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QUEST MEANS BUSINESS
U.S. Consumer Spending Ticks Up; WTC Site Owner Talks Rebuild;
Aired August 28, 2009 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL ANCHOR: Confidence. The U.S. economy shows more signs of turning a corner. There are profits to be made. The New York real estate investor Larry Silverstein tells me there are opportunities for the taking.
I'm Richard Quest, tonight, live from the Time Warner Center in New York where, yes, I mean business.
Good evening. Fresh U.S. data shows that consumers are still dipping into their pockets. The mood on Wall Street isn't that cheery, despite the fact it has been a generally buoyant week. Let's find out why. Susan Lisovicz at the New York Stock Exchange.
(INAUDIBLE) very noisy as well. I was going to say, a noisy Susan Lisovicz, but a noisy stock exchange. And it sounds to me, Susan, like a lot of noise, but little action.
SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: You would be exactly right, Richard, as you so often are, but not always. Yes, well, I mean, it's noisy, it's a Friday afternoon, and actually things are pretty good here.
But you know, volume is light. We're a week away from the long Labor Day holiday. And the news, not bad. Personal incomes flat, spending up just a tad. You read into that "Cash for Clunkers." Consumer sentiment improving slightly.
But really, where I'm looking at, I'm looking at Dell and Intel, two big tech players that have both said they see improvement in sales in either this quarter or the second half of the year. And that's really what a lot of folks say they need to see.
Not improvement only on the bottom line, but in actual sales in revenue. And you're hearing that from two influential companies, Richard.
QUEST: I've fallen foul on the AIG story once before, Susan, by forgetting that there was a 20 to one reverse split on AIG shares. But even allowing for that extraordinary split, AIG up more than 200 percent in a month. There is money being made.
LISOVICZ: There is money being made. I mean, it has a ways to go. And oh, by the way, this is the company that is on the hook for I think $80 billion to U.S. taxpayers. But these are the mysteries of Wall Street, Richard.
And they have a -- the company has a new CEO who so far has gone over very well on Wall Street, Robert Benmosche. Comes from MetLife, big company, and said he wanted a big paycheck. He wasn't going to be like the predecessor, Ed Liddy, a dollar a year. No, no, no.
He wanted more than $10 million a year. The stock rallied on Thursday and continuing today on the sense that the pay czar will approve it.
Also, AIG actually returning to profitability in the last quarter. That was something we hadn't seen in a couple of years. And Robert Benmosche saying, hey, you know what, I'm going to restore this company to its former glory.
So far shareholders are buying it.
QUEST: Maggie -- I'm going to be talking to Maggie Lake in just a moment, but I want to ask you the same question I'm going to ask her. Do you think there is a -- in New York, as we come to the end of this "NY-Lon- Kong" section, do you feel a new optimism that the worst is over, the ship has turned, whatever cliche you want to use?
LISOVICZ: I think that people are not as afraid as they were earlier this year. But I think in terms of how are their finances -- their specific finances? I don't think things are so much better. But I don't think there is this prevalent fear or even hysteria that was something that was with -- you know, could be witnessed latter half or the last few months of 2008 and the first few months of this year.
Yes. Things have improved, but I don't think everybody has so much more money in their pockets, no.
QUEST: Susan Lisovicz, at the New York Stock Exchange, sorry we didn't quite have that cup of coffee. But I assure you the check is in the mail. Many thanks, indeed.
Right. Maggie Lake is with me now. Good afternoon, Maggie. You've been with me all week. The question to you that heard me ask Susan, is the worst over?
MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: Yes, I wasn't able to hear what Susan was saying. I think that I have -- I think the answer is no. But I have been surprised throughout reporting on the recession, and especially this week, going around to different parts of New York, just how optimistic people are.
I keep expecting to hear in Brooklyn with the real estate developer that, listen, things are really tough, we're hanging in there, but things are tough. In fashion, where we know they've got to be getting hit with the consumer pulling back, again, expanding that optimism that this is a good time for an opportunity.
Now is that particular to New York? I have a feeling some of it is. And I'll tell you what's really striking. What a few of the different people both this week and over the course of the last few months have told me.
Listen, we're New Yorkers, we've been through September 11th, we can get through anything. So for people around here, compared to that event, which is still very much in their minds, a recession is manageable.
QUEST: But things are changing. Things are moving forward. Is there any anger yet, do you think, at the Wall Streeters with their bonuses coming back?
LAKE: Again, throughout the country a huge amount.
QUEST: Yes, yes, yes.
LAKE: A huge amount of anger. And we have not seen the last of those repercussions. But again, when people start making money, when they feel better about the economy, suddenly they have more to pay attention to than blaming someone.
So as long things stay bad, there is a huge amount of anger. As things start to improve, I wonder whether people will turn their attention away from this.
QUEST: What happens to the rest of the summer? What happens as we now move into the autumn and of course once again we've got the October issue that will be coming up?
LAKE: It will be huge. I'm very concerned that a lot of the -- first of all, the stock market rally, a huge amount of speculation going on. And you and Susan were talking about AIG, Fannie, Freddie, Citi, there are short-term players.
QUEST: Are you worried about October and an October surprise?
LAKE: I am because I worry that once all of this enthusiasm that we've seen that the worst is over, we're past it, the edge starts to fade and the reality is that the consumer is still in a whole lot of trouble. People are going to come back down to earth and just what happens, especially since there has been fast money in the market, concerns me a lot -- Richard.
QUEST: Maggie Lake, we thank you. Thanks for that.
LAKE: Lovely to see you in New York.
QUEST: Thank you for having me here. All right, many thanks.
The European markets and they have ended the trading week on a high note. Two negative sessions. The major indices jumped into positive territory. So that was a very different environment. Banks were amongst the best gainers. Shares in Lloyd's over 6 percent. Commerzbank, UBS also performed well.
Mines were higher -- up on higher metal prices. Paris, L'Oreal sold over 7 percent. The cosmetics company posted better-than-expected results. Nokia rose 3, following the launch of its new Linux phone, which will compete with Apple's iPhone.
Japan hit a big bump in the road to recovery as voters got ready to go to the polls. Jobless numbers there have soared to a record high of 5.7 percent in July. That is despite news that the country was emerging from a recession with slight growth earlier this month.
On top of that, consumer prices have dropped 2.2 percent from a year ago. It's the worst decline on record. And it is raising concerns the country is in a deflationary spiral. It wouldn't be the first time that Japan has been in that situation.
You're up to date with the markets. It may be a quiet day in the financial world. News-wise it's busy and Becky Anderson is at the CNN news desk in London.
BECKY ANDERSON, CNN INTERNATIONAL ANCHOR: I am, Richard. Thanks for that. The man at the heart of a bizarre abduction is set to appear in a California courtroom. Phillip Garrido is accused of kidnapping 11-year-old Jaycee Dugard back in 1991.
Now the convicted sex offender reportedly fathered two children with the girl, keeping them all captive in shacks behind his home. He and his wife are expected to face multiple charges when they appear before a judge in about two hours' time. The now 29-year-old abductee was reunited with her family on Thursday.
A Dutch court has put on hold plans by a 13-year-old to sail around the world by herself. During the next two months Laura Dekker will undergo psychological testing to determine whether she is fit to take on the challenge. The court will then decide if her parents will have the final say about how the daughter plans to do that.
Well, a grim milestone in Afghanistan. A U.S. soldier has been killed by a roadside bomb. August has now become the deadliest month for American forces there since the 2001 invasion. Forty-six U.S. troops have been killed in Afghanistan so far this month, topping the previous high set in July.
Well, tens of thousands of people crowded the streets of Baghdad for the funeral procession of Abdul Aziz al-Hakim. The revered Iraqi politician and Shiite leader died Wednesday of lung cancer. He was a symbol of the Shiite reemergence after the fall of Saddam Hussein. Al- Hakim lived in exile for more than 20 years and returned to Iraq in 2003.
And those are the headlines, for the moment at least. Back to you, Richard, in New York.
QUEST: And we will be with you again in about 15 or 20 minutes Becky Anderson, at the CNN news desk. More later.
In just a moment after the break, we're going to look at property from two sides. We'll be looking at commercial real estate and hotels. And also, rising from the ashes of Ground Zero, as the eighth anniversary of 9/11 approaches, the developer of the site, Larry Silverstein, gives me the lowdown. He's in charge of rebuilding.
QUEST: Construction at the site of the former Twin Towers here in New York is years behind schedule. It has been held up by a combination of design disputes and complicated litigation.
Just this week the Port Authority -- which actually owns the land but not necessarily the leases on the various buildings, the Port Authority turned over a final parcel to the site to the developer, Larry Silverstein.
Now, Mr. Silverstein is actually building many of the buildings many of the buildings on the property. You have an owner, you have a developer. I went to meet the man himself, Larry Silverstein, and I got a privileged glimpse of the construction site.
QUEST: This is a rare chance to get inside the World Trade Center site. And now I can really find out the state of the development, the sheer size and scale of this operation.
UNIDENTIFIED MALE: It's hard to believe it has been eight years, and we're still at this stage. The last remnants of the actual site is being torn down right there. Tower 3 is right next to it. And then in that corner, Tower 4 is being built.
This is all going to be covered in about three weeks, four weeks with a new deck. And this will be pretty much street level.
QUEST: The World Trade Center site is relatively simple in concept, a 16-acre square with four sides that can clearly be seen. But that's when the difficulties begin, because different parcels of the site are owned by different people, and will be developed at different stages and speeds. And the money to pay for it all is coming from different sources.
Which is why the man I'm going to visit up in the office there, Larry Silverstein, knows all about the problems.
LARRY SILVERSTEIN, SILVERSTEIN PROPERTIES: I am one of the most frustrated people you're going to speak to. At 78 years of age, my frustration is total because I've been at this trying to get this place rebuilt since 9/11.
What we're dealing with here is a disaster. The project is totally at risk and it's going at a snail's pace. The Port has suggested completions that go way out into 2036 or whatever. It makes no sense to me at all.
QUEST: Whatever the buildings finally look like, and I know to some extent this happens in every major construction project. But there can't be too many that have as much World Trade Center's Tower 2.
It's not just a few (INAUDIBLE), it's pages of it. Just about every twist and turn, from the insurance claim, to who owns which bits, to who was going to develop which bits, even now you're still in arbitration over vast areas of this.
SILVERSTEIN: Well, in point of fact, we finally got disgusted with the pace of activity -- or inactivity. Port had certainly obligations with respect to delivery of infrastructure so that we could build our buildings.
They didn't deliver the sites to us, which they were obligated to do. They didn't start the infrastructure in a timely fashion. And at the rate it's going, it's not going to be done in a timely way.
QUEST: You were paying $10 million a month in rent for a property that you can't rent out yourself. And you are getting money back in return. It seems bizarre.
SILVERSTEIN: Three hundred thousand dollars a day they're paying us is to cover the rental that we have to pay them. It's just a wash. It's absolutely a wash.
QUEST: So -- so.
SILVERSTEIN: So there is no benefit to us whatsoever.
QUEST: Look at the detail on this. I mean, you can't even read what some of these are.
SILVERSTEIN: That was about six weeks before 9/11, we acquired the World Trade Center. And of course, disaster followed thereafter. But nevertheless, we faced the reality and the reality was we had an obligation under the documents we had signed to rebuild the Trade -- to rebuild and even anything would happen.
QUEST: Is this the most important project that you've been involved with?
SILVERSTEIN: Clearly. There is nothing that has captured the public's imagination and attention to the extent that the rebuilding of the Trade Center has. And to have this responsibility is enormous. And I feel it. That's why I'm pressing this as avidly as I am to move this arbitration process forward so that decisions can be made as to who is right, who is wrong.
Ultimately my hope and my prayer is that in a time frame that gets there, 2014, '15, and '16, so that in six, seven years from today, at that point I'll be 85, 86, whatever, hopefully I'll be here and be able to enjoy the results of our efforts.
QUEST: If you ever had any doubt as to why you were doing what they're doing in there, that is what it's all about.
Will you make money on this project?
SILVERSTEIN: It's not a case of making money. Money has no relevancy anymore. It's the recognition of the importance of rebuilding this thing, and getting all of it, and the -- whether or not it makes money is really not an issue.
QUEST: Larry Silverstein, who is developing the World Trade Center site. And that's the first time I've been privileged enough to actually go down and see the construction taking place.
One of the most notable aspects of the recession, certainly for business travelers and those of us on the road, of course, has been what has been happening in the hotel industry.
Hotel occupancy rates across "NY-Lon-Kong," New York, London, and Hong Kong, have been down very sharply. Not surprisingly, since they are, of course, the three major financial centers that have been badly affected.
To find out more about how they are persevering, what are they doing? Who is getting hit hardest? You'd have thought it was the luxury hotel sector, I met with the chief operating officer of the Four Seasons Hotels and Resorts, Katie Taylor.
KATIE TAYLOR, COO, FOUR SEASONS: I think business pressure for just about every business person has increased over the last year. Some businesses obviously are doing better in recessionary times, but most businesses have felt the effects of the global downturn.
QUEST: Are you able to get any pricing pressure back into the market yet?
TAYLOR: We're seeing some green shoots in the business for sure, if you want to call them that. We've seen some occupancy pressure coming in different markets. We've seen some build in terms of the business, and coming from some unexpected sources, perhaps, in some of the major markets.
And so we're hoping that as we work through the balance of 2009 and into 2010, we'll start to see a floor to occupancy and maybe some increase in demand over the next few months.
QUEST: Your role as the COO is to ensure, of course, that the company remains profitable and actually operationally successful. So what did you start doing?
TAYLOR: The customers notice everything. Guests notice everything. And in this period of great pressure, they are under pressure personally. Their business is maybe under pressure. They are actually noticing more today than they may have even just a year ago.
QUEST: But what sort of things did you look at?
TAYLOR: Well, specifics really all revolve around the philosophy that we adopted many, many recessions ago, called "control without compromise." It's well understood at every level in the business, and every employee gets what this is about.
So we asked all of our employees and all of our managers to think about ways that they could start to control costs differently, but always trying to maintain and even enhance that important focus on the guest experience.
QUEST: In London, you've got one property opened. You're spending a fortune on another property. It's not exactly the best time to be spending a fortune renovating a hotel.
TAYLOR: Actually, it's probably a terrific time to be making that investment. Business demand levels in London are down. Major renovations displace a huge amount of business in a hotel. And so that's a cost of doing a renovation.
So those dollars -- those big displacement dollars in a very busy hotel have ironically been saved by doing a renovation at this particular moment in time.
QUEST: You do also face an additional problem these days that it is difficult for companies to allow their executives to stay in the luxury hotels. That they've now been required to downgrade.
TAYLOR: There is no doubt that there was pressure that came out of the public relations issues associated with people staying at luxury hotels and some of the politics that were played out around that. And that, for sure, did have an impact on all luxury hotels, Four Seasons included.
I think as we look at that experience, it taught us a lot about how we're going to have to get our value message out, how we have to essentially reintroduce the concept of the value-added experience that Four Seasons does provide. And we're in the process of doing that with all of our customers around the world right now.
QUEST: Katie Taylor of Four Seasons. And you can see more about with my interview not only with Katie Taylor, but also how "NY-Lon-Kong" is being affected in the hotels, in aviations, and for business travelers. That's "BizTrav," Wednesday, 1:30, right here in New York, 18:30, of course, is the time in London.
When we come back, they are the 30-somethings. They have been hit by probably the biggest recession that they've seen in their adult lives, if not the only recession they've seen so far. We'll have some of that story in just a moment when we come back.
QUEST: QUEST MEANS BUSINESS coming to you from New York City.
They are the children of the Baby Boomers. They conquered fashion in the 1980s. They mastered the computers -- they were the masters of the computers of the '90s. Can these 30-somethings survive unemployment in the new millennium? Joined by Jeffrey Mann and Nathan Phillips.
Jeffrey, you, first of all. Record labels, you were in the music industry and you were laid off. How grim has it been in?
JEFFREY MANN, JOB SEEKER: It has been difficult trying to find employment. You know, with the market changing, the business models of the industry changing, we have to adapt ourselves to find new ways of exploring with artists and marketing artists.
So we find ourselves going from the old models to the new models. And so we have to adapt ourselves, best skill set too.
QUEST: Have you had to reappraise your dreams, your goals, your ideas in all of this?
MANN: It has actually gotten me closer to my goals and my dreams, going after the old business models, I found myself following footsteps of my older mentors and now in a recession I'm finding myself reevaluating my skills, teaching myself new skills, and finding myself being able to reapply them in a whole different method, getting closer to the artists.
QUEST: That may be up to a point the success that you can enjoy. But, Nathan Phillips, you're in a similar situation in terms of having lost a job or having had to change direction that you were going in.
NATHAN PHILLIPS, JOB SEEKER: Yes. I was working very successfully as a freelancer in New York City as a writer. And.
QUEST: That work just disappeared.
PHILLIPS: It literally dried up. There was hiring freezes at the agencies for the advertising. I would create interactive things for museums, no more grants. And I would write comedy jokes, and the television pilots, they were -- there were no longer production budgets.
So I was left with very little opportunity. We actually came up -- my partner, Victoria Wellman (ph) and I, came up with an idea for speechwriting. And we combined our experience as performers and writers and came up with a cool company that kind of combined all of our skills.
QUEST: But you had to rethink the whole concept of where you were going, what you were doing, and how you were going to do it?
PHILLIPS: Absolutely. And it was the Internet that kind of allowed us to do it. Because there is a real opportunity with blogs and everything that we tried to take advantage of that wasn't there during the freelancing thing.
QUEST: How bad is it out there for either of you gentlemen? How bad is the circumstance? Let's start back with you, Jeffrey, in terms of, we know the recession, we know you've had to rethink your jobs, but how bad?
MANN: It has been difficult. Most of the interviews that I've been on, you're finding yourself either overqualified or having to reevaluate your skills and learn a whole new skill set. So for some people, you must go back to school. For myself, I've been learning it the hard way, doing freelance consulting.
QUEST: How -- Nathan, how do you stay cheerful and keep your morale up? You're a joke writer. You're a speechwriter. How do you manage to sort of remain cheerful?
PHILLIPS: Well, it's hard to put a smile on somebody's face, especially in these rough economic times, Richard. But this company, the Oratory Laboratory (ph), lets us do the thing that we love, which is get people to be funny and get people to have a good time where they weren't able to do that.
And so I get to write jokes for other people, and in the meantime, I get to keep my own jokes to myself.
QUEST: Did you ever think -- either of you gentlemen, did you ever think it was going to get as bad as it actually has got?
PHILLIPS: It's all news to me. It's -- you know, working at home in your pajamas is a fantastic opportunity and it's terrifying when there is no -- there is no work. I mean, a hiring freeze means they're no longer hiring people, which is scarier than I ever thought it would be.
MANN: I feel the exact same way.
MANN: I enjoy the coffee and the P.J.s.
QUEST: Coffee, P.J.s, The New York Times, the magazines. Well, actually, no, not the magazines, you can't afford them.
PHILLIPS: No, the delivery is like $9 a week, are you kidding me?
QUEST: Gentlemen, thank you very much, indeed, for coming in, the 30- somethings. We'll talk more later on.
Now how do you fancy a dose of optimism? We know what has been happening with the youngsters, what about commercial real estate? The rumor and the gossip is that the next big downturn is in commercial property. Larry Silverstein does not see that. What is his business philosophy?
QUEST MEANS BUSINESS, we're live in New York.
QUEST: Good evening. I'm Richard Quest. This is QUEST MEANS BUSINESS. You're watching CNN. Delighted that you're with us this evening. The last edition of our program from New York, "NY-Lon-Kong."
The subprime mortgage crisis was the catalyst for the global recession. We've seen residential property prices plummet up to 50 percent in some major cities, sometimes more in some lesser areas.
What of the commercial property sector? The big fear is that the next leg of this crisis will be in commercial property. I asked the property developer Larry Silverstein, the man who is developing the World Trade Center site, in part two of our chat, if he saw a collapse of commercial property prices.
SILVERSTEIN: No, I don't. Not at all. And it's really very simple. We're not building for this market. We're building for a market that will exist in 2014, 2015, 2016, when the buildings are done.
Just as we went into the ground on 7 World Trade Center in April of 2002, there was zero market for office space. You couldn't give office space away, no one wanted it. And no one wanted to be Downtown because that site was smoldering.
But we simply started this building knowing that by 2006, when it would be done, there would be a market. And that's the same circumstance here, when you have the opportunity to put up first class quality buildings, first class quality office buildings that are technologically the state of the art and that are environmentally sensitive.
There is enormous need for that kind of space in New York, because there are not -- there is no (INAUDIBLE) office building sitting around that have been built that are vacant. That is something that we see now on a continuing basis.
Goldman Sachs, for example, is just finishing their building right across the street. They're moving out of a building that is 25 years old because technologically, it is deficient. .
QUEST: Will financial markets be able to withstand the amount of debt that is out there at the moment, waiting to be refinanced on major properties in top cities?
SILVERSTEIN: The financial institutions today, as you've -- as we've seen now -- are in much better condition than they were six or eight, 10, 12 months ago.
I think we've seen the worst of this. But recognize something, Richard. After every fall comes a rebound. And the rebound, we're going to be seeing. If not in 2010, we'll see it in 2011, 2012, 2013. The world comes together again. It always has and it will this time, as well. It's happened all -- it's happened so many times. In my lifetime, it's happened so many times. In fact, we're in the market looking for investment opportunities on a continuing basis, because we feel this is a very good time to buy. And it is. It's for buying at rates that are much reduced, at costs that are much reduced.
And so it's -- it's opportunistic and there are people -- there's huge amounts of capital in the world available for investment opportunities, here in New York and elsewhere. And they're going to be taking advantage of them.
(END VIDEO TAPE)
QUEST: Larry Silverstein, a man who's got more than a buck or two in the bank. Mr. Silverstein told me that he is 78 years old. Now, that's -- if you're -- if times are hard when you're that old, it's pretty difficult. But when you're out of work and your financial future becomes a real worry, especially if you're in your 20s and 30s and re-evaluating every part of your life.
Top tips from a financial journalist and author.
QUEST MEANS BUSINESS in New York.
QUEST: As we look on the road to the recovery, during the show, we've been talking to some young job hunters about their struggles to find work in New York City.
Now, we need to try and get some financial help for them.
This is not -- this is specifically designed, and now, as I would say, not for me, on the wrong side of 40, but for those on the other side.
The financial journalist, Beth Kobliner, who has written "Get A Financial Life," joins me now.
You're not advising me, are you?
BETH KOBLINER, AUTHOR, "GET A FINANCIAL LIFE": I thought you were 26, so that's what I heard. But then when I saw you, I thought maybe 23. So I (INAUDIBLE).
QUEST: Oh, you schmooze.
Now, let's talk about it. The -- the problems of the 20s and the 30s, we heard some of them here. They're re-evaluating their dreams. They've got gazillions of debt from student loans...
KOBLINER: And credit card debt.
QUEST: Why are they in such a worse situation?
They've got their lives ahead of them.
KOBLINER: It's an absolute fiasco that's happened in the last 10 years.
First of all, credit card companies have been aggressively going after young people, college students who had no jobs, no income to speak of. That's number one.
Number two, college costs have been skyrocketing out of control. So they -- they're given student loans to take out. So the average college student graduates with about $4,000 in credit card debt and $23,000 (INAUDIBLE)...
QUEST: No, no, no, no. Hang on. Hang on. No one invited them to take all that credit card debt. Nobody forced it down their throats.
KOBLINER: But you know what?
They've given it to them without giving any education. There is no...
QUEST: Oh, come on, Beth.
KOBLINER: Whether you go from Harvard to a community college, none of these schools explain to young people. They say here's...
QUEST: Look, nobody...
QUEST: No, no, no. Nobody explains to them. You earn a dollar...
QUEST: ...you don't spend a dollar one.
KOBLINER: (INAUDIBLE) to me. So you're -- it's like -- it's like being -- it's just like the mortgage situation, where a mortgage company comes and says here, here's a mortgage person. I will not require you to have a downpayment and people think, you know something, if the bank, the one responsible for taking -- you know, for evaluating risk, if they think I'm able to make this payment, then I'm able to make this payment. And that's the problem.
QUEST: All right.
KOBLINER: I'm not saying people are not responsible, but they have to -- they have to take some -- you have to look at the whole system and see what the problem was.
QUEST: Let's push it forward...
QUEST: ...to the road to recovery.
QUEST: Are those people -- are those youngsters -- the people we had here, sitting here, the writers and the people in the music industry -- are they going to be paying off their debt for the foreseeable future?
Are they saddled with their debt?
KOBLINER: They are definitely saddled with their debt. I'm now interviewing young people who are saying, you know, I have a kid about to go to college, I'm still paying off my own college debt. So I think they're going to be saddled for a very long time.
But what they have to do is learn to not live beyond their means, to focus in on paying off debts, especially high rate credit card debts charging 14, 15 percent, on average.
QUEST: Let's talk philosophically here.
QUEST: And never mind the -- the minutiae, because, obviously, different circumstances. But I need to hear from you now about whether you're in Europe, in Asia, in Latin America or the United States, talk about the morality and philosophy of change that they have to mentally have now, youngsters.
KOBLINER: I am seeing change. I'm talking to people who are just graduating from college who expected to have that great banking job, that great Wall Street job and now they have nothing. And I said you know what, you're going to have to move back home with your parents. That's happening more and more in America. And around the -- around the globe. And people have to take a job that's not your ideal job and work really hard and work toward paying off your debt. Because you have to have enough money to pay for what you buy.
QUEST: And what could...
KOBLINER: That's the bottom line.
QUEST: And what about the moral -- the ethics of money is not the end be and all...
KOBLINER: It's happening.
QUEST: Are you seeing people now saying...
KOBLINER: Absolutely. They're -- there is a silver lining to this cloud covering all of us and that is Peace Corps volunteers are up. In America, AmeriCorps volunteers are up. All over, people are saying you know what, I'm not going to make $100,000 right out of the -- right out of the start when I graduate from law school, so I'm going to have to figure out a way that I'm going to find a job that I actually like and makes it a -- a livable wage.
QUEST: And as we come to the end of our discussion here, do you see, in your discussions with youngsters and in general, things getting better or do you believe there is another way to perform?
KOBLINER: I'm very worried about credit card debt. I'm very worried about the student loans. I think the student default rate is climbing and I think we're going to see that still trickle out for the next few years.
I think that attitudes have changed and I think we're going to have to see a massive mind set change before we're out of the woods.
QUEST: What's wrong with just telling them stop spending, you ain't got any money left. Stop spending.
KOBLINER: That's the perfect message to give and you're the one to give it, because I -- people have been saying that for years. And I think now the -- you know, the chickens have come home to roost. The reality is setting in...
QUEST: All right...
KOBLINER: ...every single cliche in the book, people realize they have to stop spending.
QUEST: Beth, thank you very much for coming in.
KOBLINER: It's been my pleasure.
QUEST: Have a good weekend.
KOBLINER: Thank you.
QUEST: Thank you very much, indeed.
All right, Guillermo, look, it's very simple -- you nearly -- you nearly got it right every single day. The last day...
GUILLERMO ARDUINO, CNN METEOROLOGIST: But...
QUEST: The last day of NYLONKONG (ph) and you pushed the wrong button and you got rain and I'm inside.
ARDUINO: No. No. But remember, we have a tropical cyclone in the middle of the ocean and that's destabilizing everything.
QUEST: Well, that's cold comfort for me having been standing outside.
ARDUINO: I know. Well, I thought that today the weather was going to hold up. It is not. And tonight it is going to be awful. Tomorrow it's going to be bad. And Sunday it's not going to be that bad. It's going to get better.
But if you want the percentage, 100 percent -- 100 percent chance of rain for tomorrow in New York. I mean, you know, I tried, but well, this is what's going on. Remember that we have a cyclone there in the open ocean and that's destabilizing the atmosphere.
At the same time, there's a stationary front in here from Chicago into Philadelphia and New York, bad weather.
The same in the South. We like it here, you know, so that you didn't come here. But I think you had an awesome week in New York. It was extremely nice. The temperature got better on Thursday. Today, say goodbye and the rain comes.
Also, we're looking at Danny, as you see, Richard. And it's going to brush North Carolina. There are tropical storm watches in North Carolina. We don't think it's going to be a direct landfall, a direct impact. It will be indirect. It's close enough.
We'll see waves. We'll see rain. We'll see winds. And the same here. And in the Martha's Vineyard's area, we may see landfall -- may, may. But definitely we're expecting it in Nova Scotia, as we saw it with Bill. It is not a huge system. Not at all. It's actually very disorganized.
Now, looking at this chart, the only city here with extreme activity is New York, unfortunately, and JFK, the airport, with some delays probably. Then elsewhere, it's fine.
San Fran, the risk of fires continue. Actually, we have fires in Los Angeles and in San Fran.
We'll, let's see what's going on in Britain. We see rain. Actually, tonight into tomorrow it's going to be rainy in London. Then, we think the weekend is not going to be terrible, but it's going to be humid. You know, here and there the clouds, everything. There are no alerts over there, only in the north. And the same in Italy. Anywhere here from through Liebinitz (ph) here, Julia (ph), all the way down into Venice, we are going to see some chance of severe storms. And into Slovenia, the same thing. That's where the precipitation is going to be.
You see, London doesn't even pop up over there. But I'm sure that Richard is going to stay in New York. It's going to be rainy, though.
And I was -- I was inviting international viewers to come to New York because the weather was going to be nice and now I have to take those words back.
So I know, when I toss it back to Richard, I know I'm going to get hammered. But Amsterdam with winds, Dublin with winds. And temperature- wise, looking fine -- 22 for London; 23 in Paris; and 35 in Madrid.
Do -- we're going to see some more forecast, actually. (INAUDIBLE) let's go.
And I see here on the satellite, again, that everything is going on here in Scotland. You see the low pressure center into the North Sea and Scandinavia; here Denmark with bad weather. And some system actually goes all the way down into the Alpine region.
And another look at the next 48 hours, because that's what's current. And also a system going through Ukraine, Belarus. And that's where we will see a change.
I want to inject a comment, Richard, on the last interview that you had. Not only people should stop spending money, but also they shouldn't borrow any more money -- back to you.
QUEST: We thank you for that, Guillermo, at the World Weather Center.
One piece of new breaking news to bring you, it is being confirmed -- it is official -- that by the Los Angeles County coroner, that Michael Jackson's death was homicide. It needs to be added to that, of course, that that does not mean anything more than that. It merely means that Michael Jackson died as a result of the actions of another. It is not a murder, it is not a manslaughter, it is not a negligent homicide. Those things are still to be determined. So let's be quite clear about that.
The fact that the death has been ruled homicide does not tell us much more than that the coroner has ruled Michael Jackson died as a result of the acts of another. We'll have more on that at the top of the hour.
And that is QUEST MEANS BUSINESS for the end of this New York section of NYLONKONG.
I'm Richard Quest.
The next stop is London.
In just a moment, John Defterios has "MARKET NEWS MIDDLE EAST."
As always, whatever you're up to in the hours ahead, I hope it's profitable.
I'll see you in London on Monday.