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Quest Means Business

IMF Stability Report Says Policy Efforts Not Enough; Quest for Stability; Cracks in European Recovery; European Markets Down; US Stocks Slide; US-Listed YPF Shares Plunge; Olympic Countdown; Cost of Olympic Games; Pound Gaining, Euro and Yen Down Against Dollar; King of Spain Under Fire

Aired April 18, 2012 - 14:00   ET

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

NINA DOS SANTOS, HOST: Easing the banks. The IMF says we risk another credit crunch.

One hundred days to go, and London gets ready for a sprint finish.

Also on the show, checked bags check. A report shows that airlines are losing less and less of our luggage than ever before.

Hello, I'm Nina Dos Santos in for Richard Quest, and this is QUEST MEANS BUSINESS.

Good evening. Tonight, the world is at risk of another financial crisis, and it's all up to Europe's banks. The International Monetary Fund has warned that these banks could face serious damage and cause serious damage if they rush to dump risky assets on the markets.

In its latest report, here, the IMF has been saying that policymakers need to do more to achieve lasting confidence and stability in the world markets. All of this comes on the eve of the Fund's annual spring meeting, which kicks off tomorrow.

What we've been doing here is we've been fleshing out this report by putting some of the things inside it through our word generator, and these are the main top themes that seem to come up. There are basically four, starting out with this one: the banks.

No surprise to see this word featuring high up in the word generator. The International Monetary Fund has been warning that Europe's banks are set to clear almost 7 percent of their assets next year. That works out as being worth a whopping $2.6 trillion, as you can see on that report, there.

The next one that we need to look at is debt, which the IMF in its report describes as a dangerous and chronic condition here, which is set to continue to weight down the world's advanced economies.

Also another word that came up here was longevity, but not really in the traditional sense that you might think. What it does is, here, in this report, it -- refers to the kind of prospect that people might be living longer than expected. Indeed, the IMF has been warning the cost of aging could be rising to the tune of about 50 percent.

The final and interesting recurring theme that came up through the report, one that also few will doubt will dominate these talks at the IMF over the next few days has been risk. And this is the interesting bit that they've been saying. No asset, as you can see here, can be viewed as truly risk-free.

Very interesting for some investors to hear. Perhaps even investors who are invested in cash. Joining me now from Washington is the financial counselor and director of the Monetary Capital Market department at the IMF. His name is Jose Vinals. Thank you so much for coming on QUEST MEANS BUSINESS, Mr. Vinals. And first off --

JOSE VINALS, DIRECTOR OF MONETARY AND CAPITAL MARKETS, IMF: Thank you.

DOS SANTOS: -- how likely is this scenario to materialize? It doesn't read a little bit like a doomsday scenario from many an investor watching this.

VINALS: Well, our -- we have three scenarios. There is a downside scenario, there is an upside scenario, and then there is the current or baseline scenario.

And what we are trying to do in the report is basically to say that after all the excellent work that has been done in recent months in Europe, both at the level of national economic policies, financial policies, and at the level of the decisions taken at the euro level, it is very important that we go to the truly good scenario where the leveraging process of European banks would be smoother, would be orderly, and that would constitute a very positive contribution to lasting financial stability and to the prolongation and give an impetus to economic recovery.

DOS SANTOS: Granted --

VINALS: So, we tried to be constructive. We tried to be constructive.

DOS SANTOS: Granted, though, but if you're saying things like "no asset can be deemed as truly risk-free," there's a lot of people there who are keeping there money in cash, have done since the credit crunch. They'd be very worried to read a statement like that coming from a prestigious institution like the IMF.

VINALS: Well, I think that it needs to put in the proper context. The safety of assets is something which is relative, and you have, for example, assets like the United States bonds, where they are Triple-A, according to two of the major rating agencies, but they're not Triple-A, according to one of the three major rating agencies.

So, in that sense, you don't have as many fully-fledged Triple-A assets now as you had before the crisis. But the important thing, and what we're advocating, is that policies be put in place to restore the credibility of the public finances so that assets can go back to being regarded as fully safe on the part of investors. Because we think this is absolutely essential.

DOS SANTOS: Let's home in on those particular policies, because the interesting thing is, the backdrop this comes against is just spring meetings.

We saw your chief economist come out saying that things, perhaps, weren't quite as bad as expected, raising the global growth forecast by the IMF, but they still said, you need deeper integration for Europe. Would you advocate euro bonds again on the table?

VINALS: Well, we do not necessarily put forward any specific financial instrument for that. What we think is very important from the point of view of stabilizing markets and regaining confidence in a lasting manner in the euro area. It's that the political authorities can forge now a consensus towards advancing towards more fiscally and financially integrated Europe.

And there are steps that are being taken, but we think that these steps need to be deeper, need to be more ambitious, in order to clearly lay out a roadmap that can be convincing to markets. We think that this is what is needed.

For example, we think that, yes, the euro bills could be the wrong way of instrumenting these deeper fiscal integration through the same extent that we're sharing. But there are euro bonds, and there're all things that could be contemplated.

It is not so much the precise form, but the overall goal and the commitment to it, which we think is important.

DOS SANTOS: The reason why I mention this, and we'll come to this later on in the show is that Spain is going back to the bond markets with another ten-year note auction.

And it's becoming increasingly unsustainable, the kind of levels that these countries, big economies like Spain, have to pay to borrow money out there. Is that going to be the kind of tipping point that could throw us into one of these scenarios that you're talking about?

VINALS: Well, I think that one should not think that if you are paying a high interest rate for a number of months or weeks that this is going to be there always.

I think that in countries like Spain, which are doing the right things in terms of little market reform, in terms of financial reform, and in terms of fiscal consolidation, which are moving the right direction, I think that if these countries persevere, and they can continue to commit to good policies, we think that markets will ultimately reward them.

So, maybe the very high interest rates that we're seeing there would not be there in the future. But let's remember that you need not only countries like Spain or Italy doing the right thing, you also need at the European level, the right decisions are taken to have full stabilization of the situation.

DOS SANTOS: Jose Vinals from the International Monetary Fund joining us in Washington. Many thanks for your time today.

Today brings plenty of examples of the kind of concerns that the IMF has been talking about in its report. We spoke there about Italy and also Spain.

Let's focus in on the former, because Italy's prime minister says that his country will run a half a percent deficit in 2013 instead of balancing the budget, as his predecessors had already promised they were going to be doing. Mario Monti says that growth must now take priority over belt- tightening measures.

And the prime minister of Portugal has also said that, well, there are no guarantees that his country won't need more financial help for the future. Writing in the "Financial Times," Pedro Passos Coelho has been warning that there are many factors outside of his control.

And speaking of Spain, well, as I was saying before, it's going to be facing a really big test of the markets on Thursday when it's set to auction another set of ten-year bonds.

This is because the yield or rate that Spain must borrow at is at a pretty uncomfortable level, especially in the secondary markets, as you can see. It has come down below 6 percent, but still hovering at 5.82 percent at the moment.

And that, in turn, has been having ripple effects right across the stock markets. The Spanish benchmark index the IBEX has been sinking to the tune of about 4 percent.

Losses were also heavy on the some of the other main European markets like, for instance, Milan, as you can see, ending the day down to the tune of 2.4 percent, and the CAC Quarante down to the tune of 1.6 percent. Even the XETRA DAX, doing slightly better, wasn't spared the red.

Now, it's another big name earnings day for markets in the United States. There's plenty to talk about. Let's go over to Alison Kosik, who joins us now, live from the New York Stock Exchange. Earnings week seems to be doing pretty well, doesn't it, Alison?

ALISON KOSIK, CNN CORRESPONDENT: It seems to be doing well, but not really living up to what Wall Street expected. Also, those worries about Spain are playing into a bit of a sell-off today for the Dow, at least. The Dow is down 78 points, especially after Spain came out with data showing Spanish banks are holding more bad loans than expected.

So, yes, in the meantime, earnings are really driving the action on Wall Street. Shares of IBM are sliding right now more than 3 percent. The tech giant beat quarterly profit estimates but missing on sales.

Also weighing on the Dow, shares of Intel, shares of Intel down about 1.5 percent. The chip maker beat estimates, but PC sales slipped 1 percent and server sales were flat.

Yahoo, though, seems to be a bright spot. Shares are up almost 3 percent. The company beat profit estimates, but investors are also cheering Yahoo's new strategy. It's going to be closing down 50 properties to try to streamline the business, though at this point, Nina, we're not sure which properties Yahoo is focusing on. Nina?

DOS SANTOS: Let's just come back to the topic of Spain, because Spain's also in the news for corporate reasons, as well, and this basically is to do with Repsol, the Spanish oil company. It's been having to kiss good-bye to an enormous portion of its earnings because Argentina wants to nationalize part of one of its jewels in the crown. Tell us about the latest.

KOSIK: Exactly. And actually, a US State Department spokesman came out just a few minutes ago and said that the US is really concerned about Argentina taking over YPF, saying that it's going to hurt the economy and it's going to dampen investment in Argentina.

Now, you see what -- you saw what happened to YPF's shares that trade, especially here in the US. They were briefly stopped from trading, and then when trading resumed, you saw shares plunge more than 20 percent. Right now, they're down 27 percent.

Of course, as you said, that's after half of the company is going to be taken over by the government of Argentina. The other half is going to be owned by energy company Repsol.

Repsol, just so you know, demanded $10.5 billion in compensation for its YPF unit, but the government rejected it saying it's going to just rely on solid data to try to value its takeover of 51 percent of its shares.

Now clearly, this loss of YPF, it's a big deal for Repsol. YPF accounts for about 25 percent of its profits and 60 percent of its production, but Argentina's president is arguing that this move is necessary for the sake of Argentina's sovereignty over its own natural resources. Nina?

DOS SANTOS: Does indeed seem to be souring relations with many a country, then, perhaps even the United States, not just Spain.

KOSIK: You bet.

DOS SANTOS: Alison Kosik, as always, many thanks there at the New York Stock Exchange.

You're watching QUEST MEANS BUSINESS. Coming up after this break, 100 days on the clock. London marks a milestone in the countdown to the Olympic Games.

(COMMERCIAL BREAK)

DOS SANTOS: London is marking 100 days until the start of the Olympic Games with a day of colorful celebrations. Becky Anderson is standing by Trafalgar Square to tell us all about what the atmosphere's like. Becky?

BECKY ANDERSON, CNN INTERNATIONAL CORRESPONDENT: That's right, 100 days. We're in the home stretch. The London Organizing Committee here today celebrating that fact. Take a look behind me. That's the Olympic clock counting down to the opening ceremony, 27th of July, 9:00 local time, 100 days, 1 hour, 43 minutes, and 37 seconds to go.

It has been a miserable day, let me tell you, here in London. That cannot and wouldn't dampen the enthusiasm of that Organizing Committee today as they unveiled a number of sort of iconic images as we move towards these London 2012 Games.

Some flowers are unveiled today in the shape of a giant Olympic ring at the Horticultural Gardens in Kew today. Those who fly in from now on in into Heathrow will see this giant Olympic ring on the flight path in and out of Heathrow, 20,000 flowers, a 50-foot ring, and those will be in bloom as we move towards the summer.

As I say, it's been a miserable day, but the preparations are well underway, as you would expect, here in London, 200,000 temporary seats still to install on what are more than 30 stadia around London and the country, Nina. Still a million tickets to sell, but I don't doubt those will go. The demand has been huge. Some 7 million will have been sold by the time we get to the end of July this year.

So, as I say, we are in the home stretch at this point. The budget, well, it's some $14 billion, and even though they don't admit to it, they say they've got a contingency of about a half a billion at this stage, my sense is they're over somewhat.

Security has been a lot more expensive than they ever expected that it would be, some 20,000 security staff getting ready to make sure that these Games are as safe as we would expect them to be. The budget for that nearing a billion in and of itself. But they say they are nearly ready. Roll on 2012, London, July 27th. Nina?

DOS SANTOS: And perhaps keep our fingers crossed for a little bit better weather. Having said that, though, July, sometimes it can be this temperature outside where you are even in the best of years.

Becky, let's go back to what we were talking about -- where you were talking about whether they're ready or not. This is a momentous achievement, isn't it? Because London is a city of 8, 9 million people.

ANDERSON: Yes, it's a difficult one. This is -- this is an important point for them. It's been some years, of course, six or seven years in the making, now. It's a big city.

The point about the Olympics so far as the organizing committee is concerned, that it's not just about the 19 days that we'll see one of the greatest sporting events ever, but the legacy that these Games will leave.

London is a big city, and one part of that city is an area that's been very much rejuvenated by these Games. That's the East End of London. So far as transport, housing, and facilities are concerned, it's completely changed.

You and I know London really well, and that part of London, the East End, Stratford, is like a completely different place to that which I remember when I was growing up here. So, the legacy is really important, here.

The main stadia, for example -- or the main stadium, for example, is an 80,000 seats. There'll only be about 25,000 seats in that stadium when the event closes. They're going to take off most of the seats. Much of what is being created here is temporary so far as the sort of infrastructure is concerned for the Games.

But the infrastructure that will be left is what the Organizing Committee hopes will be the legacy of these Games. It's a big city, but let's hope it works.

DOS SANTOS: Exciting times, indeed. Becky Anderson, many thanks, there, in London's Trafalgar Square.

Well, as Becky was just saying, parts of London have been completely transformed for these Olympic Games. This is the site of the Olympic Stadium just some seven years ago. And this is what it looks like today. Take a look at that. What a transformation.

However, all of these preparations, as you'd imagine, have come at a significant cost. CNN's Matthew Chance takes a look at the changing face of London and the long-term impact.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): The transformation has been dramatic. A once rundown, grubby corner of London's East End now poised to sparkle with Olympic glory.

But none of this comes cheap. Britain's spent billions building its Olympic dream, justified, say organizers, by the vast economic benefits the Games are expected to bring.

CHANCE (on camera): Well, the last time I was here about ten years ago, this was an urban wasteland. It's astonishing how much building and development has taken place. Obviously, the Olympic Stadium, there. It's got a capacity of 80,000 people, a huge sporting venue. It's going to go to some big football team, potentially. That's still being negotiated.

All these apartment buildings, shopping centers have been built. Just over there, the Olympic Village, where the organizers say 3,600 new homes will be built after the Games have come to an end, creating what they say will be what they call a zone of opportunity in this part of East London. Not just lifting the local economy, but bolstering Britain's economy in general.

CHANCE (voice-over): Already, the biggest urban shopping center in Western Europe has opened nearby, creating thousands of local jobs. There are 300 stores here and 70 restaurants. But surprisingly, deep misgivings as well about the wisdom of the nation spending so much on a sporting extravaganza.

UNIDENTIFIED FEMALE: It mortifies me to see the amount of money that's being spent when so much needs to be spent on. That's my --

CHANCE (on camera): What about long-term benefits, though? Really could regenerate the area.

UNIDENTIFIED FEMALE: I can't see it.

UNIDENTIFIED MALE: I'm not sure if it's going to have any permanent effects. It may be temporary. Temporary boost to the area.

CHANCE: After the Games are over, people go down the street --

UNIDENTIFIED MALE: Once the Games are over, a lot of what they've built will go to waste.

CHANCE (voice-over): Their concerns, financial analysts say, may be well-founded. The idea staging the Olympics means a certain economic boon, they say, is simply not true.

HOWARD WHEELDON, FINANCIAL ANALYST: Look at the rest of the UK. There's going to be a net deficiency to -- in their pockets for the simple reason people are going to be watching the Olympic Games on television, so they're not going to be going out and spending in the same way that they would have done.

CHANCE (on camera): What about the legacy, though? Because look what's been created, this amazing stadium behind us, here. It's a sporting paradise. It's going to bring all sorts of investment and workers and business here, isn't it? And that's something the benefit of which can't be calculated at the moment.

WHEELDON: Legacy is a wonderful, wonderful expression and term. The problem is, we just don't know. We can't know now what the legacy will be. We can think we know.

We can think it might be used by the community, funded by the community, funded by the government, funded by whoever. But the trouble is, history tells us that after the event, people who say they'll do things change their minds.

CHANCE (voice-over): So, the true economic success of the Games may only be measured in years to come, and this Olympic transformation is, in fact, a huge gamble.

Matthew Chance, CNN, London.

(END VIDEOTAPE)

DOS SANTOS: A Currency Conundrum for you now. Where was the world's first cash-dispensing ATM introduced? Was it A, New York, installed by Chemical Bank? B, Paris installed by Societe Generale? Or C, in London, introduced by Barclay's Bank? We'll reveal the answer a little later on in the program.

First up, though, let's take a look at the movements in the world's currency market today. The pound is gaining around about half a percent against the US dollar tonight.

Sterling has actually hit a five-month high after UK numbers of the jobless total across the country came out a bit stronger than expected. We also saw the minutes from the Bank of England pointing to a slowdown in the policy of monetary easing.

Also, let's take a look at the euro. It's down slightly against the dollar at a touch over 1.31. And good news for Japanese exporters. For once, the yen is down by around about a third of one percent against the greenback.

(COMMERCIAL BREAK)

DOS SANTOS: Five million unemployed and a very apologen -- apologetic, I should say -- monarch. We're talking about the king of Spain, here, because he's expressed remorse after he caused an outcry by going on an expensive holiday to Botswana.

Well, it was meant to be a personal outing for the king, and the details would have remained private, but he was injured on a hunting trip and had to be rushed back to Madrid for urgent treatment.

The revelations did not sit well with the Spaniards, however. With almost one in four currently out of work across this country, many also are struggling with austerity and tax increases, and a lot of them with some very difficult questions asking that the king, perhaps, may have to answer to.

Let's get more from Al Goodman, our Madrid Bureau Chief, who's been watching this story for a number of days. Al, first up, presumably if a monarch wants to go on a private trip, why is it anybody's business what he does?

AL GOODMAN, CNN MADRID BUREAU CHIEF: Well, it wouldn't have been anybody's business, and it would have stayed out of the public eye, which is what he planned, so that the media and most Spaniards would not have known about this.

But then, he fell, not while he was hunting in Botswana, he fell after the hunt. He broke his hip and he was rushed back to Madrid, as you say, for the hip operation, and that's when the news came out last weekend, and that's when the polemic started going like a snowball.

Why? Because people said, how could he go on this expensive safari in the midst of the nation's deep economic crisis with 23 percent unemployment? And although it's private, wasn't there public money used to protect him? He's the head of state, there has to be police protection. That question.

And then, as photos came out of him hunting elephants, the animal rights activists said what is he doing hunting elephants? All of this led up to this rare apology from King Juan Carlos this day as he was released from hospital. Let's listen to what he had to say.

(BEGIN VIDEO CLIP)

JUAN CARLOS, KING OF SPAIN (through translator): I feel much better. I thank all the medical team and the clinic for the way they have treated me. I'm looking forward to rethinking my duties and I'm sorry, I've made a mistake, and it won't happen again.

(END VIDEO CLIP)

GOODMAN: You know, the king is generally widely respected in Spain for his service to the nation, his defense of democracy. He's really never had a hot potato like this one before. Nina?

DOS SANTOS: Al Good man in Madrid, many thanks for that -- following that story for the last few days. Interesting stuff.

Well, even as protests continue in Bahrain, the weekend Grand Prix still has the green light to go ahead. Next, the chairman of the Bahrain International Circuit tells us why it's still going ahead.

(COMMERCIAL BREAK)

DOS SANTOS: Welcome back, I'm Nina dos Santos. We'll have more QUEST MEANS BUSINESS in just a moment's time, but first, here's a roundup of your main news headlines.

Syrian activists that troops have killed 32 people this Wednesday. Video posted online appears to show shelling in Homs. Just a short while ago, the U.S. secretary of state threatened tougher measures against the regime if this violence continues. Syrian state media say that rebels have killed eight law enforcement officers today.

Police in Afghanistan are questioning two caretakers in connection with a suspected poisoning at a girls' school. More than 170 female teachers and students were hospitalized after drinking from the school's water supply. Local health officials blame extremists who oppose women's education.

A storm system in southeastern Europe that's caused bridge closures and also widespread structural damage in Turkey. This is the set of the new James Bond film "Sky Fall." That was one of the spots that was badly damaged, while the wind gusts have been strong as hurricanes hit in some places.

King Juan Carlos of (ph) Spain has apologized for going on an expensive hunting trip to Africa at a time when his country is facing deep austerity. His trip to Botswana has caused an uproar in Spain over its expense. King Juan Carlos flew home after receiving medical treatment for a fractured hip that he incurred in Botswana. He says that he made a mistake and that it won't happen again.

There are just 100 days to go until the Olympic games in London. Organizers says two (ph) series of events celebrate this event, and this was one such event. A giant set of Olympic rings made up over 200,000 plants. Well, the opening ceremonies are due to kick off on July the 27th.

(MUSIC PLAYING)

DOS SANTOS: Anti-government protesters in Bahrain have promised three days of rage to coincide with this weekend's Grand Prix. Tensions are mounting in the kingdom with protest like these becoming a daily occurrence.

Opposition groups say that more than 80 leading activists have been arrested ahead of the raid, a preventative by the authorities there. The chairman of the Bahrain International Circuit says that the anger isn't directed at the Grand Prix itself, and that going -- it's going to be going ahead with a decision, and that will be the right thing to do.

(BEGIN VIDEO CLIP)

ZAYED R. ALZAYANI, CHAIRMAN, BAHRAIN INTERNATIONAL CIRCUIT: I don't think it's a big risk. I mean, I've said before that this is a calculated decision.

We have to go back to last year, where we took the opposite decision to postpone the event, because we believed back then that the situation was more inappropriate than it is today. And now we're back, a year later, and we think that things are calm enough to have an event.

FREDERIK PLEITGEN, CNN CORRESPONDENT: At the same time, you have protests that have been growing in the run up to the race. You have the opposition calling for a week of protests, other opposition groups calling for days of rage. Doesn't that concern you?

ALZAYANI: No, I think I have to, first of all, correct that. It's not in connection with the race. None of the program that's been announced by Lufak (ph) is in relation to the race. And what they -- what's been happening for the last year is continuous themes of protest. They are all related to political agendas and having nothing to do with the race.

PLEITGEN: But there are opposition groups who --

ALZAYANI: Yes.

(CROSSTALK)

PLEITGEN: -- say that they don't want the race to be run.

ALZAYANI: There are, and there are who say that they want the race to be run. And in every country, you have some opposing voices to other races or other sporting events. But I don't think they're significant enough to disrupt the race. And I don't think they will cause any damage to the event.

PLEITGEN: So there are some who relate this to the race and say that Formula 1 shouldn't come here, who in this situation say that you shouldn't have a Formula 1 race as the political situation is the way it is. I mean, it is something that is happening. There are signs out in some places that say we don't want Formula 1 --

ALZAYANI: Well, I don't -- I fail to see the link between Formula 1 and their demands. You know, we are a sports event. We are a social event. This is nothing to do with political reform in the country. Formula 1 happening this week or not will not solve any outstanding issues. I don't think if Formula 1 doesn't happen, they're still protesting. We need time and change has to come gradual.

PLEITGEN: How big do you think the danger would be, though, if something did happen?

The long-term effects on Bahrain being able to host Formula 1 races, and the long-term effects for Formula 1 as well?

ALZAYANI: I mean, if we thought that way, nothing would ever happen in this world. I mean, why would London not think the same, that, oh, we shouldn't try to go for the Olympics because something might happen and damage there? Why would not -- why would any other city or venue think of hosting anything, whether sports or culture or whatever?

You always have opposing voices. There are people who are responsible for arranging the event, and that's our role at the track, putting up the show, making sure everything runs well logistically and keeping the crowd happy. And there are people who are in charge of other things, which are security, and I'm sure they know well how to keep things at bay and have a successful event.

Equally, there is overwhelming support for the event, and there are people who continuously tweet and blog about why the race should happen. And I think we are obliged to satisfy these crowds, and we have an obligation to them because we (inaudible) deprived of the event last year, and it would be unfortunate not to have it this year as well.

PLEITGEN: Do you think there is still a remote chance that it could be called off?

ALZAYANI: No. I hope not. I'd like to think not, but I'm quite sure it's a no.

(END VIDEO CLIP)

DOS SANTOS: Big towels, running water and, oh, yes, Wi-Fi. Next we'll take a look at the hotel essentials that some places still think is an extra.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

DOS SANTOS: It's great news for airline passengers out there. The industry seems it's getting its act together and losing less and less of our luggage these days. Today, the airport I.T. companies released its eighth annual report. We're talking about SITA here, and this is what it found. It showed that about 99.1 percent of our baggage actually reached its owners undamaged and also on time during 2011.

SITA also says that that saved everybody a little bit of a pretty penny as well, a total of $650 million compared to 2010.

And it seems as though all of this is a little bit more than just a one-off improvement, because the report says that when it comes to the rate of mishandled baggage, it's actually hard to fight (ph) over the last five years since 2007, as you can see, it's come down by half, down from around about 19 bags per thousand passengers in 2007 to just 9,000 last year.

What SITA does is it classes mishandled bags as luggage that has been lost, delayed, damaged or otherwise stolen. But on the whole, these are some pretty positive figures for those of you out there who are concerned that each time you check your bag in, oh, it might actually get lost. Nick Gates is the director of Baggage Solutions at SITA. And he joins us now live via Skype from Vienna.

Thanks so much for coming on QUEST MEANS BUSINESS, Nick.

NICK GATES, DIRECTOR, BAGGAGE SOLUTIONS, SITA: Yes. My pleasure to be here.

DOS SANTOS: This is pretty positive and a lot of travelers watching this will be thinking, yay. For once I don't need to be worried about putting that all-important bag when I'm on a business trip. There's plenty more than needs to be done.

GATES: Yes. We can always improve things. But our report shows that over the last five years, there has been a real major reduction in the number of delayed bags. The report tells us that, you know, bags will get delayed.

Typically passengers should only see a delay of about maybe an hour or two if the bag needs to catch up with them, or perhaps delayed to the next day. But it's definitely the best (inaudible) for the industry. We've got a huge reduction in the number of late bags compared to five years ago. So it's good news for everybody, and things can only get better as well.

DOS SANTOS: And how exactly is that reduction being achieved? Is it better I.T. and ticketing systems or something like that?

GATES: Well, it's a combination of different things. The International Air Transport Association, IATA, introduced a thing called the Baggage Improvement Program a few years ago, and that was a program that they went out to the airports and airlines and helped them understand where their issues were, helped them identify where the problem areas were with their bags.

And so that program, plus the introduction of new technology, new processes around the airport has really helped us achieve these figures.

DOS SANTOS: If we look into your report, though, there is one thing that you've pointed out, it's the fact that transfer baggage really is the black spot here. It accounts for about 53 percent of total bags lost. That really is the weak spot, isn't it, where people's bags are going through one airport to the next, and they just get lost somewhere along the line.

GATES: It's a bit of a natural consequence of really the whole chain of events. Passengers (inaudible) transferring through airports. The passengers can find their own way through the airport, but the transferring bags have to find their way from an inbound flight into an outbound flight.

So quite naturally, if there are disruptions at the airport, particularly problems with delayed flights, then those can have knock-on (ph) effects on the bags.

DOS SANTOS: OK, Nick Gates, director of Baggage Solutions at SITA, thanks ever so much for coming on the show to explain your report.

Well, these days, your luggage can actually include some pretty valuable items. You've got, for instance, your phone, your laptop and maybe even a tablet handheld computer as well. That's because for today's business traveler staying connected is, of course, crucial.

In bars, cafes and even supermarkets, Wi-Fi is becoming something that we just expect to be part of the service. Ayesha Durgahee now reports you can't always expect the same from your hotel.

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AYESHA DURGAHEE, CNN CORRESPONDENT (voice-over): It's an outdated and often silent charge that you only get wind of when you're up in your room.

But some hotels, after paying them for a bed for the night, also expect us to pay for Wi-Fi, especially if it's a work trip. It's enough to make you faint or feel hot under the collar.

KURT RITTER, PRESIDENT AND CEO, REZIDOR HOTEL GROUP: Telephone income was a big part of -- I don't want to say cheating, but overcharging the customer. Everybody wants to make money. But I think you should make it in a reasonable way. And this with the Internet, I don't think, is a good idea to charge. That's like the air you breathe or the water you turn on that has to come for free.

DURGAHEE (voice-over): The Rezidor Hotel Group owns Radisson Blu, and has offered free Wi-Fi since 1995.

RITTER: If I use the 60 percent usage we have over the chain or a median figure that travelers still pay, we would have roughly $10 million more income a year.

DURGAHEE (voice-over): Still, Ritter isn't tempted to make money from Wi-Fi the way hotels did with international calls before mobile phones took over. With no such rules, the frustration doesn't end there.

Some hotels charge per device. Chain hotels offer free Wi-Fi at their budget brands, but charge for their luxury ones. Others offer it for free only to loyalty members. Hotels charge as much or as little as they like. At the Ritz in London, it's a whopping $41 a day, whereas at the Savoy, it's just $15.

JOE GERMANOTTA, CEO, GUESTWIFI: We have to pay for it as an amenity. There they guarantee you the speed and the reliability and the security. And it's becoming a very expensive proposition for the hotel to maintain these services. So it makes sense that they have to charge for it.

DURGAHEE (voice-over): Germanotta says Wi-Fi costs hotels just $375 a month per property, which is why some luxury hotels don't charge for it, like the One Aldwych in central London.

And the Wi-Fi's free throughout the hotels, even in the lift.

So when budget and luxury hotels are offering it for free, along with bars and cafes, it's hard not to raise an eyebrow at hotels that don't.

The Mandarin Oriental in Knightsbridge charges $10 an hour, or $25 a day.

MONIKA NEGER, CIO, MANDARIN ORIENTAL: The very purpose of the investment and the charges are to balance each other. We are spending at minimum $250,000 U.S. per year in all of our properties to bring them up to current specifications. Some of the challenges the industry has had is charging for not very good bandwidth.

DURGAHEE (voice-over): Paying the bills may be difficult, but so is keeping customers happy. With social media and websites like HotelChatter, it's becoming clear guests' changing standards can't be ignored.

JULIANA SHALLCROSS, MANAGING EDITOR, HOTELCHATTER: It just seems like pure profiteering on the hotels' part. But I think that hotels are starting to realize that they will lose valuable customers and valuable business by charging crazy amounts for Wi-Fi.

DURGAHEE (voice-over): The way we use Wi-Fi has changed, and some hotels still need to reassess their rates to reflect that. Logging on for free just in the lobby simply won't do. Today, it's not an extra luxury like the mini-bar or dry cleaning. It's part and parcel of a guest's experience, like hot water and clean towels -- Ayesha Durgahee, CNN, London.

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DOS SANTOS: Ten dollars an hour -- that seems pretty steep to me.

Well, we've got plenty more information for you business travelers online. Click on CNN.com/businesstraveler to find out more what Ayesha was talking about, and other interesting business traveler stories out there.

Now, for all you business travelers out there, it's time for a look at the weather, and we're seeing some serious storm systems hitting Turkey. Jenny Harrison is standing by at the CNN International Weather Center to tell us all. Jenny?

JENNY HARRISON, AMS METEOROLOGIST: Hey, Nina. Yes, it's been a very unpleasant 24 hours across some portions of eastern Europe, the southeast and Turkey in particular. Before I show you the pictures, let me just show you this. We've got two main systems. This is the one that literally wreaked havoc across Turkey. And there's another system in the northwest.

But first of all, have a look at these pictures. They're very quite dramatic. This is really -- this fires, as you can see on this boat here - - really got out of hand because of the weather conditions. The winds in this area have been over 130 kilometers an hour. And in fact, people ended up jumping off this yacht.

Now, luckily, though, they were somewhere that there's a lot of boat traffic for the people around to help get these people off. But look at this. They're coming close with some water, but of course the winds just blow the water away from the flames. And you can see here by the wave lapping up on the shore and this damage here, that boat has been sunk.

And just generally a lot of problems, water also over roadways, plenty of trees down. At the same time in Istanbul, let's have a look at these pictures, because they're in the midst of filming the latest James Bond film. "Skyfall" is the title of this film, which is quite interesting because out of the sky coming strong winds. And what you're looking at is the sort of the aftermath of these strong winds.

And so huge amount of damage has been done to their set. And obviously just trying to pick up the pieces and put things back together. Now come back to me and let me show what's going to be happening next, because as I say, we've got these two main systems, the one in the southeast is that which has caused the problems in Turkey, if only this will move on, I could actually click it on.

Let's see if that works. No, it's not going to move on. There we go.

Now, this is because we've had a very, very intense area of low pressure work its way across the region, and it's deepened very rapidly. And this is what it's brought with it, these very strong storms, and in particular these strong winds. Look at these, 137 kilometers an hour, in Turkey 105, up in Moldavia there was actually a tornado reported. All from this one storm system.

At the same time, further east, away from there, where we don't have the rain, we have instead had these very, very strong winds. Look at all this. This is dust and sand that's just been blown about at Kuwait City, Doha as well there and Katai (ph), you can barely see because of the amount of dust, and then also just to the east across the peninsula away from Abu Dhabi.

Now the last few hours, the green numbers are what's important. This is the visibility. And at one point in the last few hours, it actually did dip down to about 2 kilometers an hour. Now this is the system responsible. It will make a movement up towards the north, across eastern Europe.

So that is where the rain will be next. And the storm should actually ease, but this is the next system, very heavy rain, very severe thunderstorms across western areas. And this system also, as it heads in through the next couple days, very strong winds there. So expect some travel delays, certainly if you're heading from these major airports in the west of Europe in the next 24 to 48 hours, Nina.

DOS SANTOS: OK, Jenny Harrison there at the CNN International Weather Center, thanks ever so much for running us through the latest forecasts.

Now, more (inaudible), one stadium. We've just got 100 days to go until the Olympics opening events, and it's all shrouded in mystery. I'll be talking to one of the men hard at work behind the scenes.

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DOS SANTOS: And in the program, we asked you which of these cities had the first cash dispensing ATM, and this is the answer, C, London. Barclays bank installed the cash machine back in 1967. The idea of the machine is said to have come from the inventor, John Shepherd Barron, while he was taking a bath, something of a eureka moment, no doubt, for him, back in the 1960s.

Speaking of London, the eyes of the world will be on the British capital in 100 days' time to see the much anticipated Olympic opening ceremony. One billion people watched Beijing's ceremony live, so as you'd imagine the pressure's on these days, especially for Stephen Daldry.

This is the man who's overseeing the opening and closing ceremonies for both the Olympics and the Paralympic Games as well. He's also the man behind the musical "Billy Elliot." Jim Boulden asked him if there's a recurring theme running through all of these events.

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STEPHEN DALDRY, EXECUTIVE PRODUCER, CBE: I think the theme that Danny Boyle has -- the title he chose for the opening ceremony, which is Isles of Wonder, I think you can see that hanging over both into the closing ceremony and the opening and closing of the Paras. There is literally a theme of a tempest, and these Isles of Wonder that is there.

And obviously, organizationally and planning and financially, having one organization running all four is -- makes a huge amount of sense. And it means that, you know, having for the first time the Paralympics are right at the center of what we're doing, and we're very excited about it.

JIM BOULDEN, CNN CORRESPONDENT: I know you won't tell me too many details, but a lot of rumors going around, so I'll ask you a few.

A lot of talk that some -- a lot of it will happen outside of the stadium as well, there will be thematic things happening during the opening ceremony, but not all of it in the stadium.

Can you confirm that?

DALDRY: No, I can't. The --

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DALDRY: I can't.

BOULDEN: That's fine.

DALDRY: Most of the things you say is majority is -- it's mostly in the stadium, I've got to say.

BOULDEN: Now there's also been rumors that the Sex Pistols have turned you down. Please tell me the truth, come on.

DALDRY: You know, the -- you know, the actual truth about that is I don't know who was asking anybody, anybody, but it wasn't us.

BOULDEN: OK.

DALDRY: So people have all sorts of rumors about who's been asked to do this. And we get like, "Really?" Like who has been asking them?

BOULDEN: Have you chosen the person to light the cauldron?

DALDRY: That is under discussion and it's -- there's --

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BOULDEN: A hundred days to go.

DALDRY: There's a lot of people to bring into this. We have a plan.

BOULDEN: And that plan is?

DALDRY: Obviously (inaudible). Obviously I'm bound to tell you that. So we're just still talking to the different stakeholders (ph) --

BOULDEN: OK.

DALDRY: -- to make sure everybody's (inaudible).

BOULDEN: But, obviously, whether Sex Pistols or not, there will be some of the great British icons of music will definitely be involved. You can certainly say that.

DALDRY: I can certainly say that. But you know, you've got to look at these ceremonies across all four, and I think -- and that's one of -- that's my job, is to -- is to try to present this as a -- as one journey for the whole of these four game -- you know, four ceremonies in the -- in the -- both the Olympics and the Paralympics.

And I think it's -- once you come to the end of the whole games in September, the end of the Paralympics, you'll see, I hope, that there's been a coherence to actually getting everything anybody ever wanted to see, and more.

BOULDEN: Which has been harder, the "Billy Elliot" musical or four ceremonies in one stadium?

DALDRY: Oh, the "Billy Elliot."

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DALDRY: No, it's -- I mean, you know, it's very tough for the different directors of the individual shows, try to provide as much support as I can. It is a huge moment -- momentous task, and we'll -- but it's going well. We're really excited about it.

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DOS SANTOS: So London celebrates the 100-day countdown to the Olympics, the world's 100 most influential people celebrate those who influenced them. We'll be along after the break.

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DOS SANTOS: "Time" has named this year's 100 most influential people, just as interesting is who actually made the grade was who was picked to write their blurb. Barack Obama was chosen to write about the billionaire investor, Warren Buffett.

He said that Buffett reminds us that life is not just about the value that you seek, but also about the values that you stand for. Today the U.S. president called Warren Buffett to wish him well after he was diagnosed with prostate cancer.

The management consultant, Bill Bain of Bain and Company has praised the Massachusetts governor Mitt Romney's work ethic.

He wrote that on Mitt's first day working at Bain and Company, he was the first in the office and then Bain went on to say that the next day he came in even earlier and there he was again. He writes that Romney's work ethic, analytical mind and also devotion to his family and his country are a cocktail for success.

And the basketball superstar, Jeremy Lin, was full of praise for American football's Tim Tebow's unashamed faith. Lin writes as athletes, we pour our hearts into winning these kind of games, and said Tim is a reminder that life is about much, much more than that (ph).

And that's it for this edition of QUEST MEANS BUSINESS. Richard will be back live tomorrow from the IMF headquarters in Washington, D.C. Ahead is (INAUDIBLE) and he'll be live from New York on Friday. But in the meantime, I'm Nina dos Santos in London. And thanks for joining me.

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