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Quest Means Business
US Jobs Shocker; Stocks Tumble on Wall Street; Hiring Slowdown; European Markets Down; Dreamliner Final Test; Worst Bank in Britain; Skilling Sentence; Dollar Sliding; North Korea Tension; Anonymous Claims Responsibility for North Korea Hack Attack; Internet Wars
Aired April 05, 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: Disappointed and discouraged. US stocks tumble and the job numbers comes in way short than was expected.
There`s a skirmish on social media. Hackers are waging cyber war with North Korea.
And call it the worst bank in Britain. Former heads of HBOS are told you will never work in finance again.
I`m Richard Quest. It may be the end of the week, but I still mean business.
Good evening. Numbers from the United States on employment, the job data, missed the mark by a long shot.
(RINGS BELL)
QUEST: Just 88,000 new jobs were created last month. Now, that`s a third as less as many of the previous month. It`s also far fewer than was expected. They`d looked for a number of 190,000. The overall unemployment rate fell to 7.6 percent. Don`t get excited, it was for all the wrong reasons, and we`ll come back to that in just a moment.
But bear in mind those details: 88,000, half of what was expected, Wall Street`s not happy. Alison Kosik is at the New York Stock Exchange to tell us just how unhappy they are.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: I talked to one analyst, Richard, who said get ready for stocks to be punished today, and he was right about that. All those stocks are off their lows of the session. You are seeing the Dow down 90 points, the S&P down almost 1 percent.
It really makes you wonder if this job number, Richard, is going to really be the catalyst to what many investors have been waiting for, for the major averages to slow down a bit, because lately it seems like nothing`s been able to stop the stock run-up.
The market`s been rallying for months, despite signs that the US economy is not all that well. It`s the reason that experts say this is especially troubling that this slowdown is happening before the impact of those forced budget cuts has fully hit the US economy.
So, that is also the worry that -- what`s going to happen when the full effect of those spending cuts actually takes hold of the US economy, what would the job report look like then, Richard?
QUEST: Alison Kosik at the New York Stock Exchange giving us the market reaction. Well, when you consider that 150,000 new jobs are needed every month in the United States, and that only just keeps up with population growth, today`s numbers become even more worrying.
And it`s not a one-off -- excuse me. Look at how many jobs have been created each month since the start of last year. Now, you see very much a shortfall as it comes down, frequently missing the mark, and particularly in the most recent few months.
The number of people in employment looking for work fell by half a million in March. That`s also a rather worrying number, too. Down just by half a million to these numbers you see on the screen. They have essentially dropped out of the workforce. The US labor participation rate is now 63.3 percent, the lowest level in 34 years.
John Silvia is the chief economist at Wells Fargo. He joins me now from Charlotte, North Carolina. There`s no getting away: these numbers are disappointing, but the core question, whenever we see them is do they presage something worse or is this -- is it a trend or is it a blip? What`s your feeling?
JOHN SILVIA, CHIEF ECONOMIST, WELLS FARGO: Well, I think Alison`s got it right, this is a correction to the optimism that was out there that the economy was picking up steam. And I liked your point that the pace of job growth is positive but not as fast as the growth in the labor force overall.
So, you`ve got moderate growth in the United States. I think the stock market was pricing in much stronger growth. And again, I think the important point, too, is the unemployment rate fell, but it fell because of labor force participation declining.
QUEST: Right.
SILVIA: So, I think it`s going to force a reevaluation of what is trend growth in the US.
QUEST: Ah, now that`s a pretty serious long-term --
SILVIA: It is.
QUEST: -- difficulty --
SILVIA: It is.
QUEST: -- if you have to -- I mean, trend growth -- what? -- 2.5, 3 to 4 percent, 3 maybe even 4 if you want to go a bit more. But if you`re saying medium to long-term trend growth is at, say, 2 to 2.5 percent, that creates an entirely different scenario for the job numbers.
SILVIA: Well, Richard, I think it`s quite right. And not only the job number, but let`s put it in context. The last three years, the US economy has grown between 2 and 2.5 percent. Our expectation is another year of 2 and 2.5 percent.
At some point, you have to say, well, this is it. This is what we`ve got given the current framework in terms of the euro in Asia and policy and regulation and taxes. This is what our framework is.
And I think more than just jobs, Richard. The challenge is how does America pay off its debt or pay off its entitlements with that kind of growth?
QUEST: You see, there`s only one difficulty with lower short -- lower long-term trend growth, and it`s this: intermediate forecasts coming from the Fed. The Fed says it`s buying $85 billion of bonds and every bit of rubbish they can find for the next -- well, for the foreseeable future until 6.5 percent. But if trend growth doesn`t pick up, then they`re not going to hit the 6.5 percent.
SILVIA: Well, again, if the 6.5 percent is a solid kind of number, yes. What happens to our labor force participation in that calculation? Do we get to 6.5 simply because people drop out of the labor force? That`s a whole different calculation.
So, no, it suggests to me that the Fed stays easier for a longer period of time. They will not phase out their purchases of mortgage-backed securities or treasuries this year. They`re just going to stay in the game for longer.
QUEST: John, good to see you. Nice to have you on the program.
SILVIA: Thank you, Richard.
QUEST: We look forward to talking to you again from Wells Fargo. Nice to have you on the program, putting it into such good common sense and making it understandable, these numbers.
You want to talk about numbers and being understandable, look at this: Europe`s major stock indices ended Friday`s session deep into the red.
Airline shares were the worst performers, London and Frankfurt. IAG off 7 percent, that`s British Airways and Iberia. Lufthansa down 5. That`s because of the new strain of Bird Flu, which could hit international travel, and we`ll talk about that a little later on in the program. All the indices down for the week as a whole.
Staying with travel, Boeing has a 787 Dreamliner in the air at this moment.
(RINGS BELL)
QUEST: And what it hopes is a final demonstration, a so-called certification flight to test the redesigned battery. This is the flight plan. It is a two-hour flight. It`s a LOT -- it was a plane that was built for LOT, the Polish airline. Its flight number is BOE272, and it`s going on a round trip from Paine Field in Washington state, about an hour and a half.
Fifty Dreamliners are grounded since January the 16th, and you`ll be aware, of course, that Boeing hopes that this flight will be the flight that the authorities will take into account when they decide to start again.
After the break, a banking row call of shame. A coruscated report on the demise of HBOS and a call to ban those responsible from ever working in the city, in the financial industry, again.
(COMMERCIAL BREAK)
QUEST: It was an accident waiting to happen, a colossal failure of senior management, and a candidate for the worst bank in Britain. Now, these aren`t my words, or indeed anybody -- they are the words in the stinging conclusions of a UK parliamentary report into the collapses of Halifax Bank of Scotland, better known as HBOS.
The committee lays the blame for the failure firmly at the feet of three men who oversaw the bank`s collapse in 2008 at a cost to taxpayers of more than $30 billion.
Now, it`s not often you get such blunt language, but I promise you, if you join me in the library, you`ll see exactly -- all right, let`s start with this one. This is Sir James Crosby, the former chief executive from 01 to 06.
According to the committee, he was the architect of the strategy that set the course for disaster. He was paid $12 million and, incidentally, he today resigned from the company where he is now a corporate advisor, a financial firm called Bridgewater (sic).
How about this chap? Andy Hornby. He took over as chief executive from Crosby, paid about $3 million a year. But if this man set the course for disaster, Hornby, in the words of the committee, unable or unwilling to change direction.
It`s more to come. How about him? This is Lord Dennis Stevenson. Now, he was the chairman, and before the collapse, paid about $1 million a year and change. According to the committee, he was incapable of facing the realities of what placed the bank in jeopardy.
The Commission on Banking Standards has asked regulators to consider - - this chap, this chap, and this chap and basically banning them from the future finance roles. The commission chairman is Andrew Tyrie, who says all three, they were delusional.
(BEGIN VIDEO CLIP)
ANDREW TYRIE, CHAIR, UK BANKING STANDARDS COMMISSION: This was a colossal failure of management right at the top of HBOS, and the results were catastrophic, and we`re still picking up the pieces, we the taxpayer.
And what particularly sticks in the gullet of the taxpayers is that they feel the people who made these mistakes have not been brought to book, and they feel that far too many people have ended up walking away with huge sums, which have not been clawed back.
(END VIDEO CLIP)
QUEST: Now, none of the men we`ve been talking about have been charged with any criminal activity, unlike the former Enron chief executive, Jeffrey Skilling, who is serving a seriously long sentence in the United States for fraud and a variety of other offenses.
Now, though, Skilling could be about to get out of jail early. The US Department of Justice has given a notice it`s considering re-sentencing him for his convictions, including fraud, conspiracy, insider trading. Currently, Skilling isn`t scheduled to be released until 2028.
Andrew Stoltmann is a lawyer specializing in securities frauds and joins me now from CNN Chicago. Andrew, I know the court has to re-sentence Skilling because he won an appeal on a particular point. But that`s one thing. The court will make its own decision. Why would the Department of Justice want to get into a deal concerning that re-sentencing?
ANDREW STOLTMANN, SECURITIES LAWYER: It`s really hard to figure out. I think part of the reason has to do with the fact that since the 2008 economic crisis, the DOJ, the Department of Justice, has come under withering criticism for not bringing any criminal indictments against any of the senior banking executives.
I think what they want to do is they want to try to get ahead of this issue because they are afraid what Judge Lake will do if he ends up re- sentencing Skilling. So, I think they want to try to cut the best deal they can.
But they shouldn`t be a part of this deal. Jeffrey Skilling is the poster boy for securities fraud in this country. What he did in melting down an $11 billion company is absolutely stunning.
QUEST: Right. Right. But he served 6 or 7 years so far. The guidelines for the re-sentencing -- hang on -- the guidelines for the re- sentencing are something like up to 16 or 17 years. So, is there a feeling that if he does a half decent deal with the DOJ, he could be out before you and I have breakfast?
STOLTMANN: Absolutely. And that`s part of the reason why I think it`s such a horrible idea for the DOJ to be part of these negotiations with him. Let Judge Lake decide what Judge Lake is going to do, and let`s hope that he has to serve at least 16 years.
He`s served 6 years, so if you can serve another 10 years, that will still have that same prophylactic impact that`s prevented these other accounting scandals from taking place in this country.
QUEST: Sixteen years is a very long time for white collar fraud. I know there were lots of victims and I know it was a cancer into corporate America, I`m aware of that. But still, people get less time in prison for crimes of physical -- of physical harm.
STOLTMANN: It`s -- it`s really hard to believe. There are a lot of young African-American men sitting in prisons in the United States for longer than what Jeff Skilling is probably going to serve for stealing $1,000, for stealing $5,000 or $10,000.
And in this country, we simply treat white collar crime dramatically different than the way we treat street crime, and it`s really unfortunate. But we`ve seen it with Skilling, we`ve seen the no indictments, no criminal prosecutions of the guys who were responsible for almost melting down the global worldwide economy. It`s really quite incredible. It`s hard to believe.
QUEST: You`re a -- you`re not a fan of the no -- too big for jail theory, I`m gathering on that one.
(LAUGHTER)
QUEST: Good to see you, thank you.
STOLTMANN: Well --
QUEST: Thank you.
STOLTMANN: You know, that`s right, and -- thank you.
QUEST: Thank you very much for joining us. We could talk about this all evening.
Ethics has been such a part of our program this week, so now, for the final time this Friday, a Business Ethics Conundrum. These are all questions based on real-life examples, tests for bankers in the UK by the Chartered Institute of Securities and Investments.
You are the risk director of a company and you`re worried about the growing number of customer complaints since the new chief exec comes in. You take your concerns to the risk committee, but the new chief exec isn`t interested.
So, what do you do? A, you take it to the boss one last time? B, you take it to the senior independent director ahead of the next board meeting? C, you mention it informally to the registry supervisor at the next meeting. The boss is getting complaints, who do you complain to? The answer later in the program.
The dollar is sliding on jobs data, down three quarters of a percent against the euro and the pound. Those are the rates --
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QUEST: -- this is the break.
(COMMERCIAL BREAK)
QUEST: The United States says it would not be surprised, in their words, if North Korea launched a missile. The comment came from the White House spokesman Jay Carney as foreign diplomats in Pyongyang are considering whether to remain there.
They`ve been told their safety cannot be guaranteed in the event of an armed conflict. Reports suggest that North Korea is preparing two missiles. South Korea is sending naval destroyers to patrol the coast.
So, you know about the tensions. Well, the first blows may already have been dealt in an online war. The hackers group Anonymous says it took over official North Korean websites on Thursday. As Kyung Lah explains, one conflict may be helping feed the other.
(BEGIN VIDEOTAPE)
(MAN SHOUTING IN KOREAN)
KYUNG LAH, CNN INTERNATIONAL CORRESPONDENT (voice-over): It sounds like North Korean state TV, but what it says?
(MAN SHOUTING IN KOREAN)
LAH: "You`re no better than a dog, Kim Jong-un!" That`s what greeted viewers of the North Korean government website, Uriminzokkiri, along with pictures of Kim Jong-un in drag, somber song showing Kim Jong-il drinking wine while North Korean children starve.
On Uriminzokkiri`s Twitter account, links to this image: a wanted poster showing Kim Jong-un dressed as an obese pig with exposed chest hair and a Mickey Mouse tattoo on his gut, calling him a threat to world peace.
The North Korean Twitter account blared the word "Hacked" and it showed an image of a mask that`s a favorite symbol of the hacking group Anonymous.
(MAN SPEAKING KOREAN)
LAH (on camera): That sounds totally like a North Korean announcer.
SEUNGJOO KIM, PROFESSOR, GRADUAATE SCHOOL OF INFORMATION SECURITY, KOREA UNIVERSITY: Yes.
LAH (voice-over): You can`t help but laugh, says information security expert Seungjoo Kim, but this is just the latest shot in an ongoing and very serious cyber war between the two Koreas that goes far beyond just the humiliation of a leader.
LAH (on camera): Which is the bigger threat, a conventional war, a nuclear war, or this cyber war?
LAH (voice-over): "The purpose of a cyber war is to disable the enemy`s ability to fight," says Professor Kim. If the cyber war continues, there`s a high possibility it could lead to a conventional war.
In a country that claims to be the most wired in the world, South Korea has been under increasing attack. Just last month, a major cyber assault knocked South Korean television networks offline and froze business at banks.
That`s why Seoul is building a cyber army. These are the soldiers, learning to break code and understand what they call North Korean cyber terrorism. We can`t show you their faces because many of them will eventually work with the South Korean military on the cyber front lines, where they`ll face off with cyber soldiers from the North.
LAH (on camera): As amusing as this is, there is growing concern among security experts in Seoul that because this was so successful and so funny, that North Korea may become enraged and launch a massive counter- cyber attack against South Korea.
Kyung Lah, CNN, Seoul.
(END VIDEOTAPE)
QUEST: It`s not only South Korea and North Korea. Israel says it`s preparing for what`s called the largest internet battle in the history of mankind. They fear Israel, because of its cyber security industry, could be the victim of Anonymous hackers, too.
Shelly Palmer is the author of "Digital Wisdom" and joins me live from New York. Shelly, we mustn`t -- we don`t make light of this, but at the same time, it`s hard to gauge the size, scale, and significance of these groups like Anonymous.
SHELLY PALMER, AUTHOR, "DIGITAL WISDOM": OK. First of all, we have to be very clear: when Anonymous attacks, they have a very specific way they do it. They have a method of operation, and sometimes they let you know it`s coming and sometimes they don`t.
What`s going on in Israel and what`s going on in Korea, completely different things. I actually think Anonymous may be involved in Korea. I know Anonymous has nothing to do with what`s going on in Israel right now.
In Israel, you`ve got a bunch of Arab hackers who are trying to pretend to be Anonymous and they`re threatening, they`re saber-rattling. And it`s silly because what they`re going to do is a very old-fashioned kind of attack called the D-DOS attack, or Denial of Service attack.
QUEST: Right.
PALMER: They`re going to throw a lot of code at Israel, and Israel`s going to fight back by throwing a lot of hardware at the problem. I don`t suspect Israel`s going to find this to be a big issue, and this is not a cyber weapon, this is a cyber attack, and it`s a pretty traditional one. Here`s the thing, Richard.
QUEST: Please.
PALMER: This is important. The kind of cyber weapons that are available today? Super cyber weapons, weapons that could really do you harm, are stealth, you don`t know they`re happening, and when they do actually strike a blow, you won`t know it`s coming and the enemy will have all the information they need to disable the command and control they`re trying to disable.
Very different kinds of attacks, very different kind of warfare. Not the kind of thing you publicize.
QUEST: So, where does Anonymous fit into all of this? Are these just a bunch of disgruntled teenagers who`ve learned to code and do it rather well? Better be careful what I say, I could find myself hacked, well and truly, here.
PALMER: Well, you`d like to believe it`s a bunch of random teenagers that are just feeling their oats. Anonymous seems to be better organized than that. They`re -- they don`t have a leader, it`s a collective. And not a whole lot is known about the individuals because they are, in fact, anonymous.
They, by the way, are a hacktivist group. They`re a group of people who are known to cause that kind of hack -- hacking terror, if you will. These are not the weapons we`re all worried about.
What we`re worried about, you and I, what Israel should worry about, what they`re truly worried about, what the South Koreans are truly worried about are what Eugene Kaspersky classified as super cyber weapons, weapons that are stealth.
They come in, they turn the video camera on in computers without the tally light. They record conversations in rooms, they record keystrokes. And they cannot be detected by normal virus software, and they cannot be shut down by normal virus software. That kind of stuff, when it infiltrates a corporation, when it infiltrates a government installation --
QUEST: Right.
PALMER: -- this is really dangerous stuff.
QUEST: Shelly, I know you`re coming to London soon. There`s a seat for you here on the other side of the desk where you will -- you and I will talk more about this. Shelly Palmer, joining me --
PALMER: I look forward to it, Richard.
QUEST: Indeed. The author of "Digital Wisdom," and the only place you get digital wisdom, of course, from Shelly besides is here on this program.
Coming up next, tackling inequality, investing for growth. The World Bank president, Jim Yong Kim tells me how it can be done, next.
(COMMERCIAL BREAK)
QUEST: Hello, I`m Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN and, on this network, the news always comes first.
As we`ve just heard, the U.S. says it would not be surprised if North Korea launched a missile. Foreign diplomats in Pyongyang are considering whether to remain there, having been told their safety cannot be guaranteed if it came to a conflict.
Reports, too, suggest North Korea is preparing two missiles while South Korea sends naval destroyers to patrol the coast.
Pope Francis is calling on the Vatican to, in his words, "act decisively" to address the sex abuse scandal that has rocked the Catholic Church. He issued a statement, calling on top church officials to prosecute abuses and to do more to protect children in the church`s care. (Inaudible) advocates say the pope`s statement is nothing new.
Chinese authorities have traced a deadly rare form of avian flu to pigeons on sale at a live poultry market in Shanghai. They`ve culled more than 20,000 birds in response. Officials have shut down all the city`s markets temporarily. The rare form of bird flu has killed at least six people in eastern China.
Employers in the United States hired just 88,000 people last month, less than half the number economists had expected. It represents the slowest pace of job creation since last June.
Boeing`s hopes of getting the 787 Dreamliner back in service are in the air, staging a final certification test flight at the moment -- that`s the plane taxiing out -- in order to get certification for the new battery design. Fifty Dreamliners have been grounded since January the 16th. Hundreds of the planes are on order.
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(END VIDEO CLIP)
QUEST: The president of the World Bank says he is optimistic about the recovery in the developed world. Jim Yong Kim told me the economic data from the U.S. is positive -- but we spoke before today`s jobs numbers -- and Europe`s cooperation with the IMF is encouraging. On Thursday, the president said it`s the developing countries he`s focused on.
(BEGIN VIDEO CLIP)
JIM YONG KIM, WORLD BANK PRESIDENT: Our concern is with how do these crises affect the poorest countries. And so far growth in the developing countries has remained much stronger than the rest of the world.
QUEST: Growth may have remained stronger, but I suggest that is in spite of rather than because of anything that`s happening in the developed countries.
KIM: Over the years, so many developing countries have done the right thing, have set up health and education and social protection systems, have invested in infrastructure, have straightened out their banking systems. So many have done the right thing. But even through this crisis, they`ve weathered it very, very nicely.
QUEST: We will be left with a growing state of inequality at the end of this. The rich have got richer, the poor have got, if not poorer, at least to a certain extent they`re not rising as they should be.
KIM: We are very concerned about the inequality. Moreover, you know, I`m a -- I`m trained in medicine and training in looking at scientific evidence. The evidence is now overwhelming. I mean, what has the Arab Spring taught us but that if you have GDP growth and you`re not including young people, you`re not including women, you`re building instability into your societies.
You know, the case to be made for greater equality is not simply a philosophical argument. It`s actually a very practical argument.
QUEST: I know your main areas, of course, are in the more -- are in the developing countries. But when you`ve got developed countries in such a (inaudible) state, that inequality gap is getting bigger.
KIM: There are places where the inequality gap is getting smaller, for example, Brazil. And what the Brazilians have taught us is that if you`re very thoughtful, if you shape policies that are explicitly focused on reducing inequality, you can get there.
QUEST: As a scientist, sir, would you continue with the austerity at the same throttled level that it is going in Europe at the moment?
KIM: We are not working in most of the Eurozone area. So we don`t -- I don`t know the exact economic situation in those countries. But one of the messages that we`re giving very strongly to the middle income countries and to countries like the BRICS countries is that please focus on making the kinds of investments now that will assure your medium and long-term growth.
For example, you know, investments in infrastructure don`t wait for growth to reignite in high-income countries before you make those investments.
QUEST: That`s crucial, isn`t it?
KIM: Absolutely.
QUEST: Anybody who waits for the traditional countries, the engines of growth in the Eurozone and the U.S. to get their own house in order and grow, well, they`ll have a long wait and they may not get there.
KIM: Well, they may not, but here`s what we would say. One of the things that every country has to do is to say which of the public sector expenditures are actually helping the poorest, are actually fueling future economic growth.
There are ways that you can move public expenditures so that you remove fuel subsidies, for example, invest in other parts of the -- of the -- of the economy, (inaudible) poor people health and education, that are actually going to build the foundation for future growth. That`s what we`re really talking about.
(END VIDEO CLIP)
QUEST: Ahead on QUEST MEANS BUSINESS, a mass slaughter of birds in China. Authorities are trying to put the lid on a bird flu outbreak.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
QUEST: The answer to tonight`s "Ethics Conundrum," what should your next step be if you`re convinced inaction at your firm is storing up serious problems and your boss simply won`t listen?
The answer is, according to the CICI, discuss your concerns with the senior independent director before the next board meeting in two weeks` time, because it`s clear your boss is not going to take your concerns clearly and it`s more than just an informal chat with the regulatory supervisor. Speak to the senior directors before the next board meeting.
More than 20,000 birds have been slaughtered in China following an outbreak of avian flu, killing six people. Poultry markets in Shanghai are being closed and authorities are tackling the H7N9 virus, which came, apparently, from pigeons.
The effects can be seen on the Hong Kong Hang Seng and also of course, if you look, investors are concerned about what the effect will be for travel around the region. So Air China shares were down 10 percent, Eastern in China down -- well, all the China -- major Chinese airlines were off very sharply, 8-9 percent, even Cathay Pacific in Hong Kong was down by over 4 percent.
CNN`s David McKenzie is following events from the Chinese capital, Beijing.
(BEGIN VIDEO CLIP)
DAVID MCKENZIE, CNN CORRESPONDENT: At least half a dozen people have died from a highly unusual strain of bird flu in Eastern China, according to Chinese health authorities, in recent days. Experts say it`s H7N9, an unusual strain of bird flu because it`s never infected humans before.
Authorities are at pains to show that they are rapidly responding to this virus that, they say, at that point, cannot be transferred from human to human. They have closed off the markets in Shanghai of live poultry and they went into a trading zone and culled at least 20,000 chickens, ducks, geese and pigeons on Friday after the bird flu strain was found amongst the pigeon population.
Further afield in Hong Kong, authorities saying that they are watching incoming passengers from China very closely. And the same can be said for regional airports. Even further afield, the Centers for Disease Control in the U.S. says it will work on a vaccine. That could take up to six months, though.
Chinese authorities are trying to allay any fears from the population that is very wary of information distribution here because of a checkered history of responses to outbreaks -- David McKenzie, CNN, Beijing.
(END VIDEO CLIP)
QUEST: Now on this weekend, I`m off on a low-cost carrier quest; going to do a bit of personal research and tweeting on the way on a variety of low-cost carriers, five of them over six flights in two days. I`ll be visiting Aeroflot (ph), London, Dortmund, Budapest, Rome, Copenhagen, Barcelona before coming home.
It`s all to see the differences between the low-cost carriers, @RichardQuest if the sort of question that you want to find out, leg room, price of a cup of coffee, how long it took to board, all those sort of issues as we make our way around Europe.
Jenny Harrison is at the World Weather Center for us tonight.
Jenny, what weather should I expect?
JENNY HARRISON, CNN METEOROLOGIST: You know, you`ve not picked a bad weekend, actually, Richard. You should have some pretty good weather. I`m assuming you`re not taking any luggage, are you, on this trip of yours? You`re not unloading any bags on tarmac?
QUEST: Absolutely not. No bags on the tarmac and of course, it`ll all be in good old-fashioned economy.
HARRISON: Good old-fashioned -- jolly good. I`m glad to hear it. So, yes, you`re going to have a shock, aren`t you? My goodness, (inaudible) such a shock.
Yes, you know what, some pretty nice weather. You should have some good weather in Rome certainly. Actually, when you get back to London as well, the good news, Richard, is a big of a change in store, actually, for western and central Europe. Finally, finally looks as if spring might have heard that, should it have arrived by now, and it is on the way.
But until then, still quite a bit of cold weather out there Friday another very cold day, Warsaw just 2 Celsius, just 3 in Berlin. That will be a colder day on a cold weekend in Dortmund, certainly. You can see there what the temperatures should be, of course, in double figures. So I`m going to show you this particular graphic again.
I`m going to continue to show you this until we run out of consecutive days or the days finally stop being, of course, below the average. We`re at 29 now in London, 28 in Berlin, where it`s been below the average. The past four weeks have been like this.
And here it is, finally that pattern will change. The high pressure is going to finally give way, push off to northeastern Europe. It will allow these systems in the Atlantic to make their way into western Europe. So that means the air coming in from the west and the southwest, it`ll bring milder air with it. The temperature`s coming up to the average.
It will, of course, bring some rain likely in with it as well. We`ve seen quite a bit of that into France, even some southern areas of the U.K. in the last few hours.
A little bit of a sleet sort of mix in there as well and as we go through the weekend, the only place we could see some severe storms, quite a bit of rain, too, is the southeast of Europe and also Southern Spain and into northern sections of Africa.
So we`ve got quite a large area where there`s some warnings in place, possible tornadoes and large damaging hail, too, through the weekend. So quite unsettled through the south, clearing out across central Europe, hence the fact you could see some good sunshine this weekend, Richard, across many of your destinations, even if it is cold.
The snow mostly off to the west, Moscow, for example, you could have some fairly lengthy delays at the major airport there as we go into Saturday. Again, it`s clearing out of the picture. So actually temperatures overall to the start of the weekend not looking and feeling too bad. And look at that, 18 Celsius in Rome with some nice sunshine, Richard.
QUEST: Oh, I`m looking forward to it. I`ll raise a glass to you, Ms. Harrison.
HARRISON: You do that.
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QUEST: And send you a cheap souvenir.
Now if low-cost carriers is all too much, the world`s largest private yacht has been launched in Germany. It`s called Azzam. It`s 180 meters. It eclipses that owned by the Russian oligarch, Roman Abramovich (ph).
It`s likely to have cost around $400 million, built by Lewiston (ph) Yacht. There`s a mystery client who wanted a yacht able to travel at high speed in warm and shallow waters. Just what I was saying this morning in the office; I want a nice yacht for high speed in warm and shallow waters. Monaco`s lovely at this time of the year.
And that`s QUEST MEANS BUSINESS for tonight. I`m Richard Quest on the low-cost carriers. Whatever you`re up to in the hours ahead, I hope it`s profitable.
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ROBYN CURNOW, CNN HOST: Whether you`re looking for a smart pair of shoes or a formal jacket, you can just about buy your whole wardrobe for next to nothing at one of these secondhand clothing markets. You`re watching MARKETPLACE AFRICA and I`m Robyn Curnow.
Now call these what you will, previously owned, vintage or just other people`s old clothes, either way, the mass dumping of secondhand clothes in Africa is having an impact on the continent`s garment industry. Take a look at this story from Uganda.
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CURNOW (voice-over): Walk through a market in Uganda`s capital city and you might think you`re shopping someplace else. There`s European-made clothing, American sports jerseys and designer labels, all at discount prices. This is Kampala`s version of a thrift store, stocked with castoffs from the West.
UNIDENTIFIED FEMALE: (Inaudible) they are nice and (inaudible) coming.
CURNOW (voice-over): The sale of secondhand clothes in African markets has become a multimillion-dollar business. It starts with Western charities that earn money by selling donated clothes. Whatever doesn`t sell domestically can often end up in landfills. Increasingly, though, it ends up here, sold to wholesalers who, in turn, sell it to Africans.
To local shoppers, though, this is no dumping ground. These clothes are as desirable as they are affordable.
UNIDENTIFIED FEMALE: Yes, the price is right and the clothes (inaudible) so looking good. Yes.
CURNOW (voice-over): It appears at first to be a win-win situation. Western charities get revenue and African buyers get inexpensive, well-made clothing. But some complain there`s a loser in all of this: Uganda`s own clothing industry.
SYLVIA DWORI, FASHION DESIGNER: Business in Kampala is quite hard for any -- for any designer.
CURNOW (voice-over): Sylvia Dwori is one of Uganda`s more prominent fashion designers. She`s been in business in Kampala for more than a decade and she sees the secondhand clothing market as a growing threat to her business.
DWORI: It`s very -- it`s very difficult to compete in secondhand market because actually probably 90 percent of the clothing that they are buying in the whole country are secondhand clothes. So that`s a -- it`s a multimillion-dollar industry.
CURNOW (voice-over): There`s yet another threat to both the fledgling Ugandan fashion industry and to the secondhand clothing sellers: Chinese imports that are even cheaper than the Western hand-me-downs. And a big drawback: they`re not nearly as well made. But increasingly, bargain hunters are buying them to the despair of Ugandan business leaders.
ISSA SEKITO (PH), KAMPALA CITY TRADERS ASSOCIATION: It is cheaper but expensive. This is (inaudible). Why do you buy (inaudible) that you work for three days and it stops? Never. We need to work again. Why do you want blue? After a week it is white. So you think you are buying cheap? You are spoiling the economy. You are not getting value for money.
CURNOW (voice-over): Local fashion designer Marsha Buyungo (ph) feels the same way about the cheap imports that are flooding the African market.
MARSHA BUYUNGO, FASHION DESIGNER: Yes, the quality is not good. You wear it for three months and you (inaudible) it. (Inaudible) the fact that you wear (inaudible) wearing the same thing. You won`t feel nice wearing it again.
CURNOW (voice-over): As an up-and-coming designer, Buyungo (ph) aims to appeal to customers who are seeking something local, handmade and unique.
BUYUNGO (PH): I do like different things, African wear, which you can`t find in secondhand clothes. No. I do bridal gowns, which (inaudible). You won`t find a good one.
CURNOW (voice-over): But she doesn`t have a problem with those who choose to buy cheaper imported clothes instead.
BUYUNGO (PH): Some people can`t afford like to come to me and have something made. So I think it`s OK. I think -- I think they can be on the market really (inaudible) some people want new things and they can`t afford to have like one thing I made for them. So it`s OK.
CURNOW (voice-over): Others believe the problem is far more serious. Secondhand clothes, Chinese imports, including counterfeit Ugandan designs say they`re preventing the local fashion industry from growing and taking jobs and money away from Uganda.
SEKITO (PH): We need a very strong law against the counterfeits. It is only then that the local people can start to appreciate that designing and initiating design is something profitable.
CURNOW (voice-over): Back in Dwori`s shop, the designer says she`s resigned to the reality of her competition but looks forward to the day that homegrown businesses like hers prevail.
DWORI: So as much as I don`t like secondhand clothes to be in the market, I don`t have an alternative. I cannot make enough clothes to support, you know, a population of 33 million. So (inaudible) so we need to actually first grow our -- to grow the manufacturing and the production side of the business locally for us to say, OK, all the other stuff can come in.
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CURNOW: Some beautiful garments and some hard-working designers there from Uganda.
Well, after the break, we meet a man who has a song for every strategy, a tune for every turnover. He`s the CEO of a global career and shipping company and he says he`s singing his way to (inaudible).
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CURNOW: Ken Allen is the CEO of DHL Express, a company that he says has 100,000 employees and is based in just about every country in the world. Well, I recently caught up with him and asked him how DHL deliveries and traces packages and parcels in Africa, particularly when postal systems are sometimes nonexistent and street names are hard to find (ph).
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CURNOW: So your colleagues tell me that you`re the singing CEO.
KEN ALLEN, CEO, DHL: That`s right, yes.
CURNOW: You`ll belt out a tune for us now? It`s a good way to start an interview.
ALLEN: You want me to?
CURNOW: Please. Go for it.
ALLEN: OK. "I want to be a billionaire, so fricking bad. Another city, every night, oh, oh, I swear. The world better prepare for a brand new billionaire."
And we did that for our 2012 EBIT (ph) target, which was for the first time to break a billion euros in EBIT profit for the -- for the division. So.
CURNOW: And you did?
ALLEN: And we did. Yes. And to celebrate that, we took, for the first time, 1,000 of our top management to Dubai, where we had a fantastic celebration for one day, celebrated the billion. Then of course, it was back to work and talking about what`s going to happen in 2013 and all the things that we -- that we`re likely to do.
CURNOW: So what`s your song for this year?
ALLEN: Still want to be a billionaire, right? Because some people say to me, well, you`re a billionaire now, what do you do? But I always say, well, Bill Gates is a billionaire, all right? But he`s got more than 1 billion, right? So we can -- we can still keep on going.
But just on the serious side of that, I mean, the background to that is I think like a lot of people, everybody talks about strategies and how do we get strategies right through to the frontline of people. As I say in Express, we employ 100,000 people.
CURNOW: And if we turn around and we can see this behind you, this is a map, mostly your airline map, and this is a quality control center where we are.
Why Africa? And I see there`s a focus and a push. I think you`re trebled your presence in Africa recently. Give me some sense of why. And is it different to any other region in the world?
ALLEN: You know, the thing about Africa is it`s got to -- at the moment, it`s still got a 2:1 inbound ratio. So we bring far more material into Africa from the rest of the world than we export from Africa to the rest of the world. And we really like to help. You know, we consider ourselves experts in export and import. We`d really like to help countries develop their export markets further.
CURNOW: There`s a huge buzz around urbanization, this massive urbanization we`re seeing on the African continent. But how do you look beyond that, to the villages, to the rural areas? And how do you guys play a part in that?
ALLEN: Well, as you say, we try and facilitate as much as we can. So in every country in Africa, we have a presence. That`s for sure. And then to push out -- so in a big center like Johannesburg, we`d have a number of service centers.
But then we also do joint ventures with retail outlets and other companies so that if they`ve got a massive network throughout the country, we`ll take advantage of that. And then --
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CURNOW: (Inaudible) interrupt, but beyond South Africa, these massive success stories we`ve seen across the continent, this massive growth, Mozambique, Angola, Nigeria, you know, Rwanda, there are a number of extremely fast-growing economies on the continent. Maputo (ph) was there a few months ago and, you know, you do realize that they`re not -- they`re not -- there are no street names.
There`s not a -- really a functioning postal service because there`s no way to deliver to -- from one street to the other. How do you fit in? How do you do business within these kind of environments, which are quite similar across the continent?
ALLEN: Well, we`ve been in all those countries for 25-30 years. So Lagos is a good example, you know. Our -- one of our main entry points into West Africa is through Lagos. We fly our own planes into Lagos. And then we fly smaller planes up and down the coast to make our deliveries.
We`re the only express operator in Africa that`s got its own dedicated airline. So we have -- this is my point. We are the most international company in the world. And it sounds easy to say or a bit of a boast, but think about it; there`s no other company like DHL that`s actually operated in all these markets for so long.
CURNOW: Often when I speak to CEOs on this show, their one bugbear about doing business in Africa, the main challenge for some of them, is that -- the petty stuff, the bureaucracy, the red tape, customs officials, border -- difficulties at borders. Now you`re out there at the frontline of all of this. Is it a perception that it`s harder to do business here, more bureaucracy, than anywhere else in the world? Or is it a reality?
ALLEN: I think it`s more perception. But anyway, to be honest, the point of commercial companies is not to dictate the laws and the rules of individual countries, right? So whether it`s difficult or it`s simple, our job is to work with the authorities and find the best way of facilitating that trade. A lot of countries have got very strict customs regulations, you know. It`s not our role to question that.
It`s our role to build our systems, to interface with them, to work with them and to show them what`s available and what can happen if you open up, that our job is to have the best possible systems architecture that we can have to make it easy to do business.
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CURNOW: You can watch that interview as well as our story on secondhand clothing in Uganda at CNN.com/MarketplaceAfrica. I`m Robyn Curnow. Please do join us again next week at another African marketplace.
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