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European Leaders Seek Bank Bonus Caps; Chelsea FC Banned from Transfers

Aired September 3, 2009 - 14:00:00   ET


RICHARD QUEST, CNN INTERNATIONAL ANCHOR: Crashing the kings of the financial world: Brown, Merkel, Sarkozy want to cap bankers' bonuses. Nice idea, says the London mayor, but it won't work.


MAYOR BORIS JOHNSON, LONDON: I do think that people who are going to receive this kind of remuneration, who were going to pay themselves these kind of bonuses, when their banks have been supported by the taxpayer, they've got to have a sense of their commitment to wider society.


QUEST: And a spectacular own goal by Chelsea, banned from the transfer market for a year. A busy day, I'm Richard Quest, I mean business.

Good evening. Europe faces an uneven recovery tonight. And the president of the European Central Bank, it's better not to rock the boat. And what a busy day on economics. Jean-Claude Trichet has announced that the ECB is keeping Eurozone interest rates on hold at 1 percent.

And he seems to be saying that's where they'll stay for some time to come. Trichet admits things are getting better in the Eurozone, very.


QUEST: . on Friday Mr. Trichet will join other G-20 ministers here in London, along with central bankers, after going all-out to boost the system with extra spending, low rates, and printing money with quantitative easing. Ministers will now start to discuss how to unwind those special measures.

The heads of state of Britain, France, and Germany have written an open letter to their European partners. They're telling ministers to prepare their exit strategies, and also to design a lasting and effective regulatory framework to make sure the crisis doesn't repeat.

The most important bit says: "Our citizens are deeply shocked at the revival of reprehensible practices, despite taxpayers' money having been mobilized to support the financial sector at the height of the crisis."

The letter was sent to the Swedish prime minister. It calls, of course, for the discussions to be implemented at the G-20 in Pittsburgh. We'll be following those talks. We'll be bringing you the key developments.

On tomorrow's QUEST MEANS BUSINESS, you'll hear from the finance ministers from India (ph), South Korea, and Egypt. And of course, on Monday, a veritable potpourri of those finance ministers attending the meetings.

The analysts on what they are expecting from this week's meetings. Gilles Moec, senior economist at Deutsche Bank.

Gilles, good evening to you. Well, it's (INAUDIBLE) enormous amount first to get to grips with on that. So let's take it bit by bit. Let's start with the ECB.


GILLES MOEC, SENIOR ECONOMIST, DEUTSCHE BANK: . today. It was even more prudent than what we would have expected. For instance, the forecast for growth next year, way below consensus. So it seems that for the time being, the ECB doesn't want to get carried away by the flow of nice data that we've had over the last few weeks.

But it's still considered that it's (INAUDIBLE).

QUEST: OK. So far so good. That is what's happening at the moment. The data out today was just all over the place, whether it was the jobless claims numbers in the U.S., the ISM numbers, whether it was (INAUDIBLE) in Europe, it was just.


MOEC: . genuine improvement. There are all sorts of exceptional factors. But it's still better.

QUEST: The exit strategy, this phrase, incidentally, which, of course, you and I will become very familiar with in the weeks and months ahead, basically it means how we get out of the vast amount of (AUDIO GAP). Is this going to be on the agenda.

MOEC: Yes.

QUEST: . at Pittsburgh? And yet there is some uncomfortability (ph) with, for example, Tim Geithner saying it's too soon to talk about exit strategies.

MOEC: Yes. I gather the European approach to this is to say, we are not going to spook citizen (AUDIO GAP) speaking too soon about (AUDIO GAP). We have to prepare people, simply because citizens have to be reassured in some ways in Europe and, for instance, especially in Germany, they're afraid of inflation, afraid of too high fiscal deficits.

They want to be told that this is not here to stay. Stimulus is not forever.

QUEST: What do you make of Gordon Brown's, Angela Merkel's, and Nicolas Sarkozy's letter? It was unusual that the three of them sent a joint letter. It's very blunt.


MOEC: . minister was very keen on saying, OK, this is good. We're going to have to celebrate this, but this might not be (AUDIO GAP) and we have to watch out for the coming quarters.

So they are not, you know, complacent about the state of the French and German economy. They know that without the U.S., without the U.K., they cannot grow (INAUDIBLE).

QUEST: You know what, let's get down to basics. It's a year, just about, since Lehman Brothers. I've been going around the world, "NY-Lon- Kong," I'm in the London part of that now. Are you optimistic that the light at the end of the tunnel is real, it is sustainable, and it is not just predicated by government money?

MOEC: For the time-being, it (AUDIO GAP) policy news (ph) to recover. That's for certain. For instance, you take the (INAUDIBLE) plans in France or in Germany, it played an awful big role in the positive figure for GDP in second quarter.

At the same time, on the financial market, there is a sense of normalization. We also see, for instance, that consumer spending held up relatively well in this recession. So, yes, I think there is light.

QUEST: Thank you very much for joining us.

MOEC: You're welcome.

QUEST: It is a lovely evening tonight here in London.

MOEC: Many thanks, indeed.

QUEST: Now markets in Europe closed lower. It was the fourth session in a row that they were down. Investors seemed cautious. And few sectors did do rather well. Let me update you. Look at the numbers while I do so.

The FTSE 100 came out with an overall loss of nearly some half a percent. Actually there were gains, though, in the mining sector: Randgold, Lonmin, and Xstrata.

Paris losses were the banks. In Frankfurt, Volkswagen, oh dear, down more than 4 percent. The Dow (ph), you can see on the screen, is just up a fraction, up 22 points.

Now we are approaching the end of our three-week road trip we've called "NY-Lon-Kong." Earlier today I caught up with London's mayor, Boris Johnson. He gave me his sales pitch for why the London part is doing very well over the rest.


QUEST: I've been to New York where I've seen optimism. I've been to Hong Kong where I've seen lots of optimism.


JOHNSON: . efficiently to raise and to allocate capital, for all of the reasons that I've given. We've got the time zone. We've got the language. We've got the skills. And we've got a city that people of great talent and intelligence want to come and live in.


QUEST: And we have the views from up here. Later we're hear more of that interview and show you what the mayor has to say on bankers' bonuses. That's coming up in just a moment or two.

Time for the news headlines now. Paging Fionnuala Sweeney at the (AUDIO GAP)

FIONNUALA SWEENEY, CNN INTERNATIONAL ANCHOR: Well, let's start with the war in Iraq, Richard, because forensic tests confirm a body handed to British authorities is that of hostage Alec MacLachlan. He was one of five men kidnapped more than two years ago in Baghdad.

A short time ago, the British prime minister, Gordon Brown, extended condolences to MacLachlan's family.


GORDON BROWN, U.K. PRIME MINISTER: It's with the deepest regret that the body passed to the British embassy today, is now discovered to be that of Alec MacLachlan. My thoughts and I believe the thoughts of the whole country are with the MacLachlan at this time of great grief.

No family should have to endure what they have gone through, the loss through the hostage-taking, then the period of silence and not knowing what was happening, and now to find that their loved one is lost.


SWEENEY: Rescuers in Indonesia are racing to find people trapped from rubble on Wednesday's as the death toll rose to 57 as more bodies were recovered earlier in the day on the island of Java. Debris from landslides triggered by the magnitude 7.0 quake has blocked roads and crews haven't been able to bring in heavy machinery to help with the rescue effort.

A terror suspect wanted in connection with the bombing of a Jewish center in Argentina will now serve as Iran's defense minister. Iranian lawmakers voted overwhelmingly to approve Ahmad Vahidi's nomination.


SWEENEY: . a decisive slap to Israel.

He is accused of working with Hezbollah militants in carrying out the attack in Buenos Aires in 1994.

Finally a much-needed break in the weather and a statistic that has firefighters in California optimistic. Officials say they've contained nearly half of the so-called Station Fire, a blaze that has forced thousands from their homes and left two firefighters dead.

Cooler temperatures and increased humidity are helping in the battle against the deadly blaze.

Still in California, 70 days after his death, Michael Jackson will finally be laid to rest. The ceremony on Thursday night will be private with only family and close friends invited. The news media will be kept out. The service takes place just days after the Los Angeles coroner ruled the singer's death a homicide.

And those are the headlines, Richard, back to you.

QUEST: And we'll be back with you, Fionnuala, in about 15 or 20 minutes from now.

One piece of business news before we take a break. The European Commission is to take a closer look at software-maker Oracle's $7.4 billion takeover of Sun Microsystems. Now the commission said there are serious doubts over competition in the database market if the deal goes through.

Just two weeks ago U.S. regulators gave the deal the go-ahead. Although their investigation began far earlier. And Oracle's competitors, Microsoft and SAP, have said the tie-up could drive up prices.

Oracle is the industry leader in proprietary databases, (AUDIO GAP) open source databases in theory. The commission says it hopes to have an answer by January 2010. It also said that nobody should read into anything into the fact that they were holding this investigation.

We'll be with the world of sports in just a moment. A business headline there: an English football team, made of money, banned from spending on new players in 2011. It's all about playing dirty, accusations, we'll have a live report.

This is QUEST MEANS BUSINESS on a glorious evening.


QUEST: Chelsea Football Club says it will appeal against the ruling that bans the club from buying new players until 2011. The verdict followed a complaint by French club Lens to FIFA, the governing body of world football.

FIFA have ruled that Chelsea, which incidentally of course is one of the wealthiest clubs in the world, encouraged the Lens player Kakuta to break his contract and sign for Chelsea.

The London club and the player have been ordered to pay between them $1.3 million in compensation. The player, who is 18 years old, has been banned from playing competitive football for four months.

So what next for the team that was built on the big spending of the Russian billionaire Roman Abramovich? Alex Thomas is with us. He's at Chelsea's home at Stamford Bridge in West London.

The first question that everybody really needs to understand is, is this going to have a practical effect or is this just tilting at windmills? Were Chelsea ever going to do any deals anyway?

ALEX THOMAS, CNN INTERNATIONAL CORRESPONDENT: Well, I think Chelsea will be very, very upset if this appeal of theirs does not succeed, Richard. If you can imagine running a business, but having a freeze on employment, no one in or out for 18 months, that really makes it hard to clear out any deadwood to change your business plan.

And football very much is run along business lines these days. And with the transfer windows so they change players willy-nilly as we discussed on your program a couple of days ago, there is even less scope for changing the squad if some freak injuries happen, as can be the case in football, what can Carlo Ancelotti, Chelsea's new Italian manager, do about it?

He can't just change the squad because he's not allowed to buy any players until 2011.

QUEST: Now let's just be clear about this, because I wasn't too clear when I first heard these reports. Are Chelsea banned from buying or -- well, I know the rules say they're banned from registering. But what about those players whose contracts may be up, are they free to leave?

THOMAS: That is a good question. And that's not exactly clear at this stage. My understanding is only a ban. I did sort of mis-say it a second ago. My understanding is only a ban on buying in new players.

So they can cope on the current squad, but already some pundits are claiming Chelsea's squad is a little bit on the old side. It's working very well at the moment. They're atop of the English Premier League.

They have got plenty of money, but what's the good of that if they can't spend it?

QUEST: I can't remember -- you know me, Alex, I don't follow the sporting world as closely as I should, but I can't remember a ban of this severity or length, at least, that has crossed my books.

THOMAS: Well, you've hit the nail on the head there. And that's why the world's media are gathered here on Chelsea's doorstep, Richard, because it is an unprecedented punishment for FIFA, world football's governing body.

And if you look at that statement that they released a bit more closely, you mentioned their response. They're going to appeal, Chelsea. But the language is very, very strong, indeed, Richard.

They talk about the strongest possible appeal, the sanctions are without precedence, totally disproportionate, and they go on to say that it's an extraordinarily arbitrary decision. They are absolutely stunned.

They are confident they'll be able to get this punishment reduced on appeal. And if they don't, it sends a big message to all big football clubs in Europe, don't bully the little boys, our players aren't up for grabs willy-nilly.

QUEST: All right. Now let's bring it into the business world here, Alex. You and I are men of the world. There is something really smelly that has been going on here for -- or alleged to have been, actually, they've been ruled against, for a punishment of this severity and this length of time, against the club that's this famous, something is deep here, isn't there?

THOMAS: Well, this has come from FIFA, run by Sepp Blatter, who actually seemed to be a fan of money and football-as-business. There have been all sorts of allegations about FIFA and the way they handled their financial affairs.

It's actually UEFA, European football's governing body, that has been accused of recent times under the presidency of Michel Platini of rather penalizing the big boys, not fans of big clubs. They want the smaller clubs in the smaller European countries to catch up with the Real Madrids, with the Manchester Uniteds, with the Chelseas, with the clubs that have rich owners. The billionaire Russian businessman, Roman Abramovich owns Chelsea.

So the $1 million-plus fine here, Richard, won't bother him. But the lack of new players that they can market to their fans, will do.

QUEST: All right. Alex Thomas, we thank you for that. Alex Thomas, joining us from Stamford Bridge.

When we come back in just a moment, he has read the books, studied the financial pages, he has listened to the experts. We'll have "Rookie Trader" when we return in a moment.

A glorious night here in London. We'll be back in just a moment.


QUEST: Now you'll have to forgive me if a moment or two ago you caught me looking up, because one of the great things about where we are here at -- in London, great plane-spotting opportunities. And as you know, I never like a missed opportunity.

And the A380, the Singapore Airlines whale, has just flown overhead.

All of which means nothing this evening. All this week here on QUEST MEANS BUSINESS, Adrian Finighan has been on his mission, you'll know about, break into the high stakes world of the stock market. It's day four of his training course, and Adrian is getting lessons in the golden rules of.


QUEST: . responsible trading.


ADRIAN FINIGHAN, CNN INTERNATIONAL CORRESPONDENT (voice-over): Traders, characters molded by the sharp end of the world's financial markets. Wheeler-dealers consumed by the ebb and flow of money. Buy, sell, and turn a profit any which way you can.

DAVID BUIK, BGC PARTNERS: If money is not one of your goals, you're wasting time in this environment.

FINIGHAN: I'm on a crash course with the experts in the City of London.

UNIDENTIFIED MALE: You need to preserve your capital.

FINIGHAN: An apprenticeship so I can trade online, anytime, anywhere. This is my journey as a "Rookie Trader."

Another day, another dollar. But if one day I want that dollar to come from trading, I'll have to earn it.

(on camera): Another late night, not only am I staying up late into the evening to do all of this revision that I need to do to read through all of this stuff, I'm also getting up at least an hour earlier every morning to continue my revision. There is just so much to take in.

(voice-over): For the last time, I'm on my way to the various companies and experts that have become my trading mentors.

(on camera): Knowledge is power, and that's the overriding theme of today.

JAMES HUGHES, MARKET ANALYST, CMC MARKETS: Trillions of dollars go through the FX desk here at (AUDIO GAP).

In the corner there we've got the ICT, which is indices, commodities, and treasuries, all dealt with from that corner. And then we move down to the U.S. desk.

Knowing all of these different desks that we've been talking about, the U.S. desks, they all tie into each other. So different currencies affect different markets. The FTSE 100 will take its lead from Wall Street sometimes. So keeping abreast of all of the markets, knowing what you're looking at is a key point.

UNIDENTIFIED MALE: Are there any stocks that you've had a look at recently that you.

FINIGHAN: Well, look, it is Tuesday, the second of June, and the front page of the FT today has Barclays.

(voice-over): In the classroom, albeit it with my dummy trading account, I'm building up to my first solo trade.

(on camera): . one of Barclays' largest Middle Eastern shareholders announced plans to offload its stake in Barclays. And the shares have taken a nosedive. Now I reckon that Barclays will rise eventually. And so I think it's possibly worth placing my first trade there.

(voice-over): My first educated trade is important, but when it comes to thinking about a portfolio or a strategy, well, I'm utterly overwhelmed by the amount and variety of trades at my fingertips.

At the agency broker BGC Partners, brokers are segregated according to their area of expertise. No one trades everything.

BUIK: Do not be a jack-of-all-trades-and-master-of-none. Focus on a product -- a financial product that you feel comfortable with. Learn the ins and outs of it. And understand where the pitfalls are. Understand what affects it. You need to know your product.

FINIGHAN: So like the pros, I need to pick my poison. To help me, I ventured onto the banks of the River Thames in West London. This is the trading floor of Robbie Burns, "The Naked Trader."

(on camera): Where do I start? Do I start with stocks? Spread betting? CFDs? Foreign exchange? Where in the market do I start?

ROBBIE BURNS, AUTHOR, "THE NAKED TRADER": Well, definitely not foreign exchange. Definitely not anything where the prices move up and down like crazy all day because you're going to -- it's going to drive you mad.

And I think people are better off starting with the smaller shares. We've learned so much. And just even just identifying companies that maybe just their profits are rising, their dividends are going up, and it looks to you like they have a good business, isn't that a company likely (AUDIO GAP)?

What I like to do is to identify potential bid targets?

FINIGHAN (voice-over): Robbie has forged a very lucrative career trading from home. He believes that anyone can make money from the markets if they back up their trades with solid research.

BURNS: The most important thing is not to have all your eggs in one basket. So say you've got 10 grand, don't put a whole lot into one share, why not buy six companies at a grand each. And then you've got a nice spread.

A lot of it to me is just common sense, which sector is going to do well, which isn't? I try and ride part of a trend, so if the stock market is going up, I might (AUDIO GAP) going up, I might not get out at the top, as long I've got some of the journey, I'm happy with that

FINIGHAN: The expression goes that the "trend is your friend." Like low-hanging fruit, it's much easier to make money from a predictable market flowing in one direction. In general, though, particularly in the current economic climate, the markets are hard to read and full of surprises.

(on camera): Currencies are just too volatile for me as a beginner. And I haven't got the time to day-trade them. So it's either commodities or stocks. And (AUDIO GAP) stocks are what I know best, so I think it's going to have to be them.

UNIDENTIFIED MALE: All right. So this is the chart of Barclays over the last year. And as you said, I mean, we've seen a massive drop in Barclays after that news report came out. And it has fallen down to 270 (ph).

FINIGHAN: Once you know your product, there are two ways of researching it like a pro. There are what is called fundamentals, basically knowing what is going on in the world and how it might affect your trades. And there is technical analysis involving charts, graphs, and statistics.

UNIDENTIFIED MALE: Well, having a look at the technicals then and the sort of fundamental news that you've read up on, do you feel that there is enough upside potential in this trade to do a long trade? It's important that you make that decision yourself.

FINIGHAN (on camera): I think -- I've made the decision.

UNIDENTIFIED MALE: Made the decision?

FINIGHAN: . I want to make my first trade with Barclays.


FINIGHAN: Yes, go for it.

UNIDENTIFIED MALE: All right. Well, let's click on that "place" button. Gone green, and we're now live into the trade, so you're feeling a bit nervous?

FINIGHAN: Yes, I am.


FINIGHAN: I've -- I'm going to put my stop-losses in straight-away.

UNIDENTIFIED MALE: Absolutely. Good work, Adrian, you're learning very quickly.

FINIGHAN: I've placed my first trade. And I'm in -- thank you for holding my hand through it, because that was quite a psychological barrier to get through.

(voice-over): As it turns out, Barclays share price did rise eventually. Had it been for real, I could have made a little profit. But before I get carried away and rush online, one last piece of advice.

BUIK: People who trade too much inevitably get into trouble.

BURNS: The people that lose the most are people who trade the most.

FINIGHAN (on camera): Why is that, do you think?

BURNS: Because the more trades you have open, the harder it is to keep in touch with them and what's going on, and people just lose a grip of what they're doing.

FINIGHAN: So my formal training is at an end. I owe a huge thanks to everyone that has helped me. I'm now officially a "Rookie Trader" on my own. It's time to.



QUEST: Adrian Finighan with his "Rookie Trader."

It is coming up to half past seven in the even -- this evening in London, the evening commute is under way. When we come back in just a moment, the European Union, there is a call to tighten regulation on financial services. We'll have a report and we'll talk to the mayor of London in just a moment.


QUEST: Good evening.


I'm Richard Quest.

European ministers are preparing a clampdown on the financial sector that could change the shape of key parts of the economy. Here is a letter from the prime minister, Gordon Brown, Nicolas Sarkozy of France, Angela Merkel of Germany, basically saying that at the next G20 in Pittsburgh later this month, the G20 should consider new rules against bonuses and banking behavior.

But the mayor of London says new rules could weaken the beating heart of this city. Boris Johnson says European excessive regulation could drive hedge funds out of London in search of looser regimes overseas. He also fears bonus caps won't work.

When I met Mr. Johnson at city hall, he told me there is one area when certainly things do need to change -- the bonus.


BORIS JOHNSON, MAYOR OF LONDON: On bonuses, you know, I think it unbelievable that a sector that has been not just bailed out in some individual cases by the taxpayer, but propped up by the government -- by government intervention, with -- with taxpayers' money -- is awarding itself this kind of money.

I'm not pretending I can come up now with a -- with a solution for docking this cash. But I do think that people who are going to receive this kind of remuneration, who are going to pay themselves these kind of bonuses when their banks have been supported by the taxpayer, they've got to have a sense of their commitment to wider society.

QUEST: Their failure, in some sense, is to have that commitment and their ease with which they've moved back to normal operations, doesn't this give grist to the mill to those in Brussels that want to regulate them?

These were, after all, industries that looked for every possible loophole to try and avoid regulation.

JOHNSON: Absolutely right. And there's no question at all that the mood in amongst the public, certainly the mood in Brussels, is that this is a fantastic opportunity. Look, in Brussels, the mood is this is a fantastic opportunity to regulate. And what they want to do is to -- to seize the crisis, to take from the top shelf, where they've been gathering dust for some years, various plans which are designed to fetter the Anglo- Saxon approach to finance.

And so we are seeing, for instance, the Alternative Investment Fund manager's directive, which I think is just one of a series of measures that will come forward that I don't think is necessarily particularly well thought out, whatever the -- the merits of it may be.

And we want to be absolutely clear, there are -- there are some regulations. There is a case for regulation.

QUEST: Is it likely that if these new regulations come in, that business will go elsewhere?

Because that is your argument, which some say simply just doesn't hold water.

JOHNSON: Well, you know, you've got some thousand jobs in the hedge fund sector, at least 35,000 others associated with (INAUDIBLE) capital private equity. Clearly, there is a risk of emigration beyond the boundaries of the European Union and that makes no sense at all.

Why should we in the European Union be helping to support a directive that would basically favor other jurisdictions, Geneva, Asian economies?

I don't that is (INAUDIBLE).

So my -- my argument would be, yes, let's have regulation, but let's do it at a local level. Because these guys -- as you rightly say, these guys are global operators and we need a -- a global solution.

QUEST: Shrewd move, global regulation is a non-starter.

JOHNSON: Well, you say that...

QUEST: Well, the G20 haven't managed to (INAUDIBLE) and the U.S. is never going to go along with a global regulator. You're quite safe, aren't you, Mr. Mayor, by putting it into the global regulators' sphere?

JOHNSON: Well -- well, let me put it this way. I don't think there's any case for doing something that will simply penalize the European Union.

QUEST: Let's talk about London again and the way you perceive, obviously from your vantage point here, and at all, it is an extremely important part of your economy, the financial services...


QUEST: And yet it's being attacked at the moment from all sides -- bonuses, toting (ph) taxes, regulation from Europe.

Will it manage to survive to be the thriving industry that is, do you think?

JOHNSON: Well, I think the spirit of London is remarkably buoyant, resilient and dynamic, as you'd expect after a very turbulent time in the - - in the markets and then the economy generally. We have the conditions here in London to make sure there is a fantastically robust, healthy financial services sector.

You've got the -- you've got the time zone, you've got the language, you've got the workforce, you've got a fantastic city to live in -- a city that grows ever more attractive and peaceful to live in, with crime coming down, with major improvements to our transport infrastructure, with a massive new bicasting (ph) with the -- the "New York" magazine themselves confessing that London has superior restaurants, theater, and, indeed, dinner parties to New York.

You have all the reasons for people who are in that -- in that world coming -- to come and live in this city. So, you know, I think in the long-term, of course London will -- will come through this and come through it well.


QUEST: The mayor of London, Boris Johnson, putting the boot into the other members of NYHONLONG (ph), New York and other -- other areas, what you -- perhaps you might expect.

So, it continues our NYLONKONG (ph) coverage, looking at these three major cities in the financial world.

We need headlines.

Fionnuala Sweeney is at the CNN News Desk.

FIONNUALA SWEENEY, CNN CORRESPONDENT: Richard, more lives are claimed in narcotics related violence in Mexico. The latest killings were at a drug treatment center in Juarez. At least 17 patients were killed when gunmen stormed the facility. The city is across the border from El Paso, Texas. More than 1,400 people have been killed in the Mexican city this year.

Authorities in India have recovered the bodies of politician YSR Reddy and four others killed in a helicopter crash. A helicopter carrying Andhra Pradesh's chief minister went off radar while flying over the state Wednesday morning. Reddy had been accompanied by a bodyguard and aide and two pilots.

Family members and the lawyer representing murdered Russian journalist Anna Politkovskaya are wary but thankful. The country's supreme court has ordered prosecutors to renew the inquiry into the assassination three years ago. In a trial earlier this year, four men suspected in the crime were acquitted. The 48-year-old reporter was an outspoken critic of the Kremlin.

And did you know that Thailand is the world's largest exporter of rice?

Well, if you happened to fly over this rice paddy field, you'll probably get the message -- or at least appreciate the artistic effort by the environmental group Greenpeace. It planted the contrasting colored plants with the help of local residents. And a Greenpeace spokesperson says the art work (INAUDIBLE) rice as a Thai export and as a message to the government to protect crops from genetic engineering.

That's it for me -- back to you, Richard, on London's (INAUDIBLE) Bank.

QUEST: We thank you, Fionnuala Sweeney.

Now, in Hong Kong and in New York, we met them. They are young, they are talented and they are jobless. Now we're in London. When we come back, Fran and Ruth will be joining me to talk about what the thirtysomethings do when there isn't any work around in just a moment.


Good evening.


QUEST: Welcome back now as we continue to look at the road to recovery.

Our chief business correspondent, Ali Velshi, is on the CNN Express, a chowder bank bus if ever there was one. And he's enjoying an end of summer road trip through America's heartland, discussing in detail how Americans are coping with the downturn.

Are they seeing any signs of the road to recovery -- Ali, you're in Madison, Wisconsin this evening.

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Yes, and Richard, this is a great town, heavily dominated by students. And school has just started. The University of Wisconsin has a great deal of (INAUDIBLE) around and a different feel than we've had through the course of the trip. As you know from the conversations we've had, we've been at state fairs in small towns, industrial towns, farming communities. Yesterday, we were on the south side of Chicago, a heavily urban, crime-ridden area where we talked to people about their aspirations.

Now, we're at a college campus, a university campus, where we're going to probably encounter a mix of emotions here. Some students very excited about the start of their -- their life and probably not as worried about the economy because they understand that it goes in cycles and there'll be others who are very concerned, who are probably wondering how are they going to pay for school, will they be saddled with debt and what about this whole health care debate?

That's the sort of flavor that we're getting as we cross the country on the CNN Express.

The tenor of the debate, Richard, has toned down a little bit since our last bus trip a couple of weeks ago. There does appear to be less yelling and screaming, more civil discussion, more cordial discussion. But where we're going, we're not a lightning rod for that sort of attention, so we're getting more attention.

Here's the nut of it, Richard. There are a lot of people who understand that this recession may be ending on the numbers, technically speaking. But a lot of people are still not feeling it in their own lives. They're seeing some recovery in the stock market, still not much on the housing side and very, very worried, as you just mentioned earlier, about the job situation in the United States -- Richard.

QUEST: Now, this is the interesting bit, as I go around the world and you go around the U.S. and we start to put this big picture together. The fact is people are having to rethink their very ideas, goals and ambitions -- Ali.

VELSHI: That's absolutely right. You know, several months ago, we used to talk about the new frugality -- whether by force or by choice, people understanding that they don't have the equity in their homes, they may not get their increases at work and the stock market may not give them the returns. They may have to change everything about the way they value their lives.

When I was at the Missouri State Fair, when I talked to you a couple of weeks ago from there, one of the things that the fair director told me was a big focus of that fair was something called the rural life -- the idea of gardening, of growing your own vegetables, canning your own vegetables. Some people call it a caveman mentality -- hunkering down and protecting your own family.

I think across-the-board, there's a re-evaluation of what life is supposed to feel like, how much money we can expect to earn how we should be spending.

The problem with it, Richard, as you know, is that in the West, these economies are dictated by consumer spending.

What if we're just not going to achieve that degree of spending because people can't get the credit or they are just changing their values?

What will replace the consumer spending that has driven prosperity in the West for decades?

QUEST: Ali Velshi in Madison, Wisconsin.

We thank you for that, a place I've been to and an extremely lovely place, indeed.

Ali Velshi joining us on the CNN Election Express.

What we were just talking about there, of course, is changing your ideas, changing your direction, changing your ambitions. Think about it -- you're a decade into your career and suddenly you're out of a job. Your choices -- do you stick to your chosen path or do you look for alternatives (INAUDIBLE)?

The thirtysomethings from London. We've got Ruth Moore, who was made redundant, how long ago, Ruth?


QUEST: So a couple of years ago, you were made redundant, production director.

And we have Fran Hales. You were made redundant when?

FRAN HALES, JOB SEEKER: Two weeks ago.

QUEST: Right. So we have a long-term redundancy and a short-term redundancy.

Let's start with you, because what have you been doing during the worst point of the recession?

MOORE: Well, I've been finding that I've been needing to take on contract work. So I've been having a (INAUDIBLE) position (INAUDIBLE) the breach with fixed term contracts. And, of course, there's some (INAUDIBLE) between finding those contracts.

QUEST: Right. But -- but to some extent, you may have been benefited because companies who don't want to take on full time employees will supplement with people like yourselves.

MOORE: Hmmm.

QUEST: Or has that not bee -- or am I just being rosy and optimistic?

MOORE: I'm waiting to see the (INAUDIBLE) company and the (INAUDIBLE) is more a case of there's less movement in the marketplace.

QUEST: Fran, had you hoped your -- you're in a media company -- had you hoped that having gone through 2008 and the winter of '09, that you might have escaped?

HALES: I -- yes, I thought I was going to be fine, because I was extremely busy up until the time that I finished my work. And I -- I didn't have any clue that anything was going to happen with my position.

QUEST: Really?

So what -- so when they came to you and said, look, jobs are going and, by the way, yours is one of them, (INAUDIBLE) pink slip?

HALES: Yes, it was a shock, initially, I think a huge shock, because I'd been there for eight years, which is a long time.

QUEST: Right.

HALES: But when it kind of sank in, I -- I eventually kind of decided it's a good thing as opposed to a bad thing, because it's given me, I don't know, a motivational kick to do something else, to reassess what I want to do.

QUEST: Let's talk about that.

Have you, as you tried to -- because I assume you've tried to find full-time employment.


QUEST: Have you had to reappraise your (INAUDIBLE) work in production events and management?

Have you had to rethink the whole strategy?

MOORE: Well, absolutely. I'm finding that I can't wait for the recovery to start up, for the event industry to be taking up somebody in my position. So I'm working with a career consultant to try and identify any part that I could take in the future.

QUEST: What are you thinking about?

MOORE: Well, it's in the early stages at the moment, but maybe something to do with editorial or project management.

QUEST: Do you fear, Fran, that the jobs you might have wanted to get just either aren't there or will not be there -- you know, because you were in eight years on.


QUEST: So you were looking for promotions, not redundancy.

HALES: Yes, kind of. I -- I think the jobs are out there. The problem is that there's so many people going to get jobs that it's...

QUEST: Really?

HALES:'s a buyer's market. So employers are able to hang onto people a lot more than ever.

QUEST: Are you rethinking your strategy?

Have you finally said, oh, I've got to think this out again?

HALES: Yes, I -- I have been rethinking it, but -- because I've only just been redundant for two weeks. I've actually been enjoying the break (INAUDIBLE)...

QUEST: You're also finding the redundancy...


HALES: Absolutely. So I'm sort of -- I'm enjoying that for now. But I'm thinking a lot about what I want to do. And I'm seeing -- I'm looking at, you know, roles that I -- obviously, what I have already been doing. But I'm also thinking that I might -- I may have to take -- may have to change them slightly.

QUEST: Ladies, how can you turn this pretty horrendous recession -- and it's the worst that you've ever seen in your lives and the results.

How can you turn it to your advantage, do you think?

Pretty difficult.

MOORE: Well, I think it's about taking the time to reassess what you've been doing, what you want to be doing in the near future or beyond the near future and a chance to change course and (INAUDIBLE) things up.

HALES: Yes. I -- I agree with that. So I think in your (INAUDIBLE), you've got more of an idea of where you want. And I think that you've got a little bit of experience behind you. You probably have a bit more confidence to be able to actually try and do something different, which...


HALES: you can play that to your advantage. But you -- you need to have, I don't know, guts, I suppose.

QUEST: Guts. Let me say this. Your early 30s are the best years. I know some viewers will disagree. But in the early 30s, you've got experience, you've got wisdom, you've got a bit of money and you know what you want to do with it, provided it all goes well (INAUDIBLE).

Thank you very much for being with us.

MOORE: Thank you.

QUEST: Thank you for joining us.

Now, if you want to join us and follow on what happens and how we make this program, then, of course, there is our Facebook page. Forget all those other programs that claim they take you behind the scenes with the back story. We are the ones who've got the real back story on QUEST MEANS BUSINESS. Just search QUEST MEANS BUSINESS online, on Facebook and look at that there. That's how we actually make this program and we'll really take you behind the scenes.

QUEST MEANS BUSINESS is that story -- is our Facebook page.

Now, the weather forecast. I don't know who you paid off, Guillermo. I hope it wasn't an enormous amount of money. But by jingo, whatever you did -- look at it. It's -- and it's a brilliant night. I think, actually, I don't know whether you would know this, Guillermo, and as our other camera moves over, you -- I think you might be able to see, it's also of, I think, a full moon.


QUEST: Maybe just a fraction of a full moon tonight. There it is.

ARDUINO: And it's getting better.

QUEST: So take it away.

ARDUINO: It is getting better, Richard.

I think that tonight is going to be nice. I am reading here the observations from London City Airport. So we had showers in the vicinity of the airport at 4:00 p.m. And the pressure -- the atmospheric pressure started to go up, which is bringing nice conditions.

We're dealing with remnants of Tropical Storm Danny, that was in Newfoundland, in Canada. So we are still dealing with some unstable weather. But London, I think, is going to get better and better. But it will be cool. That's the difference. You notice now 17 degrees. And how it turned dark so quickly. I was watching you throughout the show and it's amazing how it turned dark so quickly. So that was beautiful.

You are going to get better. Sunday night, we may see some more rain showers. This is all for the rest of Europe, except for the south, where we are likely to see still warm conditions if you're in Spain, if you're in Italy.

Look at Scotland right now, with that side of the storm that is bringing bad weather. But here it's improving significantly. Needless to say, the winds are coming into London from the west.

So, Friday, the rest of tomorrow, Saturday, Sunday looking OK. Sunday night then some clouds and then rain showers in London.

Well, let's see what's going on, also, in other parts of Europe. The bad weather is in the north. As I said, the south is going to be OK. We have a low pressure center here, north of the Black Sea and we're going to see some rain showers. England is dry. But then Northern Germany, the Zut Island (ph) into Denmark, with some more intense precipitation.

Temperatures that we can expect, look at Spain, 33 for tomorrow; London, 19; the high; 20 in Paris; 32 in Rome. It's the same thing. I'm talking all over the same thing -- the south is going to be warm, the north is going to be cooler.

Winds -- they come along with a bad storm, with remnants of Danny. We will see winds into Heathrow and we will see winds in Paris and Copenhagen; perhaps in Copenhagen the worst weather, as I said.

Elsewhere, especially in the south, looking OK.

Throughout the night, I'll give you an update on Jimena, on Erika and what's going on in the Pacific. So stay tuned.

We'll see you after the break.


QUEST: British music fans could soon get to see their favorite videos again. It's all on YouTube. A row -- a nasty row that kept them offline for months has been resolved.

As our own Adrian Finighan reports, the Web site YouTube has reached an agreement with the British group that collects fees from musicians, composers and publishers.


ADRIAN FINIGHAN, CNN CORRESPONDENT (voice-over): The breakdown of a business relationship is never pleasant, but when Google-owned YouTube fell out with U.K. copyright body PRS for Music, it was British consumers that suffered.

Six months ago, YouTube refused to sign a new royalty contract to show music videos online, saying PRS was demanding too much. PRS for Music argued that artists and composers were being shortchanged due to YouTube's growing popularity.

Here's what they were saying back in March.


PATRICK WALKER, YOUTUBE: We have to pay every time the video is watched. We need to make sure that that's commensurate with what we can earn through advertising. We want to drive as many users as we can to watch these videos so we can earn more money that can then be shared. It's about sharing in the income going forward, not about charging rates that are well above what a service like ours or any other could possibly earn.


ANDREW SHAW, PRS FOR MUSIC: When we look at the amount of music that YouTube is using and the success of that service has led to an almost 300 percent increase in the number of music videos being streamed over 2008 alone. And, therefore, that, inevitably, has led to an increase in the number of amount of royalties that they're being asked to pay.

FINIGHAN: And almost overnight, U.K. YouTube users found that premium music content had vanished from the site. Now, though, harmony is restored. A new deal has been struck, back dated to the beginning of the year.

So, who blinked first?

SHAW: I don't think it was a question of who blinked first. We needed to find a deal that fairly represented the value that the 60,000 some writers and composers we represent bring to YouTube. And we also needed to find a mechanism that worked for YouTube and restored videos to users in the U.K.

FINIGHAN (on camera): Neither side will say how much it's worth, but YouTube says now the deal is sealed, that thousands of premium music videos, which had disappeared, will return to the site over the next few days. And that will be music to the ears of many British music fans.

Adrian Finighan, CNN, on YouTube.


QUEST: And finally, tonight's Profitable Moment, with a spectacular view of London behind me.

The scene is now being set for a battle royal over bonuses. The governments of Germany, the U.K. and France have said that their citizens are outraged at the business as usual attitude of banks.

The mayor of London tonight on this program expressed similar alarm at the speed at which the old behaviors had returned.

It is now starting to become clear that the financial world regarded taxpayer bailout cash as their absolute right. In "The Economist," I remember reading clearly that the reason we bailed out banks was not because we wanted to, it was because we needed to.

As the leaders prepare for Pittsburgh, the clarion call for rules to prevent unwarranted, guaranteed bonuses is going to get louder and louder. And, frankly, if the banks end up with heavier regulation, they have no one to blame but themselves.

Hala Gorani is next at the International Desk.

But that's QUEST MEANS BUSINESS for tonight.

I'm Richard Quest.

Whatever you're up to in the hours ahead, I hope it's profitable.

I'll see you tomorrow.