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Quest Means Business
Jobs On The Rocks, Hiring Crisis Threatens The U.S. Recovery; Murdoch's Paper Cut Turns Septic, As Renault Pulls All Its Ads From News International; Collision Course?; Final Shuttle Launch; Farmers Make Connections; Kenya Airways Soars
Aired July 08, 2011 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JOHN DEFTERIOS, GUEST HOST: Jobs on the rocks. A hiring crisis threatens the U.S. recovery.
Murdoch's paper cut turns septic, as Renault pulls all its ads from News International.
And to retirement and beyond, Atlantis is now on its final mission.
I'm John Defterios in for Richard Quest. This, of course, is QUEST MEANS BUSINESS.
Good evening.
The economic recovery in the U.S. is at a standstill as job creation dries up. More than 14 million people are waiting in line, but last month the world's largest economy added just 18,000 jobs. That is well below what is needed just to keep pace with population growth.
And it is a bitter blow to investors, analysts and lawmakers, who were expecting a much healthier number. We are now into a second month of a drought on the jobs front in the U.S. America was hiring in the hundreds of thousands in February, March and April, but May brought a dramatic slowdown.
The unemployment rate is creeping higher as new jobs become scarce. It now stands at 9.2 percent. President Barack Obama said recovery will take some time.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Today's job report confirms what most Americans already know. We still have a long way to go and a lot of work to do to give people the security and opportunity that they deserve. We have added more than 2 million new private sector jobs over the past 16 months. But the recession cost us more than 8 million. And that means that we still have a big whole to fill.
(END VIDEO CLIP)
DEFTERIOS: The president also called on lawmakers to help create jobs. The House of Representatives says it is cancelling the July recess to, quote, "get the nation's fiscal house in order." Republicans are standing firm in their commitment right now to curb spending.
(BEGIN VIDEO CLIP)
REP. JOHN BOEHNER (R-OH), HOUSE SPEAKER: We also need to stop Washington from spending money that it doesn't have. We need serious reforms that restrain future spending. You have heard me say before, a debt limit increase that raises taxes, or fails to make serious spending cuts, won't pass the house. We hope our Democrat counterparts will join us and seize this opportunity to do something big for our economy, and frankly, for our future. And to help get Americans back to work.
(END VIDEO CLIP)
DEFTERIOS: Stocks took a dive on that job news. Not surprisingly. Let's check into the New York Stock Exchange with Alison Kosik to get the read from the floor there.
Alison, I saw some of the expectations, 80,000 jobs to be created, 90,000, one was 140,000, way, way off the mark.
ALISON KOSIK, CNN FINANCIAL CORRESPONDENT: Yes. Oh, yes, this definitely missed it by a long shot. And it definitely shocked and stunned Wall Street. In fact, when this report came out this morning you could hear a gasp on the floor here, at the exchange. As you said, you know, those expectations had been really high. You know, up to 150,000 jobs could have been added to the economy.
And here is what is even more frustrating. You know we were building some of that momentum and then all of a sudden the bottom fell out. You look at May and June, you know, gains of just 25,000 and then 18,000, what we learned today.
And here is what is interesting, is June's report actually marks the two-year anniversary of the end of the recession, and the start of the recovery. But look how far we have gotten, you know, we really haven't gotten that far.
You think about it. We have lost 9 million jobs from when the labor force was the strongest, when we hit rock bottom. And guess how many we have gained back. We have only gained back 2 million of that 9 million, John.
DEFTERIOS: There is some concern that now the government is going to cut spending and we see that the government is laying off workers. So this could not bode well for the second half recovery, or for the 2012 election year.
KOSIK: Oh, exactly. I mean, anyway you cut it, this report, there is really little redeeming in it. I mean, then if you dig a little deeper, you see where those cuts really happened. The government lost the most jobs, 39,000. That is on top of the 48,000 government jobs lost in May.
And that is because of these budget cuts, all across the U.S. We also saw that temporary help fell by 12,000. That is not a good sign either, since temporary jobs often lead to those permanent jobs. And this is actually the third month in a row that temporary jobs have fallen.
Now, manufacturing and mining jobs, those were little changed in June. Now the one little bright spot, that we saw, where we saw some decent gains, were employment in the professional and technical services areas; increased by 24,000 in June. And we saw 14,000 health care jobs added. But other than that, there is little else that is redeeming in this report, John.
DEFTERIOS: Very quickly, is this going to spill over to corporate profits, because the growth is so anemic if you are not creating jobs?
KOSIK: You know what, the expectations for earning season, which begins next week, are very high. Everybody here is expecting corporate earnings to come in-come in pretty well. But you know, but this the kind of, the sort of narrow view, the Wall Street view, where you see corporate America doing well. But when you look the macro view, you know, are these companies hiring? They are not. They have a lot of cash but they are really reticent to spend it, and they are reticent to hire. Because they just don't know what is going to happen with the economy. There is a lot of uncertainty. And they are not going to go out and go on a hiring spree until they know that the economy is on solid footing. And obviously, with this jobs report today, it certainly is not, John.
DEFTERIOS: OK, Alison Kosik at the New York Stock Exchange with a wrap up of the very negative jobs report. So, it is difficult right now to see which lawmakers go. I brought up that question with Alison, and we laid this out here on our three screens. First, starting with debt, the debt load is extremely heavy. We know about it, makes further spending impossible, I would say. It cuts, more likely.
U.S. debt to GDP, right now, people don't talk about this number, it is 70 percent. That is in the range of Spain, which has had to put through a very severe austerity program. Political deadlock over the debt ceiling, the U.S. public debt, we have talked about it, $14 trillion. How about the deficit to GDP? It is nearly 11 percent in 2011 for the United States.
Here is the White House view, the Council of Economic Advisers, the Recovery Act so far has saved 2.4 million jobs. That is what President Obama was alluding to there. So that is the debt. Here is the road sign. The debt challenge, stimulus, can you actually do more? Well, there are no new real options on the table.
The $600 billion QE2, stimulus package has ended a week ago. Not withdrawn, but there is some support, but no fresh money. Rates remain in the range of zero to a .25 percent. That is practically zero. So the options in terms of stimulus are not there. Where does the recovery go from here? And this is the huge question mark. What is the growth expectations for the second half of 2011? We know the debt mounts up. We know the Federal Reserve has very little leeway to do anything else. The recovery, the White House was hoping for 3.5 to 4 percent growth in the second half. Some are saying that could be 2 to 3 percent, 2.5 to 3 percent. It is worth repeating, 14 million Americans are without a job right now.
Earlier I spoke with Ken Rogoff, the former chief economist at the International Monetary Fund. He told me it is hard to be positive about anything in this report.
(BEGIN VIDEOTAPE)
KENNETH ROGOFF, ECONOMICS PROFESSOR, HARVARD UNIVERSITY: It was a depressing jobs report. I don't think there is any other way to describe it. The only bright spin I could put on it is the United States is still right on track with the numbers Carmen Reinhart and I had in our book about how long it takes to dig out of a financial crisis. Unemployment lasts a long time.
But that said, I mean, you would like to be seeing it gradually coming back, instead the last two months were flat. It is discouraging. I think the best chance is things will get better in the second half of the year. But of course, this is not a great way to go into that.
DEFTERIOS: It is interesting, 18,000 jobs created in the last month; 25,000 on the revision of the month before. Would you say stagnation in the second half of the year for the U.S. economy?
ROGOFF: I don't think it will be. But we have stagnation right now, the past two months, that is basically zero job growth in the context of the U.S. economy. I mean, it is just knocking on the door of being negative. But you are right that it is a crossroads in the sense that they can't do massive stimulus. The Federal Reserve can't cut interest rates any more. They are already zero. They are limits to the response. They kind of have to ride it out.
I think they have to be careful not to go crazy here. That I do think the U.S. economy has a lot of debt but it is fundamentally got a lot of strengths. And you want to be careful not to do things that are destructive at this point, to be patient. And, of course, a lot of countries around the world are facing that. Maybe some of them will do something crazy.
DEFTERIOS: What are you suggesting here, the debt talks go the wrong way? And we leave tax cuts in place? And we don't go ahead with the government spending?
ROGOFF: I think the debt talks have been a very positive thing in the sense that a year ago they just weren't paying attention to where the U.S. deficit was going. And if you look at the crisis in Europe now, which is far, far from over, the debt overhang over the whole world-I think it is good that they're energized and they are talking about this.
But on the other hand, they do need to bear in mind that they can't just go with Draconian further changes, here. They have to withdraw stimulus, but there are limits, because the job market is very, very soft. It would be depressing. They have to phase things in gradually.
DEFTERIOS: What are your projections for growth for the year then, after looking at this report?
ROGOFF: I still think it will pick up to 2 or 2.5 percent for the year. This was a very bad report. It is not going to be the 3.5 or 4 percent that the Federal Reserve was predicting. But I think oil prices have come down. The effects of the Japanese earthquake are past. So, you know, I think it is still reasonable to project better job numbers coming in the second half of the year. But there is still 14 million people unemployed; 6 million people unemployed for over a year. We are still in a recession by any realistic measure of what it is.
(END VIDEOTAPE)
DEFTERIOS: Certainly not very optimistic. Ken Rogoff joining me from Boston a little bit earlier.
Britain's toxic tabloid maybe shut down but there is plenty more dirt to go around. The phone hacking scandals get worse and worse for Rupert Murdoch's empire. We'll explain why, right after the break.
(COMMERCIAL BREAK)
DEFTERIOS: Renault says it is pulling advertising not just from "News Of The World" but from all of Rupert Murdoch's British newspapers. This, yet another blow for News Corp, which is struggling to contain the fallout from the newspaper phone hacking scandal, even after closing the now toxic tabloid.
New arrests this morning, applied pressure for the companies executives, and the U.K. government, former "News Of The World" editor Andy Coulson was arrested by London police this morning. That affects British Prime Minister David Cameron, who once hired Coulson to be his press secretary. Coulson left that post in January when new phone hacking allegations emerged. And while Mr. Cameron says he takes responsibility for Coulson's appointment, he says it may be time for Coulson's predecessor, News International boss Rebekah Brooks to follow suit.
(BEGIN VIDEO CLIP)
DAVID CAMERON, BRITISH PRIME MINISTER: Andy Coulson, who worked for four years as my director of communications, he resigned from the "News Of The World" because of the things that happened on his watch. I decided to give him a second chance and no one has ever raised serious concerns about how he did his job for me.
But the second chance didn't work out and he had to resign all over again. The decision to hire him was mine, and mine alone, and I take full responsibility for it.
On the case of Rebekah Brooks, as I have said, I don't think it is right for the prime minister to start picking and choosing who should run, and who shouldn't run, media organizations. But it has been reported that she offered her resignation over this and in this situation I would have taken it.
(END VIDEO CLIP)
DEFTERIOS: This very British scandal is starting to have a serious impact on Murdoch's international media empire. News Corp shares are sliding for a third day running. They are currently down almost 4 percent, at 3.67 percent, trading at $16.79 a share, right now. Over the past couple of days the company has lost almost $3.5 billion of its value. This is the scale of the challenge. Let's take a look at what it has wiped out; $3.5 billion of value lost. The company's stock was trading at nearly $6 a share three years ago. Investors have been extremely patient over that time. But now with this latest challenge, while there was no big hit earlier in the week it has come back to haunt the stock with that market cap being kind of wiped out in those last two days of trading.
Well, that is a remarkable fall considering the "News Of The World" was a relatively small piece of the puzzle. According to another News Corp paper, "The Wall Street Journal" it was worth $650 million, or 1.4 percent of its total market cap. The scandal may also be putting the company's proposed takeover of BSkyB in jeopardy.
Let's take a look at that. News Corp has been trying to push through a bid for the TV and communications company for months. The British government now says approving that deal will take some time. They are leaving it kind of open. BSkyB shares fell more than 7.5 percent, as you can see here on the London stock exchange, to 7.50 pounds.
Rupert Murdoch may have some big calls in his remarkable career, but few of them have been surprising or, let's say, dramatic as closing down the "News Of The World". So what exactly is he trying to get done here? Jim Boulden takes a look at Mr. Murdoch's overall strategy.
(BEGIN VIDEOTAPE)
JIM BOULDEN, CNN FINANCIAL CORRESPONDENT (voice over): A man not shy to speak his mind, Rupert Murdoch has yet to share his views, though, on the closure of his beloved newspaper, the "News Of The World". So others are debating how this will fit into Murdoch's media strategy, in the wake of the phone hacking scandal. And whether the decision was taken by him, or his son, James, the heir apparent and head of Murdoch's British newspaper arm.
PR guru Max Clifford, himself an alleged hacking victim, says killing off the "News Of The World" won't kill off the scandal.
MAX CLIFFORD, PUBLIC RELATIONS EXPERT: And if the allegations are true, then, you know it is very, very damaging for "News Of The World". And of course, "News Of The World" is like the flagship of News International. So the cancer which is developing, and has been developing, since all of this started in "News Of The World", is now starting to spread, and the damage it is doing. So, kill it off. And hope that you don't spread that cancer to News International and News Corp worldwide.
BOULDEN: The signs outside the headquarters of News International show the breadth of Murdoch's newspaper empire in Britain. The "News Of The World" sign will be coming down soon, no doubt. And as for the employees losing their jobs, like "News Of The World" political editor David Wooding, there are so many more questions than answers.
DAVID WOODING, POLITICAL EDITOR, "NEWS OF THE WORLD": I can only assume he feels that the brand has been so badly damaged that the best thing to do is a scorched earth policy and get rid of it, but it is one hell of a decision.
BOULDEN (on camera): Would you be surprised, though, if Mr. Murdoch decided to start another Sunday paper, and it is not out of the realms of possibility.
WOODING: No, there have been rumors that he'd start another one. Or that he'd do "The Sun" on a Sunday. But you are starting from scratch there, because readers of the "News Of The World" has a loyal following.
BOULDEN (voice over): Murdoch's global arm, the Nasdaq-listed News Corp, is in the midst of a attempted $15 billion takeover of Britain's only satellite broadcaster, BSkyB. News Corp currently owns 39 percent. It may be that Rupert Murdoch sees the "News Of The World" getting in the way of the final decision by the U.K. government to clear that deal. A decision certainly delayed in the wake of the row.
PHILIP STEPHENS, "FINANCIAL TIMES": I don't think that there are any circumstances that David Cameron's government can nod this merger through now. Imagine the headlines the next morning: Cameron bows to Murdoch.
BOULDEN: BSkyB added $100 million to News Corp's first quarter operating income of more than $1 billion. Owning the whole company could add so much more. Just as the newspaper business, including the soon-to- die "News Of The World", begins to lose its luster. Jim Boulden, CNN, London.
(END VIDEOTAPE)
DEFTERIOS: While this controversy plays out in the U.K. Rupert Murdoch is at an exclusive annual media gathering in Idaho. Sandra Endo is in the Sun Valley Complex and joins us now with a bit of analysis from there.
Sandra, it was quite interesting. This is a summit that brings together people like Mark Zuckerberg to Rupert Murdoch and even Warren Buffet. Rupert Murdoch usually keeps a pretty high profile. Have you had the chance to catch his eye today? And what is he saying?
SANDRA ENDO, CNN INTERNATIONAL CORRESPONDENT: Well, John, I can tell you no sightings of Rupert Murdoch at all today. At least by the press, and that is very unusual, as you mentioned, from years in the past. And the last time the press saw him was yesterday morning when he was arriving for breakfast. That is when he declined to comment about this scandal. So, a very different feel this year and interaction by Rupert Murdoch.
We in fact, though, did see his wife, Wendi Deng, just moments ago, enter a private luncheon. That is when I had a chance to ask her a question. She declined. She just smiled and walked on by.
Now one figure, John, I have to mention, who we have been seeking out, is Joel Klein, he is the man Rupert Murdoch has tasked, as his point man, to deal with this whole scandal and investigation. He is here at this conference as well. We have seen him several times. Again, we asked him a question, he walked on by as well. So, don't expect any News Corp official to really talk or make news at this conference. They are staying very tight-lipped about the scandal rocking the U.K. and in London, John.
DEFTERIOS: Yes, it is even spilling over into the stock, of course.
Warren Buffet? He choose to time his latest giving round to this media conference. What can you tell us about his presence there, as a very large investor of media companies?
ENDO: Yes, he is here. A lot of other philanthropists are here, Oprah Winfrey. And we have seen a whole mix of super exclusive, super elite media types, business honchos. Warren Buffet was here earlier this morning, all smiles, with a big philanthropic donation, but also talking about the economy. We talked to a lot of people here about the jobs market being down and the economy just sagging, and really, just taking long time to recovery. But he was optimistic and weighed in on that, that everyone is at fault and should help the economy and really turn things around. So he is here doing his part, talking to a lot of the media and business officials here, to really try to come up with a solution.
DEFTERIOS: OK, Sandra, thanks for the update there. Sandra Endo in Sun Valley, Idaho, on the trail of Rupert Murdoch, and even a little bit of Warren Buffet.
Let's get you up to date on what happened on stock trading today. European stocks ended the week in the red. A valley turned into a retreat as soon as those U.S. jobs numbers came out. No surprise there. Sending a ripple and a shock right across the trading floors. Adecco, the staffing firm, sank 3.7 percent in Zurich. Banks shares took the biggest losses overall, especially in Italy. In Milan, the FTSE MIB lost 3.5 percent, Unicredit was the worst hit. Its shares fell nearly 8 percent on the session. Traders are anxious about the debt crisis, soaring bond yields and the results of EU bank stress tests, which are due next week.
You are with QUEST MEANS BUSINESS. Coming up, a billionaire, more than a billion potential customers and the biggest casino market on the planet. Meet the new player in tonight's edition of "The Boss".
(COMMERCIAL BREAK)
DEFTERIOS: Tonight a billionaire joins "The Boss" team. You are about to meet a high roller in the casino business who says working 12 hours a day, seven days a week, taught this man humility. Francis Lui shows us how he plays to win on this week's edition of "The Boss".
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE (voice over): Macao, Asia's sin city, the only place in China where gambling is legal, and where we find our new boss. Frances Lui leads the Galaxy Entertainment Group, one of only six companies licensed to operate casinos in Macao.
FRANCIS LUI, VICE CHAIRMAN, GALAXY ENTERTAINMENT GROUP: What is your guesstimate? How many people would turn out the best day?
UNIDENTIFIED MALE: 60,000, 70.
UNIDENTIFIED MALE: Francis Lui was born to run Galaxy. His family legacy is the K. Wah Group, a multinational property business founded by his father, and Galaxy's parent company.
LUI: The first job I had was with the family and this is the only job I have in my life.
UNIDENTIFIED MALE: Francis has worked in the family business for over 30 years. His first job, as a site engineer, required him to work 12 hours a day, seven days a week.
LUI: I learned a lot of what people actually do in their daily life. I also learned how to be humble. I also learned how to actually communicate with the junior staff, of the company. And they were all good things to me, because a lot of the things that I do right now, is actually something that I learned, I picked up when I was in the those youngest days.
UNIDENTIFIED MALE: That was then. Now, he's risen to the top of the family business, running Galaxy's five casinos and its hotel operations. But his biggest challenge still awaits, the new casino, the Galaxy Macao. A $2-billion resort, with three hotels, 450 gaming tables, and more than 50 food outlets. It has taken more than 5 years to build, and opens in a little over a week.
LUI: It looks quite good.
UNIDENTIFIED MALE: Pretty cool, huh?
LUI: Again, I want some down lights on it.
UNIDENTIFIED MALE: OK, OK.
LUI: Because right now it is not sparkling enough.
UNIDENTIFIED MALE: We'll make it lighter.
LUI: Yes make it a little bit more glitzy, huh?
UNIDENTIFIED MALE: The Galaxy Macao is Francis' first foray into mass market gaming. And he believes it is a safe bet. Macao's gaming revenue is now more than twice that of Las Vegas.
LUI: Well, we have 1.3 billion people across the border. And each of them is going to be a potential customer.
UNIDENTIFIED MALE: Francis' strategy for the resort is two-fold. To build a uniquely Asian experience, by utilizing regional brands and service standards.
LUI: We believe that the customer is always an Asian customer. We believe that 97 percent of our customers would be either from China, or from the neighborhood region.
UNIDENTIFIED MALE: But it goes beyond gaming. Francis is looking to diversify the business. Attracting customers with an artificial white sand beach, a banyan tree spa, and plans for a cinema and nightclub.
LUI: This is not just about gaming, but more, more integrated result. It took us almost like, eight to 10 years to figure it out. But I think what took us 40 years to transform.
How is the training coming along?
UNIDENTIFIED MALE: So succeed with this massive venture Francis knows he needs a strong team behind him.
LUI: I look for integrity. I only work with people that I can trust, and they can trust me, too.
UNIDENTIFIED MALE: And in all of this, he is all too aware, of his own shortcomings.
LUI: Sometimes because I am, quote/unquote, "impatient person", sometimes I don't stake out sufficient time for our staff to finish their work, but that is my style. But in all, I think I'm still a nice person.
UNIDENTIFIED MALE: He's definitive too, about his own role. As the Galaxy project has shown, he is in it for the long haul.
LUI: I like to say that I'm a visionary. I am visionary person where I would see the long-term future of the company, and am able to articulate what we need to do in order for us to achieve our goals.
UNIDENTIFIED MALE: A vision that will be tested in the weeks and months to come.
Next week on "The Boss":
LUI: Even though I push hard, but still think that I am not pushing them over the cliff so to speak.
UNIDENTIFIED MALE: With one week to go before the big opening, Francis Lui tells us why his staff must be ready for everything.
And over in London, Sarah Curran taps a new marketing director to help grow her company.
(END VIDEOTAPE)
DEFTERIOS: I love that line, not to push them over the cliff too soon.
You are with QUEST MEANS BUSINESS. Still ahead, calls for more scrutiny and claims of secrecy as Montana scrambles to clean up an oil spill. The eighth in the United States this year.
(COMMERCIAL BREAK)
DEFTERIOS: Welcome back. I'm John Defterios. And here are your headlines at the bottom of the hour.
"Godspeed Atlantis" -- that slogan on a sign at the Kennedy Space Center, as the final flight of the U.S. shuttle program blasted off.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: -- the shoulders of the space shuttle, America will continue the dream.
(END VIDEO CLIP)
DEFTERIOS: The four member crew of the Space Shuttle Atlantis is on a 12 day mission to deliver parts and supplies to the International Space Station. We'll have much more on that lift later in the program.
Nearly five months into Egypt's revolution, tens of thousands of protesters are back in Cairo's iconic Tahrir Square. They're frustrated with the slow pace of reforms. They're also demanding trials for members of the former president, Hosni Mubarak's government, as well as police officers accused of killing demonstrators.
British Prime Minister David Cameron is standing behind his decision to hire former "News of the World" editor, Andy Coulson, as his communications director. Coulson stepped down in January. He was arrested earlier today in connection with a tabloid phone hacking scandal. Prime Minister Cameron says he gave Coulson a second chance after he was assured he was not involved in wrongdoing at the paper.
Italian Prime Minister Silvio Berlusconi says he will not run again when his term expires in 2013. He faces declining approval ratings and he's on trial on charges of abuse of power and prostitution with an underage dancer. Mr. Berlusconi told the Italian newspaper, "La Republica," "La Republica," quote: "At 77, I could not be prime minister."
ExxonMobil may be on a collision course with the U.S. government over its Montana oil spill. The U.S. Transportation Department is telling the oil giant it wants some urgent safety upgrades along the disabled pipeline. And the U.S. Energy and Commerce Committee is calling for more federal scrutiny of the entire oil and gas sector industry. Last week's spill in Billings, Montana is what's causing the controversy here. Let's take a closer look at what's unfolding.
Crews are busy cleaning up about 1,000 barrels from the Yellowstone River. More than 500 people are now involved in this effort.
We're looking at ExxonMobil. It has been accused of playing down the severity of this spill from the very beginning. Montana's governor pulled out of the joint command, claiming Exxon is being secretive.
A company spokesman says the ruptured pipeline was inspected just in May.
Still, Exxon may be feeling grateful tonight that this leak is nowhere near the scale of last year's BP oil spill along the U.S. Gulf Coast. The estimate for that stands at more than three million barrels. But that's little comfort to Montana farmers grappling with the aftermath after this oil leak, as CNN's Patrick Oppmann reveals.
(BEGIN VIDEO TAPE)
PATRICK OPPMANN, CNN CORRESPONDENT: The floodwaters raging along the Yellowstone River behind me aren't the only threat that residents here are facing. Take a look at this. It's a dark stain along the bottom of this barn. It wasn't caused from just the flooding, but from 42,000 gallons of oil that went from a ruptured oil pipeline right into this river.
How much of your land has oil on it?
MIKE SCOTT, MONTANA FARMER: We don't know yet.
OPPMANN (voice-over): Farmer Mike Scott takes me to where the ExxonMobil oil invaded his land.
SCOTT: I don't know what oil is going to do to the microorganisms that are in the soil that make the soil actually grow stuff, right?
I'm also worried that the remediation efforts are going to, you know, take forever and take 50 to 60 percent of this place out of production for an indefinite future.
OPPMANN: Mike's wife, Alexis, worries about where their livestock will graze.
ALEXIS BONOGOFSKY, MONTANA FARMER: They told us to move our livestock away from it. They told us to stay away from it. But they're also telling us at the same time that the oil is -- doesn't have any harmful effects on human health or livestock health.
OPPMANN (on camera): Did it make any sense to you?
BONOGOFSKY: No, it's not -- it is not even remotely rational.
OPPMANN (voice-over): Exxon said they are doing everything they can to clean up the spill. But with so much oil in the river, they don't know yet how long that will take.
(on camera): And you just walk a few feet down in the grasslands. All you have to do is really just yank some of this grass off and you see how almost every blade of grass is coated with this thick just disgusting oil. It doesn't smell like you're out on a scenic and beautiful river. It really smells like you're in a gas station here.
(voice-over): Everything that the oil touches has to be scrubbed, even a reporter's shoes.
(on camera): What's going on now I'm having my feet decontaminated. I -- I strayed off the road a few feet and I'm being told by Exxon Mobil that you can't do that. You can't walk anywhere near the oil, even though it's practically everywhere.
UNIDENTIFIED MALE: Step down on the path.
OPPMANN: Step down on the path?
OK.
(voice-over): It's uncertain how long the cleanup will take.
(on camera): Can you promise people, though, that Exxon is going to clean up what was their failure?
GARY PRUESSING, EXXONMOBIL PIPELINE COMPANY PRESIDENT: I can assure you that we are here to do the full cleanup and to be here as long as necessary until the job is done.
OPPMANN (voice-over): Some residents fear it already may be too late.
BONOGOFSKY: You go down to where the oil is, you can't hear any -- anything anymore, no birds, no toads, no crickets, nothing. It's just silent.
OPPMANN: A silence people here say they hope goes away with the oil.
Patrick Oppmann, CNN, on the Yellowstone River.
(END VIDEO TAPE)
DEFTERIOS: And now a quick update on Andy Coulson, the former communications director for Prime Minister David Cameron. He was taken into custody this morning. We understand that he has now left the police station after questioning throughout the session.
He was the former editor of "News of the World," and, after that, the communications director for David Cameron.
Well, we know it's the end of an era, but as the Space Shuttle Atlantis soars to its final mission, we're asking, what's next for NASA?
We're live at The Kennedy Space Center, when we come back.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Ten, nine, eight, seven, six, five.
UNIDENTIFIED MALE: All three engines up and burning.
UNIDENTIFIED MALE: Two, one, zero and lift-off -- the final lift-off of Atlantis. On the shoulders of the Space Shuttle, America will continue the dream.
(END VIDEO CLIP)
DEFTERIOS: Thirty years, more than 800 million kilometers in orbit, one last mission -- Atlantis blasted off a short time ago from the Kennedy Space Center in Florida. Even after the Shuttle program is history, NASA's budget will still be quite massive by global standards. Think $20 billion. That's four times what the European Space Agency has spent.
Meanwhile, China and India are rising space powers.
John Zarrella was at the final launch today and he's been talking with NASA officials about where the U.S. space program goes from here.
He joins us now from the Space Center in Florida -- it's good to see you, John.
It's quite an exciting day. I was looking at the -- the lift-off. And we had the clock stop there. I'm sure your heart stopped, like everybody else's in the newsroom and everybody else watching it. It must have had everybody on edge.
JOHN ZARRELLA, CNN CORRESPONDENT: Yes, we were sitting here and, you know, the clock stopped at 31 seconds and we're going oh, no, you know, what happened now?
And fortunately, it -- it was just a faulty sensor, indicating that one of the -- the -- the remote arms had not moved away from the vehicle. But, indeed, it had. And they had a procedure in place to check that.
They checked it and they were able to pick up the countdown and -- and get Atlantis off the ground.
You know, it's interesting, because this -- this launch really was, in many ways, just kind of combined everything we've seen over the years. There have been weather issues over the years. We had weather issues to deal with here. There have been glitches at the last minute. We had a glitch that they had to deal with, you know, at the last second. So it was kind of a microcosm of 30 years worth of -- of shuttle flights. And now it is ending. This is the end of it. The International Space Station is 220 miles up and the Shuttle Atlantis is on its way to rendezvous with the Space Station, a Sunday morning rendezvous, the last flight, as you mentioned, of the -- the Space Shuttle program.
And then the big question is, well, where does NASA go from here?
And many people have always said NASA is at its best when it's exploring. And that's certainly true. But the question is always going to be, you know, at least for the foreseeable future, is there enough money, is there enough national will, you know?
Are the presidents going to be behind this?
And I say presidents, because it's going to take probably several administrations before the United States can ever get to an asteroid or to mars. And, you know, thousands of people are losing their jobs here and around the country as the program ends.
And Bob Cabana, who is the director of the -- the Space Center here and a former astronaut himself, talked about just that impact there's going to be felt here at the Kennedy Space Center.
(BEGIN VIDEO CLIP)
(BEGIN VIDEO CLIP, COURTESY NASA)
ROBERT CABANA, DIRECTOR, KENNEDY SPACE CENTER: We're going to be going through a tough time. Change is hard. And we're going to have more folks walking out of the door here in a few weeks. And, you know, they were and are performing their job absolutely flawlessly right up to the end. And that -- that says a lot for them. It speaks to their professionalism.
Change is difficult, but you can't do something else, you can't do something better, unless you go through change.
(END VIDEO CLIP)
ZARRELLA: So, you know, really, the issue, John, was that they couldn't start a new program until they ended the Shuttle program. There simply wasn't enough money to overlap and to do both. So the Shuttle program had to end for NASA to start embarking on building a new big rocket, a new capsule to take astronauts to -- to mars and -- and to an asteroid, perhaps.
But again, you know, right now, the worry is that the United States won't have that resolve to do it and countries like China and India and Russia could very well become the first rate space faring nations and the United States could -- could be left behind.
So that's the worry. And we're just going to have to see how it plays out --
DEFTERIOS: Yes.
ZARRELLA: -- literally, over the next, probably -- probably a decade.
DEFTERIOS: Well, as they go through the budget talks, as well.
But why such a large budget to sustain NASA in this period of in between times, before we figure out the next major move by the space agency?
ZARRELLA: Well, because NASA, in many respects, is underwriting a large part of the commercial space industry that they're trying to develop. They are giving seed money to a lot of these companies that are going to be the ones that ultimately take astronauts and cargo to the International Space Station or, right now, with the shuttle going away, the United States has to rely on Russia at $63 million a seat. Every time the Russians fly an astronaut to the Space Station, it's $63 million. The United States is work with these commercial companies to go ahead and in about three to four years, they believe they'll be able to start taking the astronauts to the Space Station.
So the United -- and NASA is underwriting that. They're paying the Russians. They're trying to develop a heavy lift rocket.
So there's still a lot of money being spent.
DEFTERIOS: OK.
Thanks a lot.
John Zarrella at The Kennedy Space Center.
ZARRELLA: You bet.
DEFTERIOS: Somebody who's covered this nearly as long as the program has been alive, for three decades. That's an exaggeration, but it's nice to see him again.
John Zarrella standing by in Florida.
Let's get a quick update for what has been a very rocky day for the big board.
The New York Stock Exchange now maintaining these losses, about 104 points, at 12614. The big news today was the jobs report. Only 18,000 jobs created in the month of June. And, in fact, the number for May was cut in half, with only 25,000 jobs created in the month of May.
The unemployment rate in the United States stands at 9.2 percent.
And that's QUEST MEANS BUSINESS for this week. I'm John Defterios sitting in for Richard.
"MARKETPLACE AFRICA" is next.
Stay with us.
(COMMERCIAL BREAK)
ROBYN CURNOW, HOST: You're watching MARKETPLACE AFRICA.
I'm Robyn Curnow here on the streets of Johannesburg.
We're going to begin this week's show in Benin, where farmers there are sharing their expertise with people on the other side of the world. They're connecting with farmers in Costa Rica in an ambitious program which is having beneficial and fruitful rewards for both countries.
Christian Purefoy now takes an In Focus look.
(BEGIN VIDEOTAPE)
CHRISTIAN PUREFOY, CNN CORRESPONDENT (voice-over): On this remote pineapple farm in the small West African country of Benin, farmer Owanga Anthony (ph) is now being sought for advice globally on how to grow pineapples. "More of my colleagues are coming," Anthony says, "to learn what we are doing and already they are starting to practice it on their farms."
And today, the people here are welcoming Alberto Chinchilla (ph), from Costa Rica. Alberto is no scientist or specialist. He's just another farmer from another developing country.
But as equals rather than experts, these farmers hope they can help solve each other's problems.
UNIDENTIFIED MALE: We have Spanish being translated into English, English being translated into French, French into English.
PUREFOY (on camera): But is that a problem?
(voice-over): "For me, it's interesting to learn about the people's love of the earth here," Alberto says, "and the soils here are better for pineapples, which now I have seen could help me do better in Costa Rica."
The experiment bringing these farmers together is an initiative of South-South Corporation, working in Costa Rica, Benin and Bhutan in South Asia.
MARIANELLA FEOLI, PARTNERS IN SOUTH-SOUTH CORPORATION: It's really a project -- a program of -- about people. It's where people -- because it's about sharing experiences and sharing knowledge. Because it's not just that I teach you, but I teach you and I learn from you.
PUREFOY: Anthony has visited Alberto's own farm and with his help, Anthony has almost doubled his annual pineapple harvest, from 50 tons per hectare to more than 80 tons per hectare in the last two years. "I've learned better ways to plow the fields, to produce manure and compost, as well as reducing the life cycle of my pineapple harvest," explains Anthony.
And Alberto is not going home empty-handed. "For me, the most important part is the opportunity to be here and learn," he says. "And it's very satisfying to see that with my support, we're having such good results on the plantation."
The results so far, everyone here at least agrees, has been fruitful.
Christian Purefoy, CNN, Alada (ph), Benin.
(END VIDEO TAPE)
CURNOW: OK, let's take a look at some more numbers now. Since the program began three years ago, more than 2,300 jobs have been created amongst three participating countries. The organization says that an additional 5,500 small producers and farmers have also benefited.
Next up, we sit down with an executive from one of Africa's biggest airlines and get inside information on the business plan that helped Kenya Airways take off.
(COMMERCIAL BREAK)
CURNOW: Welcome back.
Now, as the third largest airline in sub-Saharan Africa, Kenya Airways is soaring Kenya Airways is soaring. Last year, it reached a number of milestones, including its own goal of flying three million passengers.
Its CEO, Titus Naikuni, says there's still plenty of room to grow.
He sat down with David McKenzie in the perfect place to chat to an airline executive about growth in the industry.
(BEGIN VIDEOTAPE)
DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT: Kenya Airways is expanding rapidly in Africa.
Why is Africa such a good market for you, as Kenya Airways?
TITUS NAIKUNI, CEO, KENYA AIRWAYS: Probably (INAUDIBLE). I mean if you asked me I would have wanted to expand three times what we are doing now --
MCKENZIE: You want to do it faster?
NAIKUNI: -- (INAUDIBLE) faster. But there are limitations in terms of getting the right pilots, in terms of getting traffic rights, because it's a political business, where you don't just wake up one morning and decide to fly to a particular destination.
Now, Africa is -- is important to us and dear to us because it's a growing market. It seems to me (INAUDIBLE). And if you look at West Africa, it's not fully serviced. If you look at some pockets in -- in Central Africa, it's not serviced. And even where it's -- it's serviced, I don't think we are providing the best service because of the fact that we're going to -- under one frequency in -- in -- in the (INAUDIBLE) destinations.
We still have restrictions in the sense that you can't move from one city to another and on -- on -- and pick up passengers.
MCKENZIE: If you fly from Nairobi to Lagos, you can't pop over to Abuja, pick up people and come back to Nairobi?
NAIKUNI: No. No you can't.
MCKENZIE: Why is that?
NAIKUNI: Well, it's -- it's -- it's just the political nature of the business, you know, protectionism. People are protecting their own -- their own skies. In some countries, it is possible. You are able to negotiate what is called freedom rights.
MCKENZIE: You would think these countries, which effectively, most of them don't have a viable national carrier, would want a service for their customers.
NAIKUNI: Yes. Well, that's common sense. But, you know, common sense is not always common.
(LAUGHTER)
NAIKUNI: And in some countries, there is that realization. In other countries, it's not there. (INAUDIBLE) but if you look at the law of the land in Kenya, you see the pride of Africa. And slowly, the African is getting bigger and bigger.
So, yes, we are a de facto national carrier for some of the countries.
MCKENZIE: Who is your ideal customer in Africa?
What sort of person?
NAIKUNI: We have a real mix here, because we have the traders, who -- we are amazed how many traders we have going out to -- to the -- to the forest. You have the investor, who is coming out (INAUDIBLE) in the forest. And then -- and these are new investors -- as well as the traditional investors who have been in Africa for a long (INAUDIBLE), although we are starting to see (INAUDIBLE) by Europe to start looking at new investment in Africa.
Then you have the tourists, depending on which country you are -- you are looking at.
MCKENZIE: Some of the regions they're going to aren't necessarily the most stable places. does that worry you, from a business perspective, to take this leap and say I'm going to be flying to Abidjan (ph) on a weekly basis and then, you know, have those hits to the business?
NAIKUNI: We have a really huge security system within Kenya. We do an assessment of a country before we decide that we will be flying to it. And from -- like Abidjan (ph), when we started Abidjan, we had our own person on the ground who was advising us on what to do in this stop.
MCKENZIE: What is -- what are some of the big challenges of flying into these new routes, even like Juba (ph) in Southern Sudan?
What -- what -- what -- what keeps you up at night?
NAIKUNI: The trouble is that you have the, first of all, the experience of the staff that are there, because some of these countries are, you know, don't have the right personnel. You are looking at air traffic controllers. You are looking at ground -- ground facilities and so forth.
But we do carry out audits before we go in there. So -- so, really, the thing that makes me awake at night is, you know, especially is whether some of the (INAUDIBLE) are walking around in some of the airports.
MCKENZIE: What is it -- what is the advantage, from a business perspective, given the fact you've got South African Airways and Ethiopian Airways, the other two big players in the African market, are getting into these places first as a major carrier?
NAIKUNI: A clear advantage that you have over -- over the others if you get in first is that you start getting customers early enough and you make sure that, you know, you implant yourself in the minds of the peoples.
But I don't -- I don't ignore the fact that the two carriers you mentioned are major competitors and we compete and sometimes cooperate in some -- in some situations.
MCKENZIE: When you are flying across country and across regions in Africa, a few years ago, it wasn't even possible. And I remember I had to fly to Paris to get somewhere before, about five or six years ago.
NAIKUNI: Yes.
MCKENZIE: But still, these routes are very expensive.
Why are they quite so expensive?
NAIKUNI: They are expensive because, first of all, the numbers are not that high. So as (INAUDIBLE), I don't -- I don't feel it (INAUDIBLE) 65 percent. Someone has to pay for that air that you are carrying, 35 percent.
MCKENZIE: Supply and demand.
NAIKUNI: Yes. The second thing is if you look at the airports that we fly into, they are really expensive in terms of infrastructure, but they're under utilized. So the overhead covering that airport must be shared by the few airlines that are covering it has the cost of landing and operating from these airports is very high. And someone has to pay for it.
MCKENZIE: Are you frustrated that African countries aren't cooperating enough in terms of opening up the skies and the --
NAIKUNI: I think --
MCKENZIE: -- and lessening the taxes?
NAIKUNI: I think that I'm still frustrated, but I'm patient. I'm patient in the sense that I have seen a lot -- a lot happening. And Africa is opening up. And I think sometimes we forget the leaders in Africa are influenced by a lot of things (INAUDIBLE) prioritized.
MCKENZIE: Does it come home to you that the sort of value of connecting Africa?
NAIKUNI: It's -- it's very, very clear. And if you look at one of our core values is -- is -- is to create sustainable development in Africa. And I get very, very satisfied when I see investors (INAUDIBLE) carrying them on their way to a country they're a little bit wary. On their way back, they're all laughing and clapping and emptying my wine bottles.
(LAUGHTER)
NAIKUNI: And I do (INAUDIBLE), yes, succeeding (INAUDIBLE).
MCKENZIE: And buying your (INAUDIBLE) brew?
NAIKUNI: Yes.
(END VIDEO TAPE)
CURNOW: Titus Naikuni there from Kenya Airways.
Let's take a closer look at the company.
(voice-over): The new simulator you see here was certified back in February to train pilots to fly the Boeing 737 jet. It cost about $11.5 million and took 10 days to assemble.
New on the horizon, Kenya Airways recently firmed up its contract with Boeing for nine 787 Dreamliners. The planes are expected to be delivered by 2013.
(END VIDEO TAPE)
CURNOW: That's it for me, Robyn Curnow, here in Johannesburg.
Please do go to our Web site, which is CNN.com/marketplaceafrica. All of our stories and interviews are online, as well as links to our Facebook and Twitter pages.
But until next week, good-bye.
END
