Return to Transcripts main page
Quest Means Business
US Sues Bank of America; Judgment Day for Former Goldman Sachs Exec; Weakness in Europe; European Markets Up; Dow Slightly Higher; Economic State of the Union; US Fed Statement; Market Reaction Slight; Euro Slipping; Outlook Monaco: Tourism
Aired October 24, 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: Tonight, the mortgage hustle at Bank of America. The US Justice Department sues for a billion bucks.
The recession in the eurozone, it's set to worsen as manufacturing activity sinks deeper into decline.
And waiting for the Fed. It's the last word for the US presidential election, and it's out anytime now.
I'm Richard Quest and, of course, I mean business.
Good evening. Our program tonight, we start with tales of alleged misdeeds, misjudgment, and mismanagement. This hour in New York, sentencing has begun in the case of the former Goldman Sachs director Rajat Gupta.
Meanwhile, the United States government is taking Bank of America to court, alleging it committed large-scale mortgage fraud. It's a program that they called "the hustle." Maggie Lake is following those stories closely for us.
(RINGS BELL)
QUEST: Maggie joins me, now, from New York. Maggie, well -- let's start, first of all, with this Bank of America, "the hustle." What are they alleged to have done and how?
MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: Well, Richard -- and this, again, seems like we are watching some sort of TV program or something with some of the details coming out.
Bank of American is alleged -- and really, this is centered more on the Countrywide part of it, which Bank of America bought, for running a program that the Fed said was called "the hustle." It was intentionally organized or set up to fast-track mortgages without any kind of quality control.
US Attorney Preet Bharara, who is leading the charge once again, he is a busy man, related to both these stories today, in the file said that Countrywide's alleged behavior was spectacularly brazen in scope. The bank made disastrously bad loans, and then stuck the taxpayers with the bill.
Importantly, he said, this lawsuit should send another clear message that reckless lending practices will not be tolerated. They are looking for $1 billion from Bank of America, no small change, there.
Bank of America having no comment right now. Interestingly, Richard, the stock not really reacting. It was, in fact, up slightly when we just checked. It could be because Bank of America has already put a very large amount of money aside in loan reserves just because of this type of litigation.
QUEST: OK. This one's going to run and run. And one that's running towards its end is the sentencing of Rajat Gupta. Goldman Sachs director and American Airlines former -- figure and a variety of other companies. His lawyers are asking that he doesn't go to prison. Is that likely?
LAKE; Probably not, although we have to see. The only reason I'm even hedging that answer, Richard, is because this is a man from the upper echelons of power, very well-known for his humanitarian efforts, philanthropy, 400 people, the who's who, really, of global power brokers, sending letters in on his behalf, and he is 63. So, we'll have to see.
But Preet Bharara again, the US attorney, this is now part of this long-going insider trading, the biggest in US history crackdown that we've been reporting on for a long time. It's related to the Raj Rajaratnam case, which we -- as you, know, we covered for you outside the courthouse.
But Preet Bharara's office, very keen to send a message, again, also about insider trading. They've been trying to get jail time for most of these people, especially when we're talking about the big fish --
QUEST: Maggie?
LAKE: -- Raj Rajaratnam in for 11 years.
QUEST: The moment you hear what that sentencing is, please come back to us. It'll be a busy day --
LAKE: OK, will do.
QUEST: -- with that and with the Fed. It's all happening in New York, and you'll come back and tell us more about it. So, we will be watching those court proceedings closely. We'll bring them more as and when that sentence is read out.
Whilst everything on this side of the Atlantic is either in the courts or in the elections, the eurozone may be falling deeper into recession as we head towards the end of the year. Look at the numbers and look at the way it's progressing.
A measure of manufacturing activity is at its weakest in almost three and a half years. It's the PMI, the Purchasing Managers' Index, at 45.8. Now, anything below 50 -- you'll know this well -- represents a contraction in the economy. And what's worrying, of course, is that it seems to be falling.
Even the region's most robust economy, Germany, faltered. German business sentiment has slumped to its lowest level in more than two years. The IFO index down for the sixth straight month.
Fred Pleitgen is with me now in Berlin to put this in perspective. Look, Fred, if Germany falters any further, not only does it -- is it unable to pull the rest of the euro train along, it will seriously jeopardize Germany's own ability to avoid recession.
FRED PLEITGEN, CNN INTERNATIONAL CORRESPONDENT: Oh, absolutely. There are people, Richard, here in Berlin who fear that Germany could slip into recession. First of all, the economy will most probably contract in the fourth quarter of this year, probably not in the third quarter, but they do believe that the fourth quarter will be a very difficult one.
And one of the things that's really worrying about that confidence index that you were just talking about is that it's especially industrials that seem to be very low in confidence at this point in time.
One of the things that we have to keep in mind that Germany did to avoid the bulk of the problems that are going on in the eurozone right now is that the big German companies, what they did is they just started exporting more to emerging markets, to places like China, to places like India. But now, those are experiencing difficulties as well.
And you're absolutely right. If this gets any worse, if Germany gets weakened, if it slips into recession and especially if the unemployment figures here in Germany go up, Angela Merkel is going to have a very, very difficult time leading in all of this effort to try and curb the eurozone crisis, Richard.
QUEST: We saw Mario Draghi, there. Draghi was in Germany --
PLEITGEN: Yes.
QUEST: Defending the bond-buying plan. Slightly into the jaws of the lion, because it was the Bundesbank that is against his bond-buying plan
PLEITGEN: The Bundesbank was against the bond-buying plan. The other thing that we have to keep in mind is that German parliamentarians were very much against the bond-buying plan and continue to be very skeptical of it.
The interesting thing is that both Angela Merkel and her finance minister, Wolfgang Schaeuble, say they are in sync with Mario Draghi as far as this plan is concerned. They seem to be hedging out a sort of strategy to try and deal with the eurozone, and they just feel that it is part of it.
But there are still many members of German parliament who don't think it's a good idea. And if, for instance, a country like Spain will need additional money, if Greece will need additional money, the German parliament's going to have to vote on it.
So, today Mario Draghi went there, there was a closed-door session, because they said they wanted very frank discussions. Let's listen in to what Mario Draghi had to say after that session.
(BEGIN VIDEO CLIP)
MARIO DRAGHI, PRESIDENT, EUROPEAN CENTRAL BANK: We focused most of the questions on the ECB actions -- recent actions called OMT, Outright Monetary Transactions. And the message that I gave is that these actions are -- fully and foremost in compliance with our mandate of delivering price stability for the whole of the euro area in the medium term.
(END VIDEO CLIP)
PLEITGEN: OMT, of course, that reference to the ECB buying bonds of ailing eurozone economies on the market. And one of the most important sentences in Mario Draghi's speech, of which we obtained a copy, was that he says he believes that these measures will not cause inflation in Europe.
And that, of course, is the key sentence here in Germany, very much afraid of inflation in this country, so that'll be the key thing from all of that, Richard.
QUEST: Fred Pleitgen, who is in Berlin for us tonight. Many thanks, Fred. Keep watching that.
European markets, let's the markets. They rebounded from yesterday's losses, despite that disappointing data. I wouldn't say it was a huge rebound, bearing in mind we were off over 2 percent on the DAX and the CAC yesterday, just a quarter and a half gain today, and Zurich is just about unchanged.
One of the major influences of the market: China's PMI numbers suggest that the economy there is stabilizing. The manufacturing's still contracting, the pace of decline is most certainly slowing. Paris CAC 40 led the gains more than just over half a percent. So, to, the markets and in New York --
(RINGS BELL)
QUEST: Which is trading at the moment -- oh! Calm yourself! Don't get too excited. A mere ten points on the Dow. Let's see how that Dow responds after we get the Fed statement, which will be in just ten -- four minutes from now. Already logged in, already following, already waiting for the results. QUEST MEANS BUSINESS, good evening.
(COMMERCIAL BREAK)
QUEST: The US Fed has completed its October policy meeting, and we are moments away form its announcement, watching closely. A crucial time for the United States. Both the Fed's monetary policy and the presidential election, of course, depend on the economic fundamentals, and the indicators can be split between the stars and the stripes.
Join me at the CNN super screen and you will see what I mean. Let's start with the stars, things that are rising grandly, and for this, of course, we have jobs. I say rising, but actually, of course, it's unemployment that is falling, so that's very much in the ascendancy and one of the things that is very much in the favor of the president. It came down from 8.1 to 7.8 percent.
Housing, new home sales, they are up 5.7 percent, a strong, robust performance. Again, very much the sort of thing that President Obama has been pointing out as being what shows that the economy is recovering.
And the stock market, year-to-date, the Dow Jones, it may only be up about 10 points today, but year-to-date, the Dow has shown gain of about 7 percent, give or take.
So, if we now factor in -- those are the stars. Those are the things that people are looking at, and very much the positives. But there are other areas in this flat which we do need to attend to.
We get rid of those and you look at these, you will see you have the trade deficit which, of course, has slowly but surely risen in a way that has caused -- GDP growth.
The latest GDP, 1.3 percent in the second quarter and is likely to be weak in the third, 1.3, 1.4 is what people are talking about. So clearly, that is going to be of grave concern.
And also, you have unemployment numbers, which -- you've got to factor the unemployment rate, the jobless rate, bearing in mind we saw this, the unemployment rate, coming down, so we're seeing that trend of it.
And when you factor the total of the stars and the stripes, you understand very much this mixed picture, this picture of the US economy at the moment. So, to Alison Kosik in the -- at the New York Stock Exchange.
That is the mixed picture that we are seeing at the moment, Alison. The market is waiting for that Fed statement any second now. It may even be up already whilst we are talking, it is quarter past 2:00.
ALISON KOSIK, CNN CORRESPONDENT: Exactly
QUEST: What's the market doing?
KOSIK: So, the decision came out already, as we're speaking, and there has been no change in rates, that's not a surprise. And no change in the economic outlook, either.
You also have to remember that the Fed did its biggest move, I guess you can say, of the year when it launched its latest round of QE3, saying that it's going to buy up $40 billion in mortgage-backed securities every month in an open-ended program, Richard, until the job market improves.
So, not a lot of -- not a lot was really expected out of this Fed statement so far. I am getting some of the information in my ear --
QUEST: Right. And I'm looking at the statement, now. I have it right in front of me. Do forgive the slightly inelegant position that I seem to be in. The Fed says it expects that highly-accommodative stance of monetary policy will remain appropriate for a considerable time. It's kept the mid-2015 deadline that it has talked about before.
And frankly, there's almost no wording difference between this statement that I can see, just off the top of my head, Alison, and previous, unless you're looking more closely and you see any difference.
Alison?
KOSIK: I'm sorry, I have a producer actually talking to me in my ear about the statement. Not a lot has changed in the statement, from what I'm seeing. Inflation has picked up, though, that is a change that we see. And it -- because of energy prices, of course. We've been watching oil prices go up quite a bit, except for today, of course, and yesterday, where they're down over 2 percent, Richard.
QUEST: Alison? Stay where you are. Look at the markets. Let's go to Ali Velshi, who joins me. He's with the CNN Election Express.
(TRAIN WHISTLE)
QUEST: Oh, my word, Ali. Sounds like the train's going past. Ali, the Fed --
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Yes.
(LAUGHTER)
QUEST: The Fed hasn't done anything. That is not a surprise. Is interest rates --
VELSHI: Correct.
QUEST: -- will remain low. What do you factor into the Fed --
VELSHI: Yes.
QUEST: -- in this presidential election?
VELSHI: Well, look. They've got to be very careful. The issues, they're balancing this low, accommodative interest rates, which is starting to bear some fruit.
(TRAIN WHISTLE)
VELSHI: Sounds like that train you were on, by the way. There's an Amtrak train running right -- beside me in Orlando, here.
I'll tell you, what they've got is low interest rates that they've had, this accommodative policy, for a few years, that has finally started to bear fruit because it's combined with the bottoming out of the housing industry in the United States, particularly here in Florida, and they don't want to change that. They don't want to start to increase those interest rates because they don't want to wreck this recovery.
QUEST: Right.
VELSHI: Housing is the golden ring around the storm cloud that's above us, so that what they're saying is that they're planning to keep these rates where they are. They are seeing inflation tick up a little bit, they've said this in their report, but they're also seeing housing -- activity tick up.
This is the balance that they've got to maintain right now. They're not going to do anything, they weren't going to do anything in their last report --
QUEST: Right.
VELSHI: -- before the election. The trick is, as you know, Mitt Romney's not a big fan of Ben Bernanke and this Fed, so the question is what the election does to the Fed.
QUEST: And where are you and what are you seeing where you are?
VELSHI: I'm seeing a tiny, tiny slice of people, a smaller slice of people with each passing day, who are undecided. But as you know, we're in Florida, 29 electoral votes, so this is hard-fought. In fact, right behind me, people are assembling. Ann Romney is going to be speaking here a little later on.
But people who are undecided, Richard, are telling me they are not hearing what they want. They want specifics from the candidate.
They have visions, they understand that, they don't know how they're going to get there with Romney's promises of 20 percent tax cuts without the -- without increasing the deficit, Obama's talk of a million new manufacturing jobs --
QUEST: OK --
VELSHI: -- and 600,000 new natural gas jobs, that's what they want details about.
QUEST: How many of those checked shirts have you got?
VELSHI: I bought -- it's a little warm, by the way. It's flannel --
(LAUGHTER)
VELSHI: -- which is probably not the right idea for Florida this time of year. But it's a bipartisan shirt. I have blue and I have red, and then I've got some green and yellow, too. The problem, Richard, is that I'm frugal, like you, so I bought a 12-pack of these --
(LAUGHTER)
VELSHI: -- and we're only on day two.
QUEST: Ali Velshi is the only man I know who could be schvitzing in the Florida sun in a hot flannel shirt.
VELSHI: Yes, yes.
QUEST: Ali Velshi.
VELSHI: I'm wearing Speedos on the bottom half. You can't see that. It's keeping me cool.
QUEST: Ali Velshi in Florida. Alison Kosik is at the New York Stock Exchange.
KOSIK: Oh, Richard --
QUEST: Absolutely. Go on.
KOSIK: I was just going to say, I'm from Florida, and I can't believe he's wearing flannel. I grew up in Florida. I can't even imagine wearing what he's wearing. But it's a great shirt. I love it.
QUEST: Markets. What is happening? What's happening? The numbers, quickly, in reaction -- the instant, knee-jerk reaction from the Fed.
KOSIK: It's pretty lackluster, not much of a reaction. Look, not a lot was expected from this Fed decision. The action happened six weeks ago when QE3 was announced.
The only change that I see that stuck out to me, Richard, was the language, where the Fed says that growth in business, fixed investments "has slowed." The last statement said "appears to have slowed." So, this is the Fed acknowledging that business investment is slowing, and we're seeing this reflected in earnings this season.
QUEST: Alison Kosik, we thank you for that. Alison at the Stock Exchange, Ali Velshi in Florida. You're up to date with the Fed decision, no change, minor changing in language.
And now, our Currency Conundrum. So, in 2007, which country surprised its citizens by releasing a talking coin with the face of the former US president, John F. Kennedy. Was it North Korea, Somalia, or Mongolia? The answer's later in the program.
The euro's slipping on fears Europe's powerhouse, Germany, may be weakening. That PMI number. The single currency is down a third against the dollar. The pound is going up nearly half a percent against the US. Those are the rates --
(RINGS BELL)
QUEST: -- this is the break.
(COMMERCIAL BREAK)
QUEST: A small country that generates lots of money. Less than two square kilometers, it has a GDP of $5 billion. All this week, we are CNN's Outlook series as we examine the business climate in that most prosperous of little principalities. It is, of course, Monaco.
Over the course of the next few days, we'll be looking at the country's controversial taxation system. We'll meet Monaco's influential business leaders and entrepreneurs, and we'll look at the traditional industries, as well as sitting down and talking to the country's current ruler, Prince Albert II.
So, today, tourism: an industry which has for decades played that crucial role in propping up Monaco's economy.
(BEGIN VIDEOTAPE)
NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT (voice-over): Early morning in Monaco, and a small army of workers piles into the principality. Every day, the country's population of 35,000 more than doubles as up to 50,000 people arrive for work.
The country's biggest employer is the Societe des Bains de Mer, or SBM for short, with 3,000 workers. Formed in 1863, it runs Monaco's premier tourist attractions. The state remains its biggest shareholder.
SBM has long been synonymous with the very top end of what Monaco has to offer in the way of hotels and casinos attracting international superstars. But in the last few years, like many businesses, it has been badly affected by the credit crunch. I was keen to know how this impacted on its workforce.
DOS SANTOS (on camera): If you take a look at the latest set of figures, you have been suffering a knock on the face from the eurozone crisis. The figures haven't been particularly kind.
And of course, Monaco's in an interesting position, because you have this social and moral contract toward your employees. You can't exactly lower their families just because things are going bad. Why is that and how do you balance that?
JEAN-LOUIS MASUREL, MANAGING DIRECTOR, MONTE-CARLO SBM: In the charter of Societe des Bains de Mer going back to 1863, in the statutes it was written that it was created among other things to provide employment for Monegasque. And that is part of the pacte social that we not only have with the employees, but we have with the principality at large.
So, we have a moral obligation to be less brutal, to be more diplomatic, to be more human, when things turn -- turn down.
DOS SANTOS: The relatively high salaries guaranteed to SBM staff has eaten into profits, but Masurel accepts that the wage structure is part and parcel of running a business in Monaco. He explained how SBM contributed to the Monegasque economy.
MASUREL: We pay royalties for the concession, for the monopoly -- the gaming monopoly, and we pay VAT, et cetera, and taxes on salaries. It used to be a very important component of the budget of the state.
Now, it is less so. It is still important, but it is much less than it used to be, because other industries have taken -- have grown and developed quite well, particularly the service industries, banking insurance.
DOS SANTOS: SBM is also diversifying away from traditional tourism and getting into the online gaming market. Even this most traditional of Monegasque businesses is trying to adapt to a new world order.
Nina Dos Santos, CNN, Monaco.
(END VIDEOTAPE)
QUEST: For more on our information on Monaco and our special coverage this week, go to cnn.com/outlookmonaco. QUEST MEANS BUSINESS in a moment.
(RINGS BELL)
(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.
The international envoy for Syria says the Syrian regime has agreed in principle to a cease-fire during the upcoming Eid holiday. The UN Security Council has issued a formal statement in support of this possible truce. Rebels and many others remain skeptical. An opposition group says 124 people have been killed across Syria today.
QUEST: Pakistani police told -- say they've identified the main suspect in the October the 9th shooting of the teenage activist Malala Yousufzai in the Swat Valley. The suspect's fiancee and two of his family members have also been arrested. Doctors say Malala's making a good recovery at a hospital in Birmingham in the UK.
Tropical storm Sandy has intensified and is now a Category 1 hurricane. People are moving into shelters as it bears down on Jamaica. The eye of the storm is expected to make landfall in a few hours.
Sentencing has begun in the case of the former Goldman Sachs director, Rajat Gupta. Gupta was convicted last year of leaking boardroom secrets to the now-imprisoned hedge fund founder Raj Rajaratnam. Gupta could face as much as ten years in prison. His defense is arguing strongly that he should serve community service.
The man behind France's biggest rogue trading scandal will spend the next three years in prison. A Paris court has rejected Jerome Kerviel's attempts to overturn his jail sentence. Societe Generale says his unauthorized bets cost $6.4 billion worth of losses. Kerviel says he will file a new appeal.
(MUSIC PLAYING)
QUEST: The Gray Lady, "The New York Times" has been dragged into the scandal over the British TV presenter, the late Jimmy Savile. Now it's Mark Thompson's turn to feel the heat. He was the director-general of the BBC and will now become the CEO of "The New York Times" parent company. He was head of the Beeb when Savile died.
Shortly afterwards, a BBC expose on a serial abuse of children by Savile was dropped. Now Thompson is having to explain what he knew about that decision. He's given conflicting statements as to whether he knew about the program at all.
He claims he was aware but -- here's the key line -- "I did not know at the time or for the remainder of my period in office whether the 'Newsnight' Savile investigation included allegations related to the BBC."
That was in reply to a British lawmaker, Rob Wilson, who had asked Thompson for clarification.
Wilson's response was, "Why did you not take any steps to establish whether or not the investigation was in any way related to the BBC?"
It's complicated, it's messy and it promises to get a great deal more so.
Dan Rivers is our senior international correspondent and is in London.
I mean, let's strip away the parliamentary rhetoric here. The fundamental thing is did Mark Thompson know about this investigation, that it related to the BBC and what did he do about it?
DAN RIVERS, CNN CORRESPONDENT: Absolutely. Did he know and if he did, why didn't he do something about it? I think that's what it basically comes down to. And if he didn't know, why didn't he know? Because arguably this had, you know, had -- is having such a profound effect on the BBC. Surely he should have known about it.
And we already know now that nine serving BBC employees are being investigated for sexual harassment. So you know, he's sort of damned if he does and damned if he doesn't in some ways. But this is fiendishly complicated, Richard, as you said. But I would not be surprised now if he is called -- Thompson -- before this committee of MPs. His successor already has been.
Surely, Mark Thompson is also going to be called to answer questions about what he knew and when.
QUEST: And in his letter to that committee, he's already said he will turn up. Fine. But come on. Did this -- you know, a nasty scandal in the BBC and in the U.K. But this is growing. Now "The New York Times," Mark Thompson is due to be the CEO of "The New York Times" parent company.
And now the ombudsman of the "Times" has questioned -- questioned whether he's the right man for the job. Now, come on, Dan, explain to me, isn't it a bit of a leap of faith to go from what's happening in the U.K., without any evidence and any allegations, to suddenly question whether he's the right man for the job?
RIVERS: Well, that's certainly what Margaret Sullivan has done. Now she's what's called the public editor of "The New York Times". That basically means she's a sort of ethics guru of "The New York Times". They're not to get involved with what necessarily goes in the paper, but how they operate and the ethics of how they conduct their journalism.
Now if she is raising questions, admittedly, she's only -- not only asking questions -- she's not saying he's not suited for the job -- she's just asking questions, you know, like his integrity and decision-making are bound to affect the "Times" and its journalism profoundly.
It's worth considering now whether he's the right person for the job. It's not a brilliant way to start the job of CEO of "The New York Time," which begins in 10-11 days.
QUEST: Right. But Dan, hang on. Let's just, you know, with all the schadenfreude, perhaps, as one watches this take place, by those words, because of her job ,it has -- the mere fact that you and I are talking about it, the -- it has taken a disproportionate importance. She's virtually convicted him -- Thompson -- before he even got out the gate.
(CROSSTALK)
QUEST: Let me say, Dan, she's virtually condemned him before he's got out the gate.
RIVERS: She's certainly made it very uncomfortable for him, you're right. I mean, in some ways, that is her job. She is there to ask these difficult questions as she points out herself in her blog. And in his defense, Mark Thompson makes this very clear. The D.G., you know, sits above getting involved in the nitty-gritty of what goes in programs.
The job of the director-general is to be a kind of figurehead for the BBC. And he shouldn't get involved with whether an expose on Jimmy Savile goes ahead or not. He doesn't want to have, as he says, "a chilling effect" on the journalism of the BBC.
So he's in a difficult position because he's in this -- he was in this figurehead role, where he wasn't supposed to get his sort of hands dirty with the nitty-gritty. But nevertheless, surely, I would think now, he is going to be called before this committee. It's almost inevitable. And they're going to say to him, look, if you -- if you didn't ask the right questions about "Newsnight," why not?
You know, clearly there were rumors swirling around for years about him. You must have heard those rumors. You must have had an inkling that this was all going to blow up on the BBC. Why didn't you, you know, grab the bull by the horns then and get stuck in and say, right, let's find out, you know, how bad this is?
QUEST: Dan Rivers, who has put it far more elegantly as an uncomfortable position rather than my slightly more excitable version.
Dan, many thanks indeed for joining us.
"Trinity Mirror" is still being punished by allegations of phone hacking. Four people, including the former football manager, Sven Goran- Eriksson, is suing the flagship tabloid, "The Daily Mirror." Shares in "Trinity Mirror" closed down about 11/2 percent in London. Just look at the way the market has fallen so very sharply. It follows a 10 percent drop on Tuesday.
On the broader market, European stock markets closed mostly in the black. Strong manufacturing data out of China outweigh disappointing numbers on manufacturing activity in the Eurozone.
The Greek finance minister says negotiations with the troika are largely finalized. Yiannis Stournaras has told CNN the government is preparing its budget based on an extra two years to make painful spending cuts and tax increases.
Diana Magnay joins me now from Athens.
I'm confused, Di. I'll be blunt; I'm confused now as to where we stand. Have they got the money? I know Portugal was approved for money today. Are they getting the money? Have they got the money and are they going to get the money?
DIANA MAGNAY, CNN CORRESPONDENT: OK, so they haven't got the money yet, Richard. But apparently, according to the Greek finance minister, the nuts and bolts of the agreement are in place, but it's still the issue of labor relations, which is the sticking point.
But basically there's a Eurogroup working meeting tomorrow. And he has to present the basic elements for an agreement at that working group. So the pressure's really on and he was effectively saying today, you know, the agreement's pretty much there; there are some minor details.
But we will be able to bring it to the parliament next week so that they can vote on it, so that we can have the money by the time and money runs out, which is November the 16th, according to the Greek prime minister.
As far as this extension goes, this isn't official yet, because officially we've always been told that the E.U., the commission, will only decide whether to allow Greece more time to reach its budget goals once the troika's report has come out.
And that's not coming out for a while. But unofficially, Mr. Stournaras says the negotiations with the troika are based on a premise that they are having this two years, that they will get this two-year extension, because he says, you know, we can't wait. When we're putting together the Greek budget for the troika's report, whenever that is, we have to plan now.
And all of our negotiations with the troika are based on the premise that we get that extension. So unofficially, he says, they are working on that premise. It's effectively a done deal with the troika that they get that extension, Richard, if that makes sense.
QUEST: It makes sense. And we'll hear more from you when they sign the agreement and they actually get the money.
Di Magnay, who is in Athens for us tonight.
I alluded to it; let me give you some details now.
Portugal has received the next tranche of its bailout package. The IMF approved a $1.9 billion loan installment after reviewing the country's austerity program. Portugal was bailed out -- the original bailout, of course, came in May 2011. Portugal, one of those countries that is now seen very much the poster child for austerity and for implementing the program.
In a moment, Europe's biggest hotel operator is after 600 percent expansion in Chile. (Inaudible) CEO on "Business Traveller" next. (Inaudible).
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
QUEST: So, to this week's "Business Traveller" update, and we're all about expansion and development, join me at the CNN superscreen.
What a lot of fuss. Is Air France trying to woo Air Berlin to join SkyTeam? This has been the story. Now Air France, Air Berlin (inaudible) all coming together in one big conglomerate, if you like, of co-chairing.
Of course, Air France is a member and is now -- Air Berlin is a member of oneworld and there was a suggestion from the CEO of Air France that maybe Air Berlin would like to move across from oneworld to SkyTeam in the future.
That happened earlier this week and everybody's now denying that anybody said anything similar.
So to Singapore. Today it was announced, Singapore is to purchase five A380 aircrafts along with 20 -- that's a super jumbo -- along with 20 A350s. That's the new aircraft. It's a deal worth $7.5 billion. Remember, Singapore Airlines was the launch customer of the A380 several years ago. We were on board.
Air Koryo, it is a -- launches online booking service. It's the world only one-star airline. And Skytrax describes it as having very poor quality performance, with inconsistent standards of service. It has flights from Pyongyang to Beijing, Vladivostok.
Now in a week that has seen so many developments -- or at least movements in the airline industry, in terms of hotels, Accor is Europe's biggest hotel operator -- is announcing a 600 percent expansion in the Latin American market. The CEO, Denis Hennequin, told Ayesha Durgahee that the company wants to expand big because Chile and Latam is where the future is.
(BEGIN VIDEO CLIP)
(MUSIC PLAYING)
AYESHA DURGAHEE, CNN CORRESPONDENT (voice-over): With more than 4,000 properties in 92 countries, ranging from budget to boutique, Accor's new CEO and chairman is on a mission.
(Inaudible) last January, Denis Hennequin wants to revitalize the brand and build its presence in emerging markets, especially in Latin America.
DENIS HENNEQUIN, CHAIRMAN AND CEO, ACCOR GROUP: In 2008, our average (ph) was 3 percent coming from the emerging countries. This year, it's 20 percent. We have 153 hotels as we speak. We've just bought out another 15 with a pipeline of 14 and in Latin America, there always are plate filled with more than 200 hotels.
DURGAHEE (voice-over): Brazil is Accor's biggest market and is now expanding rapidly in the region. It's been in Chile for 10 years, operating five hotels. And by 2015, Accor plans to operate 30 more in the country.
HENNEQUIN: You have to be ahead of the game and you have to pave the way for the others. Competition is more local than international. The usual sets of suspects in terms of international competitors are not so present.
DURGAHEE (voice-over): One reason for their absence could be the boom in property prices in the region, making acquisitions hard to come by.
CHRIS PICKARD, CHAIRMAN, LATIN AMERICAN TOURISM ASSOCIATION: They should really have needed to have been in there a decade ago. So for example, you take a city like Rio, you've now got a group called Windsor, which is a Brazilian brand.
And they took over what, until a couple of years ago, was the Meridian (ph) in Rio. That is now a Windsor Hotel. So it's almost the reverse there. And that has left Meridian (ph) scrambling around.
DURGAHEE (voice-over): For the international brands already in the region, this is not a time for complacency. Luxury leisure hotels, like British hotel group Orient Express need to reevaluate how to cater to new markets in order to compete.
FILIP BOYEN, COO, ORIENT EXPRESS HOTEL GROUP: We constantly upgrade our infrastructure in the hotel. For example, to create an executive floor, to create an executive lunch and to do a soft refurb of all the rooms, more or less 40 percent of our total clientele is the business traveler.
DURGAHEE (voice-over): The Global Business Travel Association expects business travel spending in Brazil to increase by 13 percent in 2012, to $31.1 billion and 15.7 percent next year to $36 billion.
And hotels are prepared to fight for every customer.
BOYEN: Competition is very good. It keeps us on our toes and we welcome it.
DURGAHEE (voice-over): Ayesha Durgahee, CNN, London.
(END VIDEO CLIP)
QUEST: Now coming up after the break, "Will that be all, sir?"
Doing it properly. (Inaudible) go back to school to learn the answer to serving in the modern world.
And English butlers are being asked to do more -- steady!
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
(BEGIN VIDEO CLIP)
QUEST (voice-over): Let's get the answer to the "Currency Conundrum." We asked you which country released a talking JFK coin. The answer is Mongolia. This is it. Now if you press a small button on JFK's chest, out comes a sound bite from his famous "Ich bin ein Berliner" speech.
The former president was highly thought of in Mongolia for launching the Peace Corps. Anybody who's got one of those, I'd love to hear or see it. Many thanks indeed.
(END VIDEO CLIP)
QUEST: That's the "Currency Conundrum."
When you want to get good service a good bell always helps. And there's never any good service around when you need it. I'm not alone these days in wondering exactly what is happening in the search for good staff. You can't get them. Butlers in high demand as emerging economies look for status and efficiency.
Jim Boulden now meets the butlers learning the art of being a gentleman's gentleman, with some surprising requests.
(BEGIN VIDEO CLIP)
(MUSIC PLAYING)
JIM BOULDEN, CNN CORRESPONDENT (voice-over): Brown the onions, braise the chicken, form the crust for a quiche.
UNIDENTIFIED FEMALE: You want to lift it so that you get your pastry very light and plumped.
BOULDEN (voice-over): It's basic cooking lessons for eight students.
BOULDEN: This is no ordinary cooking class. These people are training to become British-style butlers.
BOULDEN (voice-over): Whipping up a soup is one part of an intensive five-week course on how to serve the wealthy and how to get it right --
UNIDENTIFIED FEMALE: The sort of people you're going to be cooking for are going to expect their food to be beautiful.
UNIDENTIFIED MALE: Mimi (ph), I want you to announce Lady Radford (ph) --
BOULDEN (voice-over): -- and expect their butlers to be British- trained.
CHRISTOPHER BALLARD, STUDENT BUTLER: Hello, Mr. Leeds' residence. How can I help you? Something like that?
BOULDEN (voice-over): Twenty-one-year-old Christopher Ballard (ph) left the army and is learning the art of being a butler.
BALLARD: A modern butler provides a family man more time with his family, his kids, and you organize his life around him so that he has that chance to do more things with his family.
(MUSIC PLAYING)
BOULDEN (voice-over): So it may not all be "Downton Abbey," but there is still some of that.
GARY WILLIAMS, TRAINING DIRECTOR, BRITISH BUTLER INSTITUTE: A butler still needs to be doing the polishing the silver, he or she must be polishing the master's shoes, the principal's shoes. He or she should be cooking. He or she should be driving, managing properties, managing staff, P.A. (ph) duties.
BOULDEN (voice-over): Not all of these students are, in fact, British. Bulgarian Kamelia Treneva works on a yacht.
KAMELIA TRENEVA, STUDENT BUTLER: I am expected to travel with my principals, like for vacation or business trips. So I would like to know that I'm 100 percent prepared.
BOULDEN (voice-over): Others are looking to upgrade within a household. Some are having the $7,000 school fee paid by their employer to learn everything from answering the phone --
UNIDENTIFIED MALE: (Inaudible) Ms. Leigh (ph) invite you to --
UNIDENTIFIED FEMALE: (Inaudible).
UNIDENTIFIED MALE: -- dine in the (inaudible).
BOULDEN (voice-over): -- to removing a drunk guest from the table, to limiting the number of cigars handed out with the cognac.
WILLIAMS: You know the house rules. If the house rule is, you know, one cigar per person, then that's what you want to convey to the guest. But it is the principal's decision.
UNIDENTIFIED FEMALE: (Inaudible).
BOULDEN (voice-over): Then there's the flower arranging course, another skill butlers need, apparently. Elaine Radford says her years of traveling will make her a good employee in the fastest growing market for British butlers.
ELAINE RADFORD, STUDENT BUTLER: I think to be based somewhere, such as Shanghai, an international city, would be an amazing opportunity.
BOULDEN (voice-over): A British butler with dignity.
RADFORD: I think my absolute principle is that it is about providing a service and not being a servant.
BOULDEN (voice-over): Britain is tapping into one of its best exports -- its tradition -- Jim Boulden, CNN, London.
(END VIDEO CLIP)
QUEST: Not much wrong you can say about that, except perhaps (inaudible) stand up if one's going to talk to Jenny Harrison.
Milords, ladies and gentlemen, I pray silence for the weather forecast from --
JENNY HARRISON, CNN METEOROLOGIST: Hey, you've missed your vocation. You'd be great as a butler.
QUEST: (Inaudible) just of forecasting.
HARRISON: You'd be great as a butler.
I like the bit about teaching them how to tell a guest that they shouldn't be dining in public, and you know, the privacy (inaudible) --
QUEST: I'd like to see you clean a bit of silver.
HARRISON: I'm very good at cleaning the silver. (Inaudible), which is (inaudible) I'm quite good at it.
Yes, now, indeed, my goodness, I'd love a butler. Fantastic. I haven't got one and won't be getting one. But let's have a look at the weather conditions first of all. Not sure any of this is to do with being a butler, but look at this, clear, dry skies across central southeastern Europe. We've still got that high pressure in control, but it's about to change.
And the last few days, we have been talking about the Indian summer across the north and the west of Europe. Well, look at this, all good things come to an end and this is exactly what's going to happen. In fact, temperatures have been above average. Give it a couple of days well below average.
So it's going to be cold across much of northern Europe as temperatures below average and the rain is back across the southwest. It will extend right the way over towards the central Mediterranean. So not particularly cold down here, but again, we've got a few more warnings in place.
Extended across pretty much all of Portugal, pushing into the southwest of Spain and again through the central Mediterranean. Heavy rain coming in with that storm system and you can see here, we're written "waterspouts possible", because these thunderstorms could actually spawn tornadoes. And as you know, over water, that is what they form, these waterspouts.
So the temperatures that have been well above average, that, as I said, is about the change. So the average result in London, 12 down to about 9 Friday and Saturday, pretty cold in the overnight hours. Get prepared for some ground frost as well and then Brussels down to single digits, and the same in Paris as well.
So make the most of Thursday (inaudible) certainly in Paris with a high of 13 because it will feel a whole lot colder come Friday. The southwest, that's where the rain is. And of course to the north, we have got some moisture up there.
So the snow really quite widespread and fairly heavy, too, as you can see, pushing through the Baltics and into western areas of Russia. Be prepared for some delays at the major airports, quite low visibility with that high pressure, even though there's no real rain there, some strong winds kicking in (inaudible) with the chance of some rain as well.
So temperatures 24 in Rome, 15 Celsius on (inaudible) -- that says Wednesday, but it should be Thursday, Richard.
QUEST: Back to a maid below stairs. (Inaudible).
(CROSSTALK)
QUEST: (Inaudible) next.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment," not all Fed decisions can be blockbusters. Today, as expected, Fed's (inaudible) they pretty much have been. However, you need to look at each and every statement, because it does tell us something about the importance of the economy.
There were those subtle changes in language, the reworking of key phrases, confirming today, for example, business investment has slowed. And that's significant when politicians and voters alike are fixated with every piece of data.
Voting day is two weeks away and this election apparently doesn't hinge on charisma but on things like job numbers next week from the BLS. It's an economic once dreamed but the totality of the situation is real and very human. Every Fed statement is the tale of 300 million people and their economic well-being. What's more, in two weeks' time, we will hear those voices for themselves.
Because that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest. We'll have full coverage of course in the hours ahead because whatever you're up to in the hours ahead, I hope it's profitable.
(MUSIC PLAYING)
QUEST: The headlines at this hour: the international envoy for Syria says the regime has agreed in principle to a cease-fire during the upcoming Eid holiday. The U.N. Security Council has issued a formal statement in support of this possible truce. But rebels and many others remain skeptical. Opposition groups say 124 people were killed across Syria today.
Pakistani police tell CNN they've identified the main suspect in the October the 9th shooting of the teenage activist, Malala Yousafzai in the Swat Valley. The suspect's fiancee and two members of his family have also been arrested. Doctors say Malala is making a good recovery at her Birmingham, England, hospital.
Sentencing has begun in the case of the former Goldman Sachs director, Roger Gupta. He was convicted last year of leaking boardroom secrets to the now-imprisoned hedge fund founder, Raj Rajaratnam. (Inaudible) face up to as much as 10 years in prison. His defense is arguing he should serve community service.
U.S. Federal Reserve left interest rates and monetary policy unchanged. They're expected to remain at between zero and a quarter of 1 percent through to the middle of 2015. In a statement, the Fed said the United States is growing at a moderate pace and the housing market is showing signs of improvement.
You are up to date with the news headlines at the top of the hour. Now to New York and "AMANPOUR."
(MUSIC PLAYING)
END
