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Quest Means Business
British Government Calls on Entrepreneurs to Lead Country Out of Recession; Interview With Jack Dorsey
Aired October 25, 2010 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, CNN INT'L. ANCHOR, QUEST MEANS BUSINESS: Small, it seems is the new big. The British government calls on entrepreneurs to lead the country out of recession.
One man shows us how it is done. Twitter Chairman Jack Dorsey on his trailblazing journey to profitability.
And a truly international monetary fund. The deal that gives emerging economies new voice.
I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS.
Hello.
Well, how do you get from $130 billion in budget cuts to an era of new economic dynamism? Well, tonight, Britain has set itself this challenge and there is no doubt the world will be watching to see how it gets on.
We've got this story covered from all angles. British Business Secretary Vince Cable tells us growth is not just about the numbers. From former Canadian Prime Minister Paul Martin, how he is using his experience to help Britain. And we'll be hearing from the chairman and co-founder of Twitter, Jack Dorsey. He says business really is the way forward.
Well, in just over 14 hours time official data is expected to show the U.K.'s economic growth is slowing, and slowing fast. This Monday Prime Minister David Cameron outlined what his government will do to get it back on track. Mr. Cameron revealed his three-point plan, at the Confederation of British Industries annual conference, here in London.
First up, creating the right framework for investment in Britain; this includes cutting corporate taxes and increasing Britain's skills base, through education reforms and apprenticeships. Secondly, investing in industries where Britain enjoys a competitive advantage, wind farming, for example, biotechnology and carbon capture, got a mention there. And finally, the prime minister says he'll make it easier for entrepreneurs to start up new businesses, which will, in turn, create jobs.
(BEGIN VIDEO CLIP)
DAVID CAMERON, BRITISH PRIME MINISTER: We're in a world of unprecedented economic change. We have got millions of new consumers, countless innovations, where companies are starting with less investment than ever before, yet still managing to become, some of them, global giants within a matter of years.
I think there is an incredible opportunity for Britain, for new start ups to flourish, for innovations to drive growth and create jobs.
(END VIDEO CLIP)
FOSTER: Well, the U.K.'s fortunes aren't just transforming-aren't transforming just yet, but Britain's office for national statistics is expected to announce that the nation's economy grew just 0.4 percent in the third quarter, and that is just a third of the pace seen in the second quarter. I asked U.K. Business Secretary Vince Cable if that has got the business of government worried.
(BEGIN VIDEOTAPE)
VINCE CABLE, U.K. BUSINESS SECRETARY: No, we're not concerned. We believe that the economy is recovering. There is a lot of evidence for that. Over 150,000 new jobs created in the last three months. The independent office of budget responsibility that the government relies on for its forecasts suggests that there will be continuing recovery. But it is not going to be easy. I mean, the underlying problem we're dealing with is our financial system collapsed two years ago. We were, you know, rescued from what could have been an absolute catastrophe.
And it is the economy as a whole has taken a big knock to confidence, as it has throughout the developed world. So recovery is not going to be easy. But we now need to be positive. The government is now doing a lot of the things that business needs to promote private investment and exports. That is what we need to keep doing. And following the spending review and the tough decisions on the budget, we now need to get around to doing things that, you know, my department, including education, training, science, promoting innovation, the things that will help growth become sustainable.
FOSTER: I guess what the figures will illustrate it that the recovery if fragile, and the concern is that certainly in terms of Europe, the British cost-cutting drive is much, much tougher. How do you answer these claims that you may be choking off this very fragile recovery?
CABLE: Well, the government has to balance the certainty and the clarity that is being given to British business and to the markets, by having a determined, five-year program for correcting the deficit. To set aside the inevitable fact that in the short-run some demand is being taken out of the economy.
And I think we have the balance right. The important thing was to give reassurance that we were dealing with our deficit, which is on a different scale from most European countries. We are talking about share of GDP, of 8, 9 percent as our basic budget deficit. That comes-is sustained, we have to show that we're doing that.
FOSTER: What do you think when you see these demonstrations in France, where the cuts are (UNINTELLIGIBLE) to any sort of extent that they have here, and you have virtual riots on the streets of Paris? You haven't got that here, but there must be concern that at least there will be nationwide strikes in reaction to what the government is doing.
CABLE: Well, we have very few strikes at the U.K. and I think it reflects the fundamental change in industrial relations since 20, 30 years ago, when I remember the more or less permanent difficulties in British industry, the car industry, and the rest of it. And I think what has happened is that the labor unions, particularly the private sector have become much more flexible, much more pragmatic. They help to get us through the worst of the slump over the last two years, by accepting flexible working practices.
The pressure is now in the public sector. I hope that we can maintain a good relationship with the trade unions, to continue to talk to them. To have a good dialogue with them, and that they will just as pragmatic as they have been in the private sector.
FOSTER: I wanted to ask you about the drive to encourage more entrepreneurialism in the U.K.?
CABLE: Well, Britain does have an entrepreneurial culture. We have lots of good new companies starting up the whole time. I noticed that looking at my department's figures for the last three months that in what you might think at first sight were improbable places, like Sunderland and Rutherland (ph) are actually pioneering a lot of new company growth.
But you are quite right, that the-you know, there are too many inhibiting factors. There is too much red tape around small companies. They find it difficult to get access to credit. It is quite difficult to start a new company in the U.K. because of the need to tie up relationships on that and other forms of taxation, company registration. And we are trying to create a system where you start a new company at the click, one simple click on the Internet, and you are going. And when we get to that stage we will be really sending a powerful signal to people to set up their own business and make money. What's wrong with that?
(END VIDEOTAPE)
FOSTER: The British business secretary, very much in the spotlight right now. Well, with credit still tightened, raising money to get new businesses off the ground, very, very difficult indeed. Jack Dorsey is the co-founder of Twitter. He told me that convincing people to help turn your idea into business is the hardest part of starting up.
(BEGIN VIDEOTAPE)
JACK DORSEY, CO-FOUNDER, CHAIRMAN, TWITTER: The hardest thing about being an entrepreneur is getting started. Getting an idea that you have been thinking about for sometime, out onto paper, sharing it with other folks, and bringing people in so they can help you work on it. If you can get started then you can really move and decide if it is something you want to commit your life to, or something you should put on the shelf for now and revisit later when the time is right.
FOSTER: But you need support, don't you? It is so hard. You don't have financial or admin support. You need confidence and support to get you started, so where does that come from?
DORSEY: You get support once you show someone what you are doing and you show your passion for what you are working on and hopefully that inspires them to also support what you are doing and have passion for what you are doing and want to see it in the world and bring it to a larger audience. But, you know, that is the biggest thing, is bringing an idea out to the surface so that people can see it, people can touch it, people can interact with it. And they get inspired to use it.
(END VIDEOTAPE)
FOSTER: More from Jack Dorsey later in the show for you, an interesting interview with head and co-founder of Twitter.
Well, this year's CBI conference comes soon after the announcement of the biggest public spending cuts since World War II, in Britain. Almost half a million public-sector jobs are expected to go in the process. At the conference today, Ayesha Durgahee found out how the private sector could fill this void left behind by the public sector.
(BEGIN VIDEOTAPE)
AYESHA DURGAHEE, CNN INT'L. CORRESPONDENT (voice over): Seated and ready to listen, more than 1,000 business leaders at the annual conference of the Confederation of British Industry, to hear the strict economic diet the U.K. government has prescribed, and an appeal for help.
DAVID CAMERON, PRIME MINISTER OF BRITAIN: Now there is one question I want to try and answer today, and that is, where is the growth going to come from? Where are the jobs going to come from? Over the course of this parliament, and the next, I believe that we can transform our fortunes.
DURGAHEE: The government has announced half a million job cuts in the public sector, over the next four years.
(On camera): And now it is up to the private sector to try and restore the U.K. economy back to health.
(Voice over): The prime minister says the government will apply a forensic focus on growth, to help businesses hire.
ALBERT ELLIS, CEO, HARVEY NASH: 23 million are employed in the private sector, it is about 6 million public sector. So, the mathematics is quite supportive of the fact that over two to three years we believe the public-the private sector, could absorb some of those, or the majority of those losses. It would only take 2 percent increase in employment in the private sector to mop up all the job losses that they are forecasting in the public sector. So we are optimistic in the medium term.
DURGAHEE: The buzzword at lunch was "growth". And advertising the U.K. as open to business and investment.
RICHARD LAMBERT, DIRECTOR GENERAL, CBI: The U.K. is the most attractive home for foreign direct investment in Europe, but it has been losing some of its competitive edge in the last few years. And so we have been making the case that we have to look at that and tweak those bits of policy that will make us more competitive in the future.
JANET HULL, INST. OF PRACTITIONERS IN ADVERTISING: We want to promote the U.K. as a creative hub for the rest of the world. But we do need the right economic climate, in which to do that. And in particular we need to be able to attract overseas best businesses to want to make the U.K. a center of excellence for their businesses, as they expand internationally.
DURGAHEE: There was also renewed emphasis on innovation. Start ups that compete, globally.
MICHAEL HOWELL, CHAIRMAN, EVO ELECTRIC: We played out the service business. I think it is back to manufacturing. How can we create the most successful high-tech manufacturing businesses? I feel very positive about the course we are on.
DURGAHEE: There was a pick up in the economy in the first half of the year, but no one at the CBI was getting carried away.
IAN MCCAFFERTY, CHIEF ECONOMIC ADVISOR, CBI: The second quarter was pretty unusual and was driven by some probably one-off factors. So we're expecting growth over the third quarter to be about, of the order of 0.5 percent, or so. And I think we will see only modest growth for the next two or three quarters. It is going to be a bumpy and choppy recovery from here.
DURGAHEE: Few expect a double-dip recession, but most anticipate a long haul to growth. Ayesha Durgahee, CNN, London.
(END VIDEOTAPE)
FOSTER: Well, we're keeping a close eye on another country deeply mired in austerity measures in Greece, the Prime Minister George Papandreou is just out of a televised press conference on the state of the economy. And he certainly lifted the mood of the heavily indebted nation ahead of regional elections on the 7th of November.
And we'll be returning live to Athens, later in the show, when CNN's Linda Labrapolou will joins us for a reaction to Mr. Papandreou's comments.
Let's take a look at how well Europe's stock markets are started the week, then. We saw modest gains on all of the major indices. Mining shares, were some of the top performers. You can see, pretty positive there. Rio Tinto, BHP Billiton each gained around 2.5 percent in London. Volkswagen gave Frankfurt's Xetra DAX a major lift and its shares rose 6.8 percent after Deutsche Bank raised its earnings estimates for the car makers, a pretty positive start.
After the break I'll be speaking to the father of Twitter. Jack Dorsey will be telling us about his latest venture, which he says will revolutionize financial transactions this time. In the say way that Twitter did for communications.
(COMMERCIAL BREAK)
FOSTER: Google is facing possible fines and a very public backlash following the most damaging privacy breach to hit the company, some say. That is after the company admitted that the cars it uses for its Street View service had accidentally collected complete e-mails and passwords from the homes they passed. Google CEO Eric Schmidt appeared on CNN's Parker & Spitzer on Friday, and was asked about how much the company really knows about its users?
(BEGIN VIDEOTAPE)
ERIC SCHMIDT, CEO, GOOGLE: We don't read your G-mail and we don't what prescription you had. What we do know is we keep the searches that you do for roughly a year, year and a half. And then we forget them.
KATHLEEN PARKER, CNN ANCHOR, PARKER SPITZER: Well, you say that but can somebody come to you and say, we need some information on Kathleen Parker?
SCHMIDT: Under a federal court order, properly delivered, to us, we might be forced to do that, but otherwise, no.
PARKER: Does that happen very often?
SCHMIDT: Very rarely. And it is not formerly delivered, then we'll fight it.
PARKER: But you can see, you can zoom in, for example, and you have Google, can do Street Views. You can see where I live. You can come straight to my house if you want to. You could show the street I live on. You know a lot about me if you want to.
SCHMIDT: And we have decided to not cross that line. So for example, Street View, we drive exactly once. So you can just move, right?
PARKER: I can move?
SCHMIDT: Yes, or all alternatives-
PARKER: That's a lot of trouble.
(LAUGHTER)
SCHMIDT: Yes, I know. The important thing is we only do once, right? This is not a monitoring situation. And with satellites, what happens is we-we actually have a delay from satellite images we do, for the same reason. So, we are very careful not to have real-time information about where people are, and any kind of real-time information about what you are doing, again it would have to be something discoverable in the searches. And that would be-
PARKER: So nobody can Google Earth me and see that my car is parked out front?
SCHMIDT: They absolutely cannot. And in fact the resolution does not allow it.
(END VIDEOTAPE)
FOSTER: The head of Google, there, speaking to CNN. And while privacy is a growing issue that affects all social media sites. Earlier I spoke with Twitter co-founder Jack Dorsey about the problem. But I began by asking him about his latest venture. It is called the Square. It is a free plug in that turns digital devices into a credit card reader.
(BEGIN VIDEOTAPE)
DORSEY: Square is a little tiny device that you plug into your smart phone. And it works with an Android or an IOS device, like your iPhone or your iPod. And people are carrying these devices everywhere. They don't leave home without their mobile phone, and without these plastic cards, in the U.S. Everyone pays with plastic, no one carries any cash or checks anymore.
So, it has made it very, very easy with these app stores and the ability to create an application to do something like this.
FOSTER: You are up against some very tough competition, the likes of PayPal who have huge amounts of trusting, long-term customers. How are you going to compete with them? Are you going to a different market? Are you just actually going to take on PayPal head on?
DORSEY: We're going for a different market. The-only 6 percent of commerce has moved off line-or online. Most of commerce is still online. So we are focused on face-to-face transactions. So these are transactions with your hairdresser, with your babysitter, with your golf instructor, at a small cafe, at a food cart. These are all off-line, face-to-face transactions.
FOSTER: It is clearly a business model, because you can take a cut of each transaction. But you are famous, of course, for setting up Twitter. How are you doing in terms of commercializing Twitter?
DORSEY: Well, Twitter is being monetized right now and you see a lot of that in the promoted products on the site. You see the promoted Tweets, the promoted Trends. We just announced promoted accounts. So these are the ways the company is thinking about monetizing the service and it is actually working out very well.
FOSTER: Twitter is a very new idea to a lot of people. And so this type of advertising is very new. Just give us a sense of how effective it is proving in those very early stages.
DORSEY: It is proving extremely effective. There is about 5 percent click through rate. Which is more than any other advertising platform we've seen. So we-you know, the company is still experimenting with the best way to approach these, but they have seen a lot of great traction so far.
FOSTER: So, it is profitable for you right now? As profitable as you hoped?
DORSEY: You know, we have some marketing (ph) to do.
FOSTER: OK, so profit isn't there yet? Have you got an end point to this, where you actually see a profit coming through?
DORSEY: Well, right now we are focused on building that revenue and making sure that it feels good to the system that is being used and there is an end point to it. So a lot of that is being defined right now. But it is out of the experimentation phase and really being rolled out to millions of people.
FOSTER: In terms of Twitter, it doesn't have the same privacy issues as other social media organizations. Because effectively all your users' information is there already, isn't it?
DORSEY: Absolutely. So, Twitter has a very different model because everything is public. Everything is on the surface and people are choosing, they are opting in to share whatever they want. So they can also choose not to share. So we don't have a lot of those privacy concerns because the individuals are making choice for themselves.
FOSTER: And you, as a person, what has it been like this last few years? I'm fascinated by the idea of someone coming up with such an obscure idea, which has gripped the world.
DORSEY: It has been amazing. It has been humbling to see how people use the system and how they define Twitter to be their own product. And to use it in a way, you know, they want to use it in the world. So we started with this very small idea and people took it and they made it their own.
FOSTER: And what impact would you say it has had? How can you encapsulate its impact? What has it changed?
DORSEY: I think it has changed the way we communicate. I think you know, we have these headlines and we can immediately share what we are thinking and what is happening around us. And people can immediately reply, without the overwhelming burden of information. It is not something that you have to keep up on, it is something that you can come to when you wish, and see the updates. But you don't have to read every single Tweet. So it is very , very easy to approach and very, very easy to use in terms of communication.
(END VIDEOTAPE)
FOSTER: Jack Dorsey there, he started Twitter.
Now, LED lights are the new sustainable starlets lighting up Hollywood. Los Angeles is our next stop in the "Future Cities" series. We look at how it leads the way in lighting the night.
(COMMERCIAL BREAK)
FOSTER: Now in our series, "Future Cities", we have been looking at how urban jungles are getting greener. This week we are in Los Angeles, where the future is getting brighter as the city adopts a stronger streetlight, which cuts costs as well, as carbon footprints. Richard has more.
(BEGIN VIDEOTAPE)
RICHARD QUEST, CNN ANCHOR, QUEST MEANS BUSINESS (voice over): At night a city like Los Angeles runs up quite an electricity bill.
ED EBRAHIMIAN, DIRECTOR, BUREAU OF STREET LIGHTING: Well, the City of Los Angeles has more than 10,000 street lights. And that amounts to approximately $16 million a year. That is the bill that we pay, every year, to the utility company to keep the streetlights on.
QUEST: The ticket to reducing the cost is LED technology. New lamps for old.
PROF. STEVEN DENBAARS, UCSB SOLID STATE LIGHTING & DISPLAY CENTER: And LED light bulb is much more efficient than the traditional tungsten light bulb, on the order of 10 times more efficient. Another way to look at it, it takes one-tenth the electricity cost to run it. So this could have huge savings impact for everyday things like traffic signals and even streetlights.
QUEST: If you know where to look, you can already find the new lights on the streets of L.A.
(On camera): So what is the difference between the old and the new? Well, over there, one of the new LED lights, with its white dots, giving out a crisp white light; meanwhile on the other side of the street, the traditional orange incandescent bulb which perhaps seems more familiar and friendly. When all is said and done, though, there is quite a difference in the effect and the feel that these two lights give out.
Before, after. In simple terms, an LED is a solid crystal that glows and you add electricity to it. There are up to 120 individual LEDs in one street light.
DENBAARS: An LED is really a solar cell run in reverse. So, a solar cell takes in light and creates electricity. And LED takes in electricity and creates light.
QUEST: Steven Denbaars and his colleague, Shuji (ph)Nakamura, at the University of California in Santa Barbara, have been at the forefront, making LEDs commercially viable.
DENBAARS: Professor Nakamura, here, really came up with a really bright blue LED back in 1993, and this revolutionized the LED world, because up until that invention, we didn't have the color blue. And you need blue to complete the color spectrum, as red, green, blue, to make white.
QUEST: Whatever the color, an LED light can last for decades.
DENBAARS: More recently we are starting to see LEDs appear as actual light bulbs, as we have here, and LED light bulb, which we can then change the color of, to anything you want to warm light, to a cold white. And we can also change, tune it, brightness level, too. So, this is what the public is starting to see now in the store shelves.
QUEST: Long-lasting, durable and energy efficient. The problem with LEDs on a grand scale has always been their cost.
DENBAARS: The reason LED light bulbs have been expensive to date, was because it is made a semi-conductor clean room, very much how Intel makes its computer chips. And it took many years to perfect the scale up of this technology. So, LED lighting really became commercially viable only in the last five years or so. Only in the recent few years has the cost of an LED light bulb come into the point where it pays back-the energy pay back is now on the order for a year for traffic signals, and but can be as long as six to seven years for a street light.
QUEST: In 2008, the City of L.A. had decided that the time had come to invest big-time in the future of LEDs, in pioneering the largest street lighting program in the world.
EBRAHIMIAN: The City of Los Angeles LED street lighting retrofit program is to convert 140,000 street lights in the city, in the next five years, to LED technology. The cost of our LED program is about $57 million.
QUEST: The investment has been considerable. So it will take seven years to pay back the money, through savings in energy and maintenance. Each year after that the city should save $10 million and will cut CO2 emissions by 40,000 tons.
EBRAHIMIAN: We already converted more than 20,000 street lights to LED. The initial energy efficiency that we had as a goal was about 40 percent, with our conversion. But based on results that we have seen so far, we are realizing about 55 percent energy savings with our conversion.
QUEST: The new lights are fitted by day. And it takes only about 5 minutes to make the switch.
(On camera): The LEDing of Los Angeles still has some way to go. The authorities are concentrating on the smaller roads first. Which means it will be some time before major thoroughfares like Sunset Boulevard get the full treatment.
(Voice over): Brighter and whiter, LEDs will change the way we perceive our cities after dark. They will also make a significant contribution to reducing the environmental impact of our cities.
DENBAARS: I think the LED has the potential to revolutionize how we light the world. In fact, 22 percent of the world's electricity consumption goes into lighting. Very inefficient lighting. We can reduce that from 22 percent to something like 5 percent.
QUEST: The orange incandescent lamps, so familiar, for so many years, is finally on its way out. The LED revolution has begun, and L.A. is lighting the way.
(END VIDEOTAPE)
FOSTER: "Future Cities" for you. Well, coming up, Greek Prime Minister George Papandreou bracing himself for critical regional elections. He is attempting to lift the mood of the nation. What is he saying? And more importantly, will it work? We're live in Athens after the break.
(COMMERCIAL BREAK)
FOSTER: I'm Max Foster.
You're watching QUEST MEANS BUSINESS.
Let's take a look at the headlines for you this hour.
The Afghan president, Hamid Karzai, has confirmed a report that his government regularly receives cash payments from Iran. Mr. Karzai told reporters the payments are transparent and that the U.S. not only knows about them, but it also provides cash to Afghan government offices. He did not describe in detail where the money goes, but mentioned paying employees.
Health officials in Haiti say the cholera outbreak there is stabilizing, with the death rates dropping off now. But aid workers say the disease remains a serious risk in the squalid tent camps in Port-au- Prince, where tens of thousands of earthquake victims live. And they're trying to educate people about the importance of hand washing and clean water. The cholera outbreak has killed at least 259 people.
The youngest detainee at the Guantanamo Bay Prison has pleaded guilty in the first military commission trial there since Barack Obama became U.S. president. Omar Khadr is accused of throwing a grenade in a 2002 firefight that killed a U.S. soldier. He was 15 years old at the time. The Pentagon says he will probably be sentenced this week.
The former Hurricane Richard has been downgraded to a tropican -- a tropical depression. It weakened after hitting Belize City as a category one storm. But it still drenched parts of blizzard with heavy rains and strong wins. Forecasters say Richard is now dissipating over the Guatemalan/Mexican border.
Now, getting back to our top story today, the UA -- the U.K. government has outlined its three part strategy to kick-start economic growth. The announcement came at the annual CBI Conference in London. Former Canadian prime minister, Paul Martin, was there. He was in government when Canada made its public sector cuts and has been advising the U.K. government on its austerity measures. Canada beefed up its banking regulation, in particular, before the economic crisis hit.
Paul Martin told me why.
(BEGIN VIDEOTAPE)
PAUL MARTIN, FORMER CANADIAN PRIME MINISTER: We could not afford to have any one of our banks get into trouble. We couldn't do that in the deficit. And so we tightened up on our bank regulations. That helped us then. And, obviously, those regulations have helped us throughout the next 15 years.
FOSTER: And it's what's made things so much worse here, for example, than in other European countries and the U.S.
MARTIN: Absolutely. And it's why I think that the G20 meeting, which is coming up in about three weeks, is so important. The -- the need to deal with bank regulation, the British, all of these issues, has to be dealt with, because all of these finance ministers, including Mr. Osborne, who are out there working so hard on their deficits, they cannot be faced with another bank upheaval in two to three years which would just simply make all of this so much more difficult. You can't ask them to go through that again.
FOSTER: You've got a very interesting perspective, because Canada, I think, is, it's fair to say, is very close with a lot of European countries, to the U.K., but also very close to the United States. Europe and the United States are dealing with this in completely different ways. America's chucking cash into the economy still. Europe is cutting back.
So, from an impartial observer point of view, who's got it right?
MARTIN: Well, I know I -- I don't think it's a question of -- I think it's a question of circumstances. I think that if you take a look at what the -- the Americans have to do, they have got to get that economy going. I mean the issue really is this, you deal with the deficit by cutting spending. But -- but the fact is that you can't go further into deficit if you impose such an austerity package that, in fact, it throw you into an even -- even a worse situation.
And I think that the judgment calls that are being made in Europe are different than the ones that are being made in the United States, based on very different circumstances.
FOSTER: But even within Europe, there are different ways of dealing with this. And Britain is being far tougher far earlier than the other European countries...
MARTIN: And I think...
FOSTER: Could it choke off the recovery?
MARTIN: No, I think that -- I think that what it -- what the British are in the process of doing is going to -- is going to pay off. We won't know that for a -- for a year to a year-and-a-half and we didn't know it in Canada for a year to a year-and-a-half.
But I -- I do believe that what they're doing is -- is the right thing.
FOSTER: Looking back on things, Canada has come through it and what was a tough time for Canada.
Did you do everything right?
What would you have done differently?
MARTIN: Well, I think we did most things -- I think we did most things right. I -- I -- tightening up on the bank regulations at the same time we -- we worked together with our provinces to save our national pension plan, which actually had an unfunded liability greater than our national debt and we dealt with the -- with the deficit.
Sure, there are things I -- there are areas where I wish we hadn't had to cut that we cut. But by and large, I think we did the right thing.
(END VIDEO TAPE)
FOSTER: The former Canadian prime minister on those tough choices that countries around the world are making right now.
Now Greece is in much more serious economic distress than Canada was and the U.K. is. We're watching live pictures now of Prime Minister George Papandreou. He's currently holding a press conference addressing the debt- stricken nation on the current state of the economy there.
And we're actually joined from Athens by Elinda Labropoulou -- well, first of all, Elinda, what did he say?
How can he possibly lift the mood -- the economic mood, at least -- in Greece?
ELINDA LABROPOULOU, CNN CORRESPONDENT: Well, what he's trying to do at the moment, he's asking for a vote of confidence. He's saying the worst is over, the measures have been implemented. He's trying to pacify the people that there won't be any other austerity measures coming their -- their way and that the year 2011 will be a year that the country will remain in recession but there will be no more cuts, that the worst is over and that as of 2012, Greece will be back on track and it will be a better country. This is what he's been saying.
So he's been asking for their vote of confidence, which he's been calling a vote of responsibility for the upcoming local elections. He's partly calling this press conference today because he hasn't been doing very well and his party hasn't been doing well and this is a result of the austerity measures. So he's trying to reverse that trend ahead of the upcoming elections.
FOSTER: It will be pretty incredible if he gets through these elections at all, won't it?
LABROPOULOU: Well, the polls are certainly suggesting that his party is unlikely to do very well in any of the large cities, which are, obviously the -- the cities of main interest.
People here are, obviously, very concerned about the financial situation. So what the -- but what the prime minister is trying to do is saying that only unity can get the country through this. He's asking people not to -- to -- to support him, effectively, in what he's done so far instead of giving up on the government now, that he thinks that the worst is over, and by playing this unity card, actually asking voters to back up his party.
FOSTER: It doesn't look like a very unified country when you look at some of the pictures coming in. The strikes are continuing, aren't they?
I gather the transport system was hit today.
LABROPOULOU: Yes, that's right. I mean throughout this week, four out of seven days, part of the transport system will not be working. This is due to privatization schemes that are underway. Obviously, employees' unions opposing them.
We do have a lot of upcoming strikes, as well. We have a general strike that's been called for the 15th of December. That will be the seventh one this year. So it's certainly a winter of discontent ahead of us.
FOSTER: OK, Elinda, thank you very much, indeed, for monitoring that press conference for us, currently taking place in Greece.
Now, when we come back, the search for R-E-S-P-E-C-T at the IMF -- a new G20 agreement is being called a big win for China and for other emerging economies, actually. We'll have the details after the break.
(COMMERCIAL BREAK)
FOSTER: Well, developed countries asked for it and now they've got it -- a bigger seat at the table of the International Monetary Fund. G20 finance ministers agreed to the big changes at the IMF over the weekend.
And Felicia Taylor is in New York with that story -- hi, Felicia.
FELICIA TAYLOR, CNN CORRESPONDENT: Hey, Max, that's right. This is going to be a very historic makeover for the IMF. For some time now, the emerging market countries have actually been demanding for a greater say over policy at the IMF. These countries make up a growing portion, naturally, of the world economy. They've also weathered the global economic crisis right along with everybody else.
They say it's now time that the world shows them a little bit of love and gives them a little bit of respect, frankly.
Details of this agreement haven't actually been hammered out yet, but here's what we know so far.
A full 6 percent of the voting power within the IMF is now going to be transferred to developing countries like China, India, Brazil and Russia by the year 2012.
China is going to get the majority share. It will become the third largest voting member at the IMF, behind the U.S. and Japan. That's pretty significant. European governments have agreed to surrender two seats at the 24-member table. So under the agreement, China will have more voting power than even France, Britain and Germany. That's why it's so significant.
The head of the IMF, Dominique Strauss-Kahn, has been pushing for this power shift. He told us a couple of weeks ago in Washington that it's the right thing to do to reflect the changing face of the world economy sort of like what happened when the G7 made way for the more inclusive G20.
Take a listen.
(BEGIN VIDEO CLIP FROM OCTOBER 9)
DOMINIQUE STRAUSS-KAHN, IMF MANAGING DIRECTOR: What's happening in India, in China, of course, and in Brazil and other countries, has a lot of consequences on the U.S. economy, on the European economies. So we have to listen and we have to work together. The time is over where the G7 countries, the big countries, including the U.S., European and Japan, were likely to say OK, we do our own business and the others will only have to follow. It's not true anymore, not only for political reasons and for democratic reasons, but just because the economy has changed.
(END VIDEO CLIP)
TAYLOR: So here's why this is so important. The IMF is a world body that obviously monitors the economies of its member nations. It warns countries about imbalances and it points out other economic red flags, if there are any. It also gives emergency aid to countries that need it.
But the IMF doesn't have any real enforcement power. In other words, it can't actually order countries to do anything specifically. Its legitimacy stems from whether member countries consider it fair and balanced. So if China feels its increased power and prestige at the IMF table, it may be more likely, perhaps, to bargain on these hot button issues that we've been talking about, like currency and, of course, trade.
Supporters say that this will increase the legitimacy and effectiveness of the IMF body itself, when the IMF, of course, is trying to expand its power.
So this is a clear shift in balance and it obviously could have reaching -- far reaching implications down the line -- Max.
FOSTER: When you talk about a shift in balance, Felicia, are you saying a balance of global power?
TAYLOR: Well, of course, when the IMF member nations come to discuss issues, the fact that China will now have the -- be -- be number third -- number three, in terms of its power, and it has a greater power than France and Britain, that's fairly significant.
And the question is, is this kind of nod of approval, nod of acceptance going to be enough to actually influence them when it comes to discussions about currency and trade?
There's still a debate about that. Who knows if that really will make a difference in terms of China believing that it has a great power and prestige in perception -- Max?
FOSTER: OK, Felicia, thank you very much, indeed, for that interesting stuff.
Now we heard earlier how Wall Street stocks have managed to remain on the up side all this session, following Europe, actually.
Alison Kosik is standing by at the New York Stock Exchange to explain what's behind these gains -- Alison.
ALISON KOSIK, CNN CORRESPONDENT: Hi, Max.
We are seeing some solid gains, with just about 90 minutes left in the session. In fact, if these gains hold, the Dow is going to end at its highest level in almost six months.
Now, stocks have been higher since the opening bell, but they picked up some steam after existing home sales came through. Those figures showed that the market is improving a bit.
Now, the market is doing pretty well today after getting these home resale numbers. They rose 10 percent in September, better than forecasted. It's actually the second month in a row for these gains.
It's fueling hopes that a housing recovery could be underway. Investors are also pleased with corporation earnings coming out.
Not much on the calendar today, but things have really been upbeat so far. Actually, more than 80 percent of the S&P 500 companies that have reported so far have topped estimates. And for most of them, it's because of higher sales, not just because of cost cutting. And that is exactly something that investors really want to see -- Max.
FOSTER: And was there much talk about the G20 there today, Alison, over the weekend?
KOSIK: You know, there has been a lot of talk. You know, investors are pleased that G20 ministers have vowed to work on balancing world trade. You know, there isn't a firm agreement yet, and we know. But the progress really reduces concerns here on the floor of the New York Stock Exchange about a global currency war.
Traders are telling me that the gains today that you're seeing are more related to currency than the housing figures or anything else, at this point. The weak dollar is lifting stocks. And, of course, besides the dollar, traders have corporation earnings and next week, mid-term elections on their radar. So those are the things that traders are focusing on right now -- Max.
FOSTER: Alison, thank you very much.
Back with you throughout the week, of course.
Now, a mega merger is in the works. Ahead, what still needs to be done before the Australian and the Singapore Stock Exchanges can merge.
(COMMERCIAL BREAK)
FOSTER: Now, markets in Asia were mostly up today, lifted by a big merger deal actually in the works. In Australia, a multi-billion dollar bid for the ASX, the Australian exchange. That gave the market a little bullish mood, clothing -- closing up just over 1.3 percent in the end.
Statements coming out of the G20 finance ministers meeting in South Korea eased fears of currency wars and helped the Hang Seng and the Shanghai Composite move higher. Only Japan lagged, inching lower toward the close.
Now, let's get some more details on the background to the bid from our Asia business editor, Eunice Yoon, who's in Hong Kong.
EUNICE YOON, CNN CORRESPONDENT: The merger between the Singapore exchange and its counterpart in Australia has yet to be approved by regulators, but traders are already talking about how the deal could reshape the competitive landscape for financial capital.
Here's what's happening. The Singapore Exchange has made an $8 billion bid for ASX. This is the operator of the main stock market in Australia. The offer is cash and stock and the pan-Pacific company would be a first for Asia and the world's fifth largest exchange by market value.
The massive pool of liquidity is generating a lot of market buzz here. Investors like liquidity. Together, the two exchanges account for nearly $7 billion in trading volume, closing in on the Hong Kong market's $9 billion.
And other talking points on the market, the new exchange could allow its traders to buy and sell stocks for 11 hours straight, from 9:00 in the morning in Sydney to 5:00 p.m. In Singapore. The Bourse says that its trading systems would be some of the world's fastest. And traders are also talking of the potential to pool mining and commodities companies.
Many see this deal as a win-win for both Singapore and Australia, but Hong Kong could lose out. Hong Kong has attracted a lot of the big listings in recent years because of its proximity to China. Chinese companies have been going public here to get funds from international investors. And international companies have been listing part of their business to get exposure to China's economic growth story.
The exchange is scheduled to go live by the second quarter of next year. And analysts say when it does, it could very well steal business away from Hong Kong.
Eunice Yoon, CNN, Hong Kong.
(END VIDEO TAPE)
FOSTER: And now we're getting reports of pretty severe winds in Southern France -- 150 kilometers an hour according to some reports.
Guillermo has been monitoring that for us.
It sounds pretty bad down there.
GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes, imagine the delays at airports, as well, over there. Actually, winds all over the world right now. I think it's transitional weather. You see the low here, the low, how it's descending from Piamonte into the Mediterranean Sea. That is bringing the intense winds over there. And it's going to continue to drop. The winds will -- may not be as high anymore. And, also, those are gusts. So it's sustained a little bit less than that.
But look, we have reported that there was going to be bad weather in Cantabria here, in the southern parts of Calabria, too; in the southern parts of Italy and into Greece. And we're going to get it. This is the same low that is causing the problems as it descends here.
The high pressure center brought some OK conditions for Britain for a little bit. And now we start to see snow. Watch out. I have some graphics here. I'm going to show you some airports that are going to see snow.
You see how the nice weather, the stable conditions in Britain is affected by a new system that is coming through. And here it goes, especially in the northern sections. So the temps are going to suffer -- 7 in Vienna, 12 in Paris. Not that bad, though.
But look, Dublin with winds then London with some clouds; Amsterdam with some rain showers and this is the problem. Vienna here with some snow showers, probably. Also, some fog in Frankfurt, Munich, Zurich also there -- look, Milano, Berlin. We start to see those now, the snow showers -- the possibility of snow showers. So a big change.
So Paris is going to be OK. The east is the problem. Also, if you are watching from Asia, it's almost 3:00 in the morning in Beijing.
And you know what?
I'll tell you the temperature right now if you happen to be awake. It's three degrees in Beijing. It's going to go up all the way to seven, probably, all the way. You know, imagine that. But Shanghai is in better shape, though.
There are low clouds, you see?
So it doesn't look very nice. Taiwan with winds because of Giri, this tropical cyclone that is in the proximity. Remember that we had a cyclone there in Taiwan and it caused a lot of problems, right, Megi?
Well, the winds will prevail. We may see delays at the airport over there. Also, Seoul with Wednesday conditions; Hong Kong with windy conditions, too. Singapore with some thunderstorms. Another look at it. Here you have it, this typhoon that is going to go near Okinawa. It's still far away, so we don't have a big problem.
Raining all over. I was checking Buffalo. It looks nasty. Also, stay tuned, Fionnuala is getting ready to start "WORLD ONE" now. We're going to talk about tornadoes in Texas. Awful video that we're going to share with you.
Very strong winds in Chicago, Max, so we may see some delays over there, too. Big airport, Minneapolis/St. Paul, the same thing happening tomorrow -- back to you.
FOSTER: Flights will be affected.
Guillermo, thank you very much, indeed.
ARDUINO: Thank you.
FOSTER: Now, we heard earlier now emerging markets will be getting more clout at the International Monetary Fund. But developed economies still need to convince investors to hand over cash.
One of those investors is Geoffrey White.
He is CEO of Lonrho PLC. That's a conglomerate with divisions in hotel management, in transport and in agriculture. His company invests only in Africa.
Maggie Lake spoke to him.
(BEGIN VIDEOTAPE)
MAGGIE LAKE, CNN CORRESPONDENT: What are the challenges -- and a lot of companies that certainly have tried to grow business in the region and encountered difficulties.
What are the challenges you see?
GEOFFREY WHITE, CEO, LONRHO PLC: Well, Africa is an emerging market. Emerging markets will always bring challenges with it. And as Lonrho, our whole approach to an emerging market is to diversify and -- and spread that risk as much as possible. So we very specifically formatted the -- the company that will operate in 17 countries, which means if there's a hiccup in one country, you've still got 17 countries that are thriving.
It's getting better. It's a challenge. Emerging markets are a challenge. But, I mean, I think Africa suffers from a -- a poor self- esteem and a poor public image.
The reality is, on the ground, there's really good economic process and -- and progress going on. And you have countries like Angola and Mozambique that really have thriving economies. And if you focus, from our perspective, as Lonrho, we focus on three core sectors, which is we look at the mineral industry, the agricultural industry and the oil industry.
And if you follow those three sectors, you're really in -- in markets that are growing very strongly.
LAKE: Let's talk about agriculture. Certainly, with -- there are so many concerns about food scarcity, food security. We've seen a lot of commodities spiking up because of some of the issues we've had.
Do you believe that -- well, what's the growth potential for that industry?
I mean some people say Africa is the continent that's going to feed the world.
Do you see that?
WHITE: I think the -- the saying everybody uses is Africa will become the breadbasket of the world and I think that's true. If you look at any of the macroeconomic research that's been done by like McKinsey and Boston Consulting nowadays, Africa has got lots of vacant land, it's got huge rock forests (ph), more importantly, it's got the right heat units, the right temperature and the right water to really become a massive producer.
Now, Africa has got a billion people to feed itself. But it clearly has the commercial potential to be a -- a large net exporter for produce to the world.
(END VIDEO TAPE)
FOSTER: Well, we'll be back in a moment with an update on the markets before we go.
(COMMERCIAL BREAK)
FOSTER: Let's get a quick recap on the current state of play on Wall Street at the beginning of the week.
Stocks have started the week pretty strongly. Investors are watching for a busy week of earnings. And economic data is very strong futures on existing home sales. Here it is coming through, up .5 percent currently. Investors also betting on next week's mid-term elections.
Would you believe, they're next week?
They believe Republicans will win control of the House, which will help stocks -- that's what a lot of people are saying, at least.
Here in Europe, a rather mild start to the week. We saw modest gains on all of the major indices. Mining shares were some of the top performers -- Rio Tinto and BHP Billiton each gained around 2.5 percent in London. Volkswagen gave Frankfurt's DAX a major lift. And its shares rose 6.8 percent after Deutsche Bank raised its earnings estimates for the car maker. And that was the large reason for that.
Now, most Asian stock markets closed higher, with only the Japanese markets losing steam toward the end of trade. In Australia, the $6.5 billion take over bid from the Singapore Stock Exchange helped the stocks there. Hong Kong and Shanghai also posted some gains. A pretty good start around the world today.
That is QUEST MEANS BUSINESS.
I'm Max Foster in London.
"WORLD ONE" starts right now.
END
