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Quest Means Business

ECB Chief Says Inflation Top Priority; Europe's Economy; Czech President Calls for Looser EU Federation; Pound Up, Other Currencies Holding; Trinity Acquires Gieves & Hawkes; US Markets Down; Rangold's Profits Rise

Aired May 03, 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: The battle for the banks. Sweden's finance minister wants stronger capital rule.

Don't fight austerity. The Czech president tells me tonight there is no alternative.

And raising the roof. Mervyn King's regrets on the financial crisis.

(BEGIN VIDEO CLIP)

MERVYN KING, ECONOMIST: We should have shouted from the rooftops.

(END VIDEO CLIP)

QUEST: I'm Richard Quest. I mean business.

Good evening. The president of European Central Bank says flourishing growth is the goal. Only national governments have the tool to make their economies bloom, and he says it is vital to keep up with the budgetary pruning.

In Barcelona today, Mario Draghi says the ECB is focused on the eurozone as a whole, and its main target is managing the dreaded weeds of inflation. That's in the constitution. The president expects inflation to remain stable at around 2 -- just above 2 percent a year as Europe's economy gradually recovers.

Interest rates were decided to be on hold at a record low of 1 percent. Mario Draghi says that will help to feed the recover, and yet, still, careful cuts are essential to make the garden grow.

(BEGIN VIDEO CLIP)

MARIO DRAGHI, PRESIDENT, EUROPEAN CENTRAL BANK: There is absolutely no contradiction between a growth compact and a fiscal compact. In fact, sustainable growth is sustainable in the long run if it's based on a variety of pillars, but one of them is fiscal stability.

(END VIDEO CLIP)

QUEST: Joining me now to talk about this and banking issues, Sweden's finance minister, Anders Borg, joins me from Stockholm. Minister, we will just start with the ECB, obviously, and what they've done. Are you satisfied looking at the policy responses now from the ECB and across the eurozone, that they've got to grips with it, as a country outside the zone?

ANDERS BORG, SWEDISH FINANCE MINISTER: Well, I think Mario Draghi is doing the right thing. He's been very active, and I also agree that the next step must now be growth measures, particularly in the Mediterranean countries. What they've done in Italy and Spain is going in the right direction, but they must continue to strengthen their competitiveness, and that is in the hands of the governments.

QUEST: So, this battle -- and it is a battle, it's an ideological battle and it is a practicalities battle -- between austerity and growth at the moment. Yes, they're not mutually exclusive, but is the balance right at the moment?

BORG: Well, I think we are basically coming to a credible situation for fiscal policy in Europe. The IMF is saying that we will have 3 percent deficit for the eurozone next year, so I think we must refocus and talk more about growth, and particularly long-term growth. So, the structural reforms that will be the focus of the years to come, I think, is the key.

QUEST: All right, let's talk about banks. You have decided, and pretty much the other members of the Union decided, not to go with the stricter Basel measures, or at least they can't agree. You the UK and a few others say that you want stricter capital requirements, you want Basel III in its extreme. Do you think Europe is making a mistake in not implementing the full capital ratios?

BORG: No, I think we are finding a balanced compromise. It's good for us. We have the second-largest banking system in the EU, so for us it's important to raise capital requirements. It's good for the Central- Eastern Europeans who want strong capital because they do not want to see the banks that are basically from the other countries leaving them with deleverage.

And I think it's also good for the euro countries, because the ones that will be growing over the next few years, like Germany, needs to have potential tools to deal with monetary growth when they only have one interest rate.

QUEST: But then, it seems foolish, doesn't it, that anybody -- and I know your country has had one banking crisis and flirted with another -- it seems foolish that any government would not want these stricter, harder standards.

BORG: Well, there is a balance between capital requirements and macro-stability on the one hand, on the other hand, internal market issues. We do want an integrated financial market.

So, there needs to be a balance, and I think the compromise that was worked out through the 16 hours of negotiations during the night basically strikes the right balance. Obviously, we would have wanted more on the capital side, but I think this is a good balance.

QUEST: But you are going to go with the harsher or at least the larger capital requirements?

BORG: Well, most definitely. We will be aiming for 12 percent capital requirement in 2015, which the rule book now allows us to do. And that is in terms of tier one capital, so it's a substantial strengthening.

And as I can see, the Swedish banking system is doing well. Credit is running well to both households and firms, and that is also true in the other countries that are more prudent.

QUEST: OK. So, as we come to the end, Minister, the -- the real problem, now, remains countries like Spain and whether or not this is suddenly going to erupt into another crisis. Give me your gut feeling for how worried you are.

BORG: I think the situation must be dealt with. Either they can recapitalize their banks, or they could take over bad asset with a substantial haircut, but I would be very much arguing for them to do something in the short term so we can avoid instability so that the recovery can get going. So, they have alternatives. Then they must go to action so we can stabilize the situation in the short term.

QUEST: And if we just take that issue with the -- Spanish banks, it surely makes a nonsense, again, of those Finance Ministers and those ministers in Brussels who did not want the higher capital requirement. Spain is an example of what can happen when it goes wrong.

BORG: Well, when we have taken over banks, what you notice is that the key issue is the amount of capital inside of the bank, so the strength of a banking system is its capital base, and if we want to see a stronger Europe with less instability in the next crisis, stronger capital is the key issue.

QUEST: Anders Borg joining me from Stockholm this evening. Many thanks.

We're going to stay with European questions after this short break. He is a man who is a thorn in the side of the fiscal compact. The Czech president tells me the European family has deep-rooted problems.

(BEGIN VIDEO CLIP)

QUEST: Is it so dysfunctional, in your view, that it needs to be rethought from the bottom up?

VACLAV KLAUS, PRESIDENT OF THE CZECH REPUBLIC: My answer to -- when the question is put so dramatically, I'm -- surprisingly, for some of the listeners, I would say yes.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

QUEST: Let's continue our focus on Europe. And tonight, the Czech president Vaclav Klaus says Europe is dysfunctional, and the only option is a looser federation of states, and that most certainly does not include the fiscal compact. I asked the president if the situation in Europe was getting steadily worse.

(BEGIN VIDEOTAPE)

KLAUS: I am a long-term critic of what is going on in the eurozone and what is going on in the European Union, and I have troubles. I don't see any solution, because there are solutions, but the European politicians and the people in Europe don't want to accept such tough solutions I would suggest.

QUEST: The solution being?

KLAUS: Well, I always repeated, the solution is not a change of some small parameters of an economic and social system or of the European construction.

I am absolutely sure that there must be fundamental change of the whole paradigm of thinking, paradigm of behaving in Europe, which is a deep, fundamental change, and I'm afraid Europeans still dream about living in a nice world where everything is possible.

QUEST: But when you say there needs to be a fundamental shift in paradigm, does that mean closer integration? Does that mean -- because if it does not mean that, then the experiment cannot succeed.

KLAUS: Well, I am definitely not suggesting closer integration. On the contrary, I am suggesting a looser integration. I think Europe made a tragic mistake by jumping into the European monetary union without having all the necessary preconditions done.

QUEST: Do you believe that -- let's say, for example, after this weekend, where there may be a change of government in France, the fiscal compact is in more danger than it was?

KLAUS: The politicians in an election campaign usually make very strong statements. So, I don't know what is real in the heat of battle. Another of the French presidential candidates never does.

I think for me, I am very much in favor of various conditions in the fiscal pact. As a former minister of finance, for me, even the deficit of Maastricht criteria, 3 percent deficit, is too big for me. I would say it must be much lower.

Nevertheless, the point is that the European pact, which means that someone else would control your state budget, is for me totally unacceptable.

QUEST: The austerity versus growth argument that is now raging in, not just the eurozone, but he EU --

KLAUS: In the whole Europe.

QUEST: Is there -- let's -- if I may be as blunt as I possibly can be with you, sir, is there now too much austerity being rammed down the throats of the European people?

KLAUS: I don't think so. I don't think so. The situation is such that the European countries, in the moment of much better, in the economic sense, didn't make savings. They continued making debts, and there is nowhere to escape that trap. There's a radical improvement of economic gross.

QUEST: So, what would you say to those countries like Spain, Portugal, and Greece, where unemployment is rising, civil unrest is potentially on the cards, and people like yourself, with respect, sir, say austerity is the answer?

KLAUS: When there is such a huge deficit, there is no way to make fiscal expansion. That's a dream which is not possible. But there are European countries which can make some fiscal expansion. Not -- definitely not Greece, but --

QUEST: Germany.

KLAUS: -- maybe not Italy. But let's say German. So, there are countries which can make some fiscal expansion. Plus, there is the European Central Bank, which could still make something.

QUEST: On the overarching picture of the European Union, is it so dysfunctional now, and the eurozone, is it so dysfunctional, in your view, that it needs to be rethought from the bottom up?

KLAUS: My answer to -- when the question is put so dramatically, I'm -- surprisingly, for some of the listeners, I would say yes. There must be radical, fundamental restructuring.

And I dare compare it with situation in my country two decades ago in the moment of the fall of Communism. Simply, we understood that partial reforms will not help. We have to make a radical, fundamental change. And structurally, we are now in Europe in a similar position.

QUEST: And everything you're seeing so far does not suggest that's happening?

KLAUS: Definitely not. We are trying to make preparative measures, to take some pills and hope that the situation will be solved. I am sorry, it's not the way how to do it.

(END VIDEOTAPE)

QUEST: Powerful answers from the president of the Czech Republic, President Vaclav Klaus.

Now, today's Currency Conundrum. In 2006, Mars or Masterfoods, as it was back then known, offered a reward for the return of Edvard Munch's stolen masterpiece, "The Scream." What was it they were offering back then? Was it $2 million, 2 million Norwegian krone, or 2 million dark chocolate M&Ms?

While you look over and mull that, let's have the rates. Hardly any movement as far as European currencies go. The pound is slightly up against the dollar. Otherwise, little change. And after all, these --

(RINGS BELL)

QUEST: -- are the rates to the break.

(COMMERCIAL BREAK)

QUEST: Gieves & Hawkes. The famous Savile Row tailor is now part of an Asian retail giant, albeit at the luxury end. Trinity, Limited paid nearly $150 million for the double-century suppliers of fashion. Gieves & Hawkes is the latest addition to a stylish collection of menswear makers, which includes Cerruti, Kent & Curwen, which are the perfect fit for Trinity's high-end customers.

The managing director, Sunny Wong, took me on a tour through his new premises just as the deal completed. We looked on Savile Row.

(BEGIN VIDEOTAPE)

QUEST: The shop is yours. What are you going to do with it, now that you have bought this premises?

SUNNY WONG, MANAGING DIRECTOR, TRINITY GROUP: Well, the first priority is, really, to build a UK business. It's an iconic brand, it's very well-known in the UK, but it needs to do better, and there's a lot of upgrading we plan to do.

And then, from that onwards, of course, we have been very successful in China. We want to make sure that the success continues. And of course, the next step is how to roll it out. Because we believe Gieves & Hawkes has a global appeal.

QUEST: Let's take that bit by bit. So, you need to get the UK division profitable, or at least not loss-making.

WONG: Exactly.

QUEST: How do you do it?

WONG: Well, it would mean that we have to have better shops in London, perhaps other cities. At the same time, we have to introduce this to more customers. Perhaps Chinese customers.

QUEST: But China -- you already have the license for China -- for greater China, don't you, for Gieves?

WONG: Yes, but then, Chinese travel, they want to see this Mecca --

QUEST: This Mecca?

WONG: -- of menswear.

QUEST: Right.

WONG: They will come.

QUEST: And then, you -- so you start off by improving the UK. Then, you get the Chinese interested, as well. And then, you expand the brand.

WONG: Exactly. We have global ambitions.

QUEST: Ooh. I love it when people talk about global ambitions. Talk to me about global ambitions.

WONG: I think what you see is that this is the menswear, this is a luxury brand. This is the oldest suiting brand. In the world, probably. And we believe that the connection, also, to the royal family, because we have the free wall warrens, and so for all these are very, very -- heritage, historical value, which appeals a lot to many English-speaking countries, and perhaps Japan.

QUEST: I look at your portfolio, and I'm trying to see the connection other than high end. They're all high end. So, with Gieves and Cerruti and Ferragamo license and --

WONG: Kent & Curwen.

QUEST: Kent & Curwen and the other parts, are you now satisfied for the time being, or are there still gaps that you want to plug?

WONG: Certainly there are gaps. We are not filling everything yet. But we do things step by step. We want everything in our portfolio successful.

QUEST: What is the long-term goal of Trinity?

WONG: We want to focus completely on high-end products. So, menswear, perhaps, we've done very well, now, we all know that. It's probably the first step. And China's our home. We grow from China. But we certainly would not limit ourselves only to do China.

QUEST: Is Trinity an example of a -- of today's company -- Chinese company that is really going to leverage the growing middle class and the growing economic performance of China? Is that your key?

WONG: Well, China is a very profitable business to us, and we're successful. We add a lot of value to all these western brands in China. And we have been able to do this, and I believe this model may be able to be applied to other places.

QUEST: OK, but you -- what I'm trying to understand, Sunny, is, does your model rely on China, or do you see China and its China plus the rest?

WONG: I think the example you've seen a few of the other global brands. China is very important and, perhaps, eventually the most important. But we cannot forget other big countries, Japan, America, here, and so forth. There are lots of countries where luxury brands are still of a substantial business.

QUEST: You're a brave man. Recession in the eurozone, and you're buying a luxury suit maker.

WONG: Well, I'm not worried at all, because things come in cycles.

QUEST: Right. Long term.

WONG: Yes, of course. Strategic, long term. At the same time, be good at the things you do. Don't try to do too many things.

(END VIDEOTAPE)

QUEST: Fascinating. The perspective as seen from Sunny Wong from Trinity Group, who now own Gieves & Hawkes. This --

(RINGS BELL)

QUEST: Excuse me. Look at the market. Down 78 points. It's a loss of just over a half of one percent. All-in-all, the markets are going to be watching very closely. The emphasis is going to be firmly on what's happening with the jobs number, which is released tomorrow. The US jobless total, not only the number of people claiming, but also the unemployment rate.

And that is going to be the deciding factor and the main driving force for the markets over the next 24 hours, at least for the US market.

In a moment, a military coup, a share price down 20 percent since the beginning of the year, and ongoing political uncertainty. The Randgold chief executive, even with gold, tells me why he's optimistic.

(RINGS BELL)

QUEST: QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN, and on this network, the news will always come first.

Osama bin Laden dreamed of another attack on the United States, but he also worried the killing of Muslim civilians was undermining al Qaeda. Those thoughts were among thousands contained in a group of bin Laden's documents, some of which the United States has posted online. Navy SEALs took the files from his compound during the raid that killed him one year ago.

The Chinese activist who left the protection of the US embassy in Beijing on Wednesday now says he does not feel safe. Chen Guangcheng is pleading with the US to bring his family to America. The US ambassador to China says the US will find out what Chen really wants to do and then act accordingly.

(BEGIN VIDEO CLIP)

(CROWDS SHOUTING)

(END VIDEO CLIP)

QUEST: Video posted online appears to show students running from gunfire at Syria's Aleppo University. An opposition group says troops killed at least six people in a pre-dawn raid. Activists say another 19 died elsewhere. Also on Thursday, the size of the UN monitoring mission has grown to 50 observers. A total of about 300 monitors is expected by the end of the month.

Four boys charged in a gang rape in South Africa have been released on $67 bail. They will not be going home because of concerns for their safety. The community has been outraged since a cell phone video of the assault on a mentally disabled girl was put online and went viral.

Nicolas Sarkozy and Francois Hollande are back on the campaign trail a day after their fiery television debate. It was the French president's last big chance to gain ground on the Socialist frontrunner before Sunday's presidential runoff. Analysts say no clear winner emerged from the television debate. President Sarkozy continues to trail in the polls.

Don't mention the coup. Randgold says it's doing well in spite of unrest in a key production facility. The South African miner says profits more than doubled in Q1, three months of which included a military coup in Mali, which produces two-thirds of its output.

Randgold shares have lost 20 percent since the coup in March as investors are worried. The company's sticking to its 2012 target. I asked the chief executive, Mark Bristow, if he thinks the unrest will affect the business at all.

(BEGIN VIDEO CLIP)

MARK BRISTOW, CEO, RANDGOLD: Operationally, no effect at all. Psychologically to our shareholders and the share price, yes.

QUEST: That 20 percent reduction in share prices since (inaudible), how serious is that and how much pressure do you feel under?

BRISTOW: I've always said that I believe that share prices are only affected if you crystallize them. So if we use -- if we had to raise money or to put shares into the market or there was something fundamentally wrong with our business, then the share price should be a real issue. But we'll get back there. I've got no doubt about it. And we'll -- we are constantly outperforming the market.

We will outperform the market on costs, on profitability and you know, as long as the -- and on a relative basis, if you look back 15 years, West Africa is a much easier place to operate, even with some of the challenges we've had in the last two quarters.

QUEST: I do not know today where gold stands in the psyche in investors, other than the old bromide, it's best to have a balanced portfolio. If inflation is coming as a result of QE and everything else, although we don't see too much of that at the moment, then you're onto a winner. If it's not, you're looking at the biggest bubble that there is around, except social media.

BRISTOW: Well, maybe you should stop to reflect on platinum and how it has performed recently, because platinum's price went up to $1,600. The industry today is insolvent, effectively. And gold prices have been driven by a lot of things and the industry's not profitable. So that's the first issue, is how profitable are we relative to the industry?

QUEST: OK. But where -- what gold price would you be comfortable with?

BRISTOW: We plan at $1,000. That's what makes us effort (ph) to the industry. We allocate capital at $1,000 because in reality, when you get to a real $1,600 gold price, the cost profile to that is going to be higher than it is today.

So that's -- and the other -- just to get back to your gold price, one thing you forget is there's a fundamental change in the global economy. Well, you don't forget that of course, but you know it. And the central banks that are buying gold today are not the central banks that bought gold in the past or sold them during the '90s. They are central banks with lots of money trying to manage risk.

QUEST: I'm not surprised that you're still saying to me -- and it's good to have you here, face to face, rather than down the line. Is not gold the biggest canard of artificiality that we've ever seen?

BRISTOW: Absolutely not. Then so is the U.S. dollar paper money. You know, it's part of -- it's an integral part of -- that's what we've seen. In the '90s, what did you see? You saw gold becoming almost worthless.

Why? Because the rest of the world was such a good place to be. Now that it's not such a good place to be every single fund manager I've spoken to in the last five years has lost money on currencies. And that's why gold is so important. In the '90s everyone made money, despite what they did. And gold --

QUEST: Are these prices, Mark, the risk is on the down side?

BRISTOW: I think at these prices right now, given the supply and demand in the gold industry, the price is on the up side. There's no downside risk.

(END VIDEO CLIP)

QUEST: That's the view from Randgold. He is, of course, selling gold. We make no comment on whether there's upside or downside risk. You make your own choice on that one.

Randgold is one of the world's performers on the FTSE today. Have a look at the numbers of the Euro voices (ph). Smith & Nephew up nearly 4 percent on strong earnings. Commodity related shares fell, Randgold, as I say, down 3.7 percent. Lasmore Metal (ph) in Frankfurt -- in Paris, I beg your pardon, down 1.8, banks (inaudible) commerce, the worst performer on the DAX down 3.6 percent.

Across Europe, shareholders are revolting -- the old joke's in the bet -- but this time it is executive pay that they have in effect. If you'll join me in the library, a majority of (inaudible) -- this is extraordinary. (Inaudible) a majority of the shareholders that rejected the executive pay policy, 54 percent voted against executive plans.

Plenty more abstained. They say the insurer underperformed and the share's down 31 percent in the last odd months.

The chairman, which is now the common refrain when they finally get a kick in the backside from shareholders has said they are sorry and they'll go back and look at it again. UBS shareholders made voices heard, 37 percent voted against the pay plans, 39 percent voted against discharging board members. That's like a vote of no confidence.

You remember (inaudible) Rove trader pushed UBS into a $2 billion losses. So protests there. And Lufthansa German Airlines, it's been a tough Q1, a net loss of half a billion dollars. Now a lot of that perhaps comes into BMI, the U.K. subsidiary, which it's now offloaded to IAG's British Airways.

Even so, Lufthansa will lose 31/2 thousand jobs. The airline was hurt by higher fuel, German air traffic control, BMI -- you name it, they all took their toll on Lufthansa, particularly a shame since they'd just taken delivery of their 747-8 which goes into service next month.

Jenny Harrison at the World Weather Center, one of the advantages of having Jenny, my own forecast for the weekend.

JENNY HARRISON, CNN METEOROLOGIST: I know, well, I might get to it. (Inaudible) I might just throw it in, weave it in during the forecast. So unless you're paying attention, I'll come back -- I'll come back to that.

Well, one thing I can tell you, plenty rain across Western Europe. There's been more in the last few hours. Those sort of three main areas of weather, the heat that is still on across central eastern regions, that is going to ease a little bit, in fact, just look at the last few hours, we had a rash of thunderstorms there.

That cloud heading across the U.K., pushing west, that's attached to (inaudible) disturbance, a small area of low pressure. Then this continuing to spin just off the coast out of Portugal, Spain and France, that is an area of low pressure which has been bringing the rain a few days ago. But, look, this is the rain that's continuing over the last few hours.

This is very much what it looks like across quite a bit of the U.K. This is Tewkesbury and Gloucestershire, and this is (inaudible) actually, the longest river in the U.K. But of course, you've got these towns and villages alongside rivers.

Well, unfortunately, there are many scenes just like that. The warm weather across the east, still there but the temperatures beginning to come down to average. And then we've got a real blast of cool air on the way. This next front is going to slide through.

But still that system, it's very persistent, just sitting off the west coast. But Thursday the temperatures once again, 32 in Budapest, 31 in Bucharest. The average is 19-20 Celsius. But as I say, by Friday, (inaudible) the weekend, a lot of that warm air is going to really retreat and just generally cool back down to the average.

But you can see in the north that blue and purple indicating the cooler air coming through. So Berlin temperatures slightly down here as we go into the weekend, some rain on Saturday, temperatures below the average as I say.

And then Kiev managing to stay well above average, but even so, you will see quite a bit of cloud with that as well. Plenty of rain pushing into the west.

And all the weather that's been occurring across the U.K., back in March, the hot, dry weather, and then followed by April, so much cooler than average, (inaudible) has actually led to a bumper strawberry crop, 10 percent more than usual this year. (Inaudible) very sweet and flavorful, but is that something to come out of the rains of April.

But look at this as we go through into Thursday and Friday, we've got some warnings here in place for some pretty strong thunderstorms. But the snow will continue across the north with all that cold air coming in, all that moisture turning to rather heavy snow so particularly across central and northern Sweden, as you can see there.

Not too many delays at the airports on Friday. We could see one or two thunderstorms in (inaudible) and Paris. Of course, the rain will continue there, but even so the delay's not particularly long, and there are your temperatures, 19 in Paris, 21 in Rome. I'm still going to mention Florence. I will get to that right at the end.

I want to talk about (inaudible) into Sunday, it is going to be a perigee moon or a supermoon. That's when it comes closest to the Earth. It comes so very close, still about 350-odd thousand kilometers away, but it will appear much larger and much brighter. So get yourself a good spot, see it as it begins to rise, the moon, and when it's near the horizon, that (inaudible) absolutely at its best.

And Richard, your weather for Florence, not good. It's just as well. You take your rain mack with you everywhere you go, because you will need it (inaudible) on Sunday.

QUEST: You enjoyed this. You enjoyed -- you enjoyed rain -- you enjoyed raining on my parade.

HARRISON: I know. There, you've got the right gift -- no. You know what, I don't know where you're going. Friday's going to be lovely, about 21 Celsius, Saturday showers in the afternoon, Sunday's thunderstorms.

QUEST: Thank you. Jenny Harrison at the World Weather Center. Now I sense an infinite scream passing through nature and out of the auction room. Edvard Munch's masterpiece sets a scary new record. What did it have to do with the financial crisis, after the break.

(MUSIC PLAYING)

QUEST: It's time for the answer to today's "Currency Conundrum." We asked what (inaudible) previously Masterfoods offered as the reward for the return of Edvard Munch's "Scream," the answer is C, 2 million dark chocolate M&Ms. That's about 41/2 metric tons' worth.

(Inaudible) couldn't tell us if it actually delivered the reward, but we can tell you it's haunting, it's iconic, and most importantly, it's worth almost $120 million. Munch's "The Scream" has set a new world record.

It is now the most expensive artwork ever sold at auction, $120 million was the final price, which smashes the record of two years ago. That was Picasso's "Nude, Green Leaves, and Bust," here worth to be 106. As for "The Scream," that now belongs to an as yet unnamed buyer.

Tonight's "Profitable Moment," shouting and screaming is very much in the news today and whether it's Munch's "Scream" painting sold or the governor of the Bank of England, Mervyn King, saying he wishes he raised a racket about what was going on in the banking system, scream and shout.

(BEGIN VIDEO CLIP)

MERVYN KING, GOVERNOR, BANK OF ENGLAND: Our path was limited to that of publishing reports and preaching sermons. And we did preach sermons about the risks. But we didn't imagine the scale of the disaster that would occur when the risks crystallized. With the benefit of hindsight, we should have shouted from the rooftops.

(END VIDEO CLIP)

QUEST: Let me continue this "Profitable Moment" from Sir Mervyn's preferred venue, the rooftops of London. It seems to me the governor's comments sound like shoulda, coulda, woulda. In fact, so many regulators and officials are now saying they wished they'd done more. But there's more shouting and screaming. This time from shareholders.

For instance, today it was Aviva's turn to rebel against the corporate pay packages, joining the companies of Barclay's, UBS and Citi in saying enough is enough. The CEOs and chairmans (sic) are now doing mega mea culpas, saying they've learned their lessons, which begs the question: how did they get it so wrong in the first place? And fortunately, answering that, I fear I'm shouting in the wind.

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

(MUSIC PLAYING)

(COMMERCIAL BREAK)

JULIET MANN, CNN HOST: Welcome to MARKETPLACE EUROPE. I'm Juliet Mann. Greece returns to center stage this week, as the country prepares to go to the polls to elect a new government. The country's battling its fifth year of recession, with the debt crisis sending shock waves across the Eurozone.

(BEGIN VIDEO CLIP)

MANN (voice-over): Coming out, we find out how neighboring Bulgaria is benefiting from the financial crisis in Greece. And Poland's finance minister tells us he wants to join the euro as soon as it's safe to do so.

JAN VINCENT-ROSTOWSKI, POLAND'S FINANCE MINISTER: There's still a lot of work to be done and the Eurozone has a lot of homework to do.

(END VIDEO CLIP)

MANN: Since November, Greece has been run by an interim coalition government and is struggling under the weight of austerity measures aimed at reducing the country's huge mountain of debt. This weekend's elections will be scrutinized by European leaders who've injected so much cash into keeping Greece in the euro.

(BEGIN VIDEO CLIP)

MANN (voice-over): This is what the Greek people think of austerity. Drastic measures to rescue the economy have led to a massive drop in living standards, a backlash against the politicians who put them in place.

LOUISE COOPER, MARKETS ANALYST, BGC PARTNERS: The interim government inherited an almost insolvable problem. It is a mess, and austerity clearly isn't working. The Greek economy is imploding, and at the moment, the politicians are sitting on the sidelines twiddling their thumbs.

MANN (voice-over): But the next government is likely to be even more fragmented, making decision-making messier.

COOPER: The solution, as far as I'm concerned, is Greece has to exit the euro. It has to get competitive. It has to devalue its currency and then it almost needs a Marshall Plan. Austerity has destroyed the country. What it needs is money into the country to rebuild.

MANN (voice-over): For now, the only money being pumped in is earmarked for austerity. As the rest of Europe is determined to keep the Eurozone intact. But what Greece really needs is a plan for growth.

MANN: While the Greek economy seems to hit low point after low point, Bulgaria is benefiting from its neighbor's demise, as Greeks head there in search of cheaper goods. Many Greek businesses are also setting up shop over the border in Bulgaria, where industrial parks are springing up, as Fred Pleitgen reports.

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FRED PLEITGEN, CNN CORRESPONDENT (voice-over): Ever wonder how your jeans get that distinctive pre-worn look? Sandpaper does the trick. Staff Jeans is a Greek company with part of its production in the Bulgarian village, Rakovski. Now management wants to move all of its manufacturing to Bulgaria after sales in Greece plummeted by 40 percent last year.

"What's happening in Greece right now is a tragedy," the manager says. "We are losing a lot of revenue, and at the same time, have large costs bringing our products back and forth between Bulgaria and Greece. So we need to bring those costs down to be more competitive in Europe."

With taxes and wages in Bulgaria much lower than in neighboring Greece, management says moving across the border was a no-brainer. But that's a big problem for the Eurozone, as the Eurozone crisis drags on, more and more Greeks are making the move across the border, not just big companies like this one, but also private people looking to invest in a place where their euros will go a longer way.

Places like the ski and mountain resort, Bansko, near the border with Greece.

Aristo Theodoropoulos purchased a house in this upscale gated community.

ARISTO THEODOROPOULOS, GREEK INVESTOR: I buy this 100 -- 90, I think, thousand euros. In Greece, the (inaudible) the same in the same region, area, maybe 500 thousand euros.

PLEITGEN: While there are no official numbers, real estate brokers like Boyko Boykov say the influx of Greek investors is noticeable.

BOYKO BOYKOV, B & H REAL ESTATE: First of all, it is very comfortable for them to travel to Bulgaria. It's not so far away from Greece. They are (inaudible) border. And secondly because -- again, because of the price and because of the location.

PLEITGEN: With capital and jobs migrating from Greece, some experts believe Bulgaria could be a benefactor of Greece's economic demise.

GEORGY GANEV, CENTRE FOR LIBERAL STRATEGIES: It's a very sad reason, but it's happening, actually. Even some Greeks are transferring their monetary balances from Greece to Bulgaria in -- obviously hedging the risk for Greece leaving the Eurozone, reestablishing the drachma or something.

Staff Jeans says its reasons are purely economic, as they are betting on Bulgaria to help them lower their costs to survive the crisis.

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MANN: Fred Pleitgen reporting from Bulgaria.

Coming up after the break, the Polish finance minister talks growth, the euro and austerity measures.

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MANN: Welcome back to MARKETPLACE EUROPE. Poland joined the European Union in 2004, and has been held as a success story among the transition economy. It's the only country to avoid recession during the economic downturn.

The country's economy grew 4.3 percent in 2011, and Poland's finance minister says he's confident of achieving 2.5 percent growth this year.

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ROSTOWSKI: We have been by far the fastest growing economy in the European Union out of all 27. Almost 16 percent cumulative growth in 2008, 2011. And more than twice as fast as the second-growing -- fastest growing economy, which was Slovakia, which achieved 8 percent. So I think growth is not something that we feel terribly worried about, even when external circumstances are challenged.

JIM BOULDEN, CNN CORRESPONDENT: It's very clear the Polish zloty has raised in value a lot this year already, one of the fastest growing currencies. Does that concern you and could that impact negatively on the economy? Or do you see that as a sign of strength?

ROSTOWSKI: No, I think that the way the mechanism works is quite well-known, and that is that when the situation in Europe becomes calmer, there's (inaudible) because it has a huge capacity to strengthen.

When the situation in Europe becomes more fragile, the zloty weakens, and that strengthens our export performance. So we're fairly comfortable with both situations. And therefore, I'm not too concerned one way or the other.

BOULDEN: Let's talk about austerity. It is a hard sell in Poland for people to understand why you're embarking on austerity at a time when the economy is growing and grew throughout the recession?

ROSTOWSKI: We now have very little doubt, practically no doubt, that we will succeed in eliminating the excessive deficit, and indeed, bringing the public sector deficit to below 3 percent this year, which would mean that we will have achieved a 4.8 percent reduction -- percentage points of GDP reduction in that deficit over two years.

We're doing that mostly by holding very tight -- holding expenditures down, very, very tightly, in spite of the economic growth that we've -- that we're -- that we're experiencing. And I think that's, in the short term, short to medium term, the most important aspect of our fiscal policy. We shall actually be reducing the ratio of public debt to GDP already this year.

And I think we're probably the first country in the European Union, out of those which experience increases, because there are one or two that didn't that will be reversing the trend now at this stage of the crisis.

BOULDEN: Last year when I interviewed you, I asked you when is Poland going to join the Eurozone. You have to, eventually. Is your policy on this change, which is not the time, wait and see, certainly you wouldn't join in the middle of a crisis.

ROSTOWSKI: We want to join as soon as it's safe to do so. But we also (inaudible) hard not to notice that there's a problem in the Eurozone, and that it's quite a profound problem.

Therefore, the Eurozone has to be repaired. We are very concerned -- we think part of the job has been done, the six-pack (ph) directives and regulations and the ensuing twin pack. They're very good legal instruments, measures to ensure that the present crisis doesn't happen again, that it would be very unlikely to happen.

We're still not entirely out of the woods. Therefore, you need not only mechanisms to prevent you getting into problems, but you also need some kind of emergency capacity to act, some kind of safety net.

Now we don't feel that that really exists. We feel that the so-called firewall is inadequately large and we also think that the freedom of action that the European Central Bank thinks it has is inadequate.

We would need to see a European Central Bank that was far less fettered by -- as far as, for instance, its ability to buy -- to enter -- to buy government bonds. So I think, you know, we feel that there's still a lot of work to be done. The Eurozone has a lot of homework to do.

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MANN: Poland's finance minister, Jan Vincent-Rostowski, there, talking to Jim Boulden.

That's it for MARKETPLACE EUROPE this week. Do join us again next time. Goodbye.

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