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Quest Means Business

Bulgarian Government Resigns; Europe Under Pressure; Plunging Pound; Currency Conflict; Fed Minutes; Markets Update; Pound, Euro Down; PlayStation 4 Coming Soon; Console Wars; Sony's Struggle

Aired February 20, 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: Austerity protests bring down Bulgaria's government. Tonight, we ask what that tells us about the European Union.

Back in the game. Sony gets ready to reveal the PlayStation 4.

And paying for bags. The airlines now finding ways to make you pay for your luggage, and you'd be surprised who's joining in.

I'm Richard Quest, we have an hour together, and I mean business.

Good evening. Bulgaria's government has resigned in the face of fierce protests over the price of energy. The prime minister is to stay in post until a caretaker cabinet has been formed ahead of national elections taking place in the spring. For Bulgarians, these protests are much more than just electricity bills.

It's our lead story tonight, because whether it's Greece, Spain, Ireland, or now Bulgaria, as Jim Boulden reports, austerity is biting.

(BEGIN VIDEOTAPE)

(CROWD CHANTING)

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): People power spoke in Bulgaria on Wednesday. After days of street protests that have now turned violent, Prime Minister Boyko Borisov said it was the threat that protests could get nastier that led to his decision to step aside.

"It's the people who put us in power," Borisov told Parliament in his resignation speech, "and we give it back to them today," he declared.

(CROWD CHANTING)

BOULDEN: Bulgaria is the latest in a long line of European countries to lose a government during austere times. From Ireland to Greece to Italy, governments were brought down in the wake of the euro crisis and attempts to get a grip on budget deficits through painful cuts.

The finance minister was let go on Monday in an attempt to quiet protesters. He said he will continue to support the outgoing prime minister and his majority party.

These protests started more than a week ago, sparked by high energy prices during the cold winter. As protests grew, people started to complain about low living standards, and many accuse the outgoing government of official corruption, something they denied.

Bulgaria is the EU's poorest country per capita and is not in the euro. But its economy relies heavily on exports to countries like Germany and other euro countries, most now mired in recession.

But up to now, Bulgaria has, in fact, been praised by Brussels for its handling of austerity and for an economy that continues to grow. Bulgaria has not needed a bailout, while Hungary and Romania have.

But issues remain, and now a newly-formed government will have to tackle these problems -- or not -- ahead of an election this spring.

(END VIDEOTAPE)

QUEST: Sergei Stanishev is the former prime minister of Bulgaria and leader of the opposition Bulgarian socialist party and joins me now from Sofia. Sir, if you were elected in the elections that are going to take place, if you find yourself in government, what fundamental change would you make to the austerity which is necessary for Bulgaria?

SERGEI STANISHEV, FORMER BULGARIAN PRIME MINISTER AND OPPOSITION LEADER: Good evening to you, first of all. And secondly, I would like to tell you a few things about the protests, because they were not only about austerity and about the social price paid by the people. Indeed, in the last years under this government, which is leaving, hopefully, tomorrow, people were impoverished.

And all the problems of the economy and the budget were resolved at their expense. And people simply cannot stand it anymore.

QUEST: Right.

STANISHEV: Because in reality, the prices increased for many commodities by 30 percent, and for electricity bills in the last three years --

QUEST: OK --

STANISHEV: -- they have increased by 60 percent. And in reality, also, they -- all the social payments were practically reduced. Now what is needed, the protests are not only about austerity, they're about returning the power to the people. They're against the plundering of the public resources --

QUEST: All right. All right --

STANISHEV: -- and they want elections.

QUEST: Let me jump in, though, if I may. If that's right and there's a change of government, the unpalatable fact is whoever's in charge is going to have to maintain the same level of austerity in Bulgaria. It's happened in Greece, it's happened in Ireland, it's happening in Spain, in the UK. Bulgaria will have to do the same.

STANISHEV: Well, let me tell you first of all that Bulgaria was always with very stable fiscal positions. Before the crisis, during my government, we had budgetary surpluses, and nobody intends to go beyond a 3 percent threshold for a budgetary deficit.

It is important to keep the financial stability, but the reality is that this current government increased the public debt and halved the fiscal reserves, which were quite huge for a country like mine.

What is needed now is to restart the economy, to have a productive economy, to support the small and medium-sized enterprises to create jobs. Because unemployment became officially 12 percent. In reality, for the discouraged people --

QUEST: All right.

STANISHEV: -- it's more than 17 or 18 percent. And this is what is needed now. But even more is needed the reconstruction of democratic institutions which were destroyed by the current populist government.

QUEST: OK -- I'm going to jump in here -- I --

STANISHEV: It was an authoritarian government.

QUEST: -- I must -- right, I must jump in here, because there are other issues we do need to cover in limited time. And particularly, your view on whether the European Union is equipped for dealing with the sort of unrest, the sort of transparency issues, the sort of governance issues that we've seen in Hungary, Romania, Bulgaria by your own admission with this government has these issues. The newer countries of the union are finding the European Union ill-equipped to deal with them.

STANISHEV: I think that the European Union definitely have its own responsibilities for the stability of the democratic process in the new member countries. Because democracy is not something given and granted once and forever. You need to fight for it, you need to defend it, you need to have positions.

And I believe that the European Union hast to follow very closely the forthcoming elections. Because 60 percent of Bulgarians now believe that the elections will be manipulated. And this is a very worrying fact. This is confirmed by the public opinion polls.

QUEST: OK, so --

STANISHEV: And I think also that the European Union, in my view, has to be much more coherent in encouraging growth. In the summer, there was a growth and jobs pact which was approved by the European Council, but very few things have been done practically. You need strong investment process, both private and public.

QUEST: All right.

STANISHEV: You need to restore confidence in the European institutions and the Union as a power of hope, giving back hope to the people.

QUEST: Right, I -- OK --

(CROSSTALK)

STANISHEV: And especially --

QUEST: So, with that -- with that in mind -- with that in mind, sir, do you -- and finally, do you see a European Union which has a very strong north, a weakened economic periphery in the south, and a rump of countries in the central European area who are almost playing their own game, almost not part of, and yet at the same time falling foul?

STANISHEV: One thing should be very clear. The European Union is based on the principle together we stand. And not divide and rule. Not a single country of the union, including the strongest economies, like Germany, can overcome the consequences of this crisis on their own, because we are all interdependent.

You need a stronger economic governance. You need a banking union. But they should be based on the principles of the European Union of solidarity, helping each other, and together overcoming the crisis. This is the only way forward. This is the only way through.

QUEST: Sir, thank you for joining us. I do apologize for interrupting you once or twice. We had a lot of ground to cover --

STANISHEV: No problem. It's a conversation.

QUEST: And -- it's a conversation, and you're a politician, and you're familiar with the way these things go, but I do thank you for joining us this evening from Sofia.

Jim's with me. This is interesting stuff, Jim. This goes to the very heart, not only of the current economic crisis, but the way the Union responds, as the former prime minister says.

BOULDEN: And you know, up until now, Bulgaria had been praised by Brussels because its budget deficit is under control, its austerity package was put into place before it got into crisis. Obviously, it's outside the euro.

And ten days ago, this government seemed -- seemed -- to be rather popular. And then the whole thing disintegrated.

QUEST: If we take Bulgaria, Romania, Hungary, Slovakia, Slovenia -- what's it all telling us now as they come out of the crisis?

BOULDEN: Well, we've seen Slovenia now getting itself into trouble, we've seen Romanian and Hungary needing IMF money. Bulgaria, again, didn't need to get the money, so it was growing, but the economy starts to weaken because it needs to have economies like Greece, Spain, Italy, buying its products, because Bulgaria's very heavily tied to exports.

So, pull it together for me tonight as we look at the way Bulgaria will have an election. The former prime minister says he's worried about transparency -- basically, vote-rigging --

BOULDEN: Yes.

QUEST: -- in the election.

BOULDEN: Countries like Bulgaria, the people wanted to join the EU because it wanted to -- they wanted to not have sort of the culture it had before with corruption. And so they were hoping that the EU would change that path inside of Bulgarian --

QUEST: Will they be worried about this in Brussels?

BOULDEN: I think they'll be worried about what's going to happen in the next two months, because if the elections in April, as we're now thinking it will be instead of in July, you've got two months of a very insecure political process going on in Bulgaria, and that will worry people in Brussels.

QUEST: Jim Boulden, we thank you. Good report. Thank you.

Now, let's turn our attention back to London's FTSE, which is hovering around a five-year high, and the five-year high on equities comes whilst the pound sterling is its lowest level in nearly three years. Policy, printing presses, and pressure on the pound.

(RINGS BELL)

QUEST: QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: The pound sterling -- we talked about it earlier in the week on the question of whether there was a short going on and traders were shorting it to try and make money. Well, now it plunged after it emerged the Bank of England is thinking about restarting the printing presses.

The minutes of the bank's most recent policy-making committee, the MPC, join me at the printing press, otherwise known as the CNN super screen, and shows exactly what happened to -- this is the trading day. This is the rate of the pound, that's the trading day.

Now look closely at the way -- well, you don't really need to look that closely. Let's go right in there and you can see. What happened here was the minutes came out and they suggested that the Bank of England was going to do more easing. There was a vote within the Monetary Policy Committee, and the pound fell sharply.

Analysts had expected the divide to be eight against one, eight in favor, one -- one doing war. It was actually six three, six in favor of keeping the status quo, three -- including the governor -- in favor of starting the printing presses and adding 25 billion sterling towards QE. So now the pound is at an eight-month low against the dollar. It's now 1 percent against the euro.

You'll remember, Ian Bremmer yesterday of the Eurasia Group told me there was no risk of a currency war. Lorenzo Bini Smaghi says that's simply not true. He's the former ECB executive board member. He joined me from Rome, and he said when you take a look at all of this, a currency war is highly possible.

(BEGIN VIDEOTAPE)

LORENZO BINI SMAGHI, FORMER ECB EXECUTIVE BOARD MEMBER: I think that there is a risk. The problem is that in order to avoid such a war, the kind of instruments that are put in place to avoid a war may lead to something even worse, which is a bubble, which will burst sooner or later, and which will lead the global economy into a worse situation.

QUEST: The currency war is the result, it's the byproduct. It was never intended. That's what you're saying, isn't it? Monetary policy has other goals, and one byproduct is the exchange rate.

SMAGHI: Yes, of course. But one of the risks, now, is that monetary policy is being asked to do other kinds of -- to achieve other objectives, and to replace other policies, like fiscal policy. Because when monetary policy -- when a central bank buys a huge amount of assets, risky assets, away from investors, it's injecting liquidity, which is then flooding to other countries.

QUEST: The Bank of England -- we saw a good example of it today. The Monetary Policy Committee starts thinking about more QE or some form of further easing and the -- and sterling drops precipitously.

SMAGHI: That's one of the problems, and the whole issue is where will this lead us? If every central bank starts entering this type of game, and especially if it is pressed by politicians to enter into this game, because this game is not a free lunch.

When you absorb all these assets, these risky assets, this will lead to losses sooner or later. It's losses that are spread to future taxpayers, but it has an advantage, of course, is that these taxes are not submitted to the vote of parliament. It's a covert tax.

QUEST: Right. So, do --

SMAGHI: And central banks are being pressed.

QUEST: Do you think that Mervyn King, Mario Draghi, the governor of the Bank of Japan, Ben Bernanke in the US -- do you think they are worried about currency risk at the moment?

SMAGHI: I think everybody's worried. Everybody's worried in the central bank environment about the pressure that politicians are putting on the central banks. We have seen this in Japan, we are seeing this elsewhere.

There is a risk that if monetary policy is pushed to do other kinds of jobs, to replace fiscal policy, to take away the pressure from the politicians to do their own part, this will lead to excessive volatility in the exchange rates.

That's why the G20 made a statement, which was not very successful, by the way. But there is a concern, of course.

(END VIDEOTAPE)

QUEST: Now, that was the former member of the ECB. In the last few moments, we've had the Fed minutes released in Washington. They are 16 pages long and they've only just come out. The Fed minutes, remembering the decision that they took, moderate growth path continues, little change. Perhaps a reduction in downside.

But here's the important bit. On the question of further QE, several participants -- several participants are now worried about the potential costs and risks of further asset purchases. In other words, they are believing that there may be the efficacy and the costs are greater than the actual benefits.

A few raised concerns about the functioning of financial markets. In the light of the discussion, they decided to support the committee's ongoing assessment. In other words, no change, but worries are growing among the members of the Fed about QE and its increased use in the markets.

The markets that are open are in New York. Let's take a look at the Down, down 18 points. Not much of a reaction to the Fed as such. As you can see, the market has been down pretty much most of the session, so it's really holding -- it's really continuing those losses, slightly widening them, maybe, but really not particularly startling result.

European shares ended Wednesday's session on a mixed -- what does that mean? Mixed? Some were up, some were down, and some were in between. In other words, 50/50, and there weren't huge gains either way.

RSA, Lufthansa were the worst performers in London and Frankfurt. RSA fell more than 14 percent, Lufthansa down more than 6 percent after the dividends suspended even though the airline returned to profitability. Zurich's SMI, fourth straight session of gains.

Time -- we've done Fed, we've done BOE, we've done equities, now Currency Conundrum. The head of China's central bank research institute has reversed its view of the US dollar, saying it will remain the leading currency for some time. Beijing has spent years suggesting the dominant dollar's days are numbered.

Before the dollar took top spot, what was the world's leading reserve? Was it the mark -- the Deutsche mark -- the pound, or the Dutch guilder?

The rates today, the pound is down nearly one percent against the dollar, the euro is down around a third of a cent, Japan's currency is holding steady. Those are the rates --

(RINGS BELL)

QUEST: -- this is the break.

(COMMERCIAL BREAK)

QUEST: This was number 1. This was number 2. This -- they're getting bigger, not smaller. This is number 3. And today, Sony is unveiling the PlayStation 4 in New York. It's the latest model in the Sony iconic game console series.

Now, it may be the most important launch of all, because the one that started in 1994 with this, the PlayStation 1, unlike most consoles before it, the games came on CD-ROMs, which opened like that. They had titles like "Final Fantasy" and "Metal Gear Solid," and they are regarded as classics. They're also antiques.

This is number 2. It's actually quite heavy. It was bigger, heavier, and it was more of a success than the first one, 150 million of them were sold, making it the most successful game console of all time, despite the challenge from Microsoft with its Xbox, which came into the market.

It's getting bigger and we are getting -- we're actually getting quite heavy now. The PlayStation 3 was supposed to be even bigger in 06. Now remember, that sold 150 million. This only sold 77 million, and there were problems with cybersecurity, particularly online playing. Hackers stole personal info because it was all stored.

Well, Sony hasn't turned a profit in almost five years, and now PlayStation is up against bigger, more robust competition. It's also in competition with the SmartPhone and the tablets. In other words, the PlayStation console could be a thing of the past, which is why, as Maggie Lake reports, they have to do something dramatic with PlayStation 4.

(BEGIN VIDEOTAPE)

MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT (voice-over): Sony needs to get out in front early if it has any hope of regaining its lead in the gaming industry. This week, the consumer electronic giant is expected to unveil the fourth generation of its PlayStation gaming console.

UNIDENTIFIED MALE: And this is a crucial play on the way.

STEPHEN TOTILO, EDITOR-IN-CHIEF, "KOTSKU": There's a lot of pressure on Sony right now. They have to justify that it's time to move from the PlayStation 3 era to the PlayStation 4 era.

They need to justify that PlayStation still matters. Because we hear about Nintendo all the time, and we hear about Xbox and Connect. With PlayStation, it's kind of faded a bit, so they need to reassert their relevance.

LAKE: There hasn't been a new console from Sony in seven years. During that time, Microsoft's Xbox has taken the lead in the US market, with Nintendo's Wii a competitive third.

Globally, Sony is still the number one console maker, but that may also be shifting. Consumers are increasingly downloading games on their SmartPhones and tablets instead of buying consoles. For new consumers, apps are often cheaper and easier.

TOTILO: So, who's kicking? Are you kicking?

LAKE (on camera): No, I'm receiving. You're kicking. Oh, no, it looks like I'm kicking. No, wait. No, I'm receiving.

LAKE (voice-over): It's a competitive playing field, but don't count Sony out yet.

TOTILO: Sony's advantage that they have over Microsoft, if they have any advantage, is that they have amassed a bunch of exclusive game development teams all around the world. When we see what Sony unveils with their hardware, we should also be looking to see what games they show.

Because just that one perfect game, like we saw Wii Sports define the Wii, could change everything for Sony.

LAKE: Maggie Lake, CNN, New York.

(END VIDEOTAPE)

QUEST: However good the technology and however marvelous and whiz- bang-pop the games, Sony is fundamentally a company designed to make profits, and the company's investors haven't been shy about expressing their doubts.

The stock down more than 71 percent since late 2007, just after this was released. And it's not all to do with the gaming division. Alex Zolbert is in Tokyo.

(BEGIN VIDEOTAPE)

ALEX ZOLBERT, CNN INTERNATIONAL CORRESPONDENT (voice-over): A clear picture of how the mighty can fall. Sony was once the dominant player in the tech world, the king of all things cool. Many will remember that must- have Walkman.

But what has not been music to the company's or investors' ears is Sony's staggering losses in recent years. While some of its competitors have been minting money, Sony hasn't turned a profit since 2008. In fact, the last fiscal year was the worst in the company's history, in part due to the aftermath of Japan's devastating tsunami, but also thanks to a weak product lineup.

ZOLBERT (on camera): This is the latest version of the Sony Discman, a product that came onto the market back in 1984. And to try to give you an idea just how far Sony shares have fallen, well before they got a boost from the weaker yen in recent months, they were trading at the same level as to when this product came on the market.

DAMIAN THONG, MACQUARIE SECURITIES: Most people are watching what other people will do or what other people are buying to make their purchase decisions. And Sony really needs to capture, you can say, the heart as well as the minds of consumers in many parts of the world to regain that luster.

ZOLBERT (voice-over): It's not all grim news for Sony, though. Sony Pictures has hit the mark with recent hits, like "Skyfall." The company's sales overseas are also now getting help from a weaker Japanese currency, and next month, when the deal is set to close, Sony should net close to $700 million from the sale of its US headquarters in New York.

But either way, as gamers await the latest PlayStation, it's clear Sony needs a big hit if it hopes to return to glory anytime soon.

Alex Zolbert, CNN, Tokyo.

(END VIDEOTAPE)

QUEST: One of the sporting world's most powerful men is the chief executive of Manchester United, and he's decided to call it a day. David Gill's legacy of record sponsorship in a moment.

(COMMERCIAL BREAK)

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

(BEGIN VIDEO CLIP)

QUEST (voice-over): The uncle of the South African runner, Oscar Pistorius, says his nephew is in, in his words, "extreme shock" and grieving for his girlfriend. Prosecutors are now laying out their case against Pistorius. He's accused of shooting and killing Reeva Steenkamp on Valentine's Day. The bail hearing resumes on Thursday.

Syrian state TV is reporting a mortar attack has hit a sports complex in Damascus. It killed one football players. At the same time, opposition activists say government warplanes are bombing populated areas of the capital and more than 90 people have died in the fighting on Wednesday.

Bulgaria's prime minister and his cabinet are stepping down ahead of elections. The caretaker government's expected to be selected on Thursday if the resignation is accepted. The leader of the opposition party, speaking on this program, has called on the European Union to ensure that the election, when it's held, is free and fair.

The process to elect a new pope may begin earlier than expected. A spokesman says Pope Benedict XVI is considering changing the Vatican constitution which would allow the vote for a successor to begin before March 15th. The pope's resignation takes effect on February the 20th.

The British prime minister, David Cameron, visited the site of an infamous massacre during his final day in India. Hundreds of people died at Amritsar in 1919 when British troops opened fire on unarmed protesters. Mr. Cameron expressed regret for what he called a deeply shameful event. He stopped short of issuing an apology.

(MUSIC PLAYING)

(END VIDEO CLIP)

QUEST: Are you sitting comfortably? What are your plans for retirement? And more importantly, will you be able to enjoy the same standard of living in retirement that you do now? Or are you destined to be part of the poor and old?

Most workers around the world are going to run out of savings 10 years into retirement, HSBC is warning. The bank says that the average retirement, the average, mind, lasts 18 years and most of us have only got enough money to last a decade. It's going to get worse as we get older. So the warnings are not new and it seems the young still aren't listening.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Well, now I am. I'm (inaudible) by retirement because, you know, you don't know -- the economy, you don't know what's happening in this world.

UNIDENTIFIED MALE: I'm pleased to have a plan. I'm not sure (inaudible) thing kind of my generation (inaudible) be aware of what's needed to make you secure in the future but I think the plan (inaudible) probably the -- probably a good one.

UNIDENTIFIED FEMALE: Well, I work as a freelance (inaudible) tourguide. And so I don't really have -- you can set aside money. But I just haven't because (inaudible), so I do.

(END VIDEO CLIP)

QUEST: Have you put enough aside? Are you putting enough aside? Do you even have a plan? @RichardQuest, we'll read some of your responses to your plans and whether or not you are actually going to enjoy a healthy, happy, wealthy retirement, or you're going to be penury and broke.

After we listen to HSBC's head of wealth development, Christine Foyster, who says it's never too late to start planning for your retirement, even if you're my age.

(BEGIN VIDEO CLIP)

CHRISTINE FOYSTER, HEAD OF WEALTH DEVELOPMENT, HSBC: It certainly is quite disturbing reading. What we're seeing is this really big gap between what people expect, if people expect to retire on three-quarters of their income, but they're just not saving enough to be able to live like that.

QUEST: But we know that the retirement debt trap is there and still we don't individually address it. Why do you think that is?

FOYSTER: I think it's the approach of I'll live for today; it's a struggle. It's a balance. It's a juggling act. What we saw was a -- quite a significant percentage of people who'd rather save for a holiday than they would their retirement, which is quite scary. But at the same time, you can understand people putting today's enjoyment before worrying about tomorrow.

QUEST: I don't want to be too pessimistic, although I'm closer to retirement than you are, but I put it to you that there is no way that the average person can ever save enough, create a pension pot large enough, make the correct investment sufficiently to have a decent retirement.

FOYSTER: I think if people continue to not plan, not think ahead and to believe that this is how it's going to be, then you're absolutely right. The only way that people can actually take control is to take personal responsibility, and that's about setting out a plan.

We've seen across the countries that we surveyed, people start thinking about it, 31 percent of people said they had a plan in their head. Well, having a plan in your head isn't good enough. You need to start actually documenting it; think about where you are now and where you want to be so that you can start thinking about how you get there.

For people who've got access to financial advice, go and talk to somebody; for people who've got access to a company pension scheme, do the best you can with that. And we're seeing the new -- the new government supported pension scheme will encourage people to start saving. We certainly saw in the U.K. that was quite a strong indicator.

QUEST: It's -- finally, you are absolutely, to use the phrase, into the wind, aren't you, because the young don't care and the old, it's too late.

FOYSTER: Firstly, it's never too late.

QUEST: But you know what I mean.

FOYSTER: I know. I know what you mean. It's (inaudible) become bigger sacrifices. But what we don't want and part of the reason for doing this report is to raise awareness. And there is this huge gap where people believe their money's going to run out.

They've actually recognized that their money's going to run out, 10 years in retirement without any money. So we need to be starting to raise awareness.

And for the young, it's never too early to start. A little bit now, a little bit today, to start getting into a disciplined savings scheme will make such a difference later in life.

(END VIDEO CLIP)

QUEST: It's never too early to start saving and we all wish we'd done it a little bit sooner. I can -- to the "Profitable Moment," I'll save it for the end of the program.

The chief executive of Manchester United is stepping down. He's David Gill and he'll leave in June after a decade in charge of one of the world's biggest football clubs. There have been highs and lows during that time. Let us enjoy some of the moment.

Gill himself says the most incredible high was in 1999, when it won the Treble. For the first time an English club won the Premier League, Champions League and the FA Cup, all in one season. It's nice to go back in history, 1999. So it's the case of what have you done for me lately?

The lows: more recent, in other words, the lows, well, of course, they lost the title to Manchester City in the final minute of last season. The highs and lows throughout.

Off the pitch, things have been just as eventful. And (inaudible) program we'll concentrate on this particular one.

In August 2012, there was an IPO, the landmark achievement of Gill was to take the club public, standing on the far left of the platform. Deloitte put their revenues at more than half a billion dollars. Last week's results showed debts at similar levels. So there we -- and then, of course, perhaps what -- no matter what the share price then, or the IPO or the titles.

They key to the club's financial success in future has been -- and the legacy of Gill has been sponsorship deals. And they have been from all over the world. This is the launch of a deal with Epson in Japan. Last year, Gill agreed a world's share -- a world record shirt sponsorship GM, it's worth half a billion dollars.

So as you contemplate your retirement, think about David Gill, who I suspect probably started saving long before you and I did.

After the break, we offload some baggage because if it goes in the hold in future, Europe's premier carriers cough up (ph). QUEST MEANS BUSINESS.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

QUEST: To check or not to check: that is the question. Welcome to the QUEST MEANS BUSINESS transit lounge. There's a different sort of departure going on these days. Europe's legacy carriers are breaking ranks on checked baggage.

Now look, we always know that this sort of thing has to be checked. It's too big to go in the overhead compartment, no matter how much you try and convince them otherwise.

This one, well, you can obviously get in the overhead compartment. And if it's got that into the overhead, well, you didn't pay any checked baggage fees. But now, well, join me over the luggage carousel. Now these are being charged by airlines that previously allowed you to take things on board for nothing. So as you can see -- and we'll go through the legacy carriers and we'll go through some of the newer charges.

Let's start with KLM of Amsterdam, the Dutch airline. From April -- excuse me -- from flights booked on or after April, they're going to charge $20, a variety of different fare fees, for that. The exemption, of course, is for frequent flyers. If you're frequent flyers, you don't pay. Then you have the new one, British Airways.

British Airways is starting up from five European routes from Gatwick. They will charge -- well, basically, there's two fares, one with luggage, one without luggage. They say they're not penalizing you. But you will get a discount if you don't have luggage with you.

Delta Air Lines with flights from the U.S. to Canada, business first frequent flyers are exempt; otherwise, there can be a charge for a bag in the hold. And as you can see, as the luggage carousel goes 'round, the one who started all of this, along with easyJet and probably the granddaddy of the charges, is Ryanair, which varies by season and flight.

The significance of this and this luggage carousel is not Ryanair charging, it's the way the others are now joining into the fray. So what do you think on the question of that, @RichardQuest, while we're talking about it. A bag in the hold now being charged by more legacy carriers.

I asked Simon Calder, the editor -- travel editor of "The Independent," whether these changes are now eroding the differences between legacies and low-cost.

(BEGIN VIDEO CLIP)

SIMON CALDER, TRAVEL WRITER: It most certainly is.

I think that easyJet, in a sense, which is Europe's second biggest budget carrier after Ryanair, has actually spent the last couple of years trying to turn itself into a version of British Airways and now we have British Airways turning itself into a version of easyJet. They are most definitely converging, Richard. And hopefully the beneficiary will be the traveler.

QUEST: BA says that they're not charging for baggage; they are merely offering a lower price if you don't take baggage. Simon, that seems to me like the worst form of semantics.

CALDER: Well, I -- that was my initial reaction as well, Richard.

But then if you study the details and if you remember the heritage that we're talking about here, British Airways has a problem that none of the other big European legacy carriers, like Air France and Lufthansa has, and that is being based in London, the main base of operations, of the two biggest low-cost airlines in Europe, that's Ryanair and easyJet.

And at Gatwick Airport, particularly, which is London's second airport, they are especially squeezed, because that is now easyJet's main base of operations. And they compete head-to-head on dozens of different routes.

QUEST: So why didn't -- so why didn't they just come straight out, do you think, and say, we're going to start charging for baggage? And by the way, you, you know, this is the price for everybody, if you want a bag in the hold, it's extra. Be up front about it.

CALDER: Well, yes. And I think we will get to that stage in a year or two. But you know how much excess baggage the legacy airlines are carrying around. And of course, it's -- they're a bit reluctant to say, actually, yes; we are completely turning ourselves into easyJet.

We've got in Germany, of course, Lufthansa is effectively outsourcing all its short-haul flying that doesn't begin or end at Frankfurt or Munich to German wings. So the Germans are going to get used to it.

The Spanish, with Iberia Express, are already getting used to it. And so therefore, I think, if we're talking in -- maybe just a year's time, certainly in five years' time, the norm will be that your ticket only buys the flying; everything else that you could possibly want is going to be extra.

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QUEST: Simon Calder with all that's the thought of paying more for those bags in the hold.

When we come back, we'll be tracking the meat from the field to your freezer. It's QUEST MEANS BUSINESS. Good evening to you. One way you won't get any nasty surprises at dinner.

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QUEST (voice-over): The answer to tonight's "Currency Conundrum," before the dollar was number one, what was the world's leading currency? It was -- ah, easy one tonight; you must have got that. It was sterling, which was dominant until the mid-'70s. (Inaudible) gold standard and all of that.

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QUEST: The scandal, the European scandal, and widening scandal over the mislabeling of meat has spread to Asia. Imported frozen beef lasagna has been taken off the shelves of major supermarket chains in Hong Kong after tests confirmed that the means contained horsemeat.

As our correspondent, Nic Robertson now reports, the scandal has got shoppers here in the U.K. fundamentally rethinking their buying habits. Caveat emptor!

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NIC ROBERTSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): Early morning on the family-run Marsh House Farm and a cow, however unwilling, must go for slaughter.

(Inaudible) seals his fate.

(Inaudible) that one today (inaudible).

ROBERTSON (voice-over): Son Daniel checks his passport, a passport to the dinner table.

UNIDENTIFIED MALE: Here we have to state the day the animal was born, the sex he is, the breed he is.

It's about 6:30 in the morning and cow number 400495 is off to the slaughter?

UNIDENTIFIED MALE: Yes, it is, yes, yes. It (inaudible) Lincolnshire here.

ROBERTSON (voice-over): One gone, 300 more to feed. The family's focus: quality food close to the customer. Husband Mike helps butcher the beef when it comes back from the abattoir.

MICHAEL BELCHER, FARMER: The supply chain is so small and we know everything about the animal. There's nothing that we don't know about it.

ROBERTSON (voice-over): They've been farming here for four generations; nothing frustrates them more than the horsemeat scandal. They blame big food chains, driving down costs to maximize profit, supermarket greed that led them to take their own meat to market.

BELCHER: I can survive on what Mr. Supermarket charges the consumer. I can't survive on what he wants to pay me as the producer.

ROBERTSON: And this is where the family meat ends up on the table in the farmers' market 100 miles south in London, one of several farmers' markets that sell their product. And over the past few weeks, they tell us that business is up.

ROBERTSON (voice-over): Customers like the direct access to the meat produced at Marsh House Farm.

UNIDENTIFIED MALE: I find the quality of the meat is very much better. And I know where it's come from. And I know that it has been raised humanely.

UNIDENTIFIED MALE: I would avoid processed, packaged stuff that's, you know, obviously now, at the moment, you don't know what's -- you don't know what's in it. These here, these talk to the farms directly. They prepare it; they bring it here. And you can see exactly what it is and they (inaudible) you can trust then.

ROBERTSON: It seems that people don't want the processed meat that's in their supermarkets. For Mike and his family and the customers that come here, this can only mean peace of mind -- Nic Robertson, CNN, London.

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QUEST: British lawmakers say the scale of the contamination and adulteration is breathtaking. It was a committee in Parliament which said recent discoveries of horsemeat in products sold as beef are likely to be the tip of the iceberg. You'll be aware, European authorities are now urging all member states to increase DNA testing of meat products.

Now we were talking earlier about the question of pensions and pension plans. Perhaps hardly the most exciting of issues, but it is one that goes to the very core. There will be a "Profitable Moment" at the end on this issue.

"The charges that I've (inaudible) retirement of sterling as a reserve secretary after 1945," writes Catherine Shenk (ph) at the University of Glasgow. "It's totally unpredictable," writes Addis Kurtalak (ph), "whether the pension funds would remain in the next 40 years, having in mind today's debt problems." Yes, well, that's not a reason not to do it.

We also have from Ali (ph), "We have in the East a family system which gives us the edge not to think after retirement yet." And perhaps I think the most telling point on this question of pensions and retirement comes from Alaghi Bojang (ph), "It's good to have a plan, but living on less than $1 a day, what plan could you have?"

Some of the thoughts on that.

The markets that are open and doing business in New York, the Dow Jones is down 66 points. We're showing you this again, because in the last hour, the market has come off about 40 points, we're under 14,000.

And we've had the Fed minutes, which show that the Fed governors are - - the FOMC are now starting to show some serious concern and questioning the efficacy and the problems of quantitative easing.

It takes away the idea that there could be more QE on the way in the United States. The exact opposite, of course, that we got from the Bank of England minutes, which were released today, which showed very much the MPC there thinking of starting QE again.

"Profitable Moment" next.

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QUEST: Tonight's "Profitable Moment," when I was barely knee-high to a grasshopper, my father would tell me one thing: "Don't forget your pension. Save, save, save." Tonight, HSBC told us the responsible thing to do is make sure you make proper provision. Forgive me if I sympathize a little with those of who are choosing to live for today and not worry about tomorrow too much.

After all, tell those people who had their pensions devalued and cut back during the crisis that they were right to stow their money away when they're facing penury.

And try telling people to put their trust in equities when even hardened traders can't gauge where things are going next.

And yet if there's one thing more terrifying than managing money, it's the prospect of a rough retirement. I'm going to be 50 -- well, I'm 50 already; I'm 51 next month. And my generation may never enjoy the security of the one before us. The retirees of my generation will be the first in modern times to be worse off than our elders.

The post-crisis world is challenging enough and won't even have enough money for happy, health retirement. That's a cheerful thought upon which to leave you, because that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable.

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QUEST (voice-over): The news at the top of the hour: this is CNN.

The uncle of the South African runner, Oscar Pistorius, says his nephew is in "extreme shock" and grieving for his girlfriend. Prosecutors are laying out their case against Pistorius as part of a bail process. He's accused of shooting and killing Reeva Steenkamp on Valentine's Day. The bail hearing will resume on Thursday.

Syrian state TV is reporting a mortar attack has hit a sports complex in Damascus. It killed one football player. At the same time, opposition activists say government warplanes are bombing populated areas of the capital; more than 90 people have died in the fighting on Wednesday.

Bulgaria's prime minister and his cabinet are stepping down. A caretaker government's expected to be selected on Thursday and elections are due to be held. The leader of the opposition, speaking on QUEST MEANS BUSINESS, called on the European Union to ensure that any election is free and fair.

The process to elect a new pope may begin earlier than expected. A spokesman said Pope Benedict XVI is considering changing the Vatican constitution that would allow for a vote to begin before March 15th.

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QUEST: You are up to date with the news headlines. Now to New York, "AMANPOUR" is live.

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