American exporters revenue. Or they could look more
aggressively, potentially in the energy sector. They of course cooperate with a variety of European and US energy companies and service companies as
QUEST: Elizabeth Rosenberg, thank you for joining us, putting it into perspective. I appreciate it.
The US markets took a real beating, under 17,000, as I told you at the start of the program. Alison is in New York. What was the reason not only
to start down, but for those losses to accelerate as the day went on?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: The reason you're seeing these losses today, Richard, because of the Fed. I know, you're not
hearing from the Fed until next week, but the worries are already starting to churn. And you really saw this on the week as a whole, all the major
indices are ending lower for the week.
The worry is is as we see the US economy rev up, we're seeing GDP at 4 percent in the second quarter, we're seeing jobs numbers in the triple
digits for more than six months. It's clear that there is momentum in the US economy.
So, the thinking is that the Fed is going to change its language at its meeting when it comes out next week, change its language about when
it's going to raise interest rates. The thinking is that the Fed could go ahead and change that timetable to raising them a lot earlier, something
Wall Street is getting very, very nervous about. And that's why we saw stocks end today to the downside.
QUEST: I understand the nerves, and I understand this whole dreadful psychologically important nonsense that we keep talking about when the
markets get -- have a conniption fit over something --
QUEST: -- that they know is going to happen.
QUEST: Surely they would be better off putting in place strategies --
KOSIK: I'm sure --
QUEST: -- as I'm sure they are --
KOSIK: I'm sure they are.
QUEST: -- rather than -- yes.
KOSIK: And then you have some of the traders that I talked to who say listen, we know the Fed's going to raise interest rates. Does it matter if
they raise them in February or if they raise them in June? It really doesn't matter. But to investors as a whole, apparently it matters enough
that they sold off today.
QUEST: That puts it beautifully succinctly on a Friday. Alison, good to see you, thank you, ma'am, for joining us tonight. Thank you. Now --
QUEST: -- to Europe, where the stocks ended mixed. The FTSE was up as the poll shows the no campaign gaining ground, or at least returning to
the lead in Scotland's independence referendum. Strong US data raised the rate hike -- you heard Alison talking about. The DAX was down on potential
sanctions against -- that will of course have an effect upon Germany.
When we come back in a moment, Westminster policy is stifling, says one Scottish businessman, and he's not the only one. We're going to hear
from the pro-Scottish independence business view -- we've heard a lot from the pro-Union view -- in a moment.
QUEST: This time next week, we will know the result of Scotland's referendum on independence. The UK always goes to the polls on a Thursday.
By Friday, it'll be a done deal. The hangovers will be there.
Now, the most recent poll puts the no votes slightly ahead of the yes votes. But really, look at this, it's 40 -- these are the people who are
going to vote one way or the other -- 48 say yes, 52 say no. The first time that no has gained ground since August.
The poll cites increasing pessimism. It's all on the economy, it's on currencies, it's on pensions, it's all the issues that we've been talking
about throughout the course of this week. And sterling rose against the dollar as the day moved on, not surprisingly, and you'll see quite clearly
that right at the end because we've had that sharp fall, and then it comes back.
Well, we've been telling you all week about how businesses are warning on independence. A yes vote would cause serious confusion, it puts the
economy at risk. Some businesses on the high road to Loch Lomond -- well, you know the song. They say that they're taking the high road out of
Scotland, moving official headquarters, maybe even some operations down to England.
There have been a queue of companies all week that have suggested that's what they're going to do. The CBI, which is Britain's business
lobby says 90 percent -- 90 percent -- of Scottish businesses are worried about independence.
(BEGIN VIDEO CLIP)
MIKE RAKE, PRESIDENT, CBI: Now, I would say absolutely, the overwhelming majority, close to 90 percent of the people, we see their
reaction, we talk to them every day. You're seeing a lot of spontaneous reaction and concern coming from business today, speaking out about their
concerns, recognizing, of course, this is for the Scottish people to decide.
(END VIDEO CLIP)
QUEST: The CBI's views are not echoed throughout Scotland. Lobby firm Business for Scotland is pro-independence, and Kenny Anderson runs
Anderson Construction in Aberdeen and is part of that group.
Mr. Anderson, all week, we've had a variety of people -- we've had the warnings from the various companies. Few, of course, chief execs have
actually come out to be interviewed on this. So, Mr. Anderson, tell me, why would you want to run the risk of the uncertainty, the undoubted
uncertainty that's going to follow a yes vote?
KENNY ANDERSON, BUSINESS FOR SCOTLAND: Well, there's a lot of uncertainty if there's a no vote, and there's all sorts of confused and
befuddled and contradicting offers on the table at the moment at the last minute from ex-prime minister Gordon Brown. Not costed, not detailed, not
So, independence brings an opportunity. We've got job creation measures that are proposed, and contrary to the CBI, what the CBI are
saying, Business for Scotland represents 2.5 -- or 2,600 business people who have signed up to the yes campaign, and they're confident about the
opportunities, and giving opportunities to young people and improving the stock operate in Scotland.
There's measures cutting corporation tax, giving a couple of allowances for R&D, getting women back to work with trail clear provisions,
QUEST: But you must admit that the issue on the currency and the central bank and the very detailed questions that relate -- that that
relates to. To be going into a referendum when that is not settled is uncertain for business, and for businesses in Scotland, it is a risk.
ANDERSON: Well, when Salmond and Cameron signed the Edinburgh agreement that is to renew pre-negotiation, and George Osborne, the
chancellor, headed up to Edinburgh on a day return ticket to tell us that if Scotland walked away from the UK, they walked away from the pound.
Of course, the pound is an internally traded currency. But the currency union issue, Scotland is a massive exporter. In terms of the
balance of payments, Scotland has got a massive export surplus, oil and gas, engineering, whiskey, medical sciences, drug discovery, you name it,
we're exporting it.
But the rest of the UK have got a balance of payments deficit. If you remove the assets and the exports from the equation of a currency union,
the pound will plummet and devalue, resulting in imports to the remainder of the United Kingdom soaring, affecting employment --
QUEST: All right.
ANDERSON: -- affecting their rating. International interest rates to the rest of the UK will go up. Ireland, which has been having all sorts of
problems has already got lower international borrowing rates than the rest of the United -- well, than the United Kingdom. There will be a currency
QUEST: I just --
ANDERSON: -- this is a campaign tactic.
QUEST: Right. But I just want to finally as, you, because what it really comes down to for anybody watching in the rest of the world,
investors or whatever, is it worth it? Is it worth going through all of this when both are part of the EU and the uncertainty and worry that will
all arrive from it? Fundamentally, is it worth it?
ANDERSON: Well, I certainly think it's worth it. And devolution, the limited powers, have already improved the business start-up rate. And
we've had population stagnation and economic growth stagnation, and we've had stifled opportunities in Scotland for the last 100 years.
But if you look around the world, Scotspeople invented the world. The television that we're looking through at the moment, invented by a
Scotsman. Telephone, FAX, ATM, even the US Navy was founded by a Scotsman.
What we need to do, without being parochial, without being restrictive, I've got three kids, two at university, one at secondary
school. I want them to go at San Francisco, Berlin, Tokyo, London, anywhere they want. But at the same time, we're losing 37,000 young people
ANDERSON: If we could just keep 7,000 or 8,000 of those adventurous people to put the effort into Scotland, we can turn around an economy. We
can grow and diversify on the strength of a very strong GDP per head. We're the 14th-richest country in the world based on GDP per head. And if
you exclude oil and gas, our GDP per head is identical to the UK's.
QUEST: And there we must leave it. Sir, whichever way it goes, I know one thing, you're in for a very, very busy week ahead. Thank you for
joining me tonight from Aberdeen.
ANDERSON: Thanks, Richard. Good to speak to you.
QUEST: When we come back, it's not all fun in the sun, at least for one man in Brazil. The country's tourism minister tells me he's been hard
at work and he guarantees Rio will be ready for the Olympics. It's QUEST MEANS BUSINESS in London.
QUEST: The presidential election in Brazil is just three weeks away, and the new polling suggests that the race is tighter than ever between the
president and two competitors or two opponents.
An apparent resurgence in support for the incumbent President Rousseff has brought her level pegging with the challenger, Marina Silva. According
to the latest opinion polls, they're both likely to finish ahead of the third candidate, Aecio Neves in the initial poll on October the 5th.
And while Ms. Rousseff, President Rousseff, may win the most votes, she won't probably get enough to avoid a run-off, and it is the run-off at
the moment that's set for October the 26th, which looks too close to call. Brazil's main index is sharply down --
QUEST: -- on the news of the surge in support for President Rousseff. Investors are moved by news that economic activity has picked up in the
months following the World Cup. The tournament was being blamed for putting brakes on the economy. I spoke to Brazil's tourism minister,
Vinicius Lages, and asked him how tourism fits into his country's robust and recovering economy.
VINICIUS LAGES, BRAZILIAN TOURISM MINISTER: We are lagging behind other sectors in terms of the economic importance. Manufacturing has been
the most important sector, and in the past four decades, the ideal business.
So, we want to follow those paths and learning from what happened in the other business. And I think tourism is on the frontier of the service
economy, because it deals with caring for people's free time.
So, technology is there, and caring for people is there. So, the service economy is all about creating memorable experiences. So, tourism
should be in the next few years as important as any other sectors in Brazil.
QUEST: Now, I will not dwell on private grief of football.
QUEST: Fatigue --
LAGES: Don't bring that subject.
QUEST: No, no, that would be unfair.
LAGES: OK, OK.
QUEST: It would be cruel.
QUEST: But what did Brazil learn -- not from the football, I'm sure there's a few lessons to be learned there. What did you learn on the
tourism front that will help you be better prepared for the Olympics so that we don't end up with these stories, will Brazil do it? Will things be
LAGES: Yes, excellent question, Richard. Yes, indeed, we had an expectation. It was really not what really happened to the country in
terms of infrastructure improvement, the readiness to organize such a huge event.
Now, we learned that we should really speed up the process of building up infrastructure, training people. And also, showcasing the country to
the world so you will know beforehand --
LAGES: -- pre event that Brazil was a member of these nations together.
QUEST: OK, but, now, you've been warned by the IOC, that are very concerned. You learned your lesson from the World Cup. There'll be no
excuses permitted for the Olympics. You're on notice that things have to move faster.
LAGES: Yes, we know that. And we are, as a minister not regarding not only the tourist agenda, we are speeding up the process of finalizing
the infrastructure that we have, improving services.
The Olympic Games will not only be in Rio. Rio will be ready. Brazil was ready for the World Cup, and we will be even readier for the Olympic
Games. We're going to organize the best Olympic Games ever, because we have proved that Brazil is capable of hosting such a big event.
New Year's Eve in Brazil, we host 2 million people in Rio de Janeiro itself. So, for the Olympics, of course we have more countries visiting
Brazil with a different kind of tourism. But we will be ready for the Olympics.
QUEST: "We'll be ready for the Olympics" says the tourism minister.
Now, the Pistorius verdict was culpable homicide. What lies ahead for Oscar Pistorius and the career he left behind? In a moment.
QUEST: Hello, I'm Richard Quest at the CNN Center in London, and this is CNN. On this network, the news always comes first.
Russia is promising swift retaliation against the US and the EU over new sanctions. The measures target Russia's major banks, oil companies,
and military hardware builders. Russia's Foreign Ministry describing the new restrictions as an "hostile step."
The Paralympian Oscar Pistorius has been convicted of the culpable homicide of his girlfriend, Reeva Steenkamp. A court in Pretoria found him
guilty on one of the gun charges. He's now on bail and awaiting sentencing, which is due to begin on October the 13th. We're going to talk
more about that in just a moment.
The US secretary of state John Kerry is pressing Turkey to do more in the fight against ISIS. Mr. Kerry met the leaders in Ankara today and says
their exact role in the campaign is under discussion. Turkey took part in the coalition talks in Saudi Arabia yesterday, but did not sign a formal
The mayor of Toronto, Rob Ford, will not seek another term in office. Mr. Ford is dropping out of the next mayoral race, which takes place next
month. He was admitted to a hospital earlier this week after a CT scan revealed a tumor in his abdomen. Rob Ford drew considerable attention and
criticism over the past year for his scandalous behavior.
Northern Ireland's former first minister, Reverend Ian Paisley has died, aged 88. Dr. Paisley was leader of the Democratic Unionist party for
nearly 40 years. His wife, Eileen, said in a statement the family is heartbroken.
The former Olympian Oscar Pistorius left court today guilty of culpable homicide. He was found not guilty of the much more serious charge
of murder of his girlfriend Reeva Steenkamp. The victims' parents say that decision was a mistake.
(BEGIN VIDEO CLIP)
JUNE STEENKAMP, REEVA STEENKAMP'S MOTHER: There were so many mistakes made.
BARRY STEENKAMP, REEVA STEENKAMP'S FATHER: Yes, it wasn't disbelief on our minds --
J. STEENKAMP: It didn't ever --
B. STEENKAMP: I think it was disbelief --
J. STEENKAMP: On everyone.
B. STEENKAMP: -- on everyone in the world --
J. STEENKAMP: Most people.
B. STEENKAMP: -- that have been following the case.
J. STEENKAMP: We had messages from all over the world wanting to know what happened. She died a horrible death, a horrible, painful, terrible
death, and she suffered, you know? And he shot through the door. And I can't believe that they believe that it was an accident.
(END VIDEO CLIP)
QUEST: Oscar Pistorius will be sentenced in October. CNN legal analyst Kelly Phelps is live for us tonight in Pretoria.
Kelly, in many ways, well, let's go through this at a fair clip so we can cover much ground. The sentencing is next month, a range, anything
from the top to the bottom, where do you think the lady's going to put the sentence?
KELLY PHELPS, CNN CORRESPONDENT: It's impossible to predict that at this stage. And the reason I say that is that the inquiry into sentencing
is much broader than the inquiry into the trial phase, into the verdict.
So we still haven't actually seen all of the information that she's going to have to consider in reaching what she feels is a fair verdict and
in combination with existing sentencing law and principles.
So it's just simply far too soon to be able to make that kind of prediction.
QUEST: The decision of culpable homicide seems to be the one that from day one and certainly as the evidence came forward, I mean, most
people, a lot of people, thought was going to be the result.
There just wasn't the evidence, the strength of evidence on premeditated murder.
Was it a mistake, do you believe, for the prosecution to go whole hog for that?
PHELPS: I certainly am very surprised and have been very surprised from as early as bail that they have pursued this as a premeditated murder
charge, even without premeditation, similar cases to Pistorius' case are usually pursued as culpable homicide.
The state obviously felt very sincerely in terms of their belief that there was evidence towards premeditated murder. That I've never doubted,
the sincerity of their conviction I've never doubted.
But I have certainly been perplexed and surprised as to how they have been so convinced, considering the weak evidence surrounding this case.
QUEST: Kelly, finally, can you give me any logical explanation for m'lady's theatrical action last night of basically finding negligence,
finding no reasonableness and then just when the next words out of her mouth should be, "And I find you guilty," she goes, right, I'm off until
PHELPS: I suspect that that was more perplexing to everyone watching the trial than it was in her own mind. And that reason I say that is that
the legal determinations that she had already made had already essentially produced a verdict of culpable homicide.
So unfortunately for the press and for all the public watching, she didn't put it in the simple words of saying he is therefore guilty or
convicted of culpable homicide.
But as she had already established that it was a legal certainty that he would be, it was the end of a very long day in court for her. She had
been reading for over four hours at that stage. And I suspect in her mind she had already decided that.
QUEST: Kelly, good to see you. Thank you for helping us understand this case as it's wended its way through the machinations of the South
African judicial system.
In a moment, QUEST MEANS BUSINESS, Yahoo! fought the United States government to avoid revealing what we do on the Internet and they fought in
secret. They faced huge fines and we're only learning about it now.
QUEST: It was a quarter of a million dollar fine every day until you give the U.S. government what it wants. And by the way, you can't tell
anybody about it. It was the threat that Uncle Sam made to Yahoo! for not handing over user data in 2008. Yahoo! ended up revealing the data and has
now won the release of documents showing the battle that it waged trying to avoid it, whose general counsel, Ron Bell, said in a statement.
"We consider this an important win for transparency and we hope these records help promote informed discussions about the relationship between
privacy, due process and intelligence gathering."
PRISM was the code name for the U.S. National Security Agency's secret data collection program. It was based on requests to Internet companies to
provide information launched in 2007 as part of President Bush's Protect America Act.
The design -- and it was revealed by the -- to the public by Edward Snowden in 2013. Last year at "The Washington Post," quote a source saying
98 percent of PRISM requests made to three companies, Yahoo!, Google and Microsoft, not surprisingly, they carry most of the Internet email and
Patrick Toomey is the staff attorney for the American Civil Liberties Union, the National Security Project. He joins me now from New York.
The Yahoo! fought the decision and they lost the initial and they lost the appeal. And faced this very severe fine. But they were finally
allowed to reveal the case, weren't they. Why?
PATRICK TOOMEY, ATTORNEY, ACLU: That's right. Yahoo! should be applauded for fighting back against the government's sweeping requests for
its customers' information. It was permitted to release these documents after an order from the secret FISA court earlier this week. And those
documents revealed both arguments that Yahoo! made on behalf of its customers' privacy and that the government made in its effort to defend its
requests for information on Yahoo! customers without a warrant and without probable cause.
QUEST: So let's put this into today's architecture. You have the United States now about to prosecute a campaign or a war, if you like,
against ISIS, ISIL. You have a coalition forming and you have the possibility that once again that sort of information is going to be
How does a government get that information when we're all using the Internet that for you passed constitutional muster?
TOOMEY: The government's efforts to obtain information about individuals should be targeted. It should be based on reasonable suspicion
and it should not engage in the type of bulk collection that had been revealed in the aftermath of the Snowden disclosures. That type of bulk
collection is not an effective tool, is not a constitutional tool for seizing the information of Americans from companies like Yahoo!, Microsoft,
Google and others.
QUEST: Do you think -- I mean, Yahoo! put up a fight and it -- and even after handing over the information, which I assume you accept they had
no choice, rule of law, you've got to hand it over. That's the way the law seems to demand it.
But they continue to fight and that, from your point of view, is to be applauded.
TOOMEY: It's -- Yahoo! is -- should be applauded for putting up the fight that it did. Of course that fight was conducted entirely in secret
without the knowledge or participation of the public, the ability of individual users of its services or other organizations like the ACLU and
other advocacy and privacy oriented organizations to participate in those core proceedings.
And in fact, some of the -- some portions of those secret core proceedings were secret even from Yahoo! itself. What this whole process
shows is that there are many layers of secrecy and many road blocks that prevent the public from participating in this conversation.
QUEST: Sir, thank you for joining us, bringing us the perspective. I appreciate it.
Jenny Harrison's now with us from the World Weather Center.
Now we know obviously this weekend is crucial, what's happening in Pakistan and in India, with -- as the crest of the rivers come down. But
it's a very busy week elsewhere.
JENNY HARRISON, CNN METEOROLOGIST: It is, as you say. This weekend, the (INAUDIBLE) are continuing to flow downstream and the warnings are in
place just about everywhere for that (INAUDIBLE) people are able to take advice from those warnings.
But let me just show you what is going on in Europe, because we are indeed heading toward the weekend and we've had some very heavy rain here.
This is the second week of very heavy rain across central regions. Not the same storm system but it's behaving in the same way, which is just sitting
across this particular area and producing some very heavy amounts of rain. Look at this, in 48 hours, 169 millimeters into Croatia, 173 into
So as I say, very slow moving storm system and in fact sandwiched between some very nice weather, still very warm across the southeast and
east of Europe, high pressure to the north, so fairly quiet, fairly nice and that for the southwest, where Mr. Quest is heading for the next week,
very nice indeed, temperatures typically in the low 30s or high 20s Celsius, no real rain in the forecast there either, but more warnings
across central regions of Europe.
And just these coastal areas of Northern Spain and the north of Portugal, where you could just have some heavy rain and maybe some storms
at times. This is the accumulation of rain where you can see it building up there all around the shores of the Adriatic. So it could be some local
flooding because this is coming down on top of some already very, very saturated ground.
The heat is clinging on, so a couple of cities this Friday were about 5 degrees above average. You can see Bucharest, 30 Celsius. The average
is 25. And also in Kiev, 25 against an average of 20, but really for now it's about the end of the summer heat. The temperatures are coming back
down to normal by the beginning of next week. So it will be about 26 for the next couple of days in Warsaw then 23 on Monday, 21 on Monday in Kiev
and 27 in Bucharest. So still feeling pretty warm. Those temperatures are actually close to the average. There's that rain, moving very far over the
next 48 hours, one or two showers maybe a thunderstorm coming into northern sections of the southwest and then these are your temperatures for
Saturday, so 21 London, which is 70 Fahrenheit, 24 in Paris and a pretty nice 29 Celsius in Athens.
Now let's just touch briefly on what is going on this Friday night through the weekend, really Saturday night as well. It's all of these
solar storms. We've been having solar flares that have been erupting and in particular there's a pretty big solar flare that has actually been
coming off the sun. This is what happens, a solar flare brought on towards Earth by the solar wind. It then starts interact with the Earth's magnetic
field. It then gets funneled towards the poles, all the electrons do that. And it's the electrons colliding with the atmosphere that give us the
lovely auroras that we look at. But this is considered to be a strong storm, G3. So we might have some interruption in some of the power
systems, some of the navigation grids. But in actual fact, this will also be very visible even as far south as 50 degrees latitude, most common we
see the greens and the yellows, less common are the purples, very rare further up there in the atmosphere are the rare reds. So there's a big
part of the world where you can actually see this. This is the best part across the Northern Hemisphere, all those countries there, all highlighted,
late hours, night into early hours of the morning, clear skies, Richard, no moon visible and very little light pollution. And you might have a nice
QUEST: Yes, yes. I wouldn't like to tell you how many times I have stood outside, middle of the night in some freezing part of the Northern
Hemisphere trying to find the borealis, or whatever it is.
Finally managed to see it.
HARRISON: Well, good. I'm glad. Have a nice weekend, warm, sunny Spain.
QUEST: (INAUDIBLE). I'll send you some pictures.
Tonight we carry on.
Now out of the ashes of a terrible fire, a dog was to benefit for more than $1.8 million. It comes from a spontaneous donation group by a crowd
-- you, me, Aunt Mary, Uncle John and (INAUDIBLE) and all. This is the Just Giving page set up in the aftermath of the blaze at the Manchester
Dogs Home. Fifty animals tragically died in the fire, which officials suspect extraordinarily was started deliberately.
The Web page received more than 114,000 donations in less than a day. This kind of crowd funding is now one of the quickest ways if you want to
raise money, whether it's a good cause or a good idea, put it on the website, ask backers to fund it. In this edition of "Future Finance,"
Diana Magnay reports on a very new, novel and a group hug way to raise capital.
DIANA MAGNAY, CNN CORRESPONDENT (voice-over): The 2008 global financial crisis saw the banks turning off the taps on loans. Overnight
the investment landscape changed. Budding entrepreneurs with no track record had to find new ways to raise capital to fund growth.
Along came crowdfunding, leveraging the power of people to finance projects and the return on your investment, well, it could be some kind of
equity stake or a reward or maybe even just the warm feeling inside you get from financing something that you believe in.
Hamburg-based startup Protonet turned to the crowd for cash to develop its secure personal service.
ALI JELVEH, FOUNDER, PROTONET: These parts come in directly from our 3D printer like we have here and it helps us keep production and
development cycles short.
MAGNAY: How many companies have this in their offices now?
JELVEH: About a little over 250. So this is -- we're sending out three or four boxes more of this today.
We said, OK. This is what we're going to do. We're going to take our story and our vision of what we believe the future should look like and
tell it to the crowd and see what happens.
MAGNAY (voice-over): What happened was that in less than an hour and a half, Protonet had raised $1 million.
JELVEH: It's a profit sharing agreement. So if we get as big and have huge successes, which we'll hopefully have, you will be a part of
that. Plus we also get one of our latest products. The percentage of crowd funding that we have is about 60-65 percent. And I believe in the
future we will see companies at 100 percent crowd funded.
MAGNAY (voice-over): Crowd funding taps into an online community, generating small contributions from lots of people.
BEN YEARSLEY, CHARLES STANLEY DIRECT: I think that's the dilemma for the crowd funding industry to sort out, the level of risk involved and who
they're actually marketing to and who they want to invest in their platforms. So the future is interesting. There's a need for funding. But
you've got this issue of risk and levels of investment that have to be sold, I think.
MAGNAY (voice-over): It's an industry that's finding its way but Oliver Gajda believes the crowdfunding approach will have a place in how
businesses are funded in the future.
OLIVER GAJDA, EUROPEAN CROWDFUNDING NETWORK: If you look at how a startup (INAUDIBLE) many of them first raise 100,000 euros through friends
and family, which if you want is slight (INAUDIBLE). So this is bringing this to the digital world or the tools that we have into the public. And I
think this is where you want what is driving the change.
I believe that with the one ecosystem where you can move from one to the other, you will also see many people that first have their own business
angel come in and then go crowdfunding to reap the benefits of market research and marketing but also raise capital.
MAGNAY (voice-over): Protonet celebrates another sale. This small German startup thinks the crowd could become a powerful force in finance.
JELVEH: I think it's going to be an earthquake. And I believe that it's going to fundamentally change the way things are funded.
MAGNAY (voice-over): As social media communities grow, the power of the online crowd could play an increasingly important role in democratizing
the investment world and in backing the businesses of the future.
QUEST: The referendum in Scotland is next week. One of the questions that will be raised, should the yes vote win, what happens to the Union
Jack for the rump U.K.? Does it have to be rewritten? Start again.
QUEST: The Union Jack has represented the United Kingdom for more than 200 years, it incorporates all sorts of things. It incorporates the
crosses of England and Scotland and Northern Ireland and the various colors reflect the countries.
If Scotland chooses independence next week, so many believe that the Union Jack as the country's flag for the rump U.K. would have to be
rethought. The U.K.'s National Flag Charity says 65 percent of its members believe the flag should be changed if Scotland becomes independent.
So this is what we're talking about now. Vexillology: we like if it's a vexillology on QUEST MEANS BUSINESS. It's the scientific study of
the history and symbolism of flags and the Flag Institute's received ideas for updating the union flag or Union Jack if indeed it comes in.
So this design, one of the designs they've been looking at, this design removes the blue, originally from Scotland's cross and adds black
and yellow, which of course from the St. David's Cross, the patron saint of Wales, which is currently not represented incidentally in the national
Then you have this one, same simple idea. It's putting some more modern colors, the greens, the whites and the reds again elements of the
official Welsh flag. And then of course you've got this one, which has every color that you can possibly think of and it's probably designed to
scare away the enemies who thinking about the future many of you before you went to bed last night.
Now let's put this together, Graham Bartram is chief vexillologist at the Flag Institute in London.
GRAHAM BARTRAM, CHIEF VEXILLOLOGIST, FLAG INSTITUTE: Hi, Richard.
QUEST: Good to see you, sir, thank you for coming in.
BARTRAM: My pleasure.
QUEST: The core point to begin with is do we need or does the U.K. need to change the flag if the vote -- I mean, can the U.K. -- could the
U.K. keep the Union Jack?
BARTRAM: It can do what it wants. There's no law that stops it from keeping it. But it's just what the people decide they want to do. They
might decide that with Scotland gone, they want a new flag. Or they might decide that with Scotland gone, they'll keep it.
QUEST: But what's your research showing of what people are saying at the moment?
BARTRAM: At present quite a few people seem to think that it should change if there's a yes vote. So it might still exist in other places.
For instance, Australia probably won't change its flag.
QUEST: No, but they're (INAUDIBLE) anyway.
BARTRAM: Well, they might --
QUEST: OK. So when you look at the sort of opportunities for changing the flag, you clearly don't want to get rid of the fundamental
structure of the flag, would you? You're an expert on it.
BARTRAM: Well, but maybe you do. If you're going to design a new flag, maybe you need to start from scratch rather than change a few colors.
Maybe you actually need to think what do we want our flag to represent? I mean, these are all very Christian symbols, this (INAUDIBLE) flag for a
multicultural society? So what are we going to do about it?
QUEST: Which of the -- what's your preference in the sense -- I know you don't -- and I'm remembering my notes now that I read earlier, but you
don't have a view on what's right, what's good, what's bad, what's indifferent, it's what people would want.
BARTRAM: Yes. Well, firstly, I think this one might be a little complicated. It's an interesting idea. It's trying to combine all the
flags but using a sort of gyroscope effect that -- I think it's a bit.
QUEST: It's a bit too much.
BARTRAM: I think it's a bit too much.
QUEST: It's a bit too much.
Finally, let's -- we've got the Scottish, the Scottish flag here and we have the Union --
BARTRAM: And the blues don't match.
BARTRAM: No, no, they don't. The Scottish blue is a different blue from the Union blue.
BARTRAM: That's historical --
What finally makes a good flag?
BARTRAM: You want something that people can recognize from a distance. You want something that people can believe in, because flags are
an important emblem of identity. And so you have to have something that people can get behind and make it the flag of the country.
QUEST: Wrap yourself in the flag.
QUEST: Good to see you, sir.
BARTRAM: My pleasure.
QUEST: Thank you very much indeed.
Now this weekend, as we (INAUDIBLE) about flags on the "Best of Quest," (INAUDIBLE) is the largest. You saw him earlier in this hour. He
doesn't like to settle down with a cup of tea and a good novel. He wants to learn and read and gain ideas which he can then apply to his work.
VINICIUS LAGES, BRAZILIAN TOURISM MINISTER: Reading is a great experience. Having a book in your hands, you know, it's a great
experience. I take notes and write down, do a mind map.
LAGES (voice-over): I was interested in why Brazil actually was discovered or rediscovered during the (INAUDIBLE).
QUEST (voice-over): The "Best of Quest" on CNN. It starts at Saturday, 12 o'clock London time, 1300 Central European.
We have a "Profitable Moment" after the break.
QUEST: Tonight's "Profitable Moment," wrapping yourself in the flag, it's easy perhaps to scoff and to wonder what the fuss is about, but of
course nationalism runs deep, patriotism is strong. And the mere prospect of which flag you would have in the future is one of those issues that may
have to be resolved after next week's referendum.
Before that, of course, there are the financial questions of how on Earth you bring these two countries apart that have been together for three
centuries. But that is an issue of a Scottish voter and no one else.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London. I'm away next week on the Costa del Sol. So whatever you're up to
in the week ahead, I hope it's profitable. For me, it'll be sunny.