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Quest Means Business
Ukraine Divided; Ukraine Pro-EU Rally; Yanukovych on EU Deal; Ukraine Protests; Black Friday; Some Stores Opened on Thanksgiving; Walmart Protests; Black Friday Frenzy; Holiday Season Sales; Syria's Lost Generation
Aired November 29, 2013 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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(NEW YORK STOCK EXCHANGE CLOSING BELL)
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RICHARD QUEST, HOST: A shorter holiday session, but no Santa Claus gift on Friday, November the 29th. There were no records on the market in New York.
On tonight's program, protests escalate in Ukraine after the government rejects a key new trade deal.
We'll tell you all about Black Friday strikes. Walmart workers say they deserve a better deal.
And Dutch courage in the face of a down trade.
I'm Richard Quest. It may be Friday, but of course, I still mean business.
Good evening. Tonight, there are sharp divisions in Ukraine over the government's decision to back out of a trade deal with the European Union. Several rallies took place in Kiev. In one, supporters of President Viktor Yanukovych turned out to celebrate Ukraine's decision to go with closer ties with Russia, its former Soviet master.
In another demonstration, this time pro-EU, demonstrators gathered by the thousands. There was a heavy police presence. Many Ukrainians are angry at the president's shift away from the West.
And earlier in the day, a group of demonstrators formed a human change in Lviv, near the Ukrainian-Polish border, linking arms, waving flags, and shouting pro-EU slogans. Opposition leader and boxing champion Vitaly Klitschko said the president had betrayed his country.
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VITALY KLITSCHKO, UKRANIAN OPPOSITION LEADER (through translator): Yanukovych has humiliated Ukraine. He's not interested in Ukrainians' fate. He only has his own interest at heart. His behaving as though he comes from a parallel world. European leaders are very disappointed. Europe has kept the door open for Ukrainians, but I'm sure this door has been closed for Yanukovych and his government.
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QUEST: Klitschko was referring there to the EU leaders summit, which is taking place in Vilnius. There were high hopes that the trade agreement with Ukraine would be the centerpiece of the event. Instead, President Yanukovych rejected all attempts by the EU to salvage the deal. The leaders expressed disappointment, keeping hope, of course, alive that an accord can be reached in the future.
(BEGIN VIDEO CLIP)
HERMAN VAN ROMPUY, PRESIDENT, EUROPEAN COUNCIL: The European Union's position remains clear: the offer of signing the most ambitious agreement the European Union has ever offered to a non-member state is still on the table. We stand ready to sign with Ukraine once the benchmarks put forward by the European Union are met, and we are really close. We may not miss this rendez-vous with history later on.
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QUEST: Now, one of the EU's conditions for the deal was the release of the former Ukrainian prime minister Yulia Tymoshenko. She has declared a hunger strike from prison and called for protests. You'll remember, of course, that she was sentenced to seven years in prison. Her health is believed to be extremely poor and she's in need of medical treatment.
Her daughter, Eugenia Tymoshenko, is live in central Kiev where they rallies are taking place, and joins me now. The rallies have taken place on both sides, but what does your gut feeling for what the ordinary person wants out of these deals? What is it, pro-Russia? Pro-EU?
EUGENIA TYMOSHENKO, DAUGHTER OF FORMER UKRANIAN PRIME MINISTER YULIA TYMOSHENKO: Well, the actual demonstration started on the 24th of November when hundred -- more than 100,000 people gathered on the streets after the Cabinet of Ministers rejected their destiny, the European destiny to Ukrainians.
What is going on now here is that two squares merged, one with the politicians and one with the youth --
QUEST: Right.
TYMOSHENKO: -- protesting against the halt in the agreement. The other rallies, which were really organized due to -- just as a provocation against the main protest, is organized by the pro-presidential people.
QUEST: All right. Now, let me jump in here, because why do you think the president decided to go with Russia, not the EU, bearing in mind -- I appreciate one of the conditions was the release of your mother -- but bearing in mind so many Ukrainians want closer relations with the European Union?
TYMOSHENKO: Well, actually, the reasons that Yanukovych gave for the insurmountable pressure of Russia and some economic losses due to the association with Europe. My mother considers and opposition considers they're false because the economic decline has been happening the last three years because of Yanukovych's corruption. That's what's brought Ukraine to the economic losses.
But actually, after Yanukovych rejected the signature, he took off his mask. Now we can see his real, true authoritarian face and he never -- that he never really intended to go towards Europe or moreover, fulfill the criteria for democratization of Ukraine.
QUEST: Where does this protest go now? Because President Yanukovych is no stranger at using fairly strong-armed methods. Now, if the protests continue, this doesn't bode well, does it? So what happens next?
TYMOSHENKO: Well, now we see today it's already snowing, it's a minus temperature, but people are still here after one week. And there are more and more people coming every night to join the protests.
Of course, it's different from the Orange Revolution. Orange Revolution was very peaceful compared to these rallies that face every night police attacks. And the most violent was around 3,000 policemen were attacking people --
QUEST: All right.
TYMOSHENKO: -- to move them from the square.
QUEST: Finally --
(CROSSTALK)
TYMOSHENKO: So what's next is that --
QUEST: -- Well, let -- let me just interrupt you there because we're out of time. But it would be remiss of me not to ask about the health and well-being of your mother. How is the former president? How is she?
TYMOSHENKO: Well, she is on a fifth day of hunger strike, actually. She announced it on Monday in support and solidarity to those people who gathered to protest against Ukrainian authorities. So, actually today, we see the start of the new wave of repressions, actually on the day of the summit.
Ironically, today our lawyer has not been let through to see my mother without any reasons. So, basically, the penitentiary system broke the law. Now we don't know how she is, what's her state of health, and we actually are very worried that the situation may be critical with her.
QUEST: Eugenia Tymoshenko, thank you for joining me tonight from Kiev. We appreciate it. It's a story we'll follow closely.
Now, the Ukrainian president isn't ruling out a trade deal with the EU. In comments published on his website, Yanukovych says Ukraine still intends to sign the agreement in the future. For now, though, he stressed, Ukraine needs financial assistance from the West.
Here's why, just take a look at the numbers. Ukraine's economy is in its third recession since 2008. Growing debt burden, it needs to tap more than $17 billion just to pay next year's bills. And foreign reserves are at the lowest since 2006, down to $20 billion in October.
James Sherr is the associate fellow for the Russia and Eurasia program at Chatham House, joins me now from Oxford via Skype. Mr. Sherr, if he wants help from the West, President Yanukovych isn't going about it an a very sensible way.
JAMES SHERR, ASSOCIATE FELLOW, CHATHAM HOUSE: Well, the paradox of all this is that in the long term, the free trade agreement, which provides Ukraine with open access to a market of 360 million people, is of immeasurable benefit.
But one reason the Ukrainian economy is in such dire straits is that the all-public institutions and the economy itself have basically been run to the benefit of very small numbers of people. And this adds to vulnerabilities that Russia can exploit and has very -- is very effectively exploiting now.
QUEST: So why, in your view, why do the deal with Russia unless it's external pressure, obviously, from the top, from President Putin and -- below?
SHERR: It's been elaborate and meticulous pressure, because in his meetings with President Putin, he presented him with reams of material illustrating exactly the countermeasures Russia would take that would have a crippling effect, particularly on the financial and business interests closest to Yanukovych. And don't forget, the biggest issue for him is reelection in 2015, and that means --
(CROSSTALK)
QUEST: OK, so --
SHERR: -- billions of dollars. Even compared to an American campaign, it's much more money required to run that.
QUEST: OK. So, pulling the strands together, finally, Mr. Sherr, is Yanukovych being dragged? Is he pushing? Is he a willing partner in this? Is he an unwilling partner in this? What is --
(CROSSTALK)
SHERR: He is --
QUEST: -- his role in this?
SHERR: He's frightened of Russia, so in that sense, he's being dragged. But Yanukovych would rather be president of a Ukraine moving towards Russian than not being president of a Ukraine --
(AUDIO GAP)
SHERR: -- that's moving towards the EU. And there's --
(AUDIO GAP)
SHERR: -- power for him is the absolute. It is the overriding objective. And that's understood by -- that's understood by people opposed to European integration in Ukraine and those who are in favor of it. It's understood by the vast majority of people there.
QUEST: James Sherr, thank you, you've put that in very clear, blunt terms, and we appreciate you joining us tonight on QUEST MEANS BUSINESS.
Coming up after this short broke --
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QUEST: -- break, even. Fighting for the best deal, there have been the traditional Black Friday punch-ups. It hasn't hurt profits. Is it really worth it when there are so many bargains and there are seemingly constant sales?
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QUEST: QUEST MEANS BUSINESS.
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QUEST: All right. You needed nerves of steel and elbows that were going to get in the way and sort things out. Well, the biggest shopping day in the United States well and truly underway. The National Retail Federation expects sales over the holiday period -- it'll be about $600 billion, more than half a trillion dollars, and that's up almost --
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QUEST: -- four percent on last year.
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QUEST: Good grief. Terrifying. Many stores opened earlier than ever this year. Macy's even opened late on Thanksgiving Day for the first time. And across the US, mall and store managers have been telling CNN shoppers arrived in droves. Interestingly, those stores which opened early have had a smoother flow of traffic instead of the usual rush at midnight.
Macy's came in for criticism, as we would say, for opening on the national holiday. The chief exec says, well, frankly, he's just giving consumers what they want.
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TERRY LUNDGREN, CEO, MACY'S: In our case, we just want to do what our customers want and what our associates want, so we're being responsive in that way. I think the fact that 15,000 people versus 11,000 who were here last year at midnight, is an indication that people want to be here when we opened our doors.
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QUEST: It's an argument that says if you build it, they will come. These were the scenes an hour before Macy's opened at the flagship store in New York. Terry Lundgren dismissed claims that staff members were unhappy to be working on Thanksgiving.
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LUNDGREN: We offered to our full-time team and said, "What would you like to do? Would you like to work at that 8:00 PM opening hours?" And we filled 90 percent of those jobs with our regular staff. They wanted to work -- the wanted to work, number one.
Sometimes we per-assume that we know all these answers, but they wanted to work for a couple of big reasons. One is they said, time and a half, that sounds good for me for my own holiday income.
But also, they were very intrigued, in many cases, by the fact that people were going to be finished with their work at 4:00 in the morning, then they could go shopping with their friends and family on Black Friday. Something that Macy's employees normally don't get to do.
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QUEST: Good grief. Black Friday wouldn't be the same. It was chaos and pugnacious behavior.
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(CROWDS SHOUTING)
UNIDENTIFIED FEMALE: Oh, my God!
(WOMAN SCREAMING)
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QUEST: There were scuffles and argy-bargy at several Walmart stores. This one's in Elton in North Carolina. There are reports from Virginia that one person was stabbed in a fight over a parking space.
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(CROWDS SHOUTING)
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QUEST: Oh, it's tough to watch this. It's also at Walmart. And shoppers aren't the only ones getting cross. Protesters have been targeting the chain, demanding more money and better conditions for workers, organizing protests at hundreds of Walmarts across the United States. The company's president and chief exec, Bill Simon, says they are treating their people fairly.
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BILL SIMON, PRESIDNET AND CEO, WALMART US: We pay in the top half of retail. Our industry offers the opportunity for people to enter at really any life stage from 16 all the way to 76 if they would like to. And then they work hard and they can build a career.
Entry-level jobs are in our store. We have lots of opportunity for people to grow into management. And today, over half of our folks make well above the amount that's being requested. We're a predominant full- time workforce with slightly over half of our workforce being full-time and the other half being part-time.
So, as people get a chance to join our company in an entry-level job - - and I started as a dishwasher in a restaurant. I'm sure you had an entry-level job at some point. And they work their way through the organization, we're proud of the opportunity that people have to progress in our company.
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QUEST: Kyung Lah joins me now from a Walmart in Los Angeles where some of those protests have been going on. Kyung, we talked to you yesterday when, of course, you were shopping on Thanksgiving, the heatheness of it all. And now, of course, you are out with those who are having fisticuffs and argy-bargy. What is going on?
KYUNG LAH, CNN INTERNATIONAL CORRESPONDENT: Well, if you talk about the frenzy of Black Friday, remember it is almost competitive sport here in America. What people are looking for are the great deals. So that's why you're seeing brawls on YouTube, people videotaping as they're fighting over $2 towels and socks. So, that's the frenzy, and it's created in part by these door buster deals. This is something that extended into Thursday.
Now, we did get some figures from Walmart, which is where we are outside, where they said it paid off. They are on track to have a record Black Friday weekend as far as the number of customers they had in their store yesterday, Thanksgiving, 22 millions.
And the number of transactions right now, they're saying 10 million transactions in just four hours, Richard. So, at least for this big box retailer, they're saying Black Friday is off to a great start even though there is some distasteful, unpleasant video out there.
QUEST: Kyung, final question, final thought. When you've finished your broadcasting duties, are you going to pop in and get a couple of bargains yourself?
LAH: Already done, Richard, already done. But one thing --
QUEST: Ah!
LAH: -- we do want to point out is actually what you're looking at over here, the issue of wages, which you just heard from the CEO --
QUEST: Right.
LAH: -- it's very much on the minds of workers here. And that's really what some of these shoppers are being greeted with are these rallying cries to not shop here because workers have to work on Thanksgiving, but also that they just don't have a livable wage, Richard.
QUEST: Kyung Lah, joining us in Los Angeles in California outside a Walmart.
Now, it's a crucial day for the retailers. Let's go into the macro area because as we said before, the holiday period's expected to over half a trillion. I'm joined now by the consumer spending analyst Hitha Prabhakar, joins me to talk about this.
We know it's a shorter holiday period from Thanksgiving through until Christmas, which makes it even more important that the sales come in and they come in fast. Is that right?
HITHA PRABHAKAR, AITCHPE RETAIL ADVISORY: That is absolutely right. Basically, Kyung was talking about this frenzy that the customer if feeling, and that is very deliberate. The retailers want that frenzy to not only happen at the beginning of Black Friday and the Black Friday weekend, but for it to be sustained through the entire holiday season.
Because to put it in perspective, 20 percent of retailers' overall annual income revenues happen within Black Friday.
QUEST: OK.
PRABHAKAR: So the sooner they get those people in there shopping, the sooner they start making that money.
QUEST: But on the wider question of discounts, every time we see, there's a discount here, a discount there. Only last week, when I was in New York, 70 percent discounts. Here in London, 60, 70 percent discounts, 30 percent. Surely the consumer -- there's an air -- get away from the sport of the actual day, Black Friday, but isn't the consumer educated now to know that there are perpetual sales?
PRABHAKAR: Well, yes, and I think that people are realizing that more. There was a piece that came out in "The Wall Street Journal" that was talking about the way that some stores, for example, here in the United States, JC Penney, as well as some other teen retailers, that build it into their business model this discounting mechanism.
So what ends up happening is when they buy the product, they up -- they basically put the suggested manufacturer's price up 70 percent higher than what they brought that product for just so they can go ahead then and discount. So basically, people aren't getting a deal unless they're seeing a discount of -- more than 30 percent.
QUEST: And the traditional January sales and the traditional June summer sales are completely meaningless now, aren't they? Because we all just know if we wait a week or two, there'll be a sale around the corner.
PRABHAKAR: Right. And that's a very great point. So, we were talking about this frenzy and the fact that these retailers need to sustain that sale. When you wait a week or two -- we have Cyber Monday here in the United States that's coming up in just 72 hours, less than 72 hours.
Those deals are going to be coming out, and they're probably going to be better than what they saw yesterday and on Friday. So, you're absolutely right. The longer we wait, the better those deals get.
QUEST: A moment of honesty, Hitha, are you going shopping on Black Friday? Come on, moment of honesty?
PRABHAKAR: No, I'm not going shopping because I did my shopping weeks ago.
(LAUGHTER)
PRABHAKAR: I don't deal --
(LAUGHTER)
PRABHAKAR: I don't deal with the crowds. No, not for me.
(LAUGHTER)
QUEST: And I'll bet you got a bargain and a sale.
(RINGS BELL)
QUEST: Many thanks for joining us, Hitha.
PRABHAKAR: Thanks for having me.
QUEST: Joining us from New York. After the break, we will completely turn and change directions. If I tell you that half of the refugees -- 2 million refugees -- are in Syria, and the United Nations calls or try to help what they're calling now the Lost Generation.
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QUEST: The United Nations says more than 1 million children have become refugees since the fighting broke out in Syria, and the report says children now make up almost half of all the Syrian refugees. The war has left them with deep physical and emotional scars.
Jordan is playing host to more than half of those Syrian refugees, and last month, I spoke to the country's finance minister, Umayya Toukan, and I asked him if he could quantify the impact that this influx was having on Jordan.
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UMAYYA TOUKAN, JORDANIAN FINANCE MINISTER: We asked now US Aid to do a study with the World Bank to get, really, all the aspects of the costs, not only direct cost on health, education, and other services.
But also it's affecting the host community, for instance. The housing sectors and so on. The security spending. But a very rough estimate we quoted in Washington, probably $1 billion, $1.5 billion to date.
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QUEST: Hala Gorani spoke to the UN High Commissioner for Refugees, Antonio Guterres, who's calling for more support for Jordan and Lebanon as they struggle to deal with this influx.
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ANTONIO GUTERRES, UN HIGH COMMISSIONER FOR REFUGEES: I think that it is the risk of a lost generation. That is why with UNICEF, with many other agencies, a campaign is being launched called No Lost Generation, asking for massive support from the international community in order to bring the Syrian children to school.
And only one third is at school at the present moment, refugee children. In order to make sure that psycho-social support is much more extended to be able to cover much more of the affected children.
And at the same time to be more effective in mobilizing capacities and helping the countries, protecting the children against illegal labor, against, for instance, situations in which young girls are driven into prostitution by their own families because of lack of resources.
All that's required is a much stronger capacity, both of the humanitarian agencies, but also of the states of the region that are now struggling with a huge influx that is having an enormous impact in their economies in their societies.
HALA GORANI, CNN INTERNATIONAL CORRESPONDENT: All right, these host states are carrying a very heavy burden, of course, at this point, but you're launching an appeal, No Lost Generation. Do you get the sense that the world has not been moved, has not been touched by the plight of Syrian refugees, specifically Syrian children enough? That people aren't paying enough attention, not donating enough money?
GUTERRES: Well, there has been support, there has been awareness. There are many people motivated. We have testimonies from all over the world and financial support from all over the world. But the problem is that it is out of proportion of the needs, out of proportion with the needs of the refugees themselves, and out of proportion with the needs of the countries hosting them.
I am in Beirut. Lebanon has today 25 percent of the population being Syrian, 800,000 are recent refugees. In the United States, it would mean 56 million refugees coming all of a sudden into the country. You can imagine what the reaction would be.
And Lebanon is not a rich country, and Lebanon has been, to a certain extent, abandoned by the international community. And so our appeal is more and more for the countries of the region, for Lebanon and Jordan, but also for Turkey, for Iraq, namely in Kurdistan, to be much more supported by the international community. Because if not, at a certain moment, they will not be able to cope with this challenge.
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QUEST: That's the -- Antonio Guterres talking to Hala Gorani. We'll be back in a moment. We will pull the strands together for what has been an interesting week in the markets. Not only the week and the month.
And Santa Claus brought with him some very early Christmas cheer. The stocks ended November with big gains, not just for today.
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QUEST: 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.
Pro E.U. demonstrators have gathered by the thousands in Ukraine's capital Kiev alongside a heavy police presence. Many Ukranians are angry at the president's decision to halt a trade deal with the E.U. Eugenia Tymoshenko, the daughter of the jailed opposition leader Yulia Tymoshenko, told us a short time ago she blames the president for Ukraine's economic troubles.
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EUGENIA TYMOSHENKO, DAUGHTER OF FORMER PRIME MINISTER OF THE UKRAINE, YULIA TYMOSHENKO: After Yanukovych rejected the signature, he took off his mask. Now we can see his real, true authoritarian face and he never -- that he never really intended to go towards Europe or moreover, fulfill the criteria for the democratization of Ukraine.
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QUEST: As we've been telling you, the United Nations says more than a million children have become refugees since fighting broke out in Syria. A new report says the war has left deep physical and emotional scars on Syria's children who now make up almost half of all Syrian refugees. There are new clashes across Egypt as protesters defy the law severely restricting demonstrations. Riot police in Giza fired teargas to clear the crowds. The Muslim Brotherhood had urged supporters of ousted President Mohammed Morsy to turn out after Friday prayers.
Hundreds of protesters have stormed the headquarters of the Thai Army. A military spokesman said they were asking for help to overthrow the government. Prime Minister Yingluck Shinawatra who survived a no- confidence vote in Parliament on Thursday says the government is ready for a dialog. In London security was tight as two men accused of killing a British soldier in a southeast city street last night arrived on the first day of their murder trial. They're charged with hacking Drummer Lee Rigby to death in broad daylight and then with the attempted murder of a police officer. Both men denied the charges.
It was a shorter trading day, and not surprisingly markets closed flat (inaudible) one does wonder if there -- if there was anybody actually there doing any trading. That's the (RINGS BELL) way it was. The Dow Jones Industrials was down 10.9 at 16,066. All three indices though ended the week higher, making eight straight weeks of gains for the Dow, the S&P and of course the NASDAQ. Zain Asher has more in New York.
ZAIN ASHER, BUSINESS AND PERSONAL FINANCE CORRESPONDENT FOR CNN: Hey there, it was a flat end to a great month for stocks. The stock market closed early at 1 o'clock for the Thanksgiving holiday. The Dow flirted with a record close but ended up falling slightly to 16,086. The NASDAQ gained slightly, closing at 4,059. The S&P 500 was little change. Major indices ended November with gains of 3 to 4 percent, and gains for the year ranged from 20 to 35 percent, certainly quite a run for your portfolio and your 401k. Trading volume though was well below average with many investors taking the day off. The Black Friday drawing large crowds. Most retailers posted very modest gains. But Apple shares were getting more attention -- the stock rose above $555 a share -- that's the highest since January. And Bitcoin hitting an all-time high of $1,242 for one Bitcoin. The virtual currency is coming close to the price of an ounce of gold. Back to you.
QUEST: Yes, well it gets there we'll soon know whether or not it's got the staying power of gold. On Black Friday Europe presented us with a mixed bag of indicators. There was some nasty surprises and not many bargains. (CLEARS THROAT) Excuse me -- especially if you're house hunting in Britain. So, let's look at what the European economic shopper found on the countries and whether they got actually a Black Friday bauble or a lump of coal. Let's start with the Netherlands. Now, the Netherlands -- well, there we have a lump of coal because the Netherlands got a rating cut, tarnished to AA, plus losing its AAA rating. S&P took away the gold-plated AAA because of weakening growth prospects. Now, the Dutch prime minister says the downgrade will not affect the economy.
(BEGIN VIDEOCLIP)
MARK RUTTE, DUTCH PRIME MINISTER, VIA TRANSLATOR: It is unavoidable, we are an open economy. At the same time one is positive about the expectations for the medium long term, and one agrees that we have to continue with our policy of reform. And from the interest rate of the Netherlands, you can see that we belong to a small group of countries that pays extreme low interest and this situation with S&P was already priced in.
(END VIDEOCLIP)
QUEST: So Netherlands is downgraded whereas in Spain -- well there we have a bauble because the outlook was upgraded from negative to stable as growth resumes. There's no change in the rating, it's still BBB-, so let's just say it's a tarnished bauble rather than a full throttle for the tree. As for the E.U. itself, Eurozone unemployment fell for the first time in nearly three years a mere smidgen -- 12.2 to 12.1 percent. Underlying that of course is youth unemployment. We have to sort of say even though it's a bauble, it really should be bauble and coal because youth unemployment at 24.4 percent is still rising. To the United Kingdom where -- excuse if I can get the United Kingdom to behave -- well you'll have to (inaudible) because it won't behave. But if It was looking at the United Kingdom, I would be able to tell you about what's been happening with house prices where they have been rising 6.6 percent, just the opposite over the other fastest place in more than -- there you are. We can always rely on those house prices to be a bit sticky before they finally come back to us. The house prices rose by 6 and a half percent in the year -- that's a bauble. But of course you'll remember that the Bank of England yesterday did announce a reduction in their lending -- funding for lending scheme which of course puts it all together. Finally, assuming we can get Greece to cooperate -- yes, Greece gets a lump of coal. The Troika has announced a delay in its visit because of a row over the size of the 2014 budget gap which may mean the last tranche of money is delayed. I wouldn't put money on that. Pull it all together -- when you look at what's happening in Europe at the moment, I spoke to James Shugg, the senior columnist at Westpac Bank Incorporation. At this point in the proceedings, particularly with the Dutch downgrade, well it appears neither helpful nor useless. And I wondered what the purpose was.
(BEGIN VIDEOCLIP)
JAMES SHUGG, SENIOR ECONOMIST, WESTPAC BANKING CORPORATION: Markets have not paid much attention to ratings agencies of late. Usually markets have already priced in the developments the agencies cite when they -- financially (inaudible) downgrades. I mean, in the Netherlands' case it was AAA so it's no longer in the elite, but it's just one notch below there -- it's on a stable outlook. What that means is that it's just compared to the you know the Dutch (inaudible). The finances or the outlook of the finances of the government, it's just about quite as good as a genuine AAA.
QUEST: But since the Eurozone has made it clear that it ain't breaking apart, and (Inaudible) made it clear it'll do whatever it takes. Doesn't it make a nonsense of something like a ratings agency that at this point to decide to downgrade a AAA in what is frankly a meaningless, minor move?
SHUGG: Well, it's -- it wasn't meaningless and minor in the case of France. Now the French economy has remained very uncompetitive when the Spanish and the Italian economies forced themselves to go through these reforms that have been very painful over the last few years. Hollande hasn't taken France down that route, so France lost its AAA status a couple of years ago and was downgraded again more recently. So, that's -- you know -- one of the fault lines that's yet to really be explored by financial markets that still runs right across the -- Europe. So I think there still is a role for the ratings agencies to play to remind us that you're not necessarily AAA forever if you don't put in place reforms and keep yourself competitive.
QUEST: Now Netherlands is going down, Spain is going up -- again it's just a smidgeon -- but it is a reflection of a reality, isn't it? That Spain -- I mean -- it's still an intensive tear but it's getting better.
SHUGG: Well, Spain is one notch from junk status -- that is if there were to be one downgrade of Spain, many investors would be forced by their mandates to (inaudible) all Spanish (inaudible). They had a negative outlook previously -- that outlook has been restored to stable. So they're still on the lowest possible investor grade ranking which is a worry, but you're right, I mean the Spanish economy grew in the latest account of GDP, and the government is still managing to get through, you know, reforms that are unpopular and there are actually factors that the S&P cited that tweaked to their outlook.
QUEST: We have an interesting set of unemployment numbers which still show a very poor state of joblessness in the Eurozone and the European community. But I'm wondering, when taken with the jobless claims that we saw for France earlier in the week, do you see any turnaround on this front?
SHUGG: Look, those French figures -- and you can see them in today's numbers too with the slight fall in the European unemployment rate from 12.2 to 12.1 was entirely due to France, yet the French economy in the latest quarter contracted again. And as I said earlier, France is not competitive, along the business surveys, it's pulling much weaker in France than they are in other parts of European -- certainly than in Germany. So we think there's a bit of a -- perplexed by those numbers -- by the French numbers. Frankly, when we think that France is where -- is one of the major economies in Europe but one that really hasn't gone through the reform process that it has to do if it's to remain sustainable in the Euro in the longer term.
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QUEST: And that's the way the market closed in Europe. London down, Frankfurt up, Paris just up a smidgeon. What did you think there of course is that investors weren't terribly concerned by that Netherlands downgrade with the AEX finishing a mere fraction lower -- basically everybody ignored what S&P had done and seemingly that's what happens with most downgrades these days. Coming up in just a moment, "Quest Means Business" -- we meet the entrepreneurs of the West Bank. They're working hard to make opportunities in very difficult business environments.
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QUEST: Qatar has pledged $150 million to help the Palestine Authority to revive its economy. Last month the World Bank reported the West Bank's economy shrank for this year for the first time in a decade. It was due to a decline in foreign aid. But also restrictions imposed by Israel. John Defterios went to investigate the problems of doing business in the West Bank.
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JOHN DEFTERIOS, CNN'S EMERGING MARKETS EDITOR AND ANCHOR OF GLOBAL EXCHANGE: These shoes hot off the production line are made under the brand name New Tossetti. They may sound European but they are crafted at this three-story factory in Hebron. Meet founder Shaker Syaj who over coffee in his boardroom gathered half of the 30 family members involved in the company. He is a true survivor of uncertainty, having opened the operation a half century ago. Today the company makes 12,000 pairs of shoes a day, but he says, with low-interest loans and export promotion by government, he could do a whole lot more.
SHAKER SYAJ, OWNER, NEW TOSSETTI SHOES COMPANY, VIA TRANSLATOR: If we get direct support to the Tossetti Company, I promise that within a year we could increase 30 percent to compete with other Arab markets.
DEFTERIOS: Business in the West Bank is complex, derailed by the stalemate in peace talks and sporadic violence. New Tossetti used to export 200,000 pairs of shoes a year to Germany until the Second Intifada or uprising against Israel in 2001.
OMAR SYAJ, BUSINESS OPERATIONS, NEW TOSSETTI SHOES COMPANY: When -- before the shortage the (inaudible) our product because they are afraid from -- they have the risk of their business from the political situation.
DEFTERIOS: But the shoemaker fits the mold of the type of company U.S. Secretary of State John Kerry wants to see expand under his Palestinian economic blueprint. The Kerry plan calls for $4 billion to be pumped into the private sector to boost the West Bank and Ghazi economies by half in just three years. While no one could argue with the spirit of economic initiative, the reality on the factory floor whether it's light manufacturing for shoes or high-tech manufacturing in telecommunications is very different. Palestinian businessmen suggest it's time to lift restrictions which have been in place for years. For New Tossetti it means lifting restrictions on some chemicals that are banned for import. Israel fears certain compounds could be used in bomb-making, third generation mobile technology has been blocked and there are the more obvious barriers to trade -- like security walls and checkpoints.
Male: Now what we offer is the opportunity to (inaudible) to connect with -
DEFTERIOS: The talk at high tech networking events is leapfrogging those barriers and thinking big through e-commerce. The goal is to link startup companies with investors by presenting their business plans to raise funding.
ABDULMALEK, AL-JABER, FOUNDER AND CHAIRMAN, ARABRENEUR: We try to do industrial zones, it failed. We tried to do -- make projects like hotels and resorts, it failed. Because these kind of projects are very much dependent on the peace process.
DEFTERIOS: This impacts tourists and their spending as well. There's a steady stream of visitors at the Church of the Nativity in Bethlehem, but is the West Bank economy really seeing the full benefits of all this traffic?
FADI KATTAN, DIRECTOR GENERAL, ACA TRAVEL AND TOURISM: These people come in and spend a day in Bethlehem. We receive 2.3 million tourists here out of which 1.8 million don't spend the night in a Palestinian hotel. What is the reason? It acts as a movement.
DEFTERIOS: And pre-movement Palestinians say cannot be tackled without a peace agreement, leaving the founder of New Tossetti struggling with the same old problems of finding new markets for his shoes.
(END VIDEOCLIP)
QUEST: Fascinating. John Defterios reporting. Now, to the weather forecast where you are this weekend. Jenny Harrison is at the World Weather Center.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Hello to you, Richard, yes I'm going to quickly take you a tour of Europe as you head as you say into the weekend -- still a very unsettled picture. More rain and snow all coming down from the north. Look at this -- very, very fast- moving front the last few hours, and all the while, another area of low pressure just spinning rather unrelentingly across the central regions of the Mediterranean. But of course in that cold air to the higher elevations, more snow coming down as well. In fact, look at this in Brocken in Germany -- 5 centimeters of new snow, we've got 22 centimeters of snow that's on the ground and then across into Fichtelberg as well, another 4 centimeters have come down there. And so all the while these totals adding up and remember of course I gave you the ski forecast through this weekend coming. But, again, some pretty good conditions across many resorts in the Alps. And if they're not open in the week, they tend to be opening sometimes throughout the weekend.
But there's quite a bit of rain as well coming into the northwest. It's not all just nice white snow. As I say, that's coming down with the next front -- very cold as well across northern and eastern areas of Europe. And in fact that cold air will also just push its way down into the southwest of Europe. The low's still sitting across the Central Med, more showers coming in there. And although we've got high pressure pushing into the northwest of Europe, don't expect to see lots of lovely sunshine. Unfortunately you know what that means this time of year -- quite a lot of stagnant air and fog -- quite a problem as we head into the beginning of the next work week.
But some warnings in place as well, particularly through the Netherlands and Belgium across into southern Italy and Sicily. Heavy winds -- some more heavy winds (inaudible) and also some more strong, gusty winds across feeling a bit cold too with that air as you can see it makes it way down to the southwest in the next couple of days. But the bitterly cold air -- that's generally across Scandinavia and western areas of Russia. That is also where we've got quite a blanket of snow coming down in the next 48 hours. The rain meanwhile sitting across central regions but of course as soon as it hits the higher elevations and the cold air, we're going to see quite a bit of snow, fairly widespread as well across into Germany, parts of Poland and you can really blanketing much of Scandinavia and also western areas of Russia. Coming to the airport, may be some delays on Saturday, very long ones possibly in Geneva and Zurich because of that snow. Some windy conditions and again some fog, so just about everything out there temperature-wise is not too bad on Saturday -- 8 in London, some nice sunshine and 9 in Paris Richard.
QUEST: Many thanks. Jenny Harrison at the World Weather Center. See you next week -- we appreciate it. Coming up after the break, possibly the best Black Friday deal you're ever likely to find. Well, it was a car and it cost a dollar.
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QUEST: It wouldn't be Black Friday without a good deal and one used car salesman in Texas took it to a new extreme, setting their prices as low as $1. It's called Sterling McCalls and the gates opened at 7 a.m. Then the cars were unlocked and consumers and shoppers rushed in to claim the prizes. The prices were written on the windshields at 9 o'clock. If you were sitting in the driver's seat, you had the first pick whether to take the deal or not. In the end, three cars were reduced to $1. If you chose not to buy it, well then whoever had sat in the passenger seat got the next option to buy it. This has been a Black Thursday -- a Black Friday -- I beg your pardon -- at Sterling McCalls since 2008. The dealership's owned by Group 1 Automotive and we have the chief exec Earl Hesterberg with us now. Mr. Hesterberg, all right, so you gave away three cars for a dollar. I assume whoever was sitting in the driver's seat bought them there and then.
EARL HESTERBERG, CHIEF EXECUTIVE OFFICER OF GROUP 1 AUTOMOTIVE: Yes, indeed. In fact we ended up giving away a fourth one for a dollar because we had two people fighting, so to keep peace we actually sold a fourth one for a dollar.
QUEST: You had people fighting over the car -- what happened?
HESTERBERG: Well, someone got out of the car right before the car was marked down, and then they started to argue a bit, so to keep peace we just sold them both a car for a dollar and moved on. We've sold 50 so far today and we still have quite a few people on the lot. So, it was the best thing to do.
QUEST: Right. What was the average discount? Give me an idea, because obviously the dollar car is the bit that hooks them in and reels them in. What was the average discount?
HESTERBERG: Well, I would say the average discount's probably two or three thousand dollars, but we sold cars anywhere from $4,000 to $40,000 today, so the average price is likely $16,000 or $18,000, so it's a pretty big range of products.
QUEST: All right, come on, let's be honest -- there's only one thing you can now do next year and that's give away the car for free. Are you going to do it?
HESTERBERG: Well, the one dollar we make, it doesn't make that much difference, so I suppose we could unless there's a legal reason otherwise. Last year we sold 100 cars during the day and we'll get pretty close to that today also I think and we leave the prices in place for three days, so we'll hold these prices through Monday.
QUEST: Final quick question. Would you ever consider opening your dealership on Thanksgiving to try and take advantage of the potential (inaudible) extra sale or two?
HESTERBERG: We've thought about that. We've decided not to. We open New Year's Day -- generally we staff it with volunteers -- that's a pretty good selling day, but I guess we would consider anything that is good for our employees, shareholders and customers, but at this point, we still think it's good to take Thanksgiving Day off so our people can be with their families.
QUEST: Right. Good for you. Well, you sold an extra car for a dollar, and next year, who knows. I might pop down me-self to try and get a bargain. What about you just tell me which car it's going to be. Thanks for joining us, Earl. Have a good Thanksgiving -
HESTERBERG: You're welcome, Rich -
QUEST: -- and we will have a "Profitable Moment" (RINGS BELL) after the break.
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QUEST: Tonight's "Profitable Moment." A car for a dollar, a TV for a song and your entire holiday shopping all done by the end of November. It's difficult to know what to make of this growing trend, the trend that's become Black Friday. Think of it, the stores dress it all up and say consumers are demanding earlier opening hours. People want to shop 'til they drop. The critics say it's all too much consumerism, and the shoppers seem to love it or at least are prepared to do battle for a bargain. But what is a bargain? In an era where stores stock up with special items for the perpetual sales, we're all so terrified of paying full retail that we just jump at the prospect of getting that discount. Well, I have to say, just look at the shops -- the perpetual sales are everywhere and frankly, anyone who pays full retail today is seen as (a bug). And that's "Quest Means Business" for tonight and for this week. I'm Richard Quest in London. Whatever you're up to in the hours ahead, I hope it's profitable. I'll see you in New York on Monday.
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