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Quest Means Business

Interview With Peter Morici; Response to Oil Leak Overblown?

Aired August 06, 2010 - 14:00   ET

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

MAX FOSTER, HOST, QUEST MEANS BUSINESS: Wanted: American jobs, corporate profits are back, but hiring isn't. That is dragging the Dow down. Without jobs growth is the recovery on the ropes.

And with the oil leak under control, many are asking if the response was overblown.

I'm Max Foster in for Richard Quest. And this is QUEST MEANS BUSINESS.

Hello to you.

The latest U.S. job numbers offer little encouragement for the American economy. The U.S. lost a total of 131,000 non-farm jobs last month. It is a greater number than was expected and many of the job cuts were made in the public sector. The private sector added 71,000 jobs in the same period but that number was also weaker than analysts were expecting.

Barack Obama has been talking about the new numbers. The U.S. president was speaking to employees at a small business in Washington. Not surprisingly he was quick to stress that the private sector had actually created jobs, but also added that recovery needs to pick up pace.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: For America's workers, families and small businesses, progress needs to come faster. Our job is to make sure that happens. Not only to lay the foundation for private sector job creation, but also to accelerate hiring, to fuel the small businesses that are the engines of economic growth. And to speed our recovery so it reaches the people and places that need relief. Not a year from now, not six months from now, but now.

(END VIDEO CLIP)

FOSTER: Well, let's have a look at the Dow because it is reacted pretty severely to that news on the jobs, down 1.28 percent, currently. We'll be following that in the closing moments of trade. Now, here's a breakdown of the numbers for us. Peter Morici, professor of international business at the University of Maryland and he joins me now, from Washington.

Peter, quite a response, really, to those job numbers; is that worse or better than expected?

PETER MORICI, PROF. OF INT'L. BUSINESS, UNIV. OF MARYLAND: Well, it was worse than the market expected. I expected numbers this bad, to be honest. The census laid of 130,000 odd workers. So if we take that out of the picture. The U.S. economy only created 12,000 jobs last month. That is an abysmal showing 13 months into the recovery.

FOSTER: And what does that mean in terms of the effort, the government effort then to stimulate the economy, get things going?

MORICI: Say what he wants about George Bush, which he does daily, this president has gotten everything he wanted, an $800 billion stimulus package, another one this week, a smaller one. The bank reform legislation, health care-which he touted as jobs creating, but it is jobs killing-and, you know, bank reform. All those things together just haven't added up. They are not creating the jobs.

I was with the National Association of Manufacturers yesterday, and to be honest with you, as a professor, I expect those guys to complain about Democrats, but they're complaining about this president in a way they never complained about Clinton. He is considered to be the terminator of jobs.

FOSTER: Aren't you expecting a bit much from the president and the stimulus effort, though? Surely it is going to take time to feed through? It is a long term plan, isn't it? Aren't you expecting too much jobs growth too soon?

MORICI: Well, we look for signs that things are working. We are at the peak of stimulus spending and we just don't see it, for example, in the construction sector. Why? He spent a lot of it on essentially pet projects, like green buildings, which don't create jobs. You know, you hire the architect to design another building, we don't build an additional building. We just replace a green building that would have gone up with- with-a green building with a non-green building that would have gone up. We don't create any additional construction. And there is too much of that in his stimulus program.

The 8,000 regional banks? They don't have any capital. He did everything he could to help and bailout Citigroup, AIG, Bank of America, but did very little for the Topeka Savings & Loan, so small businesses can't get a loan.

FOSTER: Yes, so huge amounts of money, as you say, chucked at the economy already. Are you suggesting more money should be chucked at the economy, or we go towards a double-dip?

MORICI: No, actually, I think that the answer here is just to stay the course in terms of spending. Certainly don't cut it. But maybe rearrange it so it is somewhat more stimulative. And back off all the regulation. You know, businesses are complaining that the regulators in Washington are on steroids. They are not just telling factory owners and managers how much they emit, but they are telling them how to make the products. I've never seen or heard complaining like this. Now, there may have been a regulatory problem on Wall Street, but he's hardly fixed that. The big banks are even bigger than before and the regional banks didn't get much help. It is as if he has not done the right things, we're not seeing the kinds of changes we need.

FOSTER: OK, so what do you expect, then, to happen from here? Are things going to get gradually worse?

MORICI: Well, we're not going to get the 300,000 jobs we need, every month, for the next 40 months to bring unemployment down to 6 percent by the end of 2013. Instead the economy is going to continue to peter along at a low rate of growth and unemployment will rise, which it did this month, but for the fact that 380,000 people sat down, or the economy will crash. But we're not going to get the kind of growth we need to characterize as a real recovery. This administration's policies have failed. It is time to acknowledge that, not because we want to get rid of our president, but because we want him to change his focus.

FOSTER: OK, would you suggest then that the Europeans are handling things better because it has been a bit of a row between American and Europe on how to handle this global recession?

MORICI: Well, they have warned this president about the necessity for reregulating the banks properly, and he didn't listen. And they warned the president about excessive deficits that they don't always lead to a positive outcome. You know, in Europe they understand a positive role for government and they have a competent civil service. Here, we have a president who thinks that the government is the solution to anything that isn't walking as fast as he would like.

And let's face it, America does not have the kind of civil service the Europeans have. The government administered health care programs that we have just don't hold water compared to the national health service in Britain, or the system of private insurers supported by the government that they have in Germany. If he wants to reform something, if he wants to re- regulate something, it should be the people that work for him. They're doing a terrible job.

FOSTER: OK, Peter Morici, thank you very much indeed. And have a great weekend.

MORICI: You, too. Thank you.

FOSTER: Well, those numbers, actually they do still point to a still anemic U.S. jobs market, wherever you are in the world it is not easy for job hunters right now it seems.

Jim has been looking at how the situation compares around the globe- Jim.

JIM BOULDEN, CNN FINANCIAL CORRESPONDENT: We think of the U.S. being about 9.5 percent. So, they're kind of right in the middle when you think of the three big European countries here on the map. Germany now unemployment rate in July 7.6 percent. So much better than the U.S. That was the 13th consecutive month that Germany saw a fall in unemployment. France, unfortunately, stuck at around 10 percent unemployment; really stubbornly stuck at this number.

Now, of course, we have been talking about Spain a lot this year, unemployment at 20.1 percent. Don't forget, in 2007, before economic crisis Spain's unemployment rate was 8.3 percent. So you can see what happened to that economy when the housing market and the construction boom ended.

Now, how does it all fit into the big organizations, with the OECD, which is the big economies around the world. We see 8.6 percent. So, the U.S. is above the average there. It is, though, just about where the European Union averages at this moment, 9.6 percent. Euro Zone, interestingly is also in double figures, the same as France, 10 percent for the countries that use the euro.

Now who is doing a good job when it comes to unemployment? Well, look at Japan, 5.3 percent. We should say, however, that it is at a seven-month high in Japan. And of course, back in the good ol' days, when Japan, with a lot of growth in their economy, we did see a very small unemployment number.

Switzerland, 3.8 percent, pretty much untouched by all the economic crisis that happened in the past two years. The most interesting to me, South Korea, 3.5 percent; before the economic crisis, in 2007, Korea was 3.2 percent.

So that is the one economy, Max, the one place you can see pretty much untouched. We did see a blip in unemployment in South Korea, but coming right back to where it was before we had all the economic mess.

FOSTER: Amazing, some good news. Jim, thank you very much, indeed.

Now, as BP gets closer to killing its ruptured well for good, we are in Louisiana to witness a sight that moved our reporter on the scene, the return of wildlife.

(COMMERCIAL BREAK)

FOSTER: Now, BP is moving closer to sealing its crippled well in the Gulf of Mexico forever. The oil giant says it is optimistic about plans to carry out a so-called bottom kill, a kind of insurance policy, as BP pours cement down the well. That cementing, or static kill, operation was finished earlier than expected, and Louisiana's marshes are showing a rapid rebound since as we see from CNN's David Mattingly, who sent this report to us from the Gulf Coast.

(BEGIN VIDEOTAPE)

DAVID MATTINGLY, CNN INT'L. CORRESPONDENT (voice over): Barataria Bay was among the first and worst hit areas in Louisiana when the oil started coming ashore. You'd never know it looking at it now.

(On camera): I'm only seeing an occasional piece of sheen on here. Is that all there is now?

UNIDENTIFIED MALE: Yes, it is.

MATTINGLY (voice over): This is my second trip over the Gulf in less than two weeks with federal clean up coordinator Rear Admiral Paul Zukunft (ph). He says the Gulf's oil eating microbes are working twice as fast as predicted. Oil that was expected to linger for a month is gone in half the time.

UNIDENTIFIED MALE: So what we are seeing is a very rapid biodegradation of this oil.

MATTINGLY (On camera): Faster than what you expected?

UNIDENTIFIED MALE: Certainly. We were prepared and of course we always prepare for the worst. But now, in three weeks, when the NOAA trajectory shows little to no oil on the surface, we are expecting to see more than what we see right now.

MATTINGLY (voice over): What we do see are marshes growing back fresh green grass, and flocks of feeding pelicans, all signs of an eco-system on the rebound.

(On camera): Did you ever think you would fly out over this bay again, and see this water, this clean?

UNIDENTIFIED MALE: No, I thought we'd have problems for years. But, actually it is-

MATTINGLY: I'm amazed. This is the first time I've seen it in probably over a month, and I can't believe it.

(Voice over): Getting the public to believe it is a challenge for the Coast Guard and local officials like Grand Isle Fire Chief T. Black Kaesong (ph).

(On camera): Are you still struggling with that question, though? Where did the oil go?

UNIDENTIFIED MALE: Yes, we have of people that ask that question, and I think our next challenge is to educate the public. We just need to educate them.

MATTINGLY: But where do you think it went?

UNIDENTIFIED MALE: I actually believe that, you know, when you disperse it, Mother Nature takes its course. Microorganisms eat it up, it breaks down. Mother Nature takes care of itself.

MATTINGLY: But no one is prepared to drop their guard. Federal reports indicate there is still potentially over a million barrels of oil still unseen and in the environment. It is long-term effect on these seemingly resilient eco-systems is unknown. David Mattingly, CNN, Grand Isle, Louisiana.

(END VIDEOTAPE)

FOSTER: Now, it looks like the worst, then, is over for BP's shares. And it is all linked together. During the past six months it touched a 52- week high of 658.20 (ph) on April 21st. That was the day after the Deepwater Horizon explosion. And they hit their 52-week low of $296, back on June the 25th. Now today, BP's stock finished almost half a percent higher. And it had been climbing around 2.5 percent, earlier in the session. But it could be causing the wider down draft that swept through all the markets on those U.S. jobs figures that we've been telling about, a little earlier on.

We'll be back in a moment.

(COMMERCIAL BREAK)

FOSTER: We're going to check on Wall Street now. Where that dismal unemployment report is really weighing down stocks. Felicia Taylor is on the floor of the New York Stock Exchange.

To get some sense of the shock, Felicia, that was felt there.

FELICIA TAYLOR, CNN FINANCIAL CORRESPONDENT: Yes, you know something, Max, though initially, when the number came out, indeed it was disappointing but on the surface the reaction was fairly muted. The market just dropped about 40 points. The main thing in that number was that the good news was the unemployment rate maintained steady at 9.5 percent.

And Jon Corpina, now, from Meridian Equities, is joining me. That really was just about the only good news we saw in the report, right?

JON CORPINA, MERIDIAN EQUITY PARTNERS: That truly was. Investors have been waiting for this number to come out. And on the top line, the headline number, it looked as steady and positive news as staying flat. But when you get into the real details of it, if you look at the private sector, holding its own, but not as much as they were expecting, so that is negative news. From the local, state government side, not enough jobs being awarded there. Negative news. So after I think investors really looked at the information and started to dissect it, it turns out to be negative news. And we saw the turn in the market right after the opening.

TAYLOR: And the market now pretty much across the board is off about 1 percent. Where do you think is the most crucial part of the story for Wall Street itself, moving forward?

CORPINA: I think it is all the forecast of what is moving forward and that kind of leads into next week. We have FOMC comments that are coming out and talking about interest rates. We know interest rates are going to stay the same and they are where they are and they are not going to move them. But it is all the wording of what the forecast is moving forward, is what investors are really going to look at, because unless that confidence is back in the market, investors are going to keep that money on the sideline. And it just grows into one big picture of it all comes down to jobs. We continue to hear it out of Washington, we continue to hear it out of every small town and Main Street, it all comes down to jobs.

TAYLOR: Well, without jobs we don't have any money to spend. What about from the president? We heard from also from him today. Specifically, with regard to small businesses, is there anything there on the bigger picture that he addressed that you are concerned about?

CORPINA: I think when we look at small businesses it is the cash flow of the businesses; and the banks somewhat opening up their purse strings a little bit to lend money to these small businesses. They are not going to be able to survive unless they can get money from the banks.

How are they going to get money from the bank? To be able to apply and to have some sort of restrictions taken off them, but yet still be able to maintain some sort of, you know, power, of making sure they are not lending to the wrong people. But small companies have to continue to stay in business if we are going to have our jobs, but they need the cash flow to support their businesses.

TAYLOR: But also stimulus is pretty much been taken out of the picture, as well, right?

CORPINA: Yes, that has been, looks like that is going to be taken off the table. And investors look at that as more of uncertainty of moving what is going forward. You have two states that are there, they have got the taxpayers are saying, well, we don't want our money back put into this. And then you have the other side that is saying well, we need this stimulus, we need this money. We have seen how it worked over the last 18 months. But it is very interesting how this is going to move forward. But the cloudiness, the uncertainty, is really what puts the negative tone on the market.

TAYLOR: That is always the worst word you could use when you talk about the stock market, is "uncertainty". Moving through August, though, I mean, this is a very volatile month. It is a quiet month here so that means the gyrations are even more pronounced. Moving through the rest of this, though, do we expect that it is going to stay in this tight range that we've seen all week, aside from what we saw on Monday with a gain of 200 points.

CORPINA: I think as we get towards the end of the year we are going to start to see a little bit of a run up on the market. Looking what we went through right now in earnings season, we had a very positive earnings season. So as we get towards the end of the year and we see that earnings season again. We have seen multiple quarters of positive earnings. We are going to continue to see that as we get towards the end of the year that will help move our market higher.

TAYLOR: Do you think when it comes to earnings, though, that we have actually established the fact that companies are growing, or that they are just cutting? In other words, they are not buying as many staples and paperclips and they are cutting jobs. Which is the real story there in terms of earnings?

CORPINA: I think it is two-fold. I think one is that our estimates, the bar is not really set that high. So, when these earnings come in and they are close to, in line, that is viewed as positive news. And secondly I don't think that we have truly seen the top line growth that we need to see. There have been many job cuts. There have been production cuts. There have been overhead cuts. And in doing so that has shown profitability but the true growth has to be in the top line numbers and we're not seeing that yet. But as we get quarter to quarter, we are starting to see it little by little, another two quarters we might be able to see some real sustained growth.

TAYLOR: Hopefully you are right, Jon.

I'm keeping my fingers crossed on that Max. As we move into the weekend, again, the markets are down about 1.25 percent across the board. So, hopefully things will be better on Monday, but again it is the middle of the summer. Things are kind of quiet and a little volatile, Max.

FOSTER: OK, Felicia, thank you very much indeed, for that. We were hearing there about earnings, over there in the U.S., but the big story here in Europe, as well. Particularly, this story here in London. The Royal Banks of Scotland and Alliance joined this weeks' avalanche of earnings. And RBS earnings, well the second quarter net profit came in at just over $400 million. Bad loan costs fell, so that was very good news for the bank. The first quarterly profit, actually, since 2007. It broke even in the first half with a small profit of $14 million. So, progressing well; it is majority owned by the British taxpayer now so it is a very controversial bank. RBS got a government bailout of at least $60 billion, at the height of the financial crisis. And taxpayers want that money back, I think it is fair to say.

Alliance, second quarter profits fall, 46 percent, nearly half, to $2.34 billion, a different story there. They are Europe's biggest insurer, earning less. (UNINTELLIGIBLE) selling shares in industrial and commercial bank of China, so linked with one deal, really. Wrote down it investments with Hartford Financial Service s Group, as well. Ah, 23 percent of a gain in operating profits, which surpassed estimates. There is some good news in there.

Now the European marks (ph) the day, well, that is the picture, it is pretty grim, actually. Stocks ending firmly in the red across the region. Investors focused on weaker than expected U.S. jobs numbers as we have been saying. Also, corporate earnings, not really the headline across the board. Those job numbers, really, in the U.S., Europe, have been on course to end the last day of the trading week higher. How disappointing though really reigniting fears of a faltering global economy, will have an impact here.

Now, in China regulators meanwhile are trying to reassure markets over the nature of the bank stress test there. A major report said Beijing had wanted lenders to assume a huge drop in housing price, as Eunice Yoon, now discovers. The scenario wasn't quite that bad.

(BEGIN VIDEOTAPE)

EUNICE YOON, CNN INT'L. CORRESPONDENT (On camera): China has been conducting stress tests for its banks. And the China Banking Regulatory Commission has asked its lenders to see how their books would fair, if housing prices dropped by as much as 30 percent.

The government says it is not changing its policies despite these tests. In fact, the bank regulators said that pressure tests are used all the time to manage risk. And it reiterated that its outlook for the real estate market has not changed. The government is trying to reassure investors, who have been spooked by reports that the stress tests were assuming housing price declines in some cities by as much as 60 percent. Shares of banks and property developers fell on those reports. Industrial metal prices were also shaken on fears that the stress tests could expand to include credit risks related to construction materials, like steel. China has been trying to rein in soaring property prices.

The bank regulators said that it has instructed banks to stop extending mortgages to people buying their third homes, and it would continue to use credit curbs to discourage speculation. Eunice Yoon, CNN, Hong Kong.

(END VIDEOTAPE)

FOSTER: Let's talk about the Asian markets because investors in Asia were pretty much on the sidelines ahead of those job numbers today. The Nikkei ended marginally lower after a strong day yesterday. The strength of the yen was back in the spotlight there. And the U.S. jobless numbers won't help, either, later on. The dollar is currently weakening further against the yen after the employment data did come out, in Hong Kong and Shanghai, the strongest markets today as you can see. Hong Kong was underpinned by three percent gains at Hutchison and Chong Kong, the two key listed companies of East Asia's richest man, Lee Ka Shing (ph), which beat expectations, with results after the bell on Thursday.

Now, it is traumatic enough just to loose your job, many people it is a problem which is taking longer and longer to solve. We are going to look a bit more at that.

(COMMERCIAL BREAK)

FOSTER: Welcome back. I'm Max Foster in London. More QUEST MEANS BUSINESS in just a moment, but first here at the main news headlines.

(NEWSBREAK)

FOSTER: There is increasing concern about the long-term unemployed in the U.S. Those who have been out of work for six months or more. Now, at the Brooklyn Job Center on Friday long-term job seekers say the search has been brutal.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Well, I'm an electrician and I've been out of employ for almost a year. My name is Richard. And I'm came from Florida, all the way to here, to look for a job. And it is bad everywhere.

UNIDENTIFIED MALE: I've been coming into the Department of Labor for the last almost eight months, you know, looking for employment. I've been in various workforce programs and still nothing. You know, the job market is tight and the benefits, of course, they're just getting back on. So I was struggling.

UNIDENTIFIED MALE: I'm looking for -- it's so much competition out there. I mean now, it's more education. I found that I had to go back to school and retrain.

(END VIDEO CLIP)

FOSTER: It's tough out there.

Maggie Lake has been taking a closer look at the long-term unemployment problem.

And she joins us now from New York -- what have you found out, Maggie?

MAGGIE LAKE, CNN CORRESPONDENT: Yes, you know, Max, your heart goes out to those folks when you hear them talk about being out of work for so long. And especially the -- given the fact that we're months, after, really, the worst of the recession has passed. And yet 6.6 million Americans are still among the long-term unemployed. As you said, out of work for more than six months.

This graph tells an even more disturbing story, though, and explains a lot of the stress. Take a look. The average length individuals are out of work is more than double any other post-war recession that we've experienced as you can see in those sort of shaded areas. They look like the dark lines. For a lot of people, it's not six months, it's something more like two years.

Now, the downturn that we've just gone through doesn't explain all of that phenomenon. Instead, economists point to structural changes in the U.S. labor market -- cheap, unskilled manufacturing jobs have moved overseas. The businesses that are hiring require advanced degrees or specialized training.

So how do you get those long-term unemployed re-engaged in the economy?

I put that question to the U.S. Labor secretary, who said education is the key.

(BEGIN VIDEO CLIP)

HILDA SOLIS, U.S. SECRETARY OF LABOR: We've already issued about 750 -- $750 million in job training opportunities. Much of that is going into place right now. A lot of it is going to be targeting renewable energy, high technology, I.T., health care -- areas where we know that there would be a growth. And the pattern that leads me to say is that because that's where I'm seeing manufacturing going, in the renewable energy area, but also in health care.

(END VIDEO CLIP)

LAKE: So some programs in place, but it's just a start. And there is little appetite, as we've seen, in Washington for any kind of new aid or sustained -- sustained spending in that area.

The other solution put forward by some is a little bit more novel. Umair Haque, economist and a contributor to the "Harvard Business Review," says the answer lies with consumers.

(BEGIN VIDEO CLIP)

UMAIR HAQUE, HARVARD BUSINESS REVIEW: We're shifting our consumption budgets more toward green goods, right?

So we're willing to pay for environmental benefits. We're shifting our consumption budgets in other markets toward ethical goods. So we're willing to pay for a different set of benefits.

Could we do the same thing for jobs?

Could we look at a good, whether it's, you know, your stereo or a pair of shoes, and think, as we often do today, is this going to be good for the environment?

Perhaps we could start thinking, is this going to be good for people?

Is it going to be good for somebody behind this thing?

Is it going to actually nourish a family or an economy?

So I think without that, we are going to be trapped in this equilibrium.

(END VIDEO CLIP)

LAKE: You know, his -- his idea is that to break that sort of reliance and addiction we have on cheap stuff and break that race to the bottom, as he calls it. But, you know, it's really interesting, but that has its challenges, too, doesn't it?

In a tough economy, it's also hard to tell consumers to pay double for products just because they're locally made.

Clearly, there are no easy answers. It's a really stubborn problem. But we can be sure that the debate over how to get those Americans back to work is going to dominate the mid-term elections coming this fall. And they're shaping up to be some pretty nasty ones -- Max.

FOSTER: Yes.

Do you think the jobs issue -- the long-term jobs issue, in particular -- could end up being a liability for the president?

LAKE: Absolutely. Democrats -- and, in fact, incumbents -- but -- but Democrats, because they're in power, have to be really concerned about this. You know, for a long time, they were saying they inherited this terrible recession. But at some point, a lot of political pundits pointing out Obama is going to own this economy. And we're kind of getting to that inflection point. There's a lot of frustration for those folks who have been out of work so long, as you heard, some of them now losing their unemployment benefits.

How are you going to solve that?

Very difficult. And it is certainly something that has the potential to really hurt Democrats when it comes to the elections. It always comes back to the economy, Max. And right now, that is not an issue that's working in their favor.

FOSTER: Maggie, thank you very much, indeed.

Now, he's documented the high life at Europe's busiest airport for over six decades. But Dennis Stone has stayed remarkably grounded. We meet Heathrow's photographer in residence in just a moment.

(COMMERCIAL BREAK)

FOSTER: It is the world's busiest international airport and whether you love it or you hate it, you probably won't be able to avoid London's Heathrow when on your business travels. Just check out these stats. More than 460,000 flights take off and land from Heathrow every year and it handles a whopping 65 million passengers a year.

One man has been witness to the goings on at Heathrow for the last 64 years. He's watched Concords fly in and out of service and captured the comings and goings of Sinatra, Princess Diana, The Beatles, amongst others. Capturing those key moments can be a big business for a photographer.

And Ayesha Durgahee, even -- met the remarkable Dennis Stone.

She's not going to forgive me.

(BEGIN VIDEOTAPE)

AYESHA DURGAHEE, CNN CORRESPONDENT (voice-over): Just one shot of the right celebrity at the right time could mean thousands of dollars. When arriving at the world's busiest international airport, you have to be ready for Heathrow's resident press. From movie stars to models and the mega rich, Dennis Stone has captured them all -- in good times and bad.

(on camera): And what do you think about celebrities who are in the public eye who then don't want to have their photograph taken -- the whole privacy

DENNIS STONE, HEATHROW PHOTOGRAPHER SINCE 1946: If you -- if you use the press, the press are going to use you. You don't have any privacy. You've sold your -- put your pimp on the public penny. Therefore, you're a public figure and you have no right to it whatsoever, in my view.

DURGAHEE: But what if you see a celebrity who isn't wearing any makeup or is like scruffy?

STONE: Even better.

DURGAHEE: One who's just come off a long haul flight, is jetlagged?

STONE: Well, I feel sorry for them sometimes, sorry to see them on an airplane for 10 years. They want to get off the aircraft and so you're going boom, boom, boom.

DURGAHEE: But you still take the photo?

STONE: You still have to take the picture, yes.

DURGAHEE (voice-over): Dennis has been taking photos at Heathrow for 64 years and the airport has published a collection of his images, some of which are on show here, at Terminal Five. With the 78-year-old retiring next year, he himself has become a celebrity.

SANDRA KEANE-MARAJKAR, FLIGHT ATTENDANT, KNOWN DENNIS SINCE 1977: Lots of people who work at the airport, whether they could be baggage handlers, cabin crew, check-in staff, it could be anybody -- people that have been around, they know Dennis. He was always in and out with, because so many celebrities used to fly out of Terminal Three, because in those days, it was PanAm and TWA. And if we were on the information desk, sometimes he'd come up and he'd say, I think it might be Robert Redford today or he'd give a little hint. So we'd all be looking to see, oh, yes, they're -- they're coming through now.

So he was -- and still is -- a lovely man, absolutely charming, always has been, always will be.

DURGAHEE: Over the decades, Dennis has seen the airport change and grow and that also includes the planes.

STONE: That's a

DURGAHEE:

STONE: That's a -- what do they call that -- Constellation.

DURGAHEE: What do you think about the aircraft these days, then?

STONE: Ah, well, they're so different -- different.

DURGAHEE: Do you like them?

What do you think of the Dreamliner?

STONE: I'd love to fly on it.

DURGAHEE: And the A380

STONE: Yes, well...

DURGAHEE:

To the largest in the world.

STONE: Yes, they're larger and larger and larger. I saw that one in

Came in. I thought, God, imagine it. I'd never get up in the air. But it did. Now I've seen them all. That's why I'm walking just around the tarmac if I have nothing else to do, hanging around the airport. And I saw these three pilots coming out -- boom, one shot. A target is so much easier these days. This is my pacemaker graphic -- speed graphic that I started off as a professional photographer. I've got two -- two pictures that I could take here with this monster. The difference is incredible. Besides the white, today photographers don't know how lucky they are.

DURGAHEE (voice-over): Dennis has spent his life at the airport, following the footsteps of others and forging strong friendships -- a career that he wouldn't swap for the world.

STONE: I think it's just a lovely place to work. I hate my proper job. It's lovely. It's my second home. And I love it here.

DURGAHEE: Ayesha Durgahee, CNN, Heathrow Airport, London.

(END VIDEO TAPE)

FOSTER: Well, we're going to get the latest on the flooding in Pakistan now, because there's some concern that it's going to get worse and more people are going to suffer.

Guillermo is monitoring that for us -- hi, Guillermo.

GUILLERMO ARDUINO, CNN METEOROLOGIST: Hey, with more rain coming to the north and we were talking about some relief in the north before, now more stress for the Indus River that actually is a conduit for all that water to get all the way to the south. So this is a twofold situation. On the other hand, the rain that we get provided by the monsoon. And on top of that, the behavior of the river with all that water.

So these areas that now have moderate flooding stage or even anticipated are going to quickly switch and next week, this weekend, next week, we will see the reds in those areas.

And then the cycle starts all over again, because the monsoonal flow is coming into the northern sections with this new round of intense precipitation in the north that is adding -- that is going to add more stress to this river with these numbers, like 100 millimeters of rain.

So again, since it is a seasonal rain, because it's the monsoon, it's not going to stop at any time. We have to wait until it retreats. And then the same thing it's going to happen next year. When we compare last year and this year, we see that in 2009, the amount of rain was below average. And this year, of course, we're talking about above average. So you see, I'm going to remove the banner so you see that we are getting, as I said, anywhere from 50 to more millimeters of precipitation in 24 hours.

So, also very intense in India, but in India we don't see the severity of the floods that we see in here, in -- on the other hand, it's because of the -- of the mountains that we have in Northern Pakistan. We have had peak or already in Kahunsa (ph) still the river is very high. We will continue to see this, especially next week. Gudrio (ph) you see peaking today, so we are expecting floods in these areas. Shikapur, it is rising rapidly. And we are going to see the peak this weekend. And then the other locales in the south are going to peak next week. And the -- the whole cycle starts again.

Russia, you were talking about in the headlines about the fires and also the bad quality of the air. I have to add to that that we have the drought in place, which is emphasizing the problems even more. And this high is not going anywhere. So we have had it since early July in there and it is not allowing these storms to go away. That's why Berlin had some rain. That's why in the Baltics, we may see some rain, in Northern Italy, too.

Because of the jet stream, we see no change in Ruggia -- Russia, particularly in Moscow. You see close to 40 degrees. And this will continue. So we will have one more week, in addition to the several weeks that we have seen this condition of bad weather with choking smoke. Depending on the direction of the winds, in general, we're getting winds from the south, you see. But at times, that may change locally. And then you get the difference between yesterday and today in terms of the quality of the air in Moscow.

Temperature-wise, we are eight or more degrees above average in the vicinity of Moscow. And then, as we go into outer areas, we see a little bit of a change. But still above average. Still extremely dry. And, as for the other sections of Europe, cooler than average because of the jet stream. So cool air from the north is descending. Abundant rain all alongside this jet stream.

So I think, for you, Max, Sunday may be nice. Monday may be nice. But Saturday will not be a nice day.

FOSTER: That doesn't work with my plans, Guillermo, but I'll flip...

ARDUINO: I can't do anything about it.

FOSTER: I'll flip them around.

ARDUINO: Sorry.

FOSTER: Guillermo, thank you.

Just a reminder for you, do be sure to join us tonight when Martina Navratilova is CNN's Connector of the Day. We'll talk to her about her fight against cancer and she'll answer your questions, as well. That's on "CONNECT THE WORLD" at 21:00 in London, 22:00 CET.

This is QUEST MEANS BUSINESS, though.

I'm Max Foster in London.

"MARKETPLACE MIDDLE EAST" starts now.

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