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Quest Means Business

EU Job Crisis Worsens; Prioritizing Youth Unemployment; European Market Reaction; Merkel Meets Samaras; Dow Down; US Immigration Dismantles Major Piracy Ring; Samsung Has Record Quarter; Consumer Electronics Show; US Dollar Makes Headway; Dreamliner Nightmares; Ireland's Employment Outlook

Aired January 08, 2013 - 14:00   ET

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

NINA DOS SANTOS, HOST: Prioritize the young. The EU's jobs commissioner tells me his plan to fight record eurozone unemployment.

Doubts about the Dreamliner. A second fault in a mere two days.

And marketing through mystique. David Bowie makes a sudden entrance back into the music industry.

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

Good evening. Europe's job crisis has reached another new low. Unemployment in the eurozone is now at an all-time record, up to 11.8 percent for the month of November. Well, the jobless rate for the EU as a whole is also up as well, this time to 7 percent -- 10.7 percent, so it's still in the double-digits.

Now, it's been almost two years since we saw in that monthly rate for this region, and now almost a quarter of young people across the euro area are out of work. The disparity between Northern and Southern Europe is also painfully obvious if we delve deeper into these figures.

Let's do that with the aid of our magic wall here. So, as you can see, what we've got is the map of Europe behind me, and the two worst- affected countries, as you'd expect, are both in Southern Europe, in particular, not just Greece, but also Spain, a huge economy here.

Now, Spain actually has the highest jobless rate in the European Union. Overall, it stands at 26.6 percent. It went up yet again in the latest reading that was released today. But it's its youth unemployment rate that is just as staggering. That one is up to 56.5 percent and continues to rise as well.

By contrast, what we're seeing is some pretty low rates in some of the Northern European countries. They've, in fact, got some of the best track records. Take, for instance, Germany, but also Austria and Luxemburg on either side of its borders.

Homing in on Germany, which is, of course, Europe's biggest and most robust economy, its unemployment rate is a fraction of that of Spain. Take a look at this figure: 5.4 percent versus, as I was saying before, 26.6 percent for Spain.

Germany's youth unemployment rate is also the best in Europe, well below the EU average, but it is still around about 23.7 percent, which is steep for even Germany as well.

Europe's employment commissioner, Laszlo Andor, says that countries like Spain need to take lessons that have managed to keep their unemployment rate down like, for instance, Germany. And he also says that if they can do that, the people in the south can start looking for jobs in other countries if there's no work at home.

(BEGIN VIDEOTAPE)

LASZLO ANDOR, EUROPEAN COMMISSIONER FOR EMPLOYMENT: Spain and other countries should take over good models from other countries, like the youth guarantees, which have been developed in Austria.

And we just adopted a youth employment package in December in the European Commission, which recommends the member states to adopt a youth guarantee, which would help the young generation, because the youth have been very badly hit by this recession. In the last five years, the youth unemployment became excessively high, especially in countries like Greece and Spain, and --

(CROSSTALK)

DOS SANTOS: Yes, let's quantify it, then --

ANDOR: -- a youth guarantee --

DOS SANTOS: Let's -- sorry. Let's quantify that excessively high figure.

ANDOR: Yes.

DOS SANTOS: To put it into context, we're talking about over 57 percent for some of these countries. This could be a social disaster, though.

ANDOR: Yes. In Greece and Spain, the situation is very bad. Youth unemployment is more than 50 percent. But overall in the EU, it's 23, and that's also pretty high.

So, we have to prioritize action against youth unemployment. We have to ensure that the Europeans put together funds serving this purpose more efficiently and faster.

And that's why in the last year, we reallocated about 10 billion euros in order to find projects that support the young people quicker and more efficiently.

DOS SANTOS: Let me ask you this: the painful irony of these jobs figures that were released for the EU today is that they also coincide with economic sentiment which shows that companies, at least, are getting a little bit more confident across the region.

Why do they not yet have the confidence to hire if people like your boss, Jose Manuel Barroso, is saying that the eurozone crisis is effectively almost over?

ANDOR: Well, even if there would be a recovery forthcoming, it's still very important to work on employment policy in the labor market.

Member states where there has been a start with balanced labor market reforms like, for example, Italy, have to stick to these reforms and continue implementing, because they create a more dynamic labor market and help better access, especially for the young people, but also other disadvantaged groups to quality jobs. This is very important.

And also to invest in skills and ensure that there are better models to help people coming from school or training to the labor market and the so-called dual-training system, which functions well in Germany and some other European countries. It's also a model which Italy and Spain and others should follow. So, there are many possible solutions.

Plus, on the top of that, we can ensure that there is better mobility, greater transparency of the European labor market, and those in the south or other regions where there is a recession continuing probably this year, have a better understanding of the job opportunities in other countries, and they can find it more easily than in the past.

(END VIDEOTAPE)

DOS SANTOS: That's Laszlo Andor, there, the commissioner for jobs across the European Union.

Well, the European stock markets had something of a mediocre session, as you'd imagine, given the fact that these economic numbers were not much to shot about. As you can see, the London FTSE 100, ending the day on a downbeat note.

The Xetra DAX in Frankfort being particularly affected by a fall in German exports, a surprise fall in both exports and imports, showing that Europe's most robust economy may be starting to show signs of being affected by the eurozone crisis. We saw the other two markets up, though.

Much of the focus in the United States has been, of course, on the earnings season. Investors are concerned about the prospects for the start of this earning season as a number of companies start to release their figures.

We've seen a jump in European economic sentiment giving the markets some sort of support, but in the meantime, the German chancellor, Angela Merkel, did manage to meet with the Greek prime minister in Berlin. Antonis Samaras said that Greece was making, quote, "great effort" to get its economy back on track.

And going back to the topic of those US markets and those US corporates, we're expecting Alcoa, the American aluminum producer, to kick off the earnings season after the bell, which is traditional.

A lot of people just waiting with a lot of anticipation on the Dow Jones Industrial Average to see whether Alcoa, like many companies that have reported before, will lower its guidance because about 73 percent of companies that reported their quarterly earnings statements in November showed some sort of lowering of their guidance going forward, given the uncertain outlook.

As you can see, we've got the likes of the Dow down by about 60 points at the moment, nearly half of one percent.

Up next, it's gadget mashup. The latest products redefining what it means to be a phone and a tablet and even a TV. We're going to be at the consumer electronic show in Las Vegas with all the latest gadgets.

(COMMERCIAL BREAK)

DOS SANTOS: A Chinese man has pleaded guilty to operating a website which distributed more than $100 million worth of pirated software right around the world. It's one of the most significant cases of copyright infringement ever to have been uncovered.

I'm joined now from Washington by John Morton, who's the director of the US Immigrations and Customs Enforcement, which cracked the case. This is otherwise known as the ICE, and it's the investigative arm of the Homeland Security for the United States. Great to have you on QUEST MEANS BUSINESS, John.

First of all, this is an extremely complicated case, and it also involves cross-border issues and huge amounts of money at stake here. Just run us through the complexities of dealing with all that.

JOHN MORTON, DIRECTOR, US IMMIGRATION AND CUSTOMS ENFORCEMENT: You're right, Nina. This was an international case, it literally spanned the globe. It involved the organized counterfeiting and piracy of software from major software programmers and manufacturers from around the world, the United States, Western Europe, and Japan.

And it essentially was a ring of organized criminals who were taking the software, cracking the licensing codes, and then making them available to anybody over the internet for sale.

DOS SANTOS: So, presumably for departments like yours, this is a sort of watershed moment, isn't it, in the -- in a market, a pirating market, which is worth literally billions. What does it mean, also, for the people who are buying from those individuals codes and pirated software that they knew was pirated and cracked?

MORTON: Very significant problem. Listen, we're not talking about a 13-year-old downloading a video illegally off the internet. We are talking about industrial computer software that's very sophisticated that's used in the defense industry, that's used in engineering and water management.

These are not the kinds of things that you want to be sold willy-nilly over the internet. And we're not talking about $50,000 here, $100,000 there. This was a problem measured in $100 million. So, we've got to fight this kind of piracy relentlessly. This is all about organized crime.

And by the way, when you go and you buy something like this over the internet, you're not only buying something that is unlawful, you're running the real risk of getting malware in the download, people taking your credit card and using them for nefarious purposes. No good comes of this, either for the companies involved or the people who buy it.

DOS SANTOS: If we take a look at exactly how you crack this case, between January 2010 and 2011 in June, you made a series of purchases, you had agents make a series of purchases. Honestly, this affects American companies.

But it does hinge on the cooperation of authorities elsewhere where these websites are being set up and are selling this kind of pirated software. How difficult is that? How much cooperation did you get from places like China to track down these individuals?

MORTON: It's very difficult to investigate these cases. They occur in large part in countries outside of the United States, so we have to engage in fairly sophisticated undercover techniques, and we have to do it over many years.

This case took us literally three years to investigate and we had to lure the lead defendant out of China to Saipan, where he was arrested and brought to the United States. So, a lot goes into this. It's not easy.

It's, frankly, a sophisticated international game of cat and mouse where we have to employ very, very sophisticated methods to track people over the internet and ultimately get them to the United States where we can arrest them and prosecute them.

DOS SANTOS: Fascinating stuff, John Morton, there, the director of the US Immigration and Customs Enforcement Agency. Thank you so much for joining us here on QUEST MEANS BUSINESS.

Samsung has had a record quarter. In its earnings guidance that it published today, it says that it probably made around about $8.3 billion in the last three months of the year, and that would represent an increase -- get this -- of a staggering 90 percent. It would also be the company's fifth consecutive record quarter of record figures.

Now, this is what analysts think is fueling all of this surge. Yes, you guessed it. It's Samsung's Galaxy SmartPhones that are likely to have been accountable for around about two thirds of its sales in the third quarter of the year, with global sales actually beating those of its nearest rival, the Apple iPhone.

Now, despite the record profits, Samsung Electronics still saw its shares falling by around about one and one third of one percent in Seoul this Monday.

Samsung has actually been one of the star attractions at the Consumer Electronics Show in Las Vegas. At this year's event, we've been seeing all sorts of products that combine a number of features of two gadgets, such as, for instance, something like this, I have in my hand.

Let me just show you exactly what the latest nomenclature tells us. First of all, if you put a phone and a tablet together, like for instance in this equation, you get something like this. It's called the Phablet. I have one in my hand, this is a Samsung one, this one is a Huawei one.

And the screen on the new Huawei that they're going to be releasing at the CES is only fractionally smaller than a tablet and nearly twice as big as the first iPhone, which of course revolutionized the world of touch phone technology.

Now, here's another interesting one. By combining a networked computer and a television set, what you get is one of these, it's a smart TV. This is actually the ultra-high-definition one that's being unveiled from Samsung. It even lets you upgrade the smart bit of the technology here to keep the television up-to-date with the latest software for years to come.

And next, let me just show you this. If you add the tablet features to a laptop, what you've got yourself is -- I like to call this one a tabtop, but instead, apparently, it's called a hybrid.

And at this year's CES, Intel actually announced this latest gadget. It also announced that all new laptop will be using its ultrabook specification, and they will have to have a new touch screen. So they'll have to -- you have to be able to touch this bit and flip the other bit around to make it like a tablet, as you can see.

We'll see more designs that will come like this, I'm sure, in the future from the CES. The screen, actually, as I was saying before, slides over to transform into a tablet, so it ends up being something like an iPad but also with the benefit, as you can see there, with the keys instead of having to use a touch key, which sometimes isn't quite as effective, some might say.

Dan Simon is at the Consumer Electronics Show in Las Vegas, and he joins us with all the latest lowdown and also the hype. Dan, obviously we've seen this before. So many people are choosing to use this as a forum to launch all sorts of things like phablets. Run us through the latest trends, because obviously, that affects these companies and their stock prices going forward.

DAN SIMON, CNN SILICON VALLEY CORRESPONDENT: Well, it's really interesting to get a sense of the trends here at CES. Car automation is a big thing. Home automation -- this is using your SmartPhone for different things.

But one technology I want to focus on now, it deals with a problem, Nina, that we all have. And that's when we get our cell phones and our tablets wet. If that happens, if you accidentally take them into the swimming pool, you know that they're ruined.

Well, a company called Liquipel is trying to make that problem a thing of the past, and this is Sam Winkler, who's going to explain what this technology is.

SAM WINKLER, EXECUTIVE DIRECTOR, LIQUIPEL: Liquipel is watertight technology, it's a nanocoating, it's a thousand times thinner than a human hair, so you cannot see it, you cannot feel it. It doesn't affect the functionality of the electronics. However, it does protect your electronics against accidental exposure to liquid.

So, you're a hiker, you drop it in the lake, you get pushed in the pool, human environments, rain, you will be protected with the Liquipel.

SIMON: All right. And you're going to prove it to us, right?

WINKLER: I will prove it to you. So, here we have an iPhone 5. As you can see, it doesn't look any different, it doesn't feel any different. All the ports are open. However -- and it's not just iPhones. We can do tablets, computers, headphones. So, if you come into contact, you get pushed in the pool all of a sudden --

SIMON: Wow, that's amazing. So, it's a coating that's on the phone and it protects it from accidental spills, as you said.

WINKLER: Yes, anything. Whether it's coffee, dropping it in a coffee cup, or whether it's spilling a drink on it, you will be protected once you get coated with Liquipel.

SIMON: All right, now, the question for folks at home watching this is how do they get it?

WINLKER: You go to www.liquipel.com, L-I-Q-U-I-P-E-L. You can actually order it online. We're also in Malaysia, Hong Kong, about to be in China, and Australia. So you can actually get it there as well.

SIMON: All right, Nina. And I'm going to do this just so I can, you can see it. I have a phone here. There you go, right in the water. Pretty amazing when you think about it. It's a problem that a lot of us have, getting our phones wet. So, Liquipel is a coating, as you heard him say. It's thinner than a human hair and it protects your phone from going in the water. Absolutely amazing.

We're going to be here for the next couple of days. We're going to be trying to find technologies like this that really have an implication, a practical implication for everyday lives. And so we'll be bringing them to you today and tomorrow. Nina?

DOS SANTOS: We'll certainly look forward to it. I'll bet you couldn't drop one of those in that water tank. I'm deadly jealous. Dan Simon, there, at the Consumer Electronics Show currently underway in Las Vegas.

Time now for our Currency Conundrum for you out there. Which eurozone country passed a law which prevents the use of one or two-cent euro coins? Is it -- think about this carefully -- A, Finland? Could it be B, Malta? Or C, the Netherlands? We'll have the answer for you a little later on in the show.

Speaking of currencies, the US dollar is currently making a little bit of headway against the euro and the British pound. The greenback is currently flat, though, against the Japanese yen. We'll have plenty more as QUEST MEANS BUSINESS continues after this.

(COMMERCIAL BREAK)

DOS SANTOS: Two Boeing 787 Dreamliners have been grounded in just the last two days. A Japan Airlines flight due to leave Boston just a couple of hours ago has been canceled after a fuel leak was discovered.

And on Monday, a Japan Airlines 787 actually caught fire just shortly after landing, again at Boston Airport. All passengers and crew had disembarked safely, but Boeing is investigating the incident and says that it's too early to draw any parallels. Shares in this company are currently down around about 3.5 percent.

Let's bring in Richard, who joins us now, live from New York with the latest on all this. So, Richard, this must be extremely damaging for Boeing. It couldn't have been worse. They called it the Dreamliner, but it's the stuff of nightmares.

RICHARD QUEST, CNN INTERNATIONAL: Well, it is, not only for Boeing, but also for the airlines that have bought the plane. There are 830-odd Dreamliners on order, of which, by my reckoning, about 49, 50 have been delivered.

And what we are seeing is a series and repeat of teething problems, that's how Boeing describes them. The sort of glitches that are put under the spotlight because it's a new aircraft, because everybody's looking very carefully.

We don't notice the big aircraft, the 737s and the 767s and all the problems there may be with those planes, but because the Dreamliner uses new technology, ultra-light, thin carbon fibers, it's long-distance, it's a sexy plane with these great windows. Then it gets a lot more publicity at the moment.

Having said that, these are serious issues, Nina, and the airlines rightly will say to Boeing, the plane may be safe to fly, but we're pretty annoyed at these glitches.

DOS SANTOS: Yes. In fact, we had the CEO of Qatar Airways -- I believe you spoke to him recently -- who really vented his spleen on this issue.

QUEST: Yes, and not surprisingly. Akbar Al Baker was fuming. His plane was on its delivery flight from Seattle when it had an electrical problem. The United Airlines plane had an electrical problem. There was an unrelated problem with GE engines.

And now, you have two -- I mean, if you are the CEO of JAL, sitting in Tokyo, and you say, "I've spent $300 million, $400 million, or $200 million on these planes, and the first one has a fire and a battery explodes, and the next day there's a massive fuel leak," Boeing is going to have to be very careful.

On the one hand, the airlines know there are teething problems. But on the other hand, their patience will run thin if they believe -- and there's no proof yet -- but if they believe that there's something systemic, the way Boeing was built these planes, the new technologies involved. If that happens, then the airlines will be absolutely fuming, and Boeing will feel the heat.

DOS SANTOS: OK, Richard in New York, thanks so much for bringing us the latest and also putting that into context vis-a-vis the Dreamliner 787's problems for Boeing.

Now, Ireland is a bright spot in the eurozone's otherwise bleak employment market. The Irish jobs minister tells us why in his country things are getting better these days and not worse. Stay tuned.

(COMMERCIAL BREAK)

DOS SANTOS: Hello and welcome back, I'm Nina Dos Santos, this is CNN, and it's time now to take a look at the other main stories that are making news in the world.

Let's have a look at, first of all, the unemployment rate in Europe, because nearly 90 million people in the region. The area's unemployment rate climbed to a record 11.8 percent for the month of November. Spain had the highest rate at nearly 27 percent, and more than half of Spanish workers under the age of 25 are currently unemployed. Greece came a close second.

High winds and record-setting temperatures are creating catastrophic fire conditions in southeastern Australia. An official says that 140 fires are currently burning in New South Wales right now.

Northern Ireland leaders are calling for an end to the violent protest that has taken place in Belfast recently. Unrest broke out on Monday for a fifth night, sparked by the city council's decision to stop flying the British flag year round. Pro-British political groups say that they will meet this week as part of an effort to try and diffuse those tensions.

A moderate earthquake has struck off of Turkey's western coast. The US Geological Survey says that it's monitored a 5.7 magnitude quake. That was enough force to shake cities in Turkey, and also in Greece, across the Aegean Sea. There were no immediate reports of casualties or damage, though.

France's budget minister says that he welcomes an investigation into allegations that he held a secret Swiss bank account. Jerome Cahuzac, who is leading a government crackdown on tax evasion across the country, denies the allegations and says that the inquiry will give him a chance to prove his innocence. Investigative website Mediapart alleges that Cahuzac actually held an undisclosed account in the Swiss bank UBS for nearly 20 years until 2010.

Ireland is one of the few eurozone states that didn't see its unemployment rate actually rise for the month of November. Despite still being standing pat at around about a disagreeable 14.6 percent, Ireland was, it seems, a bright spot in the bloc, and I asked Ireland's jobs minister, Richard Bruton, why they've had so much success on this front.

(BEGIN VIDEO CLIP)

RICHARD BRUTON, IRISH JOBS MINISTER: Well, I think there are a lot of things happening in the Irish economy. It is an economy in transition. On the export front, we are doing extremely well. Irish companies are winning new markets and there's a resurgence of international investment in Ireland following renewed international confidence and improved competitiveness in the country.

Obviously, in other sectors, which continue to contract like domestic construction, sectors that got too large in the boom period, they continue to contract.

So what's happening is a very important transition in the Irish economy to build on new competitiveness and win new markets. And obviously build a balance of payment surplus and pay back over time our -- the growth of indebtedness that occurred in this country.

DOS SANTOS: And key to those kind of initiatives is to try and attract foreign direct investment to Ireland. You've sent up a specific body that's helped to create about 12,000 if not 13,000 new jobs. Is FDA the secret here for you?

BRUTON: Well, I think Ireland has had to trip track records going back 30 or 40 years in winning international investment. And it has been important part of building strong clusters in our economy. But it represents only 8 percent of all employment in Ireland.

So while it is strategically very important and has built strong skills, strong sectors, it is hard to be seen in that context. Still, yes, we are very successful in this area. But we have to build a more competitive economy across many areas. And I think long-term, we've to build strong indigenous sectors as well as rely on FDI.

But I think the environment for investment by international companies is particularly good in Ireland at the moment with better cost structures. You'll have big change in many areas in terms of, for example, the cost of property, the cost of employment and I think a very flexible environment for doing business which (inaudible) is determined to improve year by year.

DOS SANTOS: Yes, the flexible environment, also tax wise (inaudible) businesses, particularly important trial and to attract companies there.

Obviously that's something that continues to be an issue a debate with the E.U. which wants to harmonize tax regimes, et cetera. But let me ask you this, is it difficult to get your population into a situation where you have the skill set that some of these new companies that are setting headquarters like Facebook in Ireland want?

BRUTON: Well, I think we've had to make decisions to change our investment in education to reflect the new skills. So our minister for education, for example, has planned to double the output of graduates in ICT areas, you know, communication technology, to reflect the growth in these areas and the new economy that is to be won out there.

So, yes, we have to have made changes and I think that's going to be continuing issue. There are, of course, the difficulties of many people who were employed in the construction sector whose skills are not well adapted to the new economy that's growing.

DOS SANTOS: When do you see Ireland's unemployment rate stabilizing below the 10 percent mark? Will it ever happen during your tenure?

BRUTON: Well, the government has set a target of 100,000 next new jobs, which will be a very significant reversal of what happened in recent years. And that's a target for 2016. I think if we achieve that target, we will have really significantly made a dent in unemployment as well as established a good environment for what is our, you know, Europe's fastest growing labor market.

We have a very rapidly growing young population. We have very high levels of well qualified people coming out of our colleges. Sadly, many of those are emigrating at the moment.

So clearly, we need to ensure that the economy become more dynamic, delivers employment and provides opportunities, not just for those who are out of work but also for very young, qualified graduates emerging from our schools and colleges.

(END VIDEO CLIP)

DOS SANTOS: Europe is in for a slow and often frustrating recovery in 2013. That's according to Bob Parker, I should say, at Credit Suisse. And as for the countries with the highest unemployment rates, well, they could soon be facing a whole year of recession. Here's what Bob Parker told me earlier today.

(BEGIN VIDEO CLIP)

BOB PARKER, CREDIT SUISSE: Well, the problems we've got in Spain are multiple. Clearly there is -- there's major issue in dealing with the budget deficit and the budget deficit is only coming down very slowly.

But you do have a very tough fiscal policy. And that is obviously driving the economy further into recession. And in the case of Spain and for that matter, Greece, I think the recession will continue well into 2014. The recession in those two countries is not going to end this year.

DOS SANTOS: (Inaudible) towards one's investment strategy. Does one still invest in Europe? Do you have to look even if you see Germany is seeing its economy contracting, do you have to look specifically at each country? Will you still be investing in European equities with these kind of job (inaudible)?

PARKER: Well, I think a number of points. The first point is I actually don't think that this year Germany will be in recession. I think it will go through at least in the first half of the year a period of mediocre growth. And then I think in the second half of the year, we will see a growth improvement in Germany. I think one surprise could be Italy, coming out of recession towards the middle of the year.

I think the next point to make is that last year, 2012, we invested heavily in German equities and large cap German equities once saw a return in euro of close to 30 percent last year. So investing in northern Europe and core Europe actually was the optimal investment strategy last year.

Now in terms of what you should be doing at the moment, many of these markets are very undervalued, particularly Spain and Italy.

If one looks at large cap companies there, which are global companies, in which are less sensitive to demand in Europe, more sensitive to, let's say, demand in Asia, Latin America, North America, then actually you're looking at global profitability as opposed to companies which are just exposed to the Eurozone. So that focus on large cap global companies in Europe I think is critical.

DOS SANTOS: Even if they're in the periphery.

Let's broaden things out and talk about also the issue that the United States are facing, in fact, the head of the International Monetary Fund, Christine Lagarde, warned earlier this month that we could have this combination of the twin evils, not the United States not being able to get its house in order and then the Eurozone crisis continuing to drag on in the face of unemployment figures like we've seen today.

Where do you see this situation going?

PARKER: Well, I think just staying on the euro for one moment, I think 2013 is going to be characterized by slow improvement and the risk of Eurozone major crisis in 2013, I actually think now is reduced relative to the situation over the last 2-3 years.

So it's going to be slow, frustrating improvement in the Eurozone. And I think the second half of the year we are going to see better data out of Germany and particularly Italy.

On the United States, obviously in the near term, investors are very worried about will the debt ceiling be extended, and if it's not extended, will the U.S. government be able to pay its bills in March and April? And investors are concerned as to whether we get a rerun of what happened in 2011.

And then the obvious, other concern is what happens towards fiscal policy with respect to public expenditure, to what extent are we going to have very heavy cuts in public expenditure?

(END VIDEO CLIP)

DOS SANTOS: (Inaudible) come clean. After months of denial, the country's oil minister finally admits that Western sanctions are biting. We'll have more of that after the break.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

DOS SANTOS: Iran's oil minister has admitted for the first time that Western sanctions are actually hurting this country's economy. In a report, Rostam Qasemi said that oil exports have fallen by 40 percent over the last nine months and when it comes to the earnings from oil, well, those have nearly halved.

His admission comes as new restrictions are set to come into effect. Let's take a look at exactly what's in the cards here.

Just last week, the United States actually introduced new measures to stop Iran from bartering its oil for gold and other precious metal on the markets. Iran had been trying to use that kind of system to get around an existing E.U. and U.S. ban on all financial transactions with the country.

The U.S. is also now managed to broaden its black list on Iranian industries to now include all energy firms, shipbuilding and also shipping enterprises as well. However, from February, importers have rang (ph) in will also be facing penalties in the United States for attempting to repatriate export earnings.

And this could in turn impound billions of dollars' worth of Iran's expected oil revenue yet again, flapping them with this.

This is already on top of already stringent -- excuse me -- already stringent export bans as well, I should point out. These include an E.U. ban on Iranian crude oil. That one came into effect as of July last year.

And let me just give you an idea of how important the Eurozone is for Iran finally. The Eurozone actually accounted for around about 20 percent of Iran's total oil exports. So these sanctions certainly starting to bite from the E.U. and the United States.

Well, an oil ministry spokesman told Iran's main news agency just a short time ago that in fact, no such comments were made. He did not deny the numbers, though. I asked our very own John Defterios earlier if the damage, though, had already been done.

(BEGIN VIDEO CLIP)

JOHN DEFTERIOS, CNN CORRESPONDENT: Well, for the last year, Nina, the oil minister of Iran, Mr. Qasemi, has suggested that Iran's production would not go below 4 million barrels a day. This is despite reports from the international (inaudible) agency back in July, suggesting production of 2.9 million barrels.

Then OPEC of which Iran is a member suggesting 2.7 million in October and still then Iran was holding it at a line of 4 million barrels a day. This is the first realistic assessment coming out of a parliamentary report from the oil ministry, suggesting that revenues are down 45 percent and production down 40 percent.

The other caveat here is because Iran's shut out of the market, perhaps some of its customers like China, South Korea and Japan, have bargained with Iran and pushed down the prices they're willing to pay because of the sanctions against Iran.

So despite the fact the oil ministry took hours to reply, sources I talked to in Iran didn't want to comment officially. But they did not deny the numbers that were in the parliament report, Nina.

DOS SANTOS: And now we know Iran has to target a price about 127 dollars a barrel if it has any hope of trying to balance its figures. This must be so detrimental to the Iranian economy.

DEFTERIOS: Indeed, and you can just look at their currency, the rial, which has dropped about 80 percent from its peak in 2011, as a result of that, we've seen inflation surging on the ground because oil export earnings make up 90 percent of foreign exchange earnings in the country.

In fact, the oil minister was recently quoted as suggesting that the Iranian government needs to -- needs to invest $400 billion over the next five years to get production back up to their target levels and to try to explore natural gas in the south (inaudible), one of the largest fields in the world.

DOS SANTOS: What's the prospect like when this country will be going towards an election later on this year? Will these economic factors perhaps eventually sway things?

DEFTERIOS: Yes, in fact, the elections are in June. So look at the rhetoric between now and June. We've been under the kind of -- the era of President Mahmoud Ahmedinejad, who is big on rhetoric and as a result has had a whole table full of sanctions coming in. I

In fact, even more sanctions from the United States in terms of dealings with any of the Iranian companies. We know that the European Union sanctions hit the central bank and the ability to not trade in euros and dollars right now, making it very difficult for Iranians on the ground.

So what's the language coming out of the candidates? And very importantly leading up to June, Nina, I think, is what are we going to hear from the Supreme Leader of Iran and what they want to do post-Ahmadinejad in that era to see if they want to get back to the bargaining table if indeed the sanctions are biting and seeing revenues go down 45 percent and production down some 40 percent today?

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DOS SANTOS: Well, from heated rhetoric on the issue of Iran to slightly more milder, maybe in some places frosty weather in Europe.

Let's go over to Jenny Harrison at the CNN International Weather Center. So Jenny, let's start out by taking a look at things in Europe, where I am. How's it looking?

JENNY HARRISON, CNN METEOROLOGIST: You know what, pretty good where you are. It has to be said that mild air's still very much in place. But it's a very unsettled picture generally across much of Europe. We've got some rain coming in of course. And then across much of central and eastern areas, quite a bit of snow with the next system. There's the rain in the last few hours.

As usually, Germany's seeing a quite a lot of it and some heavier spells of rain, some snow, of course, to the mountain tops in the U.K. as well as being that next band as it comes through. So this is work its way across the northwest. It'll bring some slightly cooler air behind it.

And of course, as it hits the already cooler air which is in place it will turn to snow. But this just shows you that (inaudible) the temperatures, the north very cold, well below average, the temperatures there, east as well. And then much of central and western Europe, temperatures pretty close to the average for this time of year.

But a very unsettled picture as you can see. Temperature wise, well, -11 on Wednesday in Kiev, whereas we'll see 13 in Rome and 7 apiece in London and Paris. And I just want to move across into the southeast in particular, Syria, the border, really, with southern Turkey. This time of year it is always going to be cold.

In fact, January is one of the coldest months. But December through February the high is at about 10 Celsius, the lows around 2, 20 to 30 days with frost. And these are the wettest months. And in fact, a lot of the snow, of course, but also all of that rain, be it snow or rain and counting for 50 percent of the annual rainfall.

Now some very unsettled weather in the last few hours. These are the current temperatures, the stations that are reporting, of course, that is the nighttimes. So expect to see those temperatures on the low side. But look at what's coming in. We've got more snow, very heavy snow working its way still across much of Turkey and a mix along the far south.

As you can see, Turkey has been impacted. Have a look at these pictures because this is actually Monday. Istanbul really, really heavy, wet snow for again this time of year, but all this moisture's being picked up from the Black Sea also through the eastern end of the Med coming down as very heavy snow, so really disrupting travel over there as you can see. The snowplows working in overtime.

But that actually is continuing to work away from Turkey but not before it dumped some of these totals. Have a look at this, because in Istanbul, 8 centimeters and then across the Far East, 24 centimeters of snow.

So the temperatures over the next few days actually coming back up closer to average as still generally below average, but widespread snow that'll head across Syria, also across Lebanon.

We'll see some pretty heavy totals across central eastern Turkey, even northeast in areas of Iraq and again that higher elevations in Lebanon where of course we're dealing with all those thousands of refugees, Nina, that are displaced at the moment.

DOS SANTOS: Yes, yes, certainly difficult times for them. Jenny Harrison, thanks so much for bringing us the latest there on the weather picture in Europe.

Up next, the unexpected return of the Thin White Duke. Without warning, David Bowie s back. We'll be looking at why his zero marketing strategy seems to be paying off.

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DOS SANTOS (voice-over): Time now for your answer to today's "Currency Conundrum." Earlier in the show we asked you this question: which Eurozone country crossed (inaudible) 1- and 2-cent euro coins? And the answer is Finland. It passed a law ensuring that all items in shops are rounded off to the nearest 5 cents. So no need for those copper coins.

And it's the same situation in the Netherlands although that's because of an agreement with retailers not (inaudible) because of an act of parliament that if you don't like those copper coins there are those two countries where you can certainly avoid them.

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DOS SANTOS: Well, 10 years after his last studio album was recorded, David Bowie is back. Fans, of course, completely by surprise today when without warning Bowie's fight linked fans to a new single release to it already has been at the top of the iTunes U.K. music charts today. Our Jim Boulden has more on the rock icon's triumphant return.

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JIM BOULDEN, CNN CORRESPONDENT (voice-over): On David Bowie's 66th birthday a present for his fans. His first single in a decade hit iTunes with little notice.

Bowie's official website says the song, "Where Are We Now?" comes at a, quote, "timely moment for such a treasure to appear as if out of nowhere," and tells fans he's been busy in New York recording an album, entitled, "The Next Day," which will be out in March.

Bowie lit up the Twitterverse. "That new Bowie song is a really lovely thing," tweeted one fan. Others: "I really thought he'd retired. Delighted to be proven wrong."

"You hardly ever see this much love on Twitter for someone who's still alive."

Some were not so kind to Bowie, who has been recording music for more than 45 years. "It's tragic to hear him using auto-tune on his new song. Old alien singer needs robot to sing."

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BOULDEN (voice-over): Bowie largely left the limelight after he released "Reality," his 23rd studio album, in 2003.

And though Bowie was once a mainstay in record stores with more 130 million album sales, his new song is in digital form, exclusive to iTunes.

KEITH HARRIS, MUSICTANK: I think the moment of the release is quite interesting as well, because I think that what's happened, particularly for artists like a David Bowie or Radiohead with the people that did it before, is in terms of (inaudible) attracting attention to a new release. You have -- you have to find innovative and newsworthy. And that's probably (inaudible) ways of doing this.

BOULDEN (voice-over): The video for "Where Are We Now" harks back to Bowie's time living in Berlin. His website says new sales aren't on his mind. This song comes, it says, when he has something to say as opposed to something to sell.

Sales success may be more obvious when the album releases in March. The question: will he perform it live? It's been eight years since Bowie's taken to the stage -- Jim Boulden, CNN, London.

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DOS SANTOS: And cue Jim Boulden, who's hear in our London studio.

That looked like an awful lot of fun. But on a serious note, though, Jim, this kind of mystique marketing is totally the opposite of what (inaudible) Justin Bieber and the young'uns.

BOULDEN: Yes. The idea, I think, was if we don't say anything and let it go out, then that's news itself. So let's see if we can do it that way instead of having it leak. You know, we even get leaks from Apple when we're not supposed to get leaks.

So to get a leak that this was happening -- and I'll tell you why we know it's been successful, because as of about a half an hour ago, David Bowie's song went #1 on YouTube, iTunes downloads here in the U.K. overtaking the "X Factor" winner. So he has shot to the top.

DOS SANTOS: Yes, we were just saying that before.

It's slightly creepy, isn't it, though, the video?

BOULDEN: I can't say I loved the video. The (inaudible) -- I said to him, you know, there's been some complaints on Twitter that maybe his voice isn't as good as it used to be. But he said, actually he was a performance artist.

He's a very good writer of the voice is unique, so there's -- you know, the talent is no doubt. It was never about his vocal range and you can see with him being away from 10 years, a lot of people worried he was ill or there was something wrong. And now we've seen that he can sing again.

DOS SANTOS: Gosh, interesting stuff. Thanks so much for that, Jim Boulden (inaudible) David Bowie's latest single and the power of mystique marketing.

Well, after the break, the former football star turned ad man Ronaldo is joining (inaudible).

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DOS SANTOS: (Inaudible) former football star Ronaldo has landed a new job in advertising. The World Cup winner is spending several months in London this year, studying the trade at (inaudible) global ad firm, WPP.

And it looks as though the CEO will probably be kept busy with his new intern. In an interview at the Brazilian newspaper, Ronaldo said this of his role alongside (inaudible), quote, "I'll be asking him questions the whole day, just like a striker. He's going to have to tell me everything," he says.

Well, the partnership isn't quite as unlikely as you might think on first glance, because Ronaldo's actually run a sports marketing communications company in Sao Paulo since 2010. That company was set up, in fact, with the collaboration of WPP. And back then, Sorrell (ph) joked that Ronaldo would end up playing for WPP at some point.

Let's take a final check on U.S. stock markets. Let me just remind you that Alcoa, the big aluminum company in the United States will be kicking off this latest set of earnings when it reports after the bell. But for the moment, as we head towards that closing bell, as you can see, the Dow Jones industrial average down about a half of 1 percent or 73 points at a level of 13,311.

Let me just remind you that in November, when a number of these companies in the United States reported their earnings, 73 percent of them lowered their guidance and as you can imagine, with all the wrangling in Washington and the troubles in the Eurozone ongoing, a number of these countries (inaudible) companies will be worried about the outlet going forward.

That'll be key in their earnings statement.

In the meantime, that's it for this edition of QUEST MEANS BUSINESS. Thanks for joining me. I'm Nina dos Santos. "AMANPOUR" follows after a news update here on CNN.

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DOS SANTOS (voice-over): Here's a roundup of the main news headlines making the news this hour.

Nearly 19 million people in the Eurozone are currently out of work. The area's unemployment rate (inaudible) record 11.8 percent for the month of November. When it comes to the country breakdown, Spain has the highest rate at nearly 27 percent and more than half the Spanish workers that are under the age of 25 are currently unemployed. Greece comes a close second.

High winds and record setting temperatures are creating catastrophic fire conditions across southeastern Australia. Officials say that there are currently 140 fires raging in New South Wales. More are currently burning in Tasmania and also in Victoria.

Northern Ireland's leaders are calling for an end to the violence (inaudible) in Belfast (inaudible) unrest broke out on Monday for a fifth night sparked by the (inaudible) British flag year-round. Pro-British political groups say that they will meet this week (inaudible).

France's budget ministers says that he welcomes an investigation to allegations that he held a secret Swiss bank account. (Inaudible) government crackdown on (inaudible) says that the inquiry will give him a chance to prove his innocence. The investigative website Media Power (ph) alleges that Kazak held an undisclosed account with (inaudible) for 20 years until 2011.

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DOS SANTOS: Or 2010, I should say. That's it for the main look at some of the stories that we're watching for you here on CNN. "AMANPOUR" is next.

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