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Quest Means Business
Ryan Hits Campaign Trail; Economic Election; The Ryan Plan; Ryan in the Race; Pros and Cons of Romney/Ryan Ticket; Asia's Slowing Growth; Euro Recession Deepens; US Stocks Weaken; Bracing for Groupon Earnings; Bad Day for European Market; Motorola Slashes 4,000 Jobs; Shooting Near Texas A&M University; Record-Breaking Property Prices in US; Euro Up, Pound Static
Aired August 13, 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: It's just the ticket for an economic campaign. The Republican vice presidential candidate Paul Ryan's first solo campaign event in this hour.
London calls, Rio answers. We review Brazil's Olympic ambitions.
And dreaming spire or just dream on? Tonight, we're inside New York's most expensive apartment.
I'm Richard Quest, and at the start of this new week, I mean business.
Good evening. The race for the White House is now a battle over the budget. Tonight, Paul Ryan is in Iowa, which is a crucial swing state with seven electoral college votes. He's campaigning on his own, solo, without Romney for the first time as the vice presidential pick.
The Republican congressman wants a radical rethink on government spending. His economic vision is obviously at odds with the president's, and we will listen to him later in this hour. We'll bring you when it happens.
But we, of course, need to get to grips with exactly what it is that Paul Ryan stands for when it come so the economy. In a US election that will be all about how the economy's doing, by picking Ryan, it's given the Republicans a heavy hitter in the world of policy. The man he'll be running alongside says Ryan is the perfect antidote to Obama.
(BEGIN VIDEO CLIP)
MITT ROMNEY (R), US PRESIDENTIAL CANDIDATE: He's come up with ideas that are very different than the president's. The president's idea, for instance, for Medicare was to cut it by $700 billion.
(CROWD BOOS)
ROMNEY: That's not the right answer. We want to make sure that we preserve and protect Medicare. The president's plan for our budget deficit was to make it worse, and Paul Ryan and I are going to get America to cut our spending and to finally get us to a balanced budget.
(CROWD CHEERS)
(END VIDEO CLIP)
QUEST: Barack Obama is in Iowa as well. The president said he admire Paul Ryan personally, said he was a family man. But there was a serious disconnect politically.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This weekend, my opponent, Mr. Romney, chose his running -- as his running mate the ideological leader of the Republicans in Congress. And I've got to tell you, I know Congressman Ryan, he's a good man, he's a family man. He is -- he's an --
(INAUDIBLE COMMENT FROM AUDIENCE MEMBER)
(LAUGHTER)
OBAMA: He is an articulate spokesman for Governor Romney's vision. But the problem is, that vision is one that I fundamentally disagree with.
(END VIDEO CLIP)
QUEST: This is the blueprint for renewal. Republicans really started taking notice of Paul Ryan after he released his path to prosperity, which goes into every single detail of the budgetary process. Let's look at some of them.
Medicare, for example, which is the US policy for the elderly. It will raise the age at which some can claim, it will introduce more private competition, but the CBO, the Congressional Budget Office, actually suggests that could increase the prices.
It doesn't matter where you look with Ryan, he has delved into the budget. On taxes, he wants to cut the six tax rates to two, lower the top rate of income tax, and close loopholes. Problem so far -- he hasn't said which loopholes will be closed.
Social Security, that safety net for the poor, it will transfer more of the onus onto the states to decided the spending and, the critics would say, gives less incentive to actually spend the money.
Bureaucracy, that canard much loved by all politicians, less bureaucracy, less financial regulation. But he wants to get rid of "too big to fail," the policy that led to the US government having to bail out banks and bail out systemically important companies, like General Motors.
Finally, on government spending, as you might expect, Ryan believes on caps, he wants to protect defense, all the usual things one might expect. Put it all together and you really do end up with the most detailed account of how a Republican would actually change the taxation system.
Paul (sic) Morici is the professor of international business at University of Maryland. We'll come to whether you like the plan in a moment, Peter, but first, you'd agree, this -- by choosing Ryan, he has really chosen somebody who has been in the deep trenches of budgetary issues, like him or hate him.
PETER MORICI, PROFESSOR OF INTERNATIONAL BUSINESS, UNIVERSITY OF MARYLAND: Oh, absolutely. Congressman Ryan is the very soul of the Republican party, and he is the principle architect of all of the budget proposals that have been coming out of the Congress since the Tea Party -- essentially seized control of the Republican caucus and the majority in the House of Representatives.
QUEST: Right. Simple question, Peter. Do you like his blueprint for renewal? Nail your colors to the mast.
MORICI: I do like it, and let me give you an example. With regard to Medicaid and Medicare, the United States spends 50 to 100 percent more than European countries on health care and doesn't get outcomes that are as good.
The governors of the state have been crying for more freedom in the implementation of Medicaid, which is the program for poor Americans and for poor and middle income children. So, they feel if they had more latitude in how they spent the money, they could accomplish the cost savings that the federal government does.
And so, I think it's a good idea. He's not talking about taking something away --
QUEST: Well, well, well --
MORICI: -- he's trying to make it better.
QUEST: Well. As you are aware, one person's "we are doing this to protect the program" is another man's or another politicians "you're doing it and you will gut the program." But the truth is, whatever political side one is on, there is going to be a very clear line in this election, isn't there?
MORICI: Oh, absolutely. I would suggest that the Democrats are offering America a set of benefits that it really can't afford. Our federal government has a trillion-dollar deficit and the solutions they've offered for closing that don't add up.
A tax on wealthy folk give you $100 billion in tax revenues, whereas you've got a trillion-dollar deficit. The Republicans are basically saying you can't afford the benefits you're getting, and you're going to have to trim things down, so get things to where you can afford it.
QUEST: All right. But I -- OK --
(CROSSTALK)
MORICI: Either -- either outcome is unpleasant --
QUEST: OK, but I need to put the other point of view, though, to you, which is, looking at this list, it is the elderly, it is the poor, it is those who can least take the pain that will bear the brunt.
MORICI: I don't agree with that. I think that we're all hurt by a system that spends too much money on health care, because the states themselves are getting to the point where they simply can't afford it. We have municipalities going bankrupt.
If the programs go away completely, simply because, like Greece, we can't afford the benefits, then who gains? At some point, the numbers have to add up, the books have to balance, and America has to live within its means.
QUEST: And we have to say thank you, Peter. Good to see you in DC, as always. Peter Morici joining us there.
If the appointment of Ryan has energized the conservatives, as you can hear there, it has galvanized their opponents. They see Ryan's dogmatic budgetary views as a huge plus for more liberal economics. Our Chief US Correspondent John King now explains the pros and cons of the Romney/Ryan ticket.
(BEGIN VIDEOTAPE)
JOHN KING, CNN CHIEF US CORRESPONDENT (voice-over): Ryan is the GOP's numbers guy, the House Budget Committee chairman who isn't afraid to say, in his view, the only way back to fiscal sanity is to dramatically shrink government and fundamentally change Medicare.
REP. PAUL RYAN (R), US VICE PRESIDENTIAL CANDIDATE: If you don't address these issues now, they're going to steamroll us as a country. And the issue is, the more you delay fixing these problems, the much uglier the solutions are going to have to be.
KING: In short, he's a lightning rod.
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: From a Democratic point of view, they are salivating, because they really want to run on Medicare and the Medicare reforms in the Ryan plan. So, that's why it's risky, but there's no question that it enlivens the base and the conservative intellectuals, they all love him.
KING: There are upsides. It will energize a GOP base sometimes suspicious of Romney. Ryan is an energetic debater and campaigner, and at just 42, he would add youthful vigor to the ticket. Close friends like former House colleague Mark Green say Ryan will help Romney in Wisconsin and across the midwest.
MARK GREEN (R), FORMER US REPRESENTATIVE, WISCONSIN: I think he does get Wisconsin. But I think more importantly, he gets that sort of blue collar conservatism that I think's the heart of the Republican party.
KING: But tapping Ryan is a big gamble because of the House GOP budget that bears his name. Up until now, Romney has done everything to make this campaign a referendum on the incumbent.
ROMNEY: The president's policies are not creating jobs.
KING: But by adding Ryan to the ticket, there's no escaping this.
SEN. CHARLES SCHUMER (D), NEW YORK: The Ryan plan to end Medicare as we know it must be taken off the table.
KING: Other potential downsides: Ryan has never run statewide. He has no foreign policy experience, and some will question whether a 42-year- old House member is ready to be commander-in-chief.
GERGEN: One of the stars of the Republican future over the next to 20 years. Whether he's ready at this moment, only the campaign trail could tell. And he's going to get -- I will tell you, he's going to take a real beating.
(END VIDEOTAPE)
QUEST: That's John King reporting there with QUEST MEANS BUSINESS on a Monday. After the break, struggling Motorola gets a revamp. Thousands of workers will pay the price.
(COMMERCIAL BREAK)
QUEST: On the economic front, Japan's latest GDP numbers sparking fears that the global slump is getting deeper. Japan's economy expanded just barely, three tenths of one percent in Q2, half the rate that was expected.
Wind it on. It comes on top of dismal trade figures in China last week, where exports were barely changed year-on-year.
And losing steam at the same time, the situation in Europe isn't improving. The Greek economy shrank 6.2 percent in the second quarter. The country's deeply still in recession, and the numbers are positively frightening.
The markets are watching all of this. Alison Kosik is at the New York Stock Exchange and joins me now. I saw the Dow was down. We have to remember, it's the 13th of August and things are quiet.
ALISON KOSIK, CNN CORRESPONDENT: Exactly.
QUEST: And is that really --
KOSIK: You read my mind.
QUEST: Ah, well. There's the -- there's a prospect in thought.
(LAUGHTER)
KOSIK: You know what? The focus today is really all about overseas. It's what you talked about: Japan's GDP, worries that Spain is going to need a full-scale bailout. And then you throw in the fact that it's a quiet day in the middle of the summer. Trading is extremely light today, and that can really exaggerate the scope of the market movement.
And you're seeing stocks kind of come off their lows every so slightly. And guess what? Traders are telling me that things could -- stay this tame until Labor Day, which is in a few weeks, and after that, most investors and traders should be back at work, out of summer vacation mode.
Also Richard, we're going to be closer to those key Federal Reserve and ECD meetings, when we can finally find out if any stimulus is going to put into the economy.
QUEST: Right. So, while we await for you holiday-makers and vacationers slacking off on the beaches of --
KOSIK: Right.
QUEST: -- Long Island and the Hamptons --
KOSIK: Doesn't include me.
QUEST: Absolutely. Look at Groupon's share price. If I touch it there, it'll do something. There we are, try it -- ah! Groupon's share price. Now that, if I've ever seen -- after -- from its high point, way down. There's nothing but misery on that price.
KOSIK: Yes, you said it. That's why Groupon, which is reporting after the close today, really has to impress this skeptical market. You look at Facebook, Facebook took the wind out of the market's sails after it had that dismal IPO. As far as confidence goes in these newly public internet companies, the market really is skeptical.
So Groupon really needs to prove that it's grown up, that these complaints that these critics have can sort of be held at bay. Richard?
QUEST: Except -- except every time I go to my health club and there are people with Groupon vouchers. I go to restaurants and they'll be with Groupon vouchers. Everybody seems to have got the vouchers or whatever. So what's the -- and I know you're not a Groupon expert or a Groupon groupie, but what's the fundamental problem with Groupon?
KOSIK: Well, you look at the drama that Groupon sort of carried with it since it went public. It's faced a lot of criticism about its account practices, and some say, Groupon doesn't have a viable long-term business model at this point. And this is why you're going to see investors really looking through this report very closely, since Groupon also is the only publicly traded company of this type.
Everybody really wants to see how this sort of new industry is faring when the economy isn't doing so great, even though it seems like everybody's walking around with these Groupons. It also has stiff competition, you have to remember. Living Social is doing a heck of a lot better than Groupon, Richard.
QUEST: It's a new world. Alison Kosik in New York. And thank you for that.
Shares in Europe had their worst day in more than a week. Waning Japanese growth and what it means for the economy, it all weighed on the market. Have a look at the numbers. And Germany's DAX fell half a percent. London's FTSE and France's CAC retreated.
Let's not get too excited by these market movements, though. As Alison said, we are in the deep, dark days of summer.
Even though we may be in summer, some people are taking the opportunity to get the bad news right out there. The hands that make up Motorola Mobility is about to slash 4,000 jobs worldwide, 20 percent of its staff.
The move is part of a massive restructuring by Google, which bought the company for $12.5 billion. It was a big investment. Google now wants a return. Maggie Lake is in New York. This was part of Google's -- major shift from software into hardware. So, why are they getting rid of so many jobs if they still want to make phones?
MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: Well, that's an open question, isn't it, Richard? A lot of people took that acquisition as a sign, maybe, that Google was going to think about making its own phones.
But really, when you talk to analysts, that purchase was really about the patents and to protect its Android operating system. Think of it as buying a valuable piece of land. On that land happened to be a house. And Google's not sure whether it wants to keep it, tear it down, sell it.
So, what it's doing is sort of getting it back in shape, cleaning it up, getting it profitable again, and then it's going to make a decision. At least that's what analysts who follow this stock closely think.
Let's take a look at some of the details. You mentioned it. These are pretty sharp cuts, but by all accounts -- I'm looking at just balance sheet issues -- they are needed. Two thirds of the jobs coming from outside the US, that's because it's very much concentrated in manufacturing.
Motorola makes too many phones that don't sell well. Google wants to get that down to just a couple models that can compete with the iPhone. They're going to close a third of the global offices, they've been laying off middle management.
It's going to cost them around $275 million. They're going to take a charge to do it. We know that's chump change for Google. They've got tons of money. That's not a problem.
Interestingly, this is the first large-scale layoff in Google's 13- year history. This is a company that hires people, not fires people, and they may well add on the research and development side. But right now, they're sort of getting thin, getting lean for this handset arm.
And again, maybe in a couple years' time, we'll see what they decide to do with it. Perhaps make a phone, if not sell it off to somebody who might want it, Richard.
QUEST: This is -- it's grim: 4,000 jobs, 20 percent of the workforce. One needs to put no more than those facts on the table. Now, Motorola Mobility wasn't doing very well. They lost the plot some years ago. But it does smack and smell as if it's an asset stripping for those patents, as you rightly say.
LAKE: Well, again, I think that the jury's out on that. One thing is, Google -- I said, well, if they don't want to make a phone, then why not just shutter the whole business? Why not just buy the patents and put this out?
People acknowledge that would have been politically very difficult to do. These are really steep layoffs, but they're not shuttering the company.
And it is possible, as you brought up, that Motorola Mobility may live to see another day under Google. Here's the tension with tech companies: they want products that are amazing, that can compete with Apple, that really showcase their operating systems.
They've been disappointed with what the hardware providers are giving them, because margins are so low. They just don't have the deep pockets, those hardware makers, to invest the way Apple can, which is why you saw Microsoft go into making its own tablet.
Will Google in a year or two's time decide that the phones just aren't good enough for the Android operating system and want to make their own phone? It's entirely possible. Analysts don't love that scenario --
QUEST: Maggie?
LAKE: -- because it moves them away from their core competency, but it is possible, Richard.
QUEST: Thank you, Maggie. Forgive me for cutting you ever so shirt there.
LAKE: No problem.
QUEST: Maggie Lake is in New York.
I need to bring you some breaking news into CNN. We're getting reports that several people, including law enforcement officers, have been shot on Monday in an off-campus shooting, it's near the Texas A&M University, obviously in Texas. The officers are on the scene and the college station police department said the event had happened.
Now, it's northwest of Houston Texas, A&M. I'm looking to see what more information I can give you. Essentially, that's all we know at the moment: there has been a shooting, possibly the gunman is in custody, but that I can't confirm. And we're just -- looking at details. So, we are going to bring some more -- more information on that.
We'll take a break. Back in a moment.
(COMMERCIAL BREAK)
QUEST: So. You want a new home and you want to make sure it's suitable for your status in life: six bedrooms, nine bathrooms, and a dining room fit for 30 people. Well, the only thing missing in this Manhattan condo is a buyer who can bring up $100 million.
The building is City Spire. It's right in the middle of 56th Street in Manhattan. And to put it into perspective, what this is costing, US house prices are finally on the rise. CNN's Felicia Taylor, who might be worth or bob or two to buy it, has been to see.
(BEGIN VIDEOTAPE)
FELICIA TAYLOR, CNN INTERNATIONAL CORRESPONDENT: This is the view that you get from what is the most expensive apartment to ever be listed in the New York real estate market. But this isn't the only view. It wraps around the entire apartment, all three floors, for a 360 degree panoramic view.
But for $100 million price tag, it's not just the view that you're going to get. We're going to take a look at some of the other amenities.
TAYLOR (voice-over): We get an exclusive tour of the penthouse from Howard Lorber, chairman of the listing agent, Prudential Douglas Elliman.
TAYLOR (on camera): Has there been any interest already?
HOWARD LORBER, CHARIMAN, PRUDENTIAL DOUGLAS ELLIMAN: Well, there has been. We've had a couple of very important showings, and we have a few more lined up.
TAYLOR (voice-over): Six bedrooms and nine bathrooms, located on the top of the City Spire building on Manhattan's west side.
TAYLOR (on camera): What makes this apartment so spectacular?
LORBER: Well, I think the most important part of this apartment is the views. This is a view apartment. You have terraces, you have over 3,000 feet of terraces facing the city, the east side, the west side. North to the park, south to downtown.
TAYLOR: $100 million asking price. I mean, it's steep for anybody out there. Is the view really what's going to capture it?
LORBER: Pricing apartments today, it's not a science. This is what the owner wants for the apartment. It'll either sell or it won't sell.
TAYLOR: Leading into the dining room.
LORBER: This is the dining room, which can seat 20, 30 people, at least.
TAYLOR: So come on. I like to cook.
LORBER: You like to cook? OK.
TAYLOR: Show me the kitchen.
LORBER: I'm not going to test your cooking, though.
(LAUGHTER)
LORBER: How would you like to be cooking and looking at this view?
TAYLOR: Oh, my goodness.
LORBER: The river --
TAYLOR: Wow.
LORBER: -- and downtown.
TAYLOR: And while sales of less swank Manhattan homes have been flat, business is booming in the so-called super prime sector.
LORBER: The high end of the market has reached a new high. The low and middle has not. It has come back and it's close to where it was before, but it hasn't gone past it. There are plenty of buyers. A lot of foreign buyers, and local buyers also.
VANESSA FRIEDMAN, "FINANCIAL TIMES": I think it's a reflection of a general interest in high-end everything. If you're a luxury consumer, and there are a lot of them out there still, you're looking at a place to put your money that's reliable. It's a hard asset class.
And that could include a boat, it could include a plane, it could include a great piece of art, watches, and jewelry, or an incredibly fabulous piece of real estate.
TAYLOR (voice-over): And fabulous real estate is going fast. At least four deals within eight months. $52 million bought one American a lux pad on Park Avenue.
Another American bought the penthouse on the Ritz Carlton on Central Park for $70 million. $88 million earned a Russian family a penthouse on Central Park West.
And the yet-to-be-completed 157 has a deal on the table for about $90 million, possibly with a Middle Eastern royal.
Back in the triplex, here's more of what a lot of money can buy.
TAYLOR (on camera): For $100 million asking price, naturally, to get to the second and third floors, you have your private elevator.
TAYLOR (voice-over): The master bedroom sits at the top and, right above it, the massive dome that caps that building. The penthouse owner controls when it's lit, adding to the New York City skyline.
TAYLOR (on camera): Whoever the buyer may be for this apartment, the sky certainly seems to be the limit when it comes to New York City real estate.
From high atop Gotham, I'm Felicia Taylor, CNN, New York.
(END VIDEOTAPE)
QUEST: And if that's a little rich for your blood, in the same building, which is 150 West 56th Street, on this street easy website, we can see that there are others for sale. You can get a nice little studio for a mere $680,000, or maybe a decent one bed, oh, just about $1 million. All that could be yours.
Now, currency conundrum for you tonight. Each of the euro banknotes have illustrations of windows and gateways. Why? Because financial dealings should be transparent? The spirit of openness and cooperation? Aesthetics -- they look good?
These are the rates, as you can see at the moment. Euro's up for the first time in four days. The pound is hovering, and the yen shows little reaction. Those are the rates --
(RINGS BELL)
QUEST: This is the break.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN and, on this network, the news always comes first.
As I was telling you a moment ago, a gunman is now in custody after several people were shot close to Texas A&M University in the United States. The university is about 150 kilometers northwest of Houston. The university has warned people to stay away from the area around a block from the university campus. There's no word on the number of people who have been injured or hurt badly.
Syrian opposition activists are accusing the government of, in their words, "a massacre" in suburban Damascus. This video is said to show some of the victims being buried. CNN can't confirm its authenticity. The activists say at least 10 people were publicly executed.
The Egyptian president, Mohammed Morsi, has shaken up his country's government. It's his big move by replacing two top military chiefs. The president says he isn't trying to drive a wedge between the new government and the powerful military, but he had clashed with military council over legislative powers. And he says the change is aimed at moving the country forward.
There's now new video that's showing tents being put up in northern Iran after twin earthquakes hit on Saturday. More than 300 people have been reported dead, thousands more are injured and many more homeless. They are being treated in the makeshift hospitals set up outdoors.
In Norway, an independent commission's disturbing report has concluded that the police in Oslo could have done more to stop last summer's massacre.
Seventy-seven people died, most of them at a youth camp on Utoya Island, when the gunman went on a rampage. According to the independent panel, the police should have and could have moved faster to stop the suspect, Anders Breivik, who's currently on trial.
(MUSIC PLAYING)
QUEST: London 2012 and the Olympics, they wowed the world and though now the circus is moving on -- and it moves pretty fast.
As soon as last night's closing ceremony finished, thousands of athletes and officials parted their way through the night and some, no doubt, with a hangover, heading home from London. Heathrow Airport introduced its own special Games terminal for the extra traffic, making a big effort.
Erin McLaughlin joins me now live from this terminal.
Erin, it's bad enough in the middle of August traveling, but all these athletes, how have things gone, trying to get them out and get them home?
ERIN MCLAUGHLIN, CNN CORRESPONDENT: That's right. Good evening from the Games terminal at Heathrow Airport, Richard. So far things here going pretty smoothly some 6,000 athletes expected to flow through here today.
In the last hour or so I've spoken to athletes from Angola, New Zealand, South Africa including marathon runner Stephen Mokoka. He has taken home with him a rather unique souvenir. Take a listen.
(BEGIN VIDEO CLIP)
JUSTIN GATLIN, U.S. OLYMPIC ATHLETE: As you come through, you know, our mission, to be able to come back out here and to make my supporters and my friends and my family happy, to show them that I am a God-given talent, so come out here and compete to my heart's content, it makes me very happy.
STEPHEN MOKOKA, SOUTH AFRICAN OLYMPIC ATHLETE: I think it's awesome, the hospitality, people around and that everything (inaudible) great experience. It's one of those, that good moment that a person had and I'm happy about everything.
MCLAUGHLIN: And I see that you're bringing home with you a little souvenir as well. This was your bedspread at the athlete village?
MOKOKA: Yes, it was. It was mine and then I was happy when I was told that manager, that I'm allowed to take one home. So I decided, no, let me just (inaudible).
(END VIDEO CLIP)
MCLAUGHLIN: Now it's hard to believe that the area you see just behind me used to be a car park. This is a temporary terminal designed for the express purpose of seeing these athletes home. It's designed in the fashion of an iconic London park, complete with a telephone booth, lampposts -- there's even a memory tree.
But it's not just about sending these athletes home in style, Richard. As you mentioned, it's also about making Heathrow run smoothly during this busy holiday period, Richard.
QUEST: Eric McLaughlin at Heathrow Airport tonight.
The Olympic baton's passed to Brazil. Rio hosts 2016's games. It's be the first time an Olympiad has taken place in South America. The mayor of Rio received the Olympic flag at the closing ceremony at the stadium last night. He'll be home in Rio in an hour and a half. I'm not sure whether she'll be there to greet him. Certainly she'll be there because she's there already.
Shasta Darlington is our correspondent in Brazil.
Shasta, there is one thing everybody looking at your reports and looking at your backdrop and looking and seeing where you are has had naked envy that you are in such glorious circumstances. Tell us what the mood is.
SHASTA DARLINGTON, CNN CORRESPONDENT: Absolutely, Richard. And you know, we just have to hope that Brazilians don't take it too easy, because so many people we talk to here in Rio de Janeiro, they're excited about the Olympics coming when we asked them. But can you compete with London, Beijing, high technology, pop music?
And they just look around them, look at this place. This is Rio. Of course we can compete. So they're definitely going to rely heavily on the landscape, the beaches, the whole Carnival atmosphere here. We're going to hear samba coming out out of every bar, every street corner. You can imagine, this is going to be one nonstop party. That doesn't mean they won't have their problems.
(BEGIN VIDEO CLIP)
(MUSIC PLAYING)
DARLINGTON (voice-over): It was an easy sell, Christ the Redeemer embracing Rio de Janeiro's beautiful beaches and Brazil's sport-loving culture. Now it has to prove it can deliver. In just four years, the marvelous city will host the 2016 Olympic Games, the first time ever for South America. This city is hard at work on venues, and officials insist they're on schedule.
ROMARIO GALVAO, RIO'S SPORTS & LEISURE DEPARTMENT SECRETARY (through translator): The government has already delivered the athletes' part, here at Barra da Tijuca. And now we started work on the race tracks, where the Olympic Village will be. So, if you look at it in terms of chronology, we are ahead of schedule.
DARLINGTON (voice-over): But one of the biggest challenges is infrastructure. Traffic-clogged street lack public transit. There's a shortage of hotel rooms. And the airport is aging. Another is security. Police ,often backed by the army, have invaded some of the most notorious hilltop shanty towns, seizing control from drug gangs. But they still have to secure dozens more.
For Fernando Meirelles, the man who directed "City of God" and created the video that helped Rio win its Olympic bid, samba music, the Carnival spirit and Brazil's famously friendly people promise to make Rio's Olympics a success. But he hopes Rio will use the Games to showcase its natural beauty and promote sustainability.
FERNANDO MEIRELLES, FILM DIRECTOR: It should be more organic, like an organic Games, you know, rather than technological and it's a game from a different world.
DARLINGTON (voice-over): Rio has the added challenge that it will also host some of the matches when Brazil stages the 2014 World Cup. Of course, that also means many venues will be finished well ahead of the Olympics. Fans hope that it's the athletes who improve their game over the next four years to win more of the medals closest to their hearts.
(END VIDEO CLIP)
DARLINGTON: And that's also a big deal here, Richard. Brazilians want to keep more gold at home, and they've especially got their eye on the gold for men's football.
QUEST: Shasta, one thing we learned in London is the Olympics is really fundamentally about organization. Infrastructure, organization, getting people from A to B and making sure the whole thing doesn't collapse. With its four different venues, give me a feel, give me an answer, just how much still has to be done?
DARLINGTON: Well, Richard, first of all, I think I'd argue that point. I mean, here, people will say it isn't so much whether or not you get an hour earlier, or an hour late, it's when you go home, are you still talking about Rio? What are the impressions that you take home with you? And I think they might be right.
But having said that, back to your question, as far as the venues are concerned, they're actually ahead of schedule in some areas, right on schedule in others.
Remember, with the World Cup coming to Brazil in 2014, the stadium, for example, Maracana, the football stadium, will be done ahead of schedule. It's really the basic infrastructure, public transit, airports and hotels, that are really behind, Richard.
QUEST: That'll prove to be the important bit. Shasta, you and I'll talk more about this, if I can ever forgive you for being in Rio at the moment. Thank you very much, Shasta Darlington, who's in Rio.
Now I told you a while ago, the Republican vice president candidate, Paul Ryan's, been speaking to his supporters at a state fair in Iowa. Not everyone was happy to see him. And sometimes it was hard to hear over the hecklers. Have a quick listen.
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REP. PAUL RYAN (R), WIS.: One thing we've got to get straight -- one thing we've got to get straight is we're not growing this economy like we need to. We're not creating jobs like we can in America.
And that is why Mitt Romney and I have a plan for a stronger middle class to get this country back on track, get this country growing jobs again and get us back on the path to prosperity in this country.
(APPLAUSE).
RYAN: There are five things that we're going to do right away that are designed to create 12 million jobs. Number one, we have energy in this country. Let's use that energy in this country.
(APPLAUSE)
RYAN: Everything, renewables, (inaudible) --
(CROSSTALK)
QUEST (voice-over): All right. It's always good to hear hecklers, politicians of either size or stripe, having to take -- listen to the public.
All right.
(END VIDEO CLIP)
QUEST: Now Portugal is suffering from a brain drain with its people looking to escape the Eurozone crisis. Many are packing up and leaving for a fresh start. So where are they going? After the break.
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QUEST (voice-over): The answer to the Conundrum, why Europe banknotes are throwing the windows and gateways? The answer is B, to represent a spirit of openness and cooperation. A picture of a bridge, a metaphor for communication between European nations.
But here's the interesting thing. None of those bridges, none of those windows actually exist. Why? Because they knew they'd never be able to agree on which ones to put on the notes.
(END VIDEO CLIP)
QUEST: Immigration is becoming a by-product of the Eurozone crisis in Portugal, and people are packing up and looking for a new start. Portugal, of course, you are well aware, is one of those countries currently under an IMF E.U. program. A memorandum of understanding, a bailout. The destination for many is the former Portuguese colony of Mozambique, from where Robyn Curnow found the opportunities awaiting the arrivals.
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ROBYN CURNOW, CNN HOST (voice-over): In his new apartment, Bruno Gabriel unpacks his suitcase full of his girlfriend's fancy handbags, reminders of their more sophisticated city life back in Portugal. The couple moved to Maputo, Mozambique, four months ago.
Gabriel, a marketing director, said he was headhunted and made a deliberate career move to Africa.
BRUNO GABRIEL, MARKETING DIRECTOR: In Europe, everybody are a little bit afraid with their own future because the crisis, worldwide crisis in terms of economics.
CURNOW (voice-over): In the Portuguese consulate, the consul-general says she's seen an increase in experienced university-educated Portuguese coming to their country's former colony.
GRACA PEREIRA, OUTGOING PORTUGUESE CONSUL-GENERAL: You know, the last two or three years, people began to come increasingly. Lots of people for small investments, some others working with the companies.
CURNOW (voice-over): Walking into Maputo's Portuguese-style pavement restaurants, locals tell us that the new arrivals from Portugal fly in to Mozambique nearly every day.
CURNOW: Thank you. This new wave of Portuguese immigrants are not only lured by familiar food and music. Mozambique's economy is forecast to grow at more than 7 percent this year, no doubt a huge incentive for those wanting to escape lack of opportunity back home and the Eurozone crisis.
VANESSA SOUZA, AVI INTERNATIONAL: (Speaking foreign language).
UNIDENTIFIED MALE: (Speaking foreign language).
SOUZA: (Speaking foreign language).
CURNOW (voice-over): One of the many new immigrants is 32-year-old Vanessa Souza. She left Lisbon in January. She's now working for AVI, a successful South African consumer goods company, helping to promote and sell tea, biscuits and coffee to Mozambique's growing middle class.
SOUZA: There's no job over there in Portugal.
CURNOW: No options?
SOUZA: No. New life, new life, new country.
CURNOW: Why Mozambique?
SOUZA: There's -- first of all, we have jobs here and the language is the same and we have opportunities here.
CURNOW (voice-over): Many Portuguese, says the consul-general, are setting up restaurants, joining small companies or offering skills in these frontier towns and bypassing the capital of Maputo.
As for the Mozambicans, locals say there's been little backlash to the Portuguese returning in very different circumstances.
HIPOLITO HAMELA, ECONOMIST: Yes, they're coming. But I see it really positive.
CURNOW (voice-over): Positive, he says, because new businesses, restaurants like this one, create jobs for local Mozambicans. More skills help development, too; also, government quotas on the number of foreigners that a company can hire ensure that local jobs are protected.
And even though scenes like this are becoming more common, Mozambique is still one of the poorest countries in the world, facing serious challenges.
Bruno Gabriel says he's frustrated with the slow pace of life and how that contrasts with Europe.
But still, it's here he's chosen to develop his career, overseeing a local TV program for one of his clients, Portuguese in Africa, as much a story of a European crisis as it is a story of African opportunity.
(END VIDEO CLIP)
QUEST: Robyn Curnow reporting there.
As the U.S. livestock industry struggles through the worst drought in half a century, Barack Obama announces new help and new action for producers (ph).
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QUEST: More drought relief in the United States. The government's now responded to the worsening crisis. It's promising to buy up food from livestock producers, $150 million worth of meat and fish will be bought and frozen for future use.
Last week, Barack Obama announced aid for farmers and ranchers. Now today, the president didn't miss an opportunity -- he's in Iowa -- for a dig at the opposition.
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BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The best way to help these states is for the folks in Congress to pass a farm bill that not only helps farmers and ranchers respond to natural disasters but also makes some necessary reforms and gives farmers and ranchers some long-term certainty.
Unfortunately, right now, too many members of Congress are blocking the farm bill from becoming law. I am told that Governor Romney's new running mate, Paul Ryan, might be around Iowa in the next few days. He is one of the leaders of Congress standing in the way.
(END VIDEO CLIP)
QUEST: Barack Obama there, on a political -- putting the boot in.
Tom Sater is tracking the drought. He's with us at the World Weather Center this evening.
Good evening.
TOM SATER, AMS METEOROLOGIST: Good evening, Richard, $150 million worth of meat they say that they will freeze. It's going to take a lot of freezers.
Well, as far as the drought is concerned, a little bit of rainfall has fallen in parts of Missouri, Illinois, Indiana. It is too little; it is too late. The pollination stage for corn was in July and it's nearly half lost now.
They are looking at a secondary front, though, that for the first time in months has dropped the temperature down 12 degrees below average. Now this is the monsoonal time of year, where we have showers in the desert southwest. You know, and many times, you know, we'll get maybe a flash flooding, sometimes storms develop without rain and lightning strikes, and they have the wildfires.
But I want to tell you -- show you some pictures, what's been happening in Phoenix. This isn't the first time. This is an iReporter video of a haboob. That's right, again, another massive dust storm makes its way over Phoenix, the Scottsdale area.
There were numerous incidents on the freeways as visibility within five minutes dropped to zero. They have had these over and over. In fact, you know, one -- that one story I read in an article was that local bartenders are now making drinks and cocktails called the Arizona haboob. I'm not sure what's in them; not sure I really want to know.
But as far as the drought is concerned, let's go -- make our attention here, where extreme and exceptional, again, a report will come out this week that most likely will change it. I do expect that the extreme to exceptional drought area will increase a little bit.
Some rainfall has helped. But you know, we talk about the Mississippi River and how it is down in Mississippi. It's -- after a 15-meter drop from last year's floods, it's down to 1.8 meters. They've had to halt traffic. But this is going to increased commodities as well. You've -- no longer can carry your cargo on the barges.
When it comes to corn and bushels of corn, a barge can carry 787,000 bushels. A rail car only 3,500 and by truck, 910. That means for each barge for corn, it takes 870 semi-trucks. This is an area that has been scorching, you know, July was horrible. We had 500 -- or excuse me, nearly 5,000 high-temperature records, several hundred of all time.
And it looks like the long-time trend will continue at least through October, above average temperatures and below average rainfall.
So I really think the bigger question here is, Richard, you may have to get your crack staff on this one. I believe by law what was 35 percent of corn yield, this year 40 percent must go to the production of ethanol. What happens when you have the worst drought in 50 years, when you lose half your yield, what gives, you know, ethanol or world consumption? So very interesting.
QUEST: That will be a question for the politicians and the --
(CROSSTALK)
QUEST: -- and we'll be watching it closely. Tom Sater at the World Weather Center.
I'll have a "Profitable Moment" after the break.
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QUEST: Tonight's "Profitable Moment": it's good to dream; $100 million for an apartment in New York. That's a dream. But it's also the staggering price being asked for the six-bedroom condo in the CitySpire Building.
Now one real estate expert broker I spoke to said the luxury penthouse probably was overpriced by 50 percent. Ah. Ah. A possible bargain. You could have this CitySpire if you'll only just take $50 million instead of the $100 million.
Now we've all loved this story because even though only a few can afford this bauble -- and I am not one of them -- we would all like to dream that we could. And there's nothing wrong with dreaming about what if. Perhaps. Maybe. Someday.
It's that dream of living large that brings so many people to Manhattan in the first place, often cooped up in apartments no bigger than a broom cupboard or my desk in the studio here. Whatever community you're in, the allure of living in that 1 percent lifestyle will never wear off. Now as I say, dream, it's OK and fine to build castles in the air, just don't try to move in till you can afford it.
And that's QUEST MEANS BUSINESS for this Monday edition. I'm Richard Quest. As always, whatever you're up to in the hours ahead, I hope it's profitable. (Inaudible).
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QUEST: The news headlines at this hour, more of the breaking news from Texas we've been telling you about. A gunman is in custody after several people were shot close to Texas A&M University northwest of Houston.
The university has warned people to stay away from the area around a block from the university campus. There's no word on the number of people injured or, indeed, the gravity of the attack.
Syrian opposition activists are accusing the government of what they say is a massacre in suburban Damascus. The video is said to show some of the victims being buried. We can't confirm its authenticity. The activists say at least 10 people were publicly executed.
The Egyptian president, Mohammed Morsi, has shaken up his country. In a big move, he's replaced the two top military chiefs in his clash with the military council over legislative powers. Mr. Morsi says the change is aimed at moving the country forward.
And new videos showing tents that are now springing up in northern Iran after two earthquakes hit on Saturday. More than 300 people have been reported dead, thousands more people are injured. Many of the injured are being treated in makeshift hospitals set up outdoors. Of course, many thousand more are homeless.
There's other stories we are watching for you on CNN. Now to New York and "AMANPOUR."
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