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Quest Means Business
Emergency Budget to Rebuild Japan; Is Your Information Being Sent to Data Centers?; `Happy Days' Actors Sue CBS
Aired April 22, 2011 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: It is an emergency budget to rebuild Japan. It is $50 billion to be spent.
Location is everything. Is your information being sent to data centers elsewhere?
And the "Happy Days" are long gone. The crew of the hit TV show want their royalties.
It's Friday. I'm Richard Quest and I still mean business.
Good evening.
Japan's prime minister says it is time to renew the determination of post-war reconstruction times. And to pay for it, his government has approved a near $50-billion emergency budget. We always knew the budget was going to be on its way. Now we have details of the size, the scale and how it is going to be paid.
If you join me over in the library, you'll see what we're talking about. It is not as big as perhaps the totality will be involved; $49 billion for the Japanese emergency budget. And the priority is the rebuilding, the cleaning up, and the new housing. The money will go largely to, as well, to loans to small- and medium-sized businesses. The total cost according to the deputy financial minister could be more than $300 billion. So as you can see this is very much a starting point.
Interestingly, the markets were concerned how it was going to be paid for. Finding the funds, with Japan's budgetary deficit, or at least that (ph) to GDP, already, well over 700 percent; the increase in the budget has to come from existing funds. So, they have scrapped pension benefits, 10- year bonds reflecting the way they like the funding, fell to four-week lows.
Of course, ultimately there is still the question of the uncertainty. The OECD's growth this year, at just around 0.8 of 1 percent, at a time when the U.S., of course, is growing 2.5 to 3 percent. That is going to be the big question. How quickly Japanese growth manages to return?
Overall, $49 billion is a great deal of money. But it is widely agreed that this much is just the start. CNN's Stan Grant reports, a lot more is going to be required.
(BEGIN VIDEOTAPE)
STAN GRANT, CNN SENIOR INTERNATIONAL CORRESPONDENT (On camera): As Japan continues to grapple with the human toll, they are now facing up to the financial costs of the earthquake, tsunami, and the nuclear crisis. The government has now earmarked the first of the money that goes toward reconstruction, and have set aside $49 billion. But they are going to have to find a lot more than that. Ultimately this may run to $300 billion, or more. And that is just in the initial stages, still not taking into effect the full ramifications of the nuclear situation.
Now, this comes at a time when Japan is already struggling with debt. Now the debt to GDP ratio, when you look at the public sector debt, overall, is 200 times the GDP. Now, the OECD has warned that Japan may have to look at other forms of funding this. Perhaps an increase in taxes, one suggestion, lifting the consumption tax from 5 percent to 20 percent to recoup that money in the short term. The OECD also saying that Japan's growth will take a hit. It is winding back on its GDP predictions for this year. But saying that next year, as a result of the stimulus, from the reconstruction that could, in fact, rise.
At the same time, Japan is still trying to grapple with this nuclear disaster, the nuclear crisis, unfolding. But now it is cracking down very much on the 20 kilometer exclusion zone. They are restricting access to people. At the same time so many people in that part of Japan still don't have access to water, they still don't have access to reliable power. Throughout this crisis it has always been the same story, that the people of Japan, ultimately, paying the biggest price.
Stan Grant, CNN, Tokyo.
(END VIDEOTAPE)
QUEST: Toyota Motors is also being affected in the aftermath and continues to feel the affects of the earthquake. Supply chain issues have led to a drop in production and Toyota now says it expects output to return to normal by November or December of this year, at the latest. It hopes to revamp, or ramp up production in July.
Welcome news for markets. Toyota shares rose more than 3 percent in Tokyo market. Now, the Nikkei finished slightly off in trading today, bearing in mind it being a bank holiday in Europe and the United States. The Asian markets which saw the business that needs to be talked about. Let's look at those Asian markets and we'll round them out for you, for the week.
The best gains of the-well, it is in Australia, really, isn't it? With the ASX, but the Hang Kong-the Hang Kong? The Hong Kong Heng Seng also had a very good session. Australia was closed today, as well, for the bank holiday weekend.
No trading in the United States. That is the way the market did trade on those days it was open, Monday to Thursday. What a roaring good session for the Nasdaq. Largely on the back of some excellent corporate results from companies like Intel as well.
In the European markets it was Paris which saw the best of the week. The French markets performed strongly. But week in the financial world was away from the equity markets. Even though they were rising, and that gave a lot of talking points. The real talking point, perhaps, under the hood, as they say, came with gold, which went for $1506. It is not a record at that level but it is-it has traded as a record level throughout the course of the week. Bearing in mind it has traded at nominal levels, $1506.
Now, Citigroup is denying responsibility for a leaked e-mail that sparked a crisis in confidence in Greece. The country has launched an investigation into the e-mail. Which claimed it was planning to restructure the events over the Easter weekend, a so-called credit event.
Greece subsequently took a hammering on the bond markets on Wednesday. I was joined by John Defterios and I asked him what was going on?
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN ANCHOR, MIDDLE EAST MARKETPLACE: It was quite fascinating, because what was internal chatter became external fodder, and took on a life of its own on Wednesday afternoon. And, in fact, the impact was quite strong. The Greek market closed at a 2011 low, down 2.6 percent. The banking stocks were down 4.5 percent. And the 10-year bond shot up to a record 14.95 percent. So, whether the intention was to keep it internal or not, it went from a gentleman called Seros Haralambos (ph), externally, to the Greek media, then the Greek trading committee. And that is why it created such an uproar.
QUEST: What he said wasn't terribly controversial, though, was it?
DEFTERIOS: No, it wasn't. They were talking about potentially increased noise over GR dept, meaning Greek debt restructuring as early as the Easter weekend. And if that is the case, if there is a restructuring, he goes on to say, "It is crucial to see what the terms would be."
There is a great concern that the private bondholders, maybe Citigroup being one of them, will have to take a haircut. And that is the big concern going forward.
QUEST: But why has this-if you like, become so significant. Because what they are saying amongst themselves, everybody is talking about.
DEFTERIOS: Yes, in fact, they are talking the inevitable restructuring, because the mountain is so big. It is nearly a half trillion dollars of debt. The EU bailout, as you know, $159 billion. And then we have the record, you know, bond yields at 14.95 percent. Just a month ago, on Greek independence day, there was an e-mail from, into the blogosphere, from an auto mechanic, believe it or not, on the Island of Crete, which sent the market going crazy because they didn't realize the source.
So a Greek government source, I spoke to today, said we have to start cracking down, because it is costing us a fortune, whether it is an auto mechanic in Crete, or an internal e-mail from Citibank that gets out. It is costing us a fortune. But the reality is, most in the market, as you said, are expecting some sort of restructuring. Is it now? Is it in the future? And that is what keeps the market on edge.
QUEST: The internal politics, Citibank is extremely, or Citigroup, is extremely concerned if their reputation goes down the pan, because they want to have their noses in the trough when it comes to the privatization.
DEFTERIOS: Yes, there is a lot on the table here. Last week, the Greek government, Mr. Papandreou, the prime minister, announced cuts of $100 billion euros over the next two years. As part of that he wants to raise 50 billion euros in privatizations. And of course, every bank in the city of London would like to have a piece of that action, so they came out really quickly to say they didn't see any wrongdoing. But they are collaborating with authorities. This is also being bumped up, quite interesting, into the Interpol League, in terms of the investigations.
QUEST: Hard final question. Do you believe there is going to be a credit event this weekend?
DEFTERIOS: Well, the conspiracy theorists of Greece love these things, because independence day, a month ago. Everybody lowers their guard around the weekend. Having met the Greek finance minister two weeks ago, I would say that it premature. But if interest rates continue to go up, the pressure is going to continue on the Greek government.
(END VIDEOTAPE)
QUEST: John Defterios, there. And the close-eyed viewers amongst you would have noticed that we were both wearing pretty much the same shade of tie. Clearly we got the Easter message that it was pink or purple day, this Friday.
They may know where you are. Just how useful is that information. Fresh claims about what Google and Apple are doing with your, and my, whereabouts. The collect the information through the smart phone and next on QUEST MEANS BUSINESS, we'll explain perhaps why it is necessary.
(COMMERCIAL BREAK)
QUEST: On last night's program I told you about the iPhone tracking that looks at your every move, whether you like it or not. Well, today, "The Wall Street Journal" is reporting that Apple is not alone. According to the article, Google-powered phones, too, are also transmitting information about your location back to the headquarters of the data centers. Many of you, of course, have been up in arms about this. And questioned the right of the companies to do this. Well, a short while ago I was joined by the co-author of "The Wall Street Journal" report, Julia Angwin. And I asked her, really, surely all this does is confirm that all these companies, they are all at it!
(LAUGHTER)
JULIA ANGWIN, SENIOR TECH EDITOR, WSJ.COM: You could look at it that way. I think a lot of people suspected that the phone was collecting more data about them than they knew. And now we have put the numbers around that. The Google phone is actually transmitting your location several times an hour. And Google says that-Apple says that is sending the data every 12 hours.
QUEST: I've read the responses and the replies to Congressman Markey's questions, from Apple. It is a long-winded view on the purpose of location services. They seem to say that the necessity is to provide a better service. Does that wash?
ANGWIN: Well, it depends on what you want out of your phone. I mean, if you want to make phone calls, send e-mail, you don't need to turn on this use-location services. But if you want your map to know exactly where you are, or if you want to look up restaurants near me, there are bunch of apps that use location services, then you probably do want to communicate with the wi-fi networks the way that these phones are doing that.
But I think that most people don't really realize that by default the phone is turned on for these location settings. You have to go in and turn it off if you don't want this.
QUEST: You see, and the other point is, it is not that it is using location services, which is a benefit to the user, it is the fact that it is sending the information back to somebody else who may want to use it.
ANGWIN: Yes. Well, so what is happening is, in a way, they are using these phones to collect data about where wi-fi networks are in the world, so they can build a huge map back at the mothership, of all the wi-fi networks in the world. So that when you request to the phone, hey, where am I? It looks up where you are based on this map that they have built. And so, in some sense that is a service to you. But you are also doing a service for them by collecting the data for them.
QUEST: They must have phenomenal capacities. If you think of the millions of iPhone, iPads, or Google Android users, they must have phenomenal capacity. And the amount of data, pouring in, must dwarf anything that you and I can conceive of.
ANGWIN: Yes, well, it is worth remember that Google Streetview, which was a very controversial thing, right? Those guys went out and drove around, all over the world, taking pictures of every street. They were also collecting all of this wi-fi data over the air. And they, this was a bit privacy issue, because they ended up collecting more data than they expected. And they shut that down and actually in the settlement that Google made with the Canadian privacy commissioner, they said, don't worry, we won't be doing it with cars anymore. We are just going to do it with the phones. So, in a sense, that phone in your pocket, if it is an Android, is actually acting as a street view car. It is collecting that same data as if you were driving around on Google's behalf.
QUEST: Finally, I just want to ask you, in the letter again, from Markey-from the general counsel at Apple, to Congressman Markey-the question was, does Apple believe the legal boilerplate information is sufficient to inform the public? Isn't that really what it comes down to? We all click on this multiple-page, I agree, and really, A, have no choice, and B, have no idea what we've agreed.
ANGWIN: Right. There is a lot of legal questions around how much does your consent mean on these agreements. There have been cases that have gone either way. Where agreeing to those terms of service have been enforceable. And sometimes the courts have ruled no. Actually, it wasn't really truly a contract because no one actually reads them. So, I think it still remains to be seen. I think the one thing that is important, at least, I see from my perspective, is for everyone to know this is going, and so they can make an educated decision.
Apple might say, look, we thought people knew because it was in the terms of service. But we think it is news, that is why we wrote about it in "The Wall Street Journal". Because we don't really think actually most people knew about this.
(END VIDEOTAPE)
QUEST: Interesting stuff, now, of course you may wonder the range of location services that are used by different devices. And it is quite extensive, frankly, if you think about it. There are some obvious ones, FourSquare, for instance. The whole raison d'etre of FourSquare is to tell people where you are, meet up with your mates, what restaurant you are at, or whatever. So that is a given. FourSquare, no problem, but what about Facebook place, where you are, and your location coming up with Facebook. We all know the difficulties that there have been with Facebook and the various privacy rules that they now have had to change.
Starts to get more tricky when you go to Twitter@RichardQuest, which of course, you'll be following closely. Because if every time I Tweet, my location comes along with it. Now, we are getting into some dodgy territory. I always like this one, FlightTrackerPro. You know that I'm on a plane, you can track the plane that I'm on. This is a particularly strong one for frequent fliers, business travelers like you and I will use quite often.
This one could arguably be quite useful. You loose your phone, this finds out where it is. Suddenly, I can perhaps see a reason for some of these location services, a bit more obvious.
This one, Shazam, is-shows the extremity of it. Shazam will take your location and will tell you where you heard that piece of music. I challenge somebody, please, @RichardQuest me, why do I need to know where I heard that piece of music. Unless of course it was a particular moment. You want to know how to switch off location services. We have done the hard work for you, to tell you. Facebook.com/CNN/Quest. And you can find out about switching off those location services; the means and the wherewithal to do it.
Forty years after the hit series hit the airwaves, "Happy Days" merchandise is still flying off the shelves. Some of the cast are decidedly not happy. Poppy Harlow is after the break.
(COMMERCIAL BREAK)
QUEST: Some members of the cast of the old TV show, "Happy Days" are finding it hard to smile. They are taking the owner of the show, CBS, to court, nearly 40 years after the first program went to air. They say they have been cheated out of $10s of millions from the sales of the show's merchandise. Our very own Poppy Harlow, who probably wasn't-well, she wasn't alive when the show first started, went to meet the actors.
(BEGIN VIDEOTAPE)
POPPY HARLOW, CNN FINANCIAL CORRESPONDENT (voice over): This is "The Happy Days" known and beloved worldwide. This is "Happy Days" today. The show's cast on slot machines, Potsy, Ralph, Joni, even the Cunninghams.
MARION ROSS, "HAPPY DAYS" CAST MEMBER: Somebody came up to me and said, you must be cleaning up on those casinos. I said, what are you talking about? And he said, you get five Marions, you hit the jackpot.
(LAUGHTER)
HARLOW: The slots represent what the actors say is a merchandising bonanza that began 37 years ago when the show first hit the airwaves. But those same actors also say they haven't been paid for the continued use of their images, as their contracts require. And now, they are preparing to sue CBS, which owns the show.
ANSON WILLIAMS, "HAPPY DAYS" CAST MEMBER: You are representing to the public, the best of what America has to offer, you know, the opportunities, the friendships, the warmth. Unfortunately, "Happy Days" now, also, represents the worst of America. Of what major companies are trying to get from it.
HARLOW: In exclusive interviews we spoke with four members of the cast, Anson Williams, Donny Most, Marion Ross, and Erin Moran, at a 1950s style cafe in Los Angeles.
The estate of Tom Bosley, who died last October, is also part of the lawsuit. And for these actors, who are like family.
WILLIAMS: You look great!
HARLOW: It was a very emotional reunion.
ROSS: The best part, the best part.
HARLOW: The issue, they argue, is simple. They want to be paid for the use of their images.
MOST: There is something kind of skewed in that the people who really had nothing to do with making the show, they are exploiting it and making money on it, by using our face, our pictures, and all of that.
HARLOW: After hearing about "The Happy Days" slots they began asking questions about where all the money went.
JON PFEIFFER, ATTORNEY: "Happy Days" has turned into unhappy days.
HARLOW: Jon Pfeiffer is the actors' attorney in the suit against CBS.
They made a promise to pay, they broke the promise. That is a breach of contract. Number two, they made a promise to pay, they purposefully didn't pay, they broke their promise, the fraud.
HARLOW: Under their contracts the actors were to be paid 5 percent from the net proceeds of merchandising if their sole image were used, and 2.5 if they were in a group. The studio has the right to deduct 50 percent off the top as a handling fee.
PFEIFFER: We have here, iconic actors, I mean, I grew up watching these people, and yet, they got stiffed.
ERIN MORAN, "HAPPY DAYS" CAST MEMBER: You haven't seen a dime from this.
HARLOW: The actors argue the studio knew it owed them money because in 1999, after Moran asked, the studio, which was then Paramount, paid her $692 for merchandising. This document also shows she was previously paid more than $8,000, which she claimed she never received.
MORAN: Bull. No I didn't. No, I did not.
HARLOW: The merchandising proceeds are especially personal for Moran, who lost her California home to foreclosure last year. In documents provided to the actors, CBS says it only owes them between $8,500 and $9,000 each. And most of that is from the slot machines. But the actors argue they are owed millions.
CBS sent us a statement, saying, "We agree that funds are owed to the actors and have been working with them for quite some time to resolve the issue."
HARLOW (on camera): Is it possible that CBS/Paramount may have just made a mistake.
WILLIAMS: I'd like to answer that question.
MORAN: That's funny.
(LAUGHTER)
WILLIAMS: I'd like to answer that question. Let's see, made a mistake, for 37 years?
HARLOW (voice over): A generation after the show ended, these actors all say this case is bigger than "Happy Days" and will set a precedent for the industry.
(On camera): People watching may be asking, you know, "Happy Days" started 37 years ago, why are they just bringing this suit now?
WILLIAMS: Well, because when we started the show we were just kids, actors.
MORAN: We were consumed.
WILLIAMS: You know, we weren't business people.
MORAN: Yeah.
WILLIAMS: And we signed, and we assumed, oh, well they send you the checks and that is it. Didn't think about it.
HARLOW: Are you fighting for more than money?
ROSS: I think fairness and-
MORAN: It's principle.
ROSS: You think of all the different shows that must be having the same argument about this.
MORAN: There you go.
ROSS: Maybe it is for the future that we are doing this.
(END VIDEOTAPE)
HARLOW: Now, Richard, the lawsuit against CBS was filed this week in Los Angeles County Superior Court. And the actors are going to be asking for a specific breakdown of how much each licensee that deals with "Happy Days" earns from sales, and also, of course, how much CBS took in. And when you look at those sales, Richard, they are continuing at a pretty fast clip. CBS recently announced licensing deals with clothing manufacturers across Europe, and here in the U.S. There are even plans in the works for a lottery game with those "Happy Days" characters. And I think, Richard, everyone out there is wondering about The Fonz, played by Henry Winkler, and Ron Howard, the Academy Award winning director, who played Richie Cunningham, neither of them is part of this suit, Richard.
QUEST: So, this is a case over quantum of damages, rather than liability to pay?
HARLOW: Yes.
QUEST: So other cases where this has happened before, Poppy?
HARLOW: You know, there are not cases that deal with this iconic of a show. You are talking about "Happy Days". It ran from 1974 to 1984, and then many more years of reruns that are really still going on. So there have been merchandising cases in the past, but there has not been cases with a show like this, that go back, 37 years, when the show first hit the airwaves. So, it really going to be interesting, I think, Richard, to see how this plays out. And as you saw in their statement, CBS is not disputing whether or not the company owes the actors money, they are disputing how much.
QUEST: Right.
HARLOW: So, this, I think, either way, if goes to court, if it settled, is going to be precedent setting. And then you wonder, what other actors, shows, may come out of the woodwork here.
QUEST: You don't remember "Happy Days" when it first came out?
HARLOW: See, that is not true. I was two years old when it was still running.
QUEST: Ah, you wound me.
(DESK BELL CHIMES).
HARLOW: There you go.
QUEST: You wound me. Poppy Harlow, who is joining us, many thanks, indeed.
(LAUGHTER)
QUEST: Ah. She said that with real delight. You could just see the look as the knife went in.
When we come back in a moment, is South Africa a BRIC too far? Jim O'Neill coined the phrase, BRIC economies. And when we return his thoughts on joining South Africa to the others.
(COMMERCIAL BREAK)
QUEST: Hello on this Easter Friday.
I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And here, whatever the day, we always have the news first.
In Syria, unrelenting anger and fresh clashes across the country. Witnesses say at least 33 people were killed when security forces cracked down on anti-government protests. The so-called "Great Friday" rallies and marches immediately followed Friday prayers. The violence comes a day after the government ended 48 years of emergency law.
Libyan rebels are telling CNN that they've captured a key building in the besieged city of Misrata. The building is located on a main thoroughfare of the city. U.S. Senator John McCain has visited the rebel stronghold of Benghazi and called for increased weapons and training for the record -- for the rebels.
Christians around the world have been observing Good Friday, that marks the crucifixion of Jesus. Pope Benedict XVI celebrated mass at St. Peter's Basilica in Rome. Earlier on Italian television, the pope answered questions sent him from Christians and non-Christians alike.
The BRICS want a bigger say. They are, as you're aware, Brazil, Russia, India and China and, most recently, not just BRIC, but BRICS, because South Africa joined for the ride.
Together, they are the rapidly industrializing countries that make up 40 percent of the world's population -- an astonishingly large amount that is growing. In fact, the growth of the world, nearly a quarter of its economic output.
Now, the man who coined the term BRIC and now BRICS, with the addition of South Africa, has been talking to Max Foster.
The chairman of Goldman Sachs Asset Management, Jim O'Neill, talked about how the world's biggest emerging economies could realign the global order.
And he started by asking, well, the core question you need to know from Mr. O'Neill -- is South Africa justified as a BRIC?
(BEGIN VIDEOTAPE)
JIM O'NEILL, CHAIRMAN, GOLDMAN SACHS ASSET MANAGEMENT: I watch with interest and amusement when people keep on suggesting that Russia shouldn't be there. I mean, relative to South Africa this -- you know, there's no comparison. Russia is five times bigger than South Africa. It's about the same size as India, even despite how poorly Russia did in 2008 and '09, over the decades since I dreamt up the phrase, Russia has done slightly better, over the whole of that period than I originally assumed.
MAX FOSTER, CNN ANCHOR: Are they referring, perhaps, to the way it can often be very difficult for Western business to do business in Russia, or at least they feel that it is?
O'NEILL: Yes, I think -- I think there are three real issues for Russia. One is the long-term demographics. Most people expect them to deteriorate, myself included. Secondly, it's too dependent on oil. And thirdly, the -- the rule of law and -- and with it, corruption. That -- that's the thing which gets so much distaste.
FOSTER: But it's become an animal unto itself, hasn't it, since you let go of it?
It's now BRICS.
O'NEILL: Well, not in...
FOSTER: Apparently...
O'NEILL: -- not in my book.
FOSTER: Not in your book?
O'NEILL: It always was BRICS but...
FOSTER: And you...
O'NEILL: -- but with a small S.
FOSTER: Yes. So, what's your idea about the role that South Africa will play -- is playing now within the group that you created?
O'NEILL: South Africa is -- is -- is a -- is a small country that there are lots of other countries that have much more justification, based on economic size and power, to be part of this club. So, in -- in many ways, it's a bit odd that South Africa is there.
I suppose President Zuma and his colleagues can -- can argue that they -- they are the representatives for the continent of Africa. Certainly, if you look at the continent as a whole, then that is as big as a Russia or a Brazil or an India. Whether all the other African countries would be happy with that, I'm not so sure.
FOSTER: You've also come up with a -- another idea. You -- you're trying to break down the developed/developing nations idea. And you're actually are creating a group within that, aren't you?
So you're talking about three groups of growth countries...
O'NEILL: I think...
FOSTER: -- is that right?
O'NEILL: Yes. The (INAUDIBLE) is growth economies to describe the four BRICS and four of -- of what are the next 11 largest population countries -- Korea, Indonesia, Mexico and Turkey. I think if you take those eight, all of them are 1 percent of GDP or more. By the way, the -- the smallest of them, Indonesia, twice the size of South Africa.
And I think at that kind of size, about $650 billion or more, they are big enough to be impacting the rest of us. And so what -- how can we call them emerging economies?
FOSTER: But what's your idea, though, about creating that third grouping?
Should -- how -- what are you hoping...
O'NEILL: Well, the idea is, you know -- and I've noticed that in my new life as the chairman of an asset management business that a lot of -- a lot of businesspeople and investors still treat these countries as though they're as risky as they've always been and as risky as all the other very small emerging countries.
And I -- I think that's inopportune for them as investors and businesswise. By calling them something different, I'm trying to make it easier for investors all over the world to -- to think about them in a different way than they have done historically, because it's my passionate belief that unless investors do, that they're missing out on the biggest economic story of our generation.
(END VIDEO TAPE)
QUEST: That's Jim O'Neill, who coined the budget cuts and not terribly certain about the new additions.
In a moment after a very short break for a very sweet tooth, the candy crisis and paying more for your Easter eggs this year.
(COMMERCIAL BREAK)
QUEST: This weekend is probably not the weekend when you want to be thinking about losing weight. Good Friday and millions of people will be enjoying chocolate Easter eggs by the gallon and the galore.
Well, if you are lucky enough to be in that position, savor every bite. You'll be aware, because you've heard about it on this program, the price of chocolate's been climbing because the cost of ingredients, those raw commodities from sugar and cocoa, all of them have been skyrocketing high.
Felicia Taylor met a famous New York chocolatier who's trying his best to hold down prices.
(BEGIN VIDEOTAPE)
FELICIA TAYLOR, CNN CORRESPONDENT: Wow! Look at that.
(voice-over): All the ingredients are in place for a delicious Easter at the Jacques Torres chocolate factory in lower Manhattan -- rivers or pure chocolate are being molded into towering three foot bunnies and massive chocolate eggs.
JACQUES TORRES, CHOCOLATIER: We make a wreath here. We've ordered all the beautiful chocolate.
TAYLOR: For Passover, there's even chocolate matzo.
TORRES: Honestly we make it taste good.
TAYLOR: Torres is a jovial ruler surveying his bustling kingdom.
(on camera): Oh, of course they make eggs.
TORRES: Hopefully by Easter, they will have babies.
TAYLOR (voice-over): One thing that turns him serious, though, is the rising price of the ingredients.
TORRES: Well, it was going up, but, you know, relatively slowly. And then suddenly, you see the (INAUDIBLE) going up. And then the last three years, completely up. So, again, I wish that my savings was like that.
TAYLOR: Over the past year, the price of wheat, used in cookies and pastries, has surged more than 70 percent. And as for milk and butter...
TORRES: The dairy products over more than doubled in the last five years. And that's not something that you can tell customers, I'm sorry, your cookies go from $1.50 to $2.50, you know, when you raise...
TAYLOR (on camera): Because of the price of flour?
TORRES: Exactly. But -- but...
TAYLOR: So what do you do, though?
So that means that you're making less money, at the end of the day.
TORRES: You work more for less money.
TAYLOR (voice-over): But, of course, the key ingredient for any chocolate maker...
TORRES: Let me show you chocolate.
TAYLOR (on camera): Ooh. Wait. Save the chocolate.
TORRES: Don't lose any.
TAYLOR (voice-over): Is pure chocolate. For Torres, the outlook is uncertain.
TORRES: The cacao beans, when -- when you buy those cacao beans, 10 years ago, a metric ton around $1,000.
TAYLOR (on camera): And now?
TORRES: Today, a metric -- the metric ton past $3,000.
TAYLOR (voice-over): Political unrest in the Ivory Coast, where much of the world's cacao comes from, is raising key concerns for chocolate makers.
TORRES: We have enough supply to (INAUDIBLE) Easter. Wait until Christmas arrives. That's where the problem is going to be.
TAYLOR (on camera): That's when you'll begin to feel it?
TORRES: That's when we're going to see the price going up. That's when we're going to suffer to get the product, to get the raw materials.
TAYLOR (voice-over): Last month, Hershey's, the world's largest candy maker, announced that it's raising prices on its chocolate by almost 10 percent. Torres says he's also being pressured to act.
TORRES: I did increase some, but I don't increase at the same rate that my -- that my cost of goods increased.
TAYLOR (on camera): Thank you.
(voice-over): For now, overall sales are up. Torres has just opened up a brand new store at 30 Rockefeller Plaza, a key New York City landmark. Life is sweet.
TORRES: I want to keep making chocolate for the rest of my life.
So that's OK, you know?
I have to find a way here.
TAYLOR: But Torres is bracing for challenges ahead.
Felicia Taylor, CNN, New York.
(END VIDEO TAPE)
QUEST: I don't think I've ever seen Felicia Taylor quite so happy since the chocolate got poured and she went into raptures. Well, we know what to buy her for Christmas.
Guillermo is at the World Weather Center.
I think you've got a bit of a sweet tooth yourself.
GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes, I do. And you noticed, she was leaving that shop with a bag.
(LAUGHTER)
ARDUINO: She knows how to play it, huh?
Are you going to ask me about the royal wedding?
QUEST: Hey, listen, I was -- look, I -- I -- I'm still skeptical. I think we're in for showers on the day of the wedding.
ARDUINO: No. No. It's going to be fine. Let me give you another forecast, because we are working it.
QUEST: Are you in for a -- are you in for a bet on this?
You know, a chocolate Easter egg.
ARDUINO: OK, let's do. It's going to be nice. This is the official CNN forecast -- partly cloudy. It's going to be 18 degrees, it's light winds. It's going to be beautiful. And those who are there, for those -- for the weekend, some rain showers on Monday. But things are going to be fine.
Also, I don't know if you noticed that it's been warm and nice. And we see that now and we are going to see some more warm conditions. Twenty- seven degrees maybe, we see this weekend. And on Tuesday, it's going to be very cool, much cooler, I must say. We're going to see some rain pushing into Britain.
But for the time being, maybe we'll see tomorrow some rain showers or, you know, humidity in here. But Sunday is going to be a nice day.
And the warm weather continues in Germany and in Poland, into the Czech Republic. So things are fine. No significant problems at the airports. A little bit breezy in Copenhagen, but that's about it -- Mr. Quest, back to you.
QUEST: A little bit breezy in Copenhagen -- there's a message to go off for the weekend.
All right. Thanks, Guillermo.
ARDUINO: Thank you.
QUEST: Have a good weekend.
And that is QUEST MEANS BUSINESS for tonight.
I thank you for your time and your attention and for joining me this week.
Whatever you're up to, I hope it's profitable.
"MARKETPLACE AFRICA" next.
(COMMERCIAL BREAK)
ROBYN CURNOW, HOST: This is MARKETPLACE AFRICA and I'm Robyn Curnow.
Now, it's estimated that at least one-and-a-half million Zimbabweans live here, in Johannesburg. They and many others fled that country in the past decade. But Zimbabwe's relationship with China is helping it just a little bit to improve the country's stagnant economy, as Nkepile Mabuse now reports.
(BEGIN VIDEOTAPE)
NKEPILE MABUSE, CNN CORRESPONDENT (voice-over): In Zimbabwean president, Robert Mugabe, China has found a friend in need of just about everything -- products from the world's second largest economy now fill his country's once empty stores. Almost everything in this shop is made in China, the manager tells us.
UNIDENTIFIED MALE: For me, I can say the coming of the Chinese to Zimbabwe is -- is -- we appreciate for the -- for their coming.
MABUSE: International isolation and a bad credit record have forced President Mugabe to look east for funds. After a decade of political violence and failed economic policies, many Western businesses have moved out...
(VIDEO CLIP)
MABUSE: -- while the Chinese are moving further in.
YANG JIECHI, CHINESE FOREIGN MINISTER: Our two economies are really cut out for each other.
MABUSE: China has been doing business in Zimbabwe for years. It recently announced a $700 million loan aimed at, among other things, rejuvenating Zimbabwe's agricultural sector. But local economists say overall, Chinese investments are difficult to quantify.
JOHN ROBERTSON, ECONOMIST: Some of the projects are not easily accessible to the public and we're not really given many details on how much work is done or what production has taken place.
WILF MBANGA EDITOR, "THE ZIMBABWEAN": There are agreements which have been reached. We have not seen copies of those agreements.
MABUSE: Our attempts to get figures from the Zimbabwean government were unsuccessful.
(on camera): I did manage to get this much information from the Chinese embassy. According to them, trade between the two countries totaled $560 million last year. That's just under .5 percent of total China-Africa trade in 2010. They also told us that Chinese imports made up nearly 60 percent of that business, with Zimbabwe importing mainly mobile communications hardware, while their number one export to China last year was apparently tobacco.
(voice-over): It is, however, mineral resources, including diamonds, that the Chinese are mainly interested in, says the Zimbabwean minister of investment promotion. Two Chinese companies reportedly have licenses to operate in the control Marange Diamond Fields near the Mozambique border. That trade has been interrupted by export controls following allegations of human rights abuses by Mugabe's ZANU-PF party. China is said to be complying with those international controls.
Zimbabwe's finance minister, Yendai Biti, who is now in a unity government with Mugabe, complains that diamonds are not contributing enough to the nation's economy.
YENDAI BITI, ZIMBABWEAN FINANCE MINISTER: Part of the problem lies in the linkage to smuggling that we think is still happening. And part of the problem lies is the fact that we need the (INAUDIBLE)
Process stamp of approval.
MABUSE: ZANU-PF denies accusations of looting and abuses while Biti, who is careful not to point a finger, blames smugglers for robbing the country of much needed revenue.
China has been silent on the issue, choosing to rather stick to its policy of non-interference in internal matters of other countries -- a policy African leaders like Mugabe no doubt much prefer.
For MARKETPLACE AFRICA, I'm Nkepile Mabuse in Johannesburg.
(END VIDEO TAPE)
CURNOW: So even with China's involvement, Zimbabwe's economy is still struggling. Let me put things in perspective for you. Five years ago, Zimbabwe's GDP growth was minus 6.3 percent. In 2008, hyperinflation was nearly 500 billion percent. That's according to the IMF.
But these days, the finance ministry says inflation is just 3.4 percent, after they abandoned the Zimbabwean dollar and adopted multiple currencies.
Now, the power sharing government in Zimbabwe is trying to attract foreign investment, but many companies are staying away because of a controversial law. We meet the man in charge of that process, after the break.
(COMMERCIAL BREAK)
CURNOW: Welcome back to MARKETPLACE AFRICA.
Now, Zimbabwe's controversial indigenization law is one of the reasons foreign-owned companies consider Zimbabwe a risky place to do business. On one level, the law forces foreign-owned mining companies to hand over a majority stake in their businesses to local black Zimbabweans.
Now, the man in charge of enforcing that law is our next guest on Face Time.
Saviour Kasukuwere is the indigenization minister.
(BEGIN VIDEOTAPE)
SAVIOUR KASUKUWERE, ZIMBABWEAN INDIGENIZATION MINISTER: Well, basically, indigenization is economic empowerment. It's a policy decision by the government to ensure that we create an enabling environment, one, for our people. Clearly -- and you'll understand from the history, there has been a process of exclusion for a very long time. And we believe it's important that Zimbabweans become major players in the economy.
CURNOW: No one disputes the philosophy of that. But it's the practical implementation of it. You're basically asking foreign mining companies to hand over 51 percent to black Zimbabweans.
KASUKUWERE: Well, I think they understand the understanding could be different. What we are saying and what we're doing is we are engaging with all the foreign mining companies in Zimbabwe and say to them, look, here we are. This resource is a Zimbabwean resource. Let us create a partnership that ensures that Zimbabwe benefits from the resources.
CURNOW: This is nationalization, isn't it?
KASUKUWERE: Well, no...
CURNOW: Expropriation?
KASUKUWERE: Well...
CURNOW: I mean you call it indigenization but let's call a spade a spade here.
KASUKUWERE: Well, when you look at the laws, it's not about expropriating shares. It's about us determining values, us as the Zimbabwean government.
CURNOW: So what are the values of those shares?
KASUKUWERE: Obviously, this is a commercial process that will allow us to sit down with the companies. And the process that we're undertaking right now is to ensure that the companies understand, appreciate the spirit and later of the law. Sit down with us and determine the way fwd.
CURNOW: How much will Rio Tinto, will Impala Plat or Anglo Plat get for their 51 percent?
KASUKUWERE: Well, if you're asking me that figure now, I don't know.
CURNOW: OK, will they be paid fair market value?
KASUKUWERE: Exactly. Let us sit down and understand...
CURNOW: So you haven't determined...
KASUKUWERE: -- the value.
CURNOW: -- it yet?
KASUKUWERE: We are sitting down with the companies.
CURNOW: How do you determine the value?
KASUKUWERE: We sit down with the companies. They have assets. We have assets. Let us now sit down, the two parties, and agree on the value of what it is that we are, as the Zimbabwean government, is expected to pay.
CURNOW: What will you pay for the resources below the ground?
KASUKUWERE: Well, exactly.
Why should we pay for resources that belong to us?
CURNOW: So you're saying that anything below the ground, they're going to get nothing for?
KASUKUWERE: Anything below the ground belongs to the people of Zimbabwe.
CURNOW: So surely, then, you're not paying fair market value...
KASUKUWERE: Well...
CURNOW: That is expropriation.
KASUKUWERE: If there is...
CURNOW: That is nationalization.
KASUKUWERE: No, no, no, no. If there is fair market value for all that belong to me. I also expect you to pay a fair market value for assets that belong to me.
CURNOW: But essentially, this is about empowering...
KASUKUWERE: Well...
CURNOW: -- political acolytes (ph)...
KASUKUWERE: -- it's unfortunate that...
CURNOW: -- in Robert Mugabe's party?
KASUKUWERE: It's unfortunate that...
CURNOW: That's what many people would say.
KASUKUWERE: Yes. So to then say it is a ploy by (INAUDIBLE) to empower cronies is wrong. Secondly, we are talking about broad-based empowerment where we set up the sovereign wealth fund, where we ensure that the benefits that derive from the mining sector benefit the people of Zimbabwe.
CURNOW: How are you going to use that money to empower local black Zimbabweans?
KASUKUWERE: Well, one is that has funding. One is that it is benefit...
CURNOW: Where does that funding come from?
KASUKUWERE: No, no, no. A wealthy state has the benefit that is accruing from the minerals that are exploited in our country. That is what we must use to support the development of our people, to support education, to support the armed services. That is how we will empower people.
CURNOW: A few weeks ago, Zimbabwe held a -- a conference trying to attract foreign investment.
How does expropriating, indigenization, whatever you want to call it, how does that really encourage foreign investment when property rights essentially aren't secure?
KASUKUWERE: I think this is unfair. Property rights -- let's not go into that. These rights are sovereign rights that belong to Zimbabwe.
CURNOW: You're a very powerful man, aren't you, because you're the man who's going to make the decision on each and every one of these...
KASUKUWERE: Well, I...
CURNOW: -- these (INAUDIBLE)?
KASUKUWERE: -- I've been asked and I've been assigned to do a job. I don't think it's about power. It's about needing to do the job.
CURNOW: When you look at it and you look at the history -- because, obviously, that is very important to you -- and you think of ZANU-PF's role in liberating the country, do you feel that perhaps people who are aligned to ZANU deserve...
KASUKUWERE: Well, you -- you can't...
CURNOW: -- one of these -- you know...
KASUKUWERE: -- one of the things...
CURNOW: -- a better chance at these (INAUDIBLE)?
KASUKUWERE: One of these -- the things that you can't deny is that ZANU-PF has been at the forefront of fighting for the political independence of our people, ensuring that we develop a sound human base, of ensuring that the people of Zimbabwe are equal. It is a fact that the sacrifices made by ZANU-PF and ZAPU brought about the current democracy we're talking about in our country. And they continue to lead in the process of ensuring that people of Zimbabwe benefit, the people of Zimbabwe develop.
(END VIDEO TAPE)
CURNOW: So what's your opinion of what the minister had to say?
We're having a debate on our Facebook page. Please do let us know what you think.
For now, though, let's take a look at what's trending this week.
(BEGIN VIDEOTAPE)
CURNOW (voice-over): Amid the debate over Zimbabwe's indigenization law, the country has now banned the export of unprocessed chrome. The move is meant to encourage local refinery production in Zimbabwe, which has some of the world's largest chrome reserves. The ban will mostly affect China and South Africa, which purchase the bulk of Zimbabwe's chrome.
And Africa's largest undersea fiber optic cable has reached the shore of South Africa. The $650 million cable system runs from South Africa to Europe and will boost bandwidth in several countries along the West African coast. The international link is expected to go live early next year.
(END VIDEO TAPE)
CURNOW: That's it for this week's show.
I'm Robyn Curnow here in Johannesburg.
If you want to connect with us, please do go to our Web site, which is CNN.com/marketplaceafrica.
Good-bye.
END
