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Quest Means Business

Spain Continues on Austerity Path; One World Trade Center Once Again New York's Tallest Building; Unemployment Austerity Trap; European Stocks Fall; Apple's Tax Tricks

Aired April 30, 2012 - 14:00   ET

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

RICHARD QUEST, HOST: Recession returns and Spain enters a double dip.

Maximizing returns. Apple's tax bill raises eyebrows.

And returning to its former glory. One World Trade Center in this hour is expected to rise to the tallest in New York. We'll have the details on that in the next hour.

I'm Richard Quest and, of course, I mean business.

Good evening. A case of no growth and no confidence and still no wavering from the plan. Spain has vowed to press on with austerity even as the economy is falling back into recession.

Spain's finance minister says their government's austerity plans are compatible with growth, despite a second straight quarter of contraction. Luis de Guindos was speaking alongside his German counterpart, Wolfgang Schauble, who said Spain's focus on austerity must continue.

All this happens, and Spain is now officially back in recession. It's confirmed that the economy shrank 0.3 percent. Interestingly, that was less than some analysts had expected. Some of the brokerage reports I was reading this morning suggested that number could have been as high as 0.9 percent.

Even so, Standard and Poor's downgraded 16 Spanish banks because if the economy is in recession, the biggest problem appears to be those of the banks and recapitalizing the banks. Our Madrid Bureau Chief Al Goodman's in the Spanish capital.

Al, we'll get to the banks in one second. Let us start -- the confirmation of a double-dip recession was expected but must be very worrying nonetheless, bearing in mind the unemployment.

AL GOODMAN, CNN MADRID BUREAU CHIEF: It's just one piece of bad news after another. The Bank of Spain a week ago Monday predicted that Spain would be back in recession, so these government figures today just confirming that, coming just after Friday's latest unemployment figures, 24.4 percent of the nation unemployed, 52 percent of the people under 25 unemployed.

And then, also on Friday, Standard and Poor's downgrading Spain's rating on fears that the banks would need more money, and this day, Standard and Poor's downgrading those banks, including some of the biggest ones.

So, it's just a litany of bad news, protests in the streets yesterday, Sunday. Again, expected tomorrow. Everywhere you look, it's not good news, Richard.

QUEST: Let's talk about those banks, and you stay where you are, Al, while you join me in the library. So, you've got a total of $189 billion at least of bad loans, which is the highest level since 1980 -- 1994, more than eight percent of the banks' balance sheets.

They're talking about a good bank/bad bank scenario to get rid of the bad loans off the bank balance sheet, but the general feeling is the banks will need a recap this year, possibly as high as $71 billion of provisions, and more might be needed. And that's where the bailout question comes from.

We know that, in terms of government borrowing, most of it, either -- both in Italy and in Spain, it is the banks who have taken ECB long-term refinancing, LTRO cash, and have then poured it into the government. So, Al Goodman, is there the general acceptance that solving the bank problem is the key to Spain avoiding a more general bailout?

GOODMAN: I think many economists here would say that, yes, Richard. Because the bank problem is everybody's problem.

I was at my bank this morning and we were talking about how his bank and many other banks are trying to sell all these brand-new -- there are hundreds of thousands of new homes, never occupied. The banks can't even shed them when they're cutting prices by 50 percent.

So, a huge problem. The prime minister alluding to this, as well, and this lack of credit flowing -- it's not flowing to businesses, to individuals. That's one reason it's back into recession, this country, because everything is stifled.

Now, the economy minister this day, meeting with his German counterpart, had this to say in terms of what's to be expected in -- coming up with bank restructuring. Let's listen.

(BEGIN VIDEO CLIP)

LUIS DE GUINDOS, SPANISH FINANCE MINISTER (through translator): In the coming days, I think we will see additional operations in terms of mergers and acquisitions and the consolidation process in the banking sector, and additional efforts by banks to restructure and clean up.

(END VIDEO CLIP)

GOODMAN: You know, Richard, the government would like the banks to set aside $70 billion in provisions, but many economists think they need at least $100 billion. It is a huge mess. Richard?

QUEST: Al Goodman, who is in Madrid for us tonight. Al, many thanks, indeed. Let me take you immediately if not sooner --

(RINGS BELL)

QUEST: -- to New York City where they are laying the beam -- that is the beam -- that will take the World Trade Center, World Trade Center One, over 380 meters -- 387 meters. With the laying of this beam, the World Trade Center once again becomes New York's highest building, beating the Empire State Building.

Mixing my meters and my feet just for the purposes of the moment. At its total height, this tower, which was originally going to be called the Freedom Tower, now called World Trade Center One, is going to be 1776 meters -- 1776, obviously -- that's right, feet. Here we go.

More than 500 meters, 540, I think it is, the total. It will take a second or two for this to go in. But I want to stay with it. This is a bit of history. It's more than a decade since the World Trade Center was brought down by an al Qaeda attack. And those in New York certainly will make of the view today that the terrorists haven't won.

And there you have it. The World Trade Center is once again the tallest building in New York City, taller than the Empire State Building, as that beam gets put into place. Many more still to go to get the building to its final height of 1,776 feet, 1776, but a celebration today that today is it now, once again, its rightful place as the tallest in the Big Apple.

The International Labor Organization says that austerity is the cause, and now we're in a new global jobs crisis, with Europe caught in the so- called "austerity trap," things are getting worse. Raymond Torres is the head of ILO's International Institute for Labor Studies.

So, Mr. Torres, I read the report, or I read the summary of the report. As I -- you know, you along with other organizations, you're dancing around the fundamental point that you believe austerity is now the problem.

RAYMOND TORRES, DIRECTOR, INSTITUTE FOR LABOR STUDIES, ILO: In fact, there are two problems. One is the pace of austerity. It's not so much the fact that countries have to reduce budget deficits. Of course, when budget deficits reach 10 percent of GDP, 11 percent of GDP, they have to be reduced. It is the pace of the reduction, on the one hand.

And secondly, it is the fact that the reduction, in part, which is sometimes too aggressive, is not accompanied by a growth strategy, by measures to promote growth and promote jobs. I think that's the problem.

QUEST: Isn't the reality, though, the measures to promote growth and to promote job creation will in the short term worsen the deficit situation? That's the catch-22.

TORRES: It is a catch-22 and, to some extent, some of the measures to promote growth and jobs will cost something. But two points.

First of all, some of these measures are not so costly to the public purse. For example, policies to keep job seekers in the labor market or to retrain them so that when there is growth, they will be available for that new growth.

Or some public investments are not necessarily so expensive, and they can be funded from additional revenue, if need be. That's the first point.

The second point is that other measures are not expensive at all to the public purse, in fact they are very cheap. For example, avoiding that wages continue to be reduced in a number of countries that don't need lower wages.

QUEST: All right.

TORRES: For example, in Spain --

QUEST: Well, now, I just want to pause you. You raised a question of Spain. Forgive me, but you raised the question of Spain. How afraid are you that the scenario in places like Spain is so bad with so little prospects of hope and optimism, that we do end up with civil distress and civil dispute?

TORRES: Our indicators suggest that for the majority of advanced economies, including European countries, the risk of social unrest is growing. It's growing very fast, and it's growing as a result of youth unemployment, and as a result of perceptions that the strategies lack vision. It's more austerity, always more austerity. It's very unclear what will happen next. So, that's a serious issue.

And the other point is that unless something is done in those countries that are suffering now, neighboring countries themselves will fall into this trap, into the austerity trap, because if Spain, of course, continues to -- into recession, it will affect German banks, and therefore the German economy.

QUEST: Mr. Torres, we'll talk more about this in the future. We thank you for joining us and putting the point of view from the ILO. Many thanks, indeed, for joining us.

Now, Spanish stocks greeted the news of the recession with a small sell-off. Banking stocks fell in Madrid, as you would expect, certainly, after the downgrade. Other European indices were down, not terribly, hugely, in London or Frankfurt, but Paris took a brunt, obviously again, on banking stock.

On the last day of April, all four have finished down for the month. Weak manufacturing data from the US is affecting the mood. Better retail sales did help things marginally.

Now, in a moment, the "New York Times" says there's more to Apple's profits than just spectacular sales. It's the accounting tricks that save billions in taxes. Apple's not the only one. We'll talk about that. QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: What does a Braeburn apple and a sandwich, an Irish Netherlands sandwich, have in common with the profits of the Apple computer company? I'll tell you. Apple may have wormed its way out of paying billions of dollars in corporate taxes using tricks that are rife in the tech sector.

According to the "New York Times," Apple is using some clever, convoluted, and yet perfectly legal accounting tricks.

One of them, for example, we've represented as this one, is the double-Irish, with a Dutch sandwich. It's a way of funneling profits through lower tax areas overseas, from Ireland to the Netherlands and then back again, and then to the Caribbean.

Then, there's Apple's Braeburn Capital unit based in Nevada. It avoids paying California's 8.8 percent corporate tax. The less Apple pays in tax, the more cash it rakes in. It all contributes to why Apples runaway profits have lifted the share price some 70 percent in the last 12 months.

Now, it's crucial that we understand this point: Apple's policies and the company makes clear, is that its accounting practices comply with all applicable laws and it behaves with the highest ethical standards.

Martin Sullivan is a tax expert and former economist for the US Treasury Department. He says Apple's tricks have saved it nearly $2.5 billion. Martin joins me now.

OK. Before anybody doubts or -- what they're doing is perfectly legal, and other companies like Microsoft and others, do exactly the same thing, correct?

MARTIN A. SULLIVAN, CONTRIBUTING EDITOR, "TAX ANALYSTS": That's right, Richard. What they're doing is perfectly legal. All large corporations engage in tax planning, and it just turns out that the high- technology companies have more advantages than others.

QUEST: Right, because this is the point, isn't it? Today's high-tech companies, because they're not selling a car, a widget, a machine, they're selling software or they're selling an iTunes. That makes it advantageous, if I understand it right.

SULLIVAN: Right. That's exactly right, Richard. Because they -- most of the value of our -- in our modern economy, most of the value is created with patents and technology. And these patents and the technology can be easily moved across borders with out -- fundamentally changing business operations.

And when you move those valuable patents offshore, the income that goes with them also goes offshore.

QUEST: Right. Now, in good times, people don't really care, do they? Because in good times, people say, "Well, everyone's making money." But it's in bad times with high deficits and cuts in spending and austerity, people say, perhaps not unreasonably, this stinks.

SULLIVAN: Well, people ask me, why is this news? And when America's most profitable -- most valuable corporation is paying billions less in tax than it should when we have deficits, yes, I think that's an important development.

QUEST: So, finally, do you believe -- and I'm aware, as a tax expert, you're much more concerned with the -- the letter of the rules rather than the spirit of it. But do you think there is a moral aspect to this? A company who's got its business in the US, who's intellectual in its research.

I can hardly believe we're talking about morality and ethics and taxation in the same sentence, but you do get the idea. Do you think there's a moral element here?

SULLIVAN: Well, actually, I don't think. I believe that any company has the right and will naturally try to minimize its taxes within the letter of the law. I believe the problem lies in our very lax tax laws that enable Apple, with their consultants and lawyers, to bend these laws and massively reduce their taxes.

QUEST: We will leave it --

SULLIVAN: So, I don't think there's a moral issue as much as a policy and legal issue.

QUEST: We thank you, sir. And please come back and help us with these difficult taxation conundrums in the future. Martin Sullivan joining us from Washington, there.

Let's stay with conundrums, the Currency Conundrum for you. Answer me this question.

(RINGS BELL)

QUEST: Where is the world's most southerly ATM located? Cash machine. Is it A, Antarctica, B, New Zealand, or C, Argentina. We'll have the answer later in QUEST MEANS BUSINESS.

Now, the rates to the break, a look at the currency. The dollar slumped to a two-month low against the yen. Now, a dollar buys you 79.8, down two-thirds of a percent. The dollar's rising up against the pound a third of a percent. Little changed against the euro. The rates, now the break.

(COMMERCIAL BREAK)

QUEST: Now, Spain is not the only country in decline. One country that fell and shrank has come back gangbusters. The Canadian economy shrank unexpectedly last month. It lost 0.2 percent when analysts were expecting a gain in exactly the opposite direction of the same amount.

In Vancouver, not surprisingly, they're doing all they can to encourage growth, and that means a little planting, watering, and weeding. Even when you're right in the middle of a big city, urban farming is flourishing in our Future City, Vancouver.

(BEGIN VIDEOTAPE)

BRENT TODERIAN, URBANWORKS, VANCOUVER: This is one of our many farmers' markets in the city of Vancouver. Local food has become a very, very important part of becoming the greenest city in the world, which is one of Vancouver's actual goals.

So, it's not superficial. It's very deeply embedded in all of our city-building thinking in Vancouver. Thank you very much.

SEANN DORY, SOLEFOOD: We're on Hasting Street, which is in the downtown east side of Vancouver, one of the most economically disadvantaged neighborhoods in Canada, and this is SOLEfood Farm, which is a half-acre urban farm in the middle of this neighborhood.

In our first season, we grew for four and a half months, and we produced roughly 10,000 pounds of food. Our second season, we did well over double that, so close to 25, 30,000 pounds of food on 17,000 square feet, so less than half an acre, which is a lot of food.

We grow lettuce and arugula and kale, chard, tomatoes, peppers, eggplants, cucumbers, strawberries. All the stuff that's grown here is taken to market and sold at market. So, we're growing a lot of stuff in a pretty small space.

GREGOR ROBERTSON, MAYOR, VANCOUVER: The urban farming movement is a real revolution in cities all over the world. People rediscovering the importance of food and the ability to grow food in cities is far more significant than, I think, anyone realized.

UNIDENTIFIED FEMALE: Organic carrots are awesome.

ROBERTSON: It is a very important thing for many Vancouverites, and it's -- I think it's part of who we are. There's a lot of pride in this that we are a very green city and a healthy city.

STEVE JOHANSEN, ORGANIC OCEAN: Today, we came out here to show you guys Spot Prawning, Spot Prawn fishing out of Vancouver. We're about five miles from downtown here at the dock at Granville Island, catching big, beautiful, wild, sweet, Spot Prawns.

UNIDENTIFIED MALE: Here we go. Oh!

JOSH WOLFE, CHEF, FRESH LOCAL WILD: It's one of the most sustainable fisheries in the world. It's a trap caught fishery. We set these traps. We're not dragging a net along the bottom. You're destroying the habitat on the ocean floor. That's why you can feel really good about eating Spot Prawns. There's no issues attached to them, and they taste really good, too.

JOHANSEN: It doesn't get fresher, does it?

WOLFE: For me as a chef, I spend as much time as I can doing this. If 20 years from now we would like to still be feeding our developing urban centers around the world.

UNIDENTIFIED MALE: Oh, looks nice!

WOLFE: We need to start looking at proper ways to eat instead of fantasizing about what the possibilities are. We need to eat what's there. We need to eat what's in front of us, and we need to start using it properly.

So, now you know where they come from, let's get them in the restaurant and see what we can do with them.

These prawns came out of the water about an hour and 20 minutes ago.

Want to eat that one? Just a little olive oil to finish it. That's a very light ceviche and wild BC Spot Prawns, seared Albacore tuna, tomato, cucumber, and a balsamic dressing.

JULIA SMITH, URBAN DIGS FARM, VANCOUVER: Here, chick, chick! Lucky, Lucy!

Vancouver passed a backyard chicken bylaw a couple of years ago, and so there's been a lot of interest in backyard hens. They make great pets, they can eat all your kitchen scraps, and make your breakfast. So, you can't say that about the family dog.

I'm a full-time farmer. We're right in the middle of the city in my basement. This is what we do for a living. This is pretty much every day.

EMI DO, YUMMY YARDS, VANCOUVER: More than 50 percent of our world's population lives in cities. If we as urban citizens aren't taking care of our food, who is going to, right?

SMITH: I'm putting five seeds into each soil block, because onions are kind of cool the way they grow. They'll grow away from each other. Most of it will go out to our commercial plats, which are just on the edges of the city. We're trying to make use of unused land.

The commercial farmers with the big equipment don't tend to be very interested in anything smaller than five acres, but us small-scale growers, who aren't using big equipment and have hands, we love those areas.

DO: You have to think really hard about maximizing the fate that you have. We have to think about maybe doing one clod right after the other after the other. I've had a couple of kids gasp in awe as they saw me pulling out carrots and going, "It comes from there?" So, it's been really rewarding to be working here.

SMITH: Not all of our days are spent as glamorously as this one out in the rain planting.

We're already spending a lot of city resources on doing things like cutting lawns and planting ornamental flowers, and a lot of people think that food is beautiful, too. So, if you're going to be tending to something and spending taxpayers' dollars to take care of something in a city park, it might as well be a food crop.

ROBERTSON: One of the explicit goals is edible landscaping in the parks. We have almost 40,000 cherry blossom trees, but they're not edible cherries.

SMITH: We have a pretty young, vibrant city. We're pretty forward- thinking and progressive. We have a sympathetic civic government right now. And so, I think all of the stars have aligned to make urban farming a successful venture in Vancouver.

(END VIDEOTAPE)

QUEST: One of my favorite cities in the world, it is of course Vancouver. Never quite been anywhere that manages to merge so much of the good life with industry, with commerce, and just beautiful scenery. Anyway, enough of me waxing lyrical. We'll have another Future City starting next week.

When we come back after the break, as we showed you in this program, the World Trade Center once again is the tallest building in New York just. The Center is back on the New York Skyline.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest, more QUEST MEANS BUSINESS in a moment, but this is CNN, and on this network, the news always comes first.

More than 100 people are believed to have drowned when their riverboat sank in northeastern India according to our sister network CNN IBN. We're told it happened during a storm in the Dhubri region. One hundred more passengers are still missing. Thirty-five people have been rescued. Authorities suspect that the ferry collided with a cargo boat.

Three blasts have rocked the Syrian city of Idlib on Monday. Opposition activists say at least 20 people have been killed. State TV has been airing images of crushed buildings and guttered cars. The government's blaming the attacks on what it says are terrorists. An opposition group says security forces staged the explosions.

A dubious new distinction now for Spain. It joins 11 other Eurozone countries officially back in recession. In addition, 15 Spanish banks have been downgraded by Standard and Poor's. (Inaudible) feeling in space there's massive budget cuts forced upon them have may well have done more harm than good.

The wife of a jailed Bahrainian activist says the kingdom's decision to grant her husband a new trial is a farce. Abdulhadi al-Khawaja has been on hunger strike for nearly three months. Arrested during anti-government protests last year he was then sentenced to life in prison for trying to overthrow the monarchy.

Several European leaders have canceled visits to Ukraine over the alleged mistreatment of the jailed opposition leader Yulia Tymoshenko. Her lawyers gave us these pictures of Tymoshenko displaying bruises she allegedly received in prison. Ukraine has accused the leaders of employing Cold War tactics.

(MUSIC PLAYING)

QUEST: It is with great pleasure that I bring to you this piece of news. The tallest building in New York is once again the World Trade Center. As this steel column was put into place, One World Trade Center grew to 387 meters, overtaking the Empire State Building.

Upon completion in about a year, the center's full height will be 541 meters. That doesn't really give you the number properly. It should 1,776 feet, obviously after independence, made it the tallest building in the U.S. The second tallest in the world is (inaudible) antenna.

Now there's always controversy over this issue, whether the antenna is an integral part of the architecture or is it part of the building? You can sit in it. Is it decorative furniture? Is it really part of the building? Now Taipei 101 is currently the second tallest building in the world with its 60-meter needle. It's sixth without it.

The fifth tallest in the world, the Petronius Towers, would slip to the 18th spot without its 18-meter needles. And 135 meter spire -- beg your pardon. Now without its 124-meter spike, the World Trade Center would have to settle for being a bit shorter, the second tallest in the world in the U.S., the 13th tallest in the world. That's the way you get it.

How important is the antenna at the top? CNN's Poppy Harlow is near One World Trade Center. She joins me now.

We'll talk about antennas in a moment, Poppy. But as that -- as that girder got placed, you could almost feel that sense of elation where you are.

POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: Absolutely, Richard. I love that you're comparing the antennas on the tops of these buildings -- it's certainly a race, and it has a lot to do with pride here and in New York that is what is being echoed around this city is a real sense of pride. I can tell you what just happened moments ago.

Maybe we can show it again, is that two 26-foot steel interior beams were placed. They were lowered down and they were placed on top of the 100th floor of One World Trade Center. This now makes this building just 21 feet taller than the Empire State Building, but it is very symbolic for people here. And I'm down in Battery Park, Richard, which you know very well, lots of tourists come here.

And as they were lowering that beam, tourists around here just stopped and took a picture. And one biker came up to me, and he said, "I used to work in the World Trade Center until three months before the terrorist attacks." And he said he biked all the way here to see it, to watch and he just said, "It's breathtaking. It's beautiful."

So it's a momentous day for people here in New York, and really across the country, Richard. But you also cannot escape the fact that the timing is a pure coincidence, but this comes one day ahead of the one-year anniversary of the death of Osama bin Laden, which was May 1st of last year, and the timing of that, just a coincidence. But security has been a big focus here.

QUEST: If they manage to get this right, they will -- and it's -- I think it's -- perhaps they are getting it right, they will have managed to marry the sacred footprint with its memorial and at the same time build a working significant piece of office real estate in one of the busiest cities in the world.

You were at the construction, weren't you?

HARLOW: I was at the construction, Richard. It -- let's play some of the video, if you can see. This was in August. I went up to the 76th floor of the One World Trade Center, and all around the site. And you can't really imagine it until you're there, the monumental scale, the sight, the complexity of this architecture, Richard.

This is built on top of multiple subway lines, something that certainly doesn't happen in constructing every big building. Obviously, for security reasons, they have poured a lot of money, a lot of energy. I was told this morning by the man in charge of construction $2 billion has been poured into this building, much more than a typical tall office building in any major city around the world.

But of course, they are building it as strong as they possibly, possibly can, and right now we're waiting a press conference by the New York Port Authority, Tishman (ph), which is building this, which is happening there on the 71st floor, it's about to begin. I'm just watching for it as well, Richard.

But also there you have some family members that lost their family in 9/11 also in attendance. So a day that is very significant for people across New York, absolutely, and just historic in terms of what's being built here.

QUEST: Let's just pause for a moment and listen to the press conference, Poppy.

UNIDENTIFIED MALE: -- well on our way to being the tallest building in the Western Hemisphere. So a very exciting day.

(APPLAUSE)

One World Trade Center is much more than iconic symbol for New York, New Jersey and our region. It is a symbol of liberty and pride for our entire country. It's a symbol of the determination and ingenuity of the men and women who've worked tirelessly to build perhaps what is the most complex construction project in our history.

As you can see when you see the people working here, this is more than a job for this team to build this incredible tower. It's been an act of passion and an act of patriotic duty.

This tower serves as a symbol of opportunity and future prosperity, providing thousands of jobs at a time when men and women throughout the region are in desperate need of employment.

The development of this building, combined with the rest of the World Trade Center site, will result in more than $14 billion of economic activity. And when completed will serve as a center for economic growth for decades to come.

In addition to One World Trade, this site will contain a world-class transportation hub, bring thousands of people to and from work and home and (inaudible) destination from people around the world.

Our board, at the direction of our governors, has a clear and defined mission, to find the best ways to ensure that the Port Authority Projects serve as economic engines for -- serve as engines for economic growth and job creation for the region. And to do this in the most efficient and cost-effective manner as possible.

Strategy to do this and to help meet this mission --

QUEST: And there we'll just leave the event in New York. The building is growing -- it's still got some more growing to do, and it will the tallest in the U.S. when it is completed. We'll be back in the Big Apple after the break.

This time it'll be Barnes & Noble, who are being the talk of Wall Street. We'll be just across -- really, just a stone's throw from where World Trade Center. (Inaudible) New York Stock Exchange as QUEST MEANS BUSINESS continues. (Inaudible).

(MUSIC PLAYING)

(COMMERCIAL BREAK)

QUEST: The answer to our "Currency Conundrum" tonight, we asked you where the most southerly ATM is. The answer was A, at the U.S. Embassy Murder (ph) Research Station in Antarctic, and it is operated by Wells Fargo. And here is a picture of it. In fact, Wells Fargo built two of them, not because of long lines, but apparently it's in case one breaks down. There's a long wait for a repairman so far down there.

What I want to know is what do they take the money out and do with it at the U.S. Embassy Murder (ph) Research Station? After all, (inaudible) just give an IOU or what do they spend it on? They're down in the Antarctic. Anyway, a question there, somebody will write to me at quest@cnn.com.

Another pleasant way to round off the month of April on Wall Street, unless you're holding bonds and no bullish shares. Felicia Taylor, good evening at the New York Stock Exchange. At the moment the Dow's office and (inaudible) a bit miserable at the end of the month.

FELICIA TAYLOR, CNN CORRESPONDENT: It's sort of like treading water, because everybody's really looking for the jobs number on Friday. We got consumer spending and income, not such a great picture there.

(Inaudible) spending rose just ever so slightly -- or was slowed ever so slightly. Income was up a little bit. But again, everybody's got all eyes on Friday for pretty much this week, as earnings have kind of dipped as well.

The big winner of the day, though, Barnes & Noble. Its stock is better by 61 percent. It was up as much as 81 percent earlier. That's because Microsoft is going to put about $300 million into the company's Nook digital book business. And we all know that that's the future of publishing.

It's also got the B&N's college textbook business in there, and it gives Microsoft an 18 percent stake in the new subsidiary, and it values it at $1.7 billion. That's more than double Barnes & Noble's entire market cap as of Friday's close.

Obviously, this is a huge deal for B&N, and it really steps up its presence in the digital market, which we know is led by Amazon and its Kindle Fire, which has about 50 percent of the market already. But nevertheless, there's still room for a little competition in there, Richard.

QUEST: Felicia Taylor at the New York Stock Exchange, many thanks indeed.

Now global (inaudible), wonderful weather in Switzerland, particularly in Zurich, where I was filming this weekend, absolutely glorious weather in Zurich. Tom Sater is at the CNN World Weather Center for us this evening, where it still seems a bit breezy but getting better.

TOM SATER, AMS METEOROLOGIST: It is. It's been wet enough for you there, I'm sure. You may be breaking a record, Richard, in the U.K. for the wettest April on record. Now QUEST MEANS BUSINESS and weather plays a major role when we talk about La Nina.

What effects for some areas are good news for the government of Australia, saving a little bit of money and saving some funding and without paying subsidies for farmers because of drought. The agriculture minister today announced for the first time in a decade they are drought-free, lifting the last two drought areas.

La Nina wet for them for two years, hasn't been a dry period in a very important soybean area, where we are finding drought conditions will lead to the highest prices for soybeans come Friday. This is the worst since its peak in the year 2000-2008 food crisis. So extremely dry conditions there. And what does that mean?

Well, a lot is going on, because what we're finding is it's a major endpoint, really, for China. One of their major agricultural endpoints, and it's closely related to their -- to their industry and of course for all of their inflation. But for 2011, production down nearly 10 percent from last season's largest drop since 1965, and it has risen 10 percent in just the last months, highest in four years.

And there are major byproducts, of course, soybean is very important, not only for the cooking industry, margarine, salad dressings, but for biodiesel fuel. So, Richard, as you know, you keep an eye on those closely. But La Nina, good news for Australia, has not been the best for Latin America and the soybean producers there.

QUEST: Many thanks (inaudible) Tom, many thanks indeed at the Weather Center. Now (inaudible) airwaves and its prime properties are under pressure. Next (inaudible) -- well, our demand, your demand, world (ph) demand for (inaudible) putting a squeeze on radio spectrum in a minute.

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QUEST: (Inaudible) has announced he's leaving (inaudible). The U.N. launched U.S. mobile phone -- mobile network. (Inaudible) is one LightSquared directors, and its biggest investor. He's spent billions on the company, which has been held back by wireless spectrum regulation. Now tomorrow Felicia Taylor will take an in-depth look at Falcone and his struggle to get the company off the ground.

The fact is wireless spectrum is a precious commodity as our thirst for mobile data (inaudible) is clotting up the arteries of our mobile networks. But (inaudible) smartphone or tablet (inaudible) extra bit that's all ready. Let me show you exactly what I mean.

Think of this as being the wireless spectrum. Now it's really quite vast. The electromagnetic spectrum is the magnetic (inaudible). I don't understand too much, not being a scientist, but I understand that the radio (inaudible) lowest frequently, you have gamma rays, x-rays, ultraviolet, visible -- the visible rays, look at this. The red, green, blue, then (inaudible) through, of course, (inaudible) to radio.

Now the actual part that is used for radio is rather small indeed. And even so within that there has to be an enormous amount fit within it. So the experts say. What that means is if you look at the United States, this is the frequently allocation just for the radio waves.

They're broadcast media, for example, there are various other ones, some of them, if we zoom in, we can see. So you've got broadcast media, marine use, mobile use and so forth.

Now the Skype call from your tablet on the bus, the MP3 download on your walk to work, all of it uses some part of the spectrum. As Maggie Lake reports, it's pushing an enormous amount of data to what's basically, as we saw earlier, a very, very narrow slot.

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"GEORGE JETSON": Ah, it's the phone. I'll get it.

"JANE JETSON": Good morning, George, dear.

MAGGIE LAKE, CNN CORRESPONDENT (voice-over): What was once the stuff of futuristic dreams is now an everyday reality. The availability of smartphones and tablets means we can connect, communicate and share any time, anywhere. That has led to a spike in data traffic. Overall, mobile traffic grew by 159 percent in 2010 and rose another 133 percent last year. That's a huge surge.

And as CNN Money's David Goldman explains, current telecommunication systems are having a hard time keeping up.

DAVID GOLDMAN, CNN MONEY: Imagine the way that you connect like a digital highway. So any time that you're getting on the network, you're driving down a highway. You always were able to connect, but that was on a wire.

Now you're connecting wirelessly. And to do that, everyone has to get on the -- on a cell tower. And especially in a park like this, where everyone is trying to connect, that eats up a lot of bandwidth. And it's much more difficult to do it wirelessly.

LAKE (voice-over): That bandwidth lives on the radio spectrum, a fixed range of frequencies between 3 kHz and 300 GHz, controlled by the federal government. It's a large area used for many different types of communication.

But only a small section is good for video. Within that small section is an even smaller band, 700-800 MHz. That's best for sending material over the mobile phone network. Some refer to it as the beachfront property of spectrum.

LAKE: As more and more of us jump on mobile devices, that desirable area of spectrum is getting all jammed up. Telecommunications experts say it is simply not possible to build out more.

DAN HAYES, PRICEWATERHOUSECOOPERS: There is a finite amount, and even more importantly, only a limited amount of it is actually viable to use for communications. That's because certain frequencies bounce off of buildings or don't penetrate walls and wouldn't be usable for us.

LAKE (voice-over): Developments like 4G, smart antennas and small portable cell tower beacons are helping move more data faster, squeezing the most out of existing spectrum. Critics say carriers have been too slow to adopt these new technologies, preferring instead to fight for exclusive rights to more spectrum.

The Federal Communications Commission, which regulates the telecommunications industry in the U.S., says a combination of adding new technologies and licensing more spectrum are needed if we're to avoid capacity problems.

LAKE: What happens if more and more of us buy this stuff and want to get on, and we don't have any more room on that data highway, on the spectrum? What's going to happen?

GOLDMAN: Well, you're going to see more dropped calls. You're going to see slower speeds for connection and the worst part, the unsavory part for consumers is that carriers are going to start to limit your ability to connect to their networks.

So you're starting to see it already where AT&T and Verizon and other carriers are tiering prices so that once you hit a certain limit, they cap your data. They start to throttle back your speed, and that's the unfortunate reality, is that they're really, in effect, raising prices.

LAKE (voice-over): The spectrum crunch isn't just a U.S. problem. Densely populated urban areas around the world and crowds at any large event, like a concert, are vulnerable to capacity problems. Dan Hayes says to ultimately resolve the capacity problem, consumers must treat spectrum like the limited natural resource it is.

HAYES; As consumers use their mobile networks, they should be conscious of whether they are connected to the cellular network or the -- or their home network, whether they're using an older technology or a newer, more efficient technology.

These things will all have a great impact on the efficiency of networks. And what consumers should really be watching out for is if we don't make better use of the cellular networks and our spectrum resources, we should all be expecting that our prices are going to go up.

LAKE (voice-over): Maggie Lake, CNN, New York.

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QUEST: Tonight's "Profitable Moment", a judge once said it's our prerogative to pay as little tax as possible. When it comes to Apple, that's a lot of pennies, which is why they're doing and what they're doing is of such great interest.

Apple's tax policy is completely legal and by the book. Little accounting tricks that save the company big money. So as long as they're legal, it will always be fair game. Even if Apple follows the letter of the law, you and I can properly ask is it following the spirit as well?

When you're raking in billions from businesses rooted firmly in one pace, and yet paying peanuts in tax because you're claiming elsewhere, it does perhaps become a moral question, when government cuts are hitting so far. No one's suggesting Apple is being rotten, and yet it could take the shine off that particular company's success. The Apple and tax have some way to go.

And that, tonight, is QUEST MEANS BUSINESS. I'm Richard Quest in London. Whatever you're up to in the hours ahead, I do hope it's profitable. I'll have the news, next.

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QUEST: More than 100 people have drowned when their riverboat sank in northeastern India, according to our sister network CNN IBN. We're told it happened during a storm in the Dhubri region. More than a hundred passengers are still missing. Thirty-five others have been rescued. Authorities suspect the ferry collided with a cargo boat.

Three blasts have rocked the Syrian city of Idlib this Monday. Opposition activists say at least 20 people were killed. State TV has been airing images of crushed buildings and guttered cars. The government blames the attacks on terrorists. An opposition group says security forces staged the explosions.

A dubious distinction for Spain as it falls back into recession. Sixteen Spanish banks have been downgraded by Standard and Poor's. There's now a feeling in Spain that massive budget cuts have done the country more harm than good.

And to New York, the tallest building (inaudible) is once again the World Trade Center. As this steel girder was put into place, One World Trade Center grew to 387 meters, overtaking the Empire State Building. Upon completion in about a year, the center's tall height will be 1,776 feet.

Those are the stories we're following for you on CNN. This is the world's news leader. Now live from New York, "AMANPOUR."

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