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Quest Means Business
Co-CEO of Saxo Bank Says Euro Doomed; German Recovery; European Markets Mixed; Europe in 2013; European Horsemeat Scandal; Sterling Sliding; Google, Topshop Team Up for London Fashion Week
Aired February 18, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: A warning tonight: the euro is doomed. The co- CEO of Saxo Bank says Europeans don't want fiscal union.
A supermarket summit. Retailers discuss the horsemeat scandal.
And the fall of the once- mighty publisher. "Reader's Digest" declares bankruptcy again.
I'm Richard Quest, the start of a new week and, of course, I mean business.
Good evening to you. Flawed and doomed to failure. A gloomy prognosis for the euro that comes from the co-CEO of Denmark's Saxo Bank. After fears of a total collapse last year, the euro has something of a comeback from its brink, and a comeback it may have been, but Lars Seier Christensen says the optimism fueling the recovery is nothing more than an illusion. A powerful one, to be sure.
Join me at the CNN super screen and you'll see what I mean. This is the euro as it's gone since July of last year. Now, in July, that was the pit of despair. That was the time when Mario Draghi said he would do whatever it takes. And that, of course, is widely regarded as the turning point of the euro's fortunes.
Since then, it has been on an upward trajectory. We have the ESM, we had more time was given for Greece, and the euro gained perhaps as much as 8 percent coming off its stops in the last few days.
Put all this together and you might be tempted to believe that the euro is out of the woods and is plain sailing. Well, despite these positive signs, Lars Seier Christensen says the single currency remains on borrowed time, and notwithstanding the markets' initial favorable reaction, it's on a collision course with reality.
LARS SEIER CHRISTENSEN, CO-CEO, SAXO BANK: It's becoming more and more evident that this is going to end in tears. Basically, the construction error that was made when the euro was put together is fundamentally very complex and creates a flawed construction which ultimately leads to so many pressures inside the eurozone that I think something has to give sooner or later.
Not necessarily a total explosion returning to 17 different currencies, but for sure something has to give compared to where we are today with many countries losing competitiveness every year.
QUEST: Various -- European officials and finance ministers point out the improvements and the changes that have been made: moves towards banking union, the fiscal compact, the ESM, the EFSF before that. The -- all the arrangements, do you not believe that is moving Europe towards fiscal union such that doomsday will be avoided?
CHRISTENSEN: It's quite clear that what lacks here is fiscal union, but it's also very clear that the populations of Europe are not supportive of that goal. And hence, I think there's a limit to how much you can bring that in the back door, if you will, when people will not accept it through the front door.
And I simply think that the differences between the member countries of the euro are so big that one, competitiveness will continue to develop in different directions. Two, people will not be able or willing to do the sacrifices necessary for, let's say, the weaker part of the eurozone.
CHRISTENSEN: That there's simply not the political will and the popular support to do what is necessary to save the euro. And I'm not saying that it's a bad thing that that support is not there, because I don't think --
CHRISTENSEN: -- that really the euro should exist, because the ability to adjust your currency is an important equilibrium between different economies and different developments. And when that's gone, you're left with a completely different set of problems.
QUEST: So the rise that we've seen in the euro, 8 to 12 percent, depending on what -- which matrix you use, you would see that as being illusory, and if you are right, it is not only going to disappear, the graph is going to go in the opposite direction?
CHRISTENSEN: Fundamentally, you're kicking the can down the road, as they say. You're not really addressing the central problems, which are that some countries simply develop their competitiveness slower than particularly Germany, and hence, they're all on a collision course with reality, at different speeds.
But you can say Greece is already well over the edge, and other Southern European countries are very much -- threatened at the moment. But the fundamental problem is not being addressed, and it's a shame that you don't use all this money on actually finding solutions to the problem that could allow these countries to move on in a better way.
QUEST: Your views are clearly controversial, and they are, I'm guessing, most definitely not welcome in the halls of Brussels, particularly when the co-CEO of a bank basically says we're doomed.
CHRISTENSEN: Of course, there's a lot of political capital invested in the euro. It is very much a political project rather than an economic project. But at the end of the day, I believe that the challenges are so great that something has to give. And unfortunately, reality has a way in the end of reinforcing itself over policies, and I think that's exactly what's going to happen here.
QUEST: What do you believe is the time scale when we should be heading for the lifeboats?
CHRISTENSEN: Depends very much how long, you can say, the Germans hold out. It depends how much longer the German population is willing to buy into supporting this. I can't give you the answer to that, but I can tell you that the problem's going to get greater rather than smaller, and eventually, it'll have to be solved.
And if it won't be done in an organized, structured way by politicians, I fear that the markets will take the thing apart eventually. Because --
CHRISTENSEN: -- this is not a sustainable situation.
QUEST: An extremely pessimistic outlook, there, for the euro, while the Bundesbank says there will be no double-dip for Germany. The country's central bank said it expects an increase in economic output in the first quarter. It will be helped by rebounding industrial sector. It also says economic activity will then pick up the pace for the rest of the year.
Germany's economy shrank six-tenths of a percent in the Q -- final quarter of last year, Q4. In December, the Bundesbank lowered its 2013 growth forecast from 1 point -- from 0.6 to 0.4 percent. So, a forecast of return to growth.
And this is the way the markets responded to what we saw today. The Xetra DAX up a half a percent. The best gains in the day came from the German markets. Banking shares were some of the top performers, Commerzbank up 2.3 percent, Societe Generale added almost 2 percent. London and Zurich were lower over the course of the session.
Putting all this together, what happens with the markets and with the euro? Jan Randolph is the head of sovereign risk at IHS and joins me now.
I -- we've just heard from the co-CEO of Saxo Bank, "doomed" was the word, he says. You heard -- you hear, of course, the economic data. Do you believe ultimately -- ultimately, not today, not next week, not a week next Thursday -- ultimately, the eurozone fractures?
JAN RANDOLPH, HEAD OF SOVEREIGN RISK, IHS: Well, there's still that risk. The bottom line risk is the political risk in the Southern eurozone, whether these governments can, are willing and able to implement both austerity and structural reform. If they can't, then all bets are off again, and we might have a fracture.
QUEST: As you sit here talking to me now, is it your feeling they will go forward with these structural reform sufficient to survive the zone?
RANDOLPH: Yes, I think so. You have to -- for those people who call doom for the euro or fracture of the euro, they have to ask themselves where are the politicians asking for an exit? Do we see any politicians in Greece, Italy, and Spain asking to return to the drachma --
QUEST: No, but the market eventually could force that issue if it perceives that fiscal compact is not doing the work that it needs to do to provide the bulwark to the union -- to the zone.
RANDOLPH: Yes, I can see -- the scenario I can see, which will be where the markets could get involved again -- in other words, dumping Spanish, Italian, and Greek government bonds -- is where precisely the government -- is hostile to austerity and structural reform.
So, we have this bottom line political risk again. And in that situation, Mario Draghi doesn't know what to do. They haven't signed up for the condition -- the program for support from the ESM to be alleviated from the high borrowing costs.
QUEST: We've seen this rally in the euro starting to unravel slightly. Not hugely, but there is a slight downturn in the value. Is it your feeling as the year goes on and unless that momentum continues, then the euro weakens considerably further?
RANDOLPH: I think in all likelihood, actually, taking everything into consideration -- and we're running a tight rip here with political race. It's Italian elections --
RANDOLPH: Cypress doesn't matter too much, but it's still there to be overcome as a hurdle. And then we've got the corruption around -- corruption scandal around Spain. Yes. These political risks have to be overcome in order for the economy to improve.
QUEST: Imagine this is the -- these are the scales. That's upward risk, downward risk. Where for you at the moment is the risk? Is it down -- the risk of the euro, or up? Which side were you going to choose?
RANDOLPH: It's a political call.
QUEST: But for you, as you look at the situation now?
RANDOLPH: OK. I think Monti's reforms will stay in place after the Italian election, although we have a different form of government. I think Spain will endure. We are seeing -- export recoveries starting to emerge in Italy and Spain. That's absolutely necessary. That could join with the German recovery --
QUEST: I'm forcing you to --
QUEST: -- one side or the other?
QUEST: Is the risk on the upside, as you see it, or the downside?
RANDOLPH: Well, I think they will muddle through.
QUEST: Right. Upside.
QUEST: Upside. Thank you very much. Good to have you. Thank you very much, indeed.
Now, when we come back, there may be upside or downside risks for the euro, but the one thing of which we are certain, there's more tests and more options. The British government calls in the supermarket chiefs. They want answers on the horsemeat scandal, and the industry says it won't rest until it's over. QUEST MEANS BUSINESS.
QUEST: Britain's environment secretary says the food industry in the UK will not rest until it stops Europe's horsemeat scandal, or at least gets a better understanding of that which took place. Owen Paterson -- excuse me -- summoned executives from the UK's top supermarkets to hear what they are doing about mislabeled meat.
Retailers say they expect most of their tests on beef products to be finished by Friday. The minister says the food industry was showing an unprecedented level of commitment.
(BEGIN VIDEO CLIP)
OWEN PATERSON, BRITISH ENVIRONMENT SECRETARY: Completely wrong that any consumer should buy a product labeled as processed beef and find it contains something else. So, last Friday, the industry after an unprecedented intense program of testing, announced results on the products which were most likely to cause a problem. And I hope it was reassuring to consumers to find 99 percent were clear of horse DNA.
(END VIDEO CLIP)
QUEST: A suspension has been lifted on one of the French companies at the center of the scandal. Spanghero has been granted permission to start producing minced beef again. That was by the French ministers. Authorities say it was the first company to mislabel meat which was later found to contain horse DNA.
French ministers met with the company's union chief on Monday, 300 jobs at the factory have been put at risk by that suspension.
Of senior international correspondent Nic Robertson joins us now. Nic, is there a feeling that, frankly, they don't believe there's any more adulterated meat in the system? Or at least they have got a handle on where it all is?
NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, the testing they've done, they said, was about a quarter of all the testing. Those are the results that came in last Friday, and that's what produced their sort of 1 percent of 2,501 tests done so far, 1 percent horse DNA contaminated.
And they did warn -- the Food Standards Agency did warn that these were going to be front-loaded, the high-risk items tested first. So the indication is, no, that it's not entirely clear about what's going to come out in the results later this week and early in the following week, but they feel that they're over the hump of it right now.
But this is complex and big, and I don't think anyone at the moment would put money on the table and say they're not going to find a new horsemeat problem still existing, Richard.
QUEST: All right. Now, I understand and recognize that you're not sort of a DNA expert in the mechanics of testing, but why did they find all this stuff at the beginning of the process and then suddenly don't seem to be finding it later in the process? Has something happened in the middle? Is it -- what's happening here, Nic? I don't quite follow it all.
ROBERTSON: Well, what happened was the initial cases where the alarm was raised was the horsemeat found in burgers and other products in Britain and in Ireland, which then got everyone testing. And then later on, the government after contaminated lasagne was found in Britain and other countries, got the British government to tell all producers to test all their beef products.
And the DNA labs in the UK can only cope with so much at a certain rate, and it takes, in some case, up to a couple of weeks to get the testing done. So, there's a backlog of tests that are going through. So, that's why there's --- that's why it's not possible to say they're out of the woods yet.
And there are also other products around Europe that have yet to be investigated as thoroughly as British producers have been investigating their products, Richard.
QUEST: Nic Robertson with that part of the story for us. Andy Foster is the operations and policy director of Britain's Trading Standards Institute. Joins me now. Andy, we were talking before we came on air, give me a feel, just a -- your gut feel -- for how big this actually is. How much frozen or pre-packaged food do you think stood -- was adulterated?
ANDY FOSTER, OPERATIONS AND POLICY DIRECTOR, TRADING STANDARDS INSTITUTE: Well, it's obviously really difficult for us to estimate that - -
FOSTER: -- and clearly, that's what we're doing at the moment, we're taking thousands and thousands of samples, that's industry samples and local government trading standards service samples, and that will give us the full picture.
But in terms of the number of processed beef meals out there, we're talking a very small percentage, but that, of course, doesn't make it right.
QUEST: So, how do they manage to find those ones? How did they show up in the tests? If it's such a small number, how come -- if you test randomly, if it's a small number, you're not going to get it.
FOSTER: Well, exactly. And that's what has been happening up and down the country. We've been not looking for horse DNA in terms of our normal risk profile it would associate with these kind of products, so it was the food safety organization in Ireland that first picked this up.
And of course, following that, we were able to follow the food chain back and then target more samples where were able to find some.
QUEST: What's the problem here? Is it a labeling problem? Is it a criminal problem? Is it an economic problem or -- where people are selling meat because they can make more profit? Or to use that phrase, is it just good, old-fashioned incompetence?
FOSTER: I think it's a combination of these things. It's a social problem as well, and I think a number of things need to happen here.
First of all, consumers need to just -- make their voice absolutely heard. I've heard a lot of people talking about, well, what do you expect if you pay 99 p. for a lasagne. And I think, well, OK, but consumers that I talk to, they don't want cheap food at any price. They want authentic and safe food at a reasonable price, and there's a big difference between the two.
QUEST: OK. So, here we have the most -- perhaps with the singular exception, maybe, of the United States, but here we have, or certainly on a par, the most advanced labeled, over-regulated, bureaucratic system in the European Union, and this manages to happen.
FOSTER: It's a combination of a number of factors here, Richard. First of all, you can't take 30 percent out of the regulatory inspection system and expect it still to be robust. That's the first problem. The second is that -- supply chains have become very long, very complicated --
QUEST: But this is what Europe and this is what the FSA and this is what all these organizations were supposed to be looking at.
FOSTER: Let's be very clear here, Richard. The responsibility for this lies squarely with the manufacturers. They put their name on it --
QUEST: Yes, yes --
FOSTER: -- they're responsible for it.
FOSTER: The second part of the system is the regulatory system. We can't inspect 100 percent of products. We will inspect some and we'd like to inspect more in the future, and you can bet your life, our risk profiles will change as a result.
QUEST: And if I, with the stroke of a pen, if I could give you one power or one authority or one rule now that you think would help you in the future, what would it be?
FOSTER: It's not power. The laws are fine. What we don't have are the people to enforce the laws. A well-resourced regulatory system --
FOSTER: -- that's all we need, and that's all consumers expect and deserve.
QUEST: Money. I knew we'd get there in the end.
QUEST: I knew money would be at the bottom. Well, we are a business program.
FOSTER: There are 6 billion pounds of consumer detriment every single year, that's how much consumers get ripped off by these kinds of frauds. Just 200 million to pay for it. There's the mismatch there.
QUEST: And who pays? The governments or the industry? Which ultimately, either way, is the consumer.
FOSTER: Absolutely. Ultimately, they're paying the price with products that are mislabeled and are totally adulterated, and that needs to stop.
QUEST: Good to have you coming in and talking about it.
FOSTER: Thanks, Richard.
QUEST: We appreciate it tonight. Many thanks to you. Now, from the euro to horsemeat to a Currency Conundrum.
QUEST: When Pakistan declared independence from India, it had to cope with a shortage of its new currency. Oh, here's a good one. How did Pakistan cope with the problem? Did it allow a bartering system? Ask people to spend less? Or stamp the word "Pakistan" on top of Indian money? We'll have the answer for that one later in the program.
Sterling slide continues. The pound's down against the dollar. So's the yen. The euro's a touch higher. Those are the rates --
QUEST: -- this is the break.
QUEST: Fashionistas the world over are training their sights on London this week. Hot on the heels of New York, the five-day fashion week is expected to bring in orders worth more than $155 million. Sir Philip Green's top shop teamed up with Google to showcase its latest collection at the Tate Modern, and Becky Anderson spoke to the British fashion mogul about the tie-up.
PHILIP GREEN, OWNER, ARCADIA GROUP: The young generation, you're going to rest on this, all of them, five of them, six of them, having dinner, and whether they're talking to each other I'm not sure, but everybody's got at least two gadgets in their hands.
It's -- that's where the world's going. So, as a choice, we've got to be involved with the best technology companies, Google.
UNIDENETIFIED MALE: The friendship with Topshop came about in the fall, where Justin Cooke, the imaginative, creative behind Topshop, came in just for a general chat.
And the ideas became so concrete and so fast that literally the day after we decided to target the Tate Modern Topshop show as kind of the coming out party for Google Plus and Topshop, showing off what brands can do with the tool set.
BECKY ANDERSON, CNN INTERNATIONAL CORRESPONDENT: Listen, I still want to get behind the scenes. I want to get behind the --
UNIDENTIFIED MALE: Let's do it.
ANDERSON: -- scenes for real, so come on, let's do this.
JUSTIN COOKE, CHIEF MARKETING OFFICER, TOPSHOP: I was very fortunate to work on the first-ever kind of live Twitter images from backstage. We've really taken it on a level, so we're going to have live video, you're going to see all the girls are going to be filmed and projected back in the space for the finale.
But this is really -- this is advanced. This is like a film set, so the girls are -- everything's being captured. And it means you're capturing it here, but you can share it with people wherever on different ways, on topshop.com, when the products arrives in stores six months later, you have all this content, all this excitement, this is what it's about.
ANDERSON: There's an allure about fashion shows that, quite frankly, you'll lose if you let everybody in behind the scenes. Are you worried about that at all?
COOKE: No, I think -- I think --
ANDERSON: The magic, that's what we're talking about.
COOKE: Yes. But I think, for me, it's -- I'm looking from the other way. I want to take the magic outwards and share it with everyone, because you don't lose what's in the room. The people still have that. But why would millions of people not get to experience that? Because not everyone can be at the show.
I think that's really what we're talking about. I think great brands make an emotional connection with the customer, and there's so much emotion in the room, when the lights go down, when the music changes, and we want to share that with everyone.
ANDERSON: How does this tool set work, and what sort of investment goes into providing the sort of technology overall that will work today?
UNIDENTIFIED MALE: The tool set is astoundingly simple. We started to sort of trickle out really this river of content, where you've got the models, Cara and Jourdan, and Topshop themselves sort of just posting photos and videos through the Google Plus stream.
You will have a Hangout app that shows people every single look that was shown on the catwalk and have them tell Topshop's buyers, hey, this is what I recommend to you as an everyday consumer what you should put in the store for your fall collection.
ANDERSON: Europe's a tough market at the moment. We all know that. How tough?
GREEN: I wouldn't want to be the chancellor, let's put it that way. It's not simple. When you've had ten years of spend, it's tough. There's no easy solution. So, I think you've got to keep it tight. We've got to be smarter, cleverer.
If you talk to any retailer around the globe, everybody would like to have less stores. So, everybody knows in the mix sort of the marketplace itself is changing.
ANDERSON: So, you tweet, you do Facebook, right?
GREEN: Well, they're teaching me.
ANDERSON: Can we just see your phone?
ANDERSON: Come on, bring the phone -- there you go!
GREEN: I wouldn't know how to turn it on.
ANDERSON: That's not his.
GREEN: That's mine, you see? Old-fashioned.
ANDERSON: You run.
GREEN: But I promise you this. I bet these answer more than anybody else in my company. I was on the phone at 5:00 AM to LA this morning to find out how the store numbers were.
QUEST: Now -- this is absolutely fascinating -- I -- not going to tell you which CEOs, but more and more CEOs tell me that they are using those old Nokia and Sony phones, those old type, because they say they can use them quickly, they can just simply send texts, and they're not as available for hacking and things like that. So there you are. Philip Green, Sir Philip Green is not alone.
Would you go back to an old phone? Are the old phones better than the new ones? @RichardQuest. The old Nokia brick.
Coming up next, a victim of changing times. The magazine maker RDA Holdings is finding its debts difficult to digest, and this is the Digest that they're going to take us to in a moment.
RICHARD QUEST, CNN HOST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. This is CNN and, on this network, the news always comes first.
(BEGIN VIDEO CLIP)
QUEST (voice-over): Nine workers have been shot in South Africa at a mine near Rustenburg. The mine owner says guards used rubber bullets to break up a confrontation between rival unions. Three security guards were also hurt; we're told none of the injuries life-threatening.
The Venezuelan president, Hugo Chavez, is back in his home country after months of cancer treatment in Cuba. The news comes just days after this photo was released, showing him with his two daughters; details on his medical condition and well-being aren't clear.
The French factory at the center of Europe's horsemeat scandal has been allowed to resume production of minced beef. French ministers have lifted the suspension at the Spanghero plant's food license. Ministers say it's the first company to mislabel beef which was found to contain horse DNA.
Jerry Buss, the owner of the Los Angeles Lakers, has died at the age of 80. He'd been fighting cancer for some time. The self-made billionaire made his fortune in real estate before turning his hand to basketball. The Lakers became the world's second most valuable team under his stewardship.
The cleanup continues in southern Russia, where a meteor broke up over the city of Chelyabinsk last Friday. Authorities have found dozens of fragments on top of a frozen lake nearby. They are still looking for the main piece of the meteor which is 10 meters of murky water.
(END VIDEO CLIP)
QUEST: The dentist will see you soon. The journal, much beloved at the doctor's waiting room, and found on buses -- ooh. The "Reader's Digest." Well, now the parent company's filed for bankruptcy for the second time in four years. It needs to slash $465 million of debt. Felicia Taylor is in New York.
You do like to read the "Reader's Digest," don't you? I mean, the very name conjures up more than just a sort of a little pocket book of reading. But what's gone wrong?
FELICIA TAYLOR, CNN CORRESPONDENT: It's very simple. And you can take a look at one statistic and get the answer. The Pew Research Center did a study and showed that in September of 2012, just 18 percent of Americans actually had read a magazine. It's all a part of the switch from print publishing to the digital age.
Everybody is reading off of their iPad or some other digital device. And that's the problem for "Reader's Digest." So what they've done is, as you said, this is the second bankruptcy in about 31/2 years. This is going to be a debt-to-equity swap on behalf of its note holders; about 70 percent of them have already agreed to do so. They hope to emerge with all of this debt gone in about six months.
What's interesting is they were able to do that back in 2009. The first time they declared bankruptcy in just about four months.
TAYLOR: But with circulation down -- listen, circulation is down 25 percent.
TAYLOR: Where are you going to get those ad sales?
QUEST: Right, OK. So never mind the financing of all of this and debt-to-equity ratios.
How is this not just moving the deck chairs on the Titanic? What's the strategy to get people reading it?
TAYLOR: Well, that's what Mr. Guth, the CEO, (inaudible) the third CEO in as many years, since this last bankruptcy. He says that they need the time to sort of, you know, reform the company. How they're actually going to do that, he hasn't been very specific about.
Obviously, they've got to figure out how to improve their online relationship and maybe eventually, as you said, do away -- you know, using the Titanic as the -- as the synonym for that, get rid of the actual physical magazine and move into a better online position.
He hasn't been specific about enough about that yet.
QUEST: "Newsweek" has gone. The "Reader's Digest" is bankrupt. And of course, we need to declare an interest, of course; TimeWarner, publishers of Time Inc., a parent company of this network -- and indeed even there the number of pages has often been questioned in terms of advertising. And those magazines much beloved in the supermarket checkout.
TAYLOR: Well, what they've done already is by -- is selling off some of its assets. And as you mentioned, Time Inc., the parent of this company, is looking at doing the same thing with "People" magazine, "InStyle" magazine.
So they're literally moving things to the side. These aren't necessarily going to be profitable business down the road. So they've got to figure out how to get rid of them from their balance sheet. And that's how they're doing it.
QUEST: When did you last buy a magazine at the supermarket checkout? I won't ask what, because I'm sure you're not the source.
I was at the supermarket earlier today, and I looked at one and I thought, "Why bother?"
QUEST: Oh, please.
TAYLOR: When was the last time you bought a magazine?
QUEST: Well, since you ask, well, that's it; last week. Last week. I was at an airport and I bought a magazine. I bought "The Economist."
TAYLOR: Well, OK.
QUEST: (Inaudible) --
TAYLOR: Good choice.
QUEST: And have you see the price of "The Economist"?
TAYLOR: Oh, you know what, I lied. I bought "The Economist" myself about 10 days ago. You're right; it was $8.99.
QUEST: Good grief. Just got a pay rise.
Felicia Taylor, who is in New York for us tonight.
Coming up after the break, as human costs of the economic crisis, protesters in Spain make their voices heard as the economy continues to suffer. It's QUEST MEANS BUSINESS (inaudible).
(BEGIN VIDEO CLIP)
QUEST (voice-over): (Inaudible) joined in on the "Currency Conundrum," Aliki Sadiki (ph), for example, came up with an answer, several (inaudible) you did, too. Now the question was how Pakistan dealt with a shortage of its new currency in the early days of independence. I loved the answer. It was C. It simply took Indian banknotes and stamped the word "Pakistan" on top of it.
(END VIDEO CLIP)
QUEST: Workers from Spain's Iberia Airline have clashed with police as they started five days of strike action. Three people were arrested (inaudible) demonstrations at Madrid-Barajas Airport. The workers protesting against IAG's plans to cut nearly 4,000 jobs. Iberia reported losses of $350 million last year. It canceled around 40 percent of its flights because of the industrial actions.
If you've been watching -- and we know you have -- Spain is at the epicenter of Europe's economic crisis at the moment. The country is in a deep double-dip recession. Unemployment stands at 26 percent. There will be no growth this year and possibly next.
The dire situation is fueling the country's anti-austerity movement. Protesters are calling themselves Los Indignados, The Indignant. This week on QUEST MEANS BUSINESS, we're bringing you their first-hand account. And tonight, we meet Sofia de la Roa, one of the group's founding members.
(BEGIN VIDEO CLIP)
SOFIA DE LA ROA, FOUNDING MEMBER, LOS INDIGNADOS (from captions): I am Sofia de la Roa. I'm 28 years old. During this year I tried to fight for my rights. Today is a demonstration to the government that the people are completely fed up.
CROWD (from captions): Don't just look at us, join us! Don't just look at us, join us!
DE LA ROA (from captions): We use the social networks to communicate. This is the tool that has permitted us to fight together and to feel that we are not alone.
CROWD (from captions): "Outlaw the governing party, the Popular Party!"
DE LA ROA (from captions): In every demonstration, the people show that we are a peaceful people.
A lot of people are thinking that we are going to see social unrest. I think we are going to have much more problems.
CROWD (from captions): "Thieves! Thieves!
UNIDENTIFIED MALE (from captions): Today in "Mercenaries of yesterday, today and always."
DE LA ROA (from captions): This is radio Agora Sol Studios. It is a radio station created in May of 2011. We thought that the media didn't broadcast the reality of what was happening in the squares of Spain.
UNIDENTIFIED FEMALE: (Speaking Spanish).
DE LA ROA (from captions): I think it is very sad, the situation for my generation. We thought that we were going to get a good life, a good job.
Around me, my friends, most of them have no jobs. The country is getting involved in poverty.
I'm really concerned about the situation, when I think about the people. When I look around me, I cannot imagine what's going to happen.
I think before violence explodes, we are going to pass a very hard time. I cannot see good things in the future.
(END VIDEO CLIP)
QUEST: (Inaudible) from Spain as the week moves on, as we look at the crisis and how it's affecting people in that country.
Tom Sater's at the World Weather Center.
Tom, now is -- before you get to grips, -14 Celsius yesterday when I was in Montreal. Even Washington had some terribly gusty breezes, which made it very, very uncomfortable, sort of landing there.
What's going on?
TOM SATER, AMS METEOROLOGIST: Well, that storm system in the northeastern U.S. has moved out. Logan picked up about 15 centimeters of snowfall for those of you who are traveling over to the northeastern U.S.
I want to focus in Europe. It looks like, Richard, you're going to remain dry. But your neighbors to the east and southeast are looking at a good blanket of snow. We'll start with the numbers right now, currently Casablanca, 15; Barcelona, 13; Torino, -3.
We had, over the weekend, as many as four, even five avalanches in northern Italy, one even around the Pyrenees. But I think what we're finding is a fresh blanket of snowfall and a surge of colder air, starting to the north. Currently, again, in London, you're 4 degrees; Copenhagen, 3. Gets a little bit cooler up toward the north.
But let's take a look at this. A surge of warmth; yes, this has been nice in parts of Portugal and Spain, even southern France, scores of you heading down. We have pictures coming to the Weather Center on the beaches down around Nice as well.
But this is the surge that we're going to be watching. It's starts to really flare out and pictures like this out of Germany, well, we're going to find more of them, as there will be some melting during the daytime. But some of you are going to keep temperatures at freezing or just below. Again, a surge of cold with moisture doesn't look like much right now.
But we can actually see it. Here's that area of low pressure. If you notice the winds, as we start to see the low drop, you're going to get a surge of cold that'll slowly slide again, when we're talking moving westward as well.
So numbers will drop in parts of the U.K. London, that means you. And we're going to be watching those numbers really start to fall as we get into parts of Germany and areas to the east.
Doesn't look like much right now. And this is a rare sight to see not much in the way of moisture, but this is the acorn that could become the oak tree as, again, look at the numbers and for those of who live here and those that are going to be doing business in the next 48 hours, keep these numbers in mind from Minsk, just over 9.4 centimeters; Warsaw, 7.1; Berlin, 7.1; Munich, close to 6; 7 in Stuttgart.
So with that, the possibility of some disruption in air travel -- this is based on computer models. So always call ahead, Munich, of course, and Berlin, Prague. We're watching possibly an hour to an hour and a half delays, we get into Tuesday. And other snowfall amounts, such as Sofia, so again, this is just the beginning.
It's not going to be a crippling snow, but anything could cause some problems as we know on roadways, rail and by air. For your Tuesday, here you go, Kiev -2, Bucharest 1. We did have a funnel cloud in Greece on Saturday.
We had an F1 tornado down on the coast of southern and southwestern parts of Turkey. So the weather's going to get a little interesting and, well, just a reminder, Richard, winter is still here, still upon us.
QUEST: You see, now that -- you've just answered the question I was about to ask. I look at those snow accumulations and a look at those temperatures for now.
But -- and I also then look and see it's the 18th of February in Northern Hemisphere. We should hardly be surprised that there is snow and cold weather.
SATER: And we've been receiving pictures of snowdrops blooming. I thought it was a sign of early spring, but I didn't realize they typically bloom before the vernal equinox coming up in just a couple of weeks anyway. Lot of pictures coming in (inaudible).
QUEST: Is it actually -- because you have the advantage over me, Tom. You have the bigger picture. I just hear it from a day-to-day basis when we're reporting it. Is this winter colder or nastier than those you traditionally see?
SATER: Well, I think it's much better than it was one year ago, if you recall; the scores of fatalities due to the cold, the crippling snow that we had. So it's not so bad, just a few more weeks, Richard. We'll make it.
QUEST: And you will. I'm off to eastern Poland at the weekend, filming for MARKETPLACE EUROPE. We'll look forward to a weather forecast for you from that as the weekend moves towards us.
Still to come on QUEST MEANS BUSINESS, Walmart was the world's most valuable brand three years ago. Now other companies have surpassed it. Of brand supremacy, who's number one, two, three and four -- after the break.
QUEST: The British prime minister, David Cameron, says a vital part of his job is to open doors for British business. And that is what he is doing in India right now, leading what he now says is the biggest trade delegation ever undertaken abroad by a British prime minister.
The visit comes amid controversy. Sumnima Udas has more from New Delhi.
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SUMNIMA UDAS, CNN CORRESPONDENT: British prime minister David Cameron is in India to boost trade with the world's second fastest-growing major economy and to make Britain what he called India's global partner of choice.
He's here with a business delegation of about 100 business representatives. That's the largest delegation ever to accompany a British prime minister. But the visit, the three-day visit, comes amid controversy here surrounding the Indian purchase of a dozen helicopters from an Anglo- Italian company.
There are some reports that suggest helicopter maker August Westland paid kickbacks to secure that $750 million deal. The Indian defense minister has said they're looking into those allegations of graft. And if there is any truth behind those media reports, serious action will be taken.
Now India has been on a bit of a shopping spree for defense equipment for the past few years, as they're looking into upgrading their aging equipment. They're willing to spend billions of dollars on it. And that's why analysts say some of those European heads of state are heading to India.
But India's purchase of defense equipment has been put on hold lately due to those allegations of corruption. The French president, Francois Hollande, was also in India just last week. Among other things, he was here to push through another big ticket defense deal. That's the sale of 126 fighter jets to India.
It would have been a deal worth more than $10 billion. But the agreement has not been signed. And some analysts here say David Cameron, the British prime minister, may also take this opportunity to promote its own British fighter jet, the euro fighter -- Sumnima Udas, CNN, New Delhi.
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QUEST: Tonight, the world's most valuable brands, according to a study by the consultancy agency, Brand Finance, in first place, well, you probably maybe could have guess that one, Apple. The company claimed total global brand supremacy estimating its worth at $87.3 billion.
The South Korean rival, Samsung, stormed into second place, the brand value jumping a staggering 54 percent since last year. And it's the only non-U.S. company in the top five.
Google is ranked third at $52 billion. And Microsoft, not surprisingly, comes in fourth place. And the world's largest retailer, which used to be number one in the survey, continues to fall down the list and is now ranked at five.
The company's maybe the most valuable, but they've all been beaten for the title of the most powerful brand.
Well, that has been awarded to Ferrari. Despite making fewer cars than some of its rivals last year, Ferrari gets the most bang for its buck, higher profits, margins and customer loyalty pushed it to accelerate to the top spot in terms of powerful brands as opposed to just valuable brands.
Brand finance CEO David Haigh told me Samsung's meteoric rise is the big story for the year.
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DAVID HAIGH, CEO, BRAND FINANCE: I think the thing which surprised me most was the speed with which Samsung has shot to the top of the table. Last year, they were number 13 or 14; this year, they're number two. They really are growing at a rapid rate and they've always been known to be great functionally; they are increasingly getting emotional power with consumers.
QUEST: And in getting to that position, of course, they're challenged but still somewhere behind Apple, who have had their own, if you like, brand difficulties in the last 12 months.
HAIGH: They are behind Apple. But you know, the two of them fight it out with each other very closely. You know, if you look at the legal cases over the last year, it's a very strange relationship in that many of the components that go into Apple products come from Samsung. And yet they're locked in a legal battle against one another.
And I think if you actually look at the two, it seems very clear that Samsung are rapidly accelerating on product quality. The question is when, if ever, will they overtake them on brand emotion.
QUEST: The horsemeat scandal that's currently bedeviled Europe at the moment, or the meat adulteration scandal, this is a case where not only individual companies could have their brands tarnished, but in industry itself the brand of an industry gets tarnished.
HAIGH: Yes, absolutely. And which industry are we talking about? Are we talking about the retail industry? Or the food manufacturing industry? You could say both are being tarnished to some extent.
The interesting thing I think is that it creates an opportunity for those brands that are the most open and bounce back and say, look, we're doing it the right way.
If you looked at, say, McDonald's a few years ago, they were right on the ropes, because they were seen to be secretive, difficult, that they all sorts of product problems and they took it to heart and they completely relaunched themselves and revamped themselves. And they'd come back.
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QUEST: Now, McDonald's may have come back and the brand may have been a little too familiar for those in charge of Burger King's Twitter account today, or at least those who hacked it. This is what the official Burger King Twitter page looked like a few hours ago.
Remember, this is the official Burger King -- eagle eyed amongst you spot the Golden Arches of McDonald's. The name of the Twitter feed was also changed to that of Burger King's main rival. Now apparently they claim that Burger King had been taken over by McDonald's.
Of course, it was a hacking. The tweets were too childish or obscene for us to recount here. The account has been suspended. For its part, McDonald's tweeted that it had nothing to do with the hack.
We will hack our way towards a "Profitable Moment" after the break.
QUEST: Tonight's interview with the CEO of Saxo Bank was really quite remarkable for the forthright way in which he lambasted the Eurozone and the single currency. It is my "Profitable Moment" because the charts may show the euro gathering strength. And the ECB's Draghi, they say the environment is as stable as it's been for years.
But the outbreak of calm in the Eurozone is underpinned by nagging sense of unease. The CEO of Saxo said the single currency may be doomed and has serious reservations that the zone can fix its crisis without tears before bedtime.
The problems he raises are the ones that have dogged the E.U. since the day it was born, the gap in competitiveness to be bridged, the sacrifices that need to be made. It'll take a political commitment, everybody -- and I mean everybody seems to accept this is political issue, not an economic one.
And the question becomes more when will the northern European countries finally say enough rather than the southern European countries going their own way? We may still be some way off. But for some, the euro is doomed. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London. Whatever you're up to in the hours ahead, I hope it's profitable.
QUEST (voice-over): The headlines on CNN at the top of the hour:
Nine workers have been shot in South Africa at a mine near Rustenburg. The mine owner said guards used rubber bullets to break up a confrontation between rival unions. Three security guards were also hurt; we're told that none of the injuries are life-threatening.
Tunisia's prime minister says a plan for a technocratic government has failed. Hamadi Jebali had been pushing for a government composed of members not belonging to any political party. That initiative came after Chokri Belaid, an opposition leader, was assassinated last week.
The Venezuelan president, Hugo Chavez, is back in his home country after months of cancer treatment in Cuba. The news comes days after this photograph was released, showing him with his two daughters; details on his condition, it still isn't clear.
A French factory at the center of Europe's horsemeat scandal has been allowed to resume production of minced beef. French ministers have lifted the suspension at the Spanghero plant's food license. Ministers say it's the first company to mislabel beef which was found to contain horse DNA.
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QUEST: Those are the headlines. Now to New York and "AMANPOUR."