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2016 Olympics Go to Rio; U.S. Unemployment Edges Up in September; IMF MD Warns Against Pulling Back Stimulus

Aired October 2, 2009 - 14:00:00   ET


RICHARD QUEST, CNN INTERNATIONAL ANCHOR: Sambaing their way to gold. It's a carnival in Rio. The Olympics going to South America for the first time. Now the race has been run, it's time to find the money.

And no end in sight in the U.S. jobs crisis, another quarter of a million layoffs in September.

It may be the end of the week, Friday, but I'm still Richard Quest, and yes, I mean business.

Good evening. Two years of decision-making, three hours of voting, and Rio de Janeiro snatches the Olympic crown. The Brazilian city beat Madrid, Tokyo, and the hot favorite, Chicago, to host the 2016 summer games.

Brazil's president, Lula, said his country was the only one of the world's 10 largest economies, never to have actually held the Olympics on its soil. Now that is changing. And for those parting on beaches like that, the Copacabana Beach in Rio, the moment was one to remember.

We make no apology for showing it to you again.


JACQUES ROGGE, PRESIDENT, INTERNATIONAL OLYMPIC COMMITTEE: I have the honor to announce that the games of the 31st Olympiad are awarded to the city of Rio de Janeiro.



QUEST: It's not often you see a president of a country enmeshed in a bear hug like that. That was, of course, President Lula of Brazil. Later -- those were the scenes in Copenhagen. And later in the press conference that has happened within the last 20 minutes, there you are, President Lula on the right.

I think the diplomatic phrase that people use on circumstances like that is "overcome with emotion." President Lula da Silva of Brazil.

In Brazil, word of the win spread like wildfire. Rio erupted into a sea of green and yellow. The president undoubtedly feeling like an Olympic champ already. It had been President Lula who had made an impassioned plea for the games.

Barack Obama's pitch in favor of Chicago was clearly unsuccessful. Now many people thought the U.S. president and the first lady would bring the games to the United States. President Obama is quoted on the wires at the moment as -- on his flight on Air Force One back to the U.S. as saying, he makes no apology and has no regrets for making the four-hour trip to Copenhagen to try and campaign for Chicago.

Chicago's first-round elimination has come as a complete shock. Thousands stunned into silence as the announcement was made. This is all about winners. There can only be one.


So we go to Rio. Shasta Darlington is among the crowds at Copacabana Beach. I'm going to speak slowly and loudly, Shasta, the mood must be quite exceptional.


And it may even be more difficult to hear me ahead (INAUDIBLE) because they keep it down (ph) at this point. But it's an absolutely amazing mood. The crowd exploded here when they announced the (INAUDIBLE) live on these screens behind me. And there is no sign that the party is going to stop any time soon.

(INAUDIBLE) 100,000 people here on the beach, in part, because Rio had already declared the day a public holiday, so with the good news, more and more people are pouring in and this music should go into the night.

And that was really one of the points that President Lula was playing up as well, that people have been passionate about this in Rio, and Brazil in general. These are very passionate people, they supported the bid, which was not Rio's first attempt, but they thought they really had the winning hand this time.

And they wanted to do it, not only for Rio, but for Brazil and for all of South America, which never, in the history of the games (INAUDIBLE) no South American city has hosted the games. So this is really a feat for Brazil and for South America is what the people here are claiming and their time has finally come -- Richard.

QUEST: Shasta, I'm going to try one question, and again, slowly and quietly -- well, loudly so you can hear. Shasta, was there any opposition locally to the games going to Rio, or was it pretty much always everyone supporting?

DARLINGTON: This is going to be hard to hear me, I know, but, yes, of course there was opposition. But (INAUDIBLE) they have a lot of (INAUDIBLE). And people here in Rio are worried that all of this money that is being spent on (INAUDIBLE) not just the games, is not going to (INAUDIBLE).

QUEST: All right. Going to leave you.


QUEST: We can't really hear too closely what you're saying. But you know something, I'm not sure -- I mean, with all due respect to my colleague Shasta, I'm not sure it matters too much. We get the impression, the mood, the feeling of what is taking place in Rio.

Anyone who has been to Copacabana Beach knows what a stunningly beautiful place it is. A bit of -- well, a lot of crime, a lot of other things going on there, but Pedro Pinto is in Copenhagen, and Pedro is with me now.

Pedro, there is a lot that you and I need to talk about. So let's talk -- let me fire the questions and let's race through this. Firstly, was Chicago eliminated by a bit of skullduggery on the voting through Asia?

PEDRO PINTO, CNN INTERNATIONAL SPORTS ANCHOR: I don't think so. I just heard an interesting sound bite from one of the members of the Chicago delegate, though, Richard. And he said that he admitted that the relationship between IOC members and members of the United States Olympic Committee hasn't been the best.

So he admitted that that might have something to do with it, but I think this was a case of Rio de Janeiro was going to win all along. The presence of President Barack Obama and his wife Michelle didn't sway any votes. And they emerged victorious at the end.

QUEST: Second question, can Rio do it? I know they've got other sporting events before then. They host the Copacabana -- the Carnaval every year, which has over a million people, but can they do the Olympics or will they be left with a terrible debt?

PINTO: Well, you know, Rio doesn't need a reason to start the party. And they can do that all right. But this is much more than a party, as you say, Richard. This can create a huge debt.

And there was one number that jumped out at me when I was looking at their bid, and that's $14 billion. That's the budget they say they need to make these games happen in Rio, because the football World Cup is one thing. They've got the football stadiums there. They've had them for years.

The Maracana Stadium is one of the most beautiful and most renowned in the world. But we're having a look at swimming pools, gymnasiums, equestrian locations. So there is a lot more than just the football stadiums which they know how to do and know how to do well. And they need to renovate them for the FIFA World Cup in 2014.

But this is a different proposition, and it's a different investment. With a World Cup and an Olympic bid to deal with, that's a lot of money. There can be some cost overruns there, no doubt about it -- Richard.

QUEST: You see, viewers will say that you and I are already being mealy-mouthed and they've hardly just won the right to host the games. But if you look at the London games, that bid started at 3 billion pounds. It rapidly, within three months, went to 9 billion pounds.

Now that's already -- 9 billion pounds is already about $14 billion, $15 billion, $16 billion. Rio ain't getting out with these games under $18 billion to $20 billion, and you heard it here first.

PINTO: That's exactly what I was going to say. Normally from the research I was doing as well, it's between 25, even 50 percent of a cost overrun when it comes to putting the Olympics together. And that is what Rio really have to face and they need to do it fast.

It's not going to be cheap, it's not going to be easy. And the glamour that they'll bring to the games, there is no doubt about that, and they can celebrate it now, the tears of joy from the president, Lula, and also from the football king of Brazil, and the world, really, Pele, they can enjoy this moment.

But reality will hit them pretty quickly. And they've also moved to squash the rumors that crime will be a problem there. They also have a lot of work to do on that front. And you mentioned that on Copacabana, but around the city. So a lot of work -- Richard.

QUEST: Finally, are you looking forward to going there? Because let's face it, the prospect of a trip to Rio -- I mean, I'd be honest, in the news room you could see people mentally politicking how quickly can they start to make a bid to go to Rio for the games.

PINTO: Well, I've got a good argument, Richard. I speak Portuguese. It may be with be with a Portuguese accent, not a Brazilian one, but I think I'm moving up on that list very quickly as we speak. And if it had been Madrid, I can work with my Spanish as well. So I'm just happy that either way, I would have come out pretty high on that list.

QUEST: All right. It's not often I offer to do this, but Pedro, I'll carry your bags on the way. Pedro Pinto, in Copenhagen.

Copenhagen, of course, you see there, and of course, Copenhagen will be back very much in the news before year's end when the environment -- the climate summit takes place, the U.N. Climate Summit. You're up-to-date with what is happening on that part.

Business and sport, we also have news, QUEST MEANS BUSINESS, Fionnuala is at the news desk.


Now the Philippines is bracing for Typhoon Parma, expected to make landfall on Saturday. Mandatory evacuations have been ordered for coastal areas. Many parts of the Philippines are still underwater from Ketsana, which dumped record amounts of rain last weekend. High winds, heavy rain forecast.

Amid so much death, a sign of life in Indonesia. A 19-year-old student was pulled alive from the rubble of her college in Padang. She had been trapped for 40 hours and her rescue reinvigorated searches. But as each hour passes, hope dims of finding anyone else alive. U.N. humanitarian chief John Holmes says as many as 1,100 people were killed during Wednesday's 7.6 magnitude quake.

The rescue operation in the Samoa Islands is evolving into recovery mode. There is little hope for more survivors of the tsunamis that claimed 168 lives. A mass funeral and burial is planned for next Tuesday, meanwhile, stunned residents are still cleaning up and thousands of people are homeless.

An unprecedented video-for-prisoner swap took place today. A so- called "proof of life" video shows a healthy-looking but captive Gilad Shalit. Palestinian militants captured the Israeli soldier three years ago. Shalit is shown reading a newspaper dated September 14th. Hamas sent Israel the video and in exchange Israel released 19 female Palestinian prisoners. Germany and Egypt brokered the arrangement.

And those are the headlines. Be sure to join me for more on the day's biggest stories on "WORLD ONE" at 8:30 p.m. London time. In the meantime, back to you, Richard, in the studio.

QUEST: Thank you very much. Do you speak Portuguese, Fionnuala?

SWEENEY: I'm going to learn pretty fast.

QUEST: Yes, back of the queue.


QUEST: Fionnuala Sweeney at the news desk.

Now we would like to give you a clarification on a story we told you about earlier. We said that there had been reports that the European Union had charged American Airlines, British Airways, and Iberia with abusing competition laws.

Well, to be clear, the European authorities are not filing any charges or accusing the airlines of any wrongdoing. The E.U. authorities were merely writing to the three airlines, expressing official concerns over their proposal to receive anti-trust immunity for their oneworld alliance.

We apologize for any confusion that this may have caused.

I'll be back with more QUEST MEANS BUSINESS.


QUEST: We're back.

Now the International Monetary Fund can seize its chance in the days ahead to establish its greater role in the new global economic order following on, of course, from the G-20 in Pittsburgh.

The IMF is having its annual meeting which every second year, I think it is, is outside of Washington. This time the meeting is being held in Istanbul. The IMF's agenda is to say full to bursting is no exaggeration.

So the meeting takes place the 4th to the 7th of October. Challenges, of course, will be how to play the role that the G-20 has given the fund in its widened and expanding era for -- of course, for example, the rebalancing of the global economy, the coordination of exit strategies on stimuli, all those sort of things will be talked about, as well as quotas and the governance of the fund itself.

A levy on the banks to -- ideally to limit risks of the so-called "Tobin tax," all sorts of things are on the agenda. They are designed to do one thing, limit the banks' ability to take further capital risks. In other words, not to have so many explosives sitting in the basement that could bring the house down at any given moment. The IMF will be coordinating that with the new FSB.

This was interesting. We told you about last night. Well worth reporting this. The IMF is forecasting growth of -- global growth of 3.1 percent. It's crucial to understand that's global growth. By that, of course, you've got to extrapolate developing economies, emerging markets and the like, from, say, for example, the developed world.

The IMF is warning that growth would still be slow, and of course it's still too early to remove stimulus spending.

When I was joined by the managing director, Dominique Strauss-Kahn, it was very important to point out with him this different of recovery between emerging, developed, and the challenges.


DOMINIQUE STRAUSS-KAHN, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: Emerging countries have a big weight, and that the recovery started in the emerging countries. But we also have improvements in advanced economies, including the U.S.

So I think that really the global economy is turning a corner and that our main scenario, you have some pay (ph) risk, of course, but our main scenario is that the growth will come back in the coming months.

The problem is that even with growth coming back, we still will contemplate rising unemployment, because there is a big lag between resuming growth on one hand, and a peak in unemployment on the other hand.

So that's why I'm not so optimistic. It's good news that growth is coming back, but we still have to work to avoid unemployment to rise too long.

QUEST: The issue, as growth comes back, is when is the right time to take away the stimulus that has been added. Now there is -- pretty much unanimity that now is not the time. But for countries, those -- they are between the devil and the deep blue sea, because the IMF says don't take away stimulus, but it won't be long before you're warning about high deficits. What do you want them to do?

STRAUSS-KAHN: You're absolutely right. And that's the difficulty of our times. We had a house on fire, so we need to get rid of the fire, that was the stimulus. But getting rid of the fire, you have a lot of water.

Now there will come the time where it will be needed to mop up, and that will be the time where we will say you need to tighten your fiscal policy.

One important point is that it will not take place at the same time in different countries. Some will have to do it earlier, some later. What is the right time? Certainly not now. It's too early.

When will we be sure that recovery is secure? When will we be sure that we see unemployment ready to decrease? Then it will be time to unwind what has been built.

QUEST: But you are going to get many more shoes thrown at you when you are the organization saying to countries, cut your deficits, now is the time to cut your deficits, and that inevitably is going to generate further social hardships in many countries.

It's "Economics 102," if you like.

STRAUSS-KAHN: That's right. That's absolutely right. And that's why we shouldn't start before we're sure that growth is back. But even in this case, you're right in saying that unwinding the fiscal stimulus will be somewhat difficult.

And the advice we're giving, we are focusing a lot on helping the most vulnerable, and advising the government to secure some part of the resources to help the poorest part of the population, which is traditionally the one which is the most hit and harmed by some kind of a decrease in public spending.

QUEST: I want you -- the IMF has now been charged with a vast new area of business. You're going to be coordinating, whether officially or otherwise, the withdrawal of stimulus. But you now stand to have a much greater role in the rebalancing of the global economy.

Mr. Managing Director, you've been given a poisoned chalice here. You can't succeed. The global economy cannot be rebalanced easily or quickly.

STRAUSS-KAHN: No, it cannot be done easily or quickly, you're right. But the growth model that the global economy will have after the crisis is very different from the growth model we had before. The growth model we had before was basically a model in which the United States were pushing growth with huge deficits while other countries, including China, were financing these deficits.

What happened during the crisis and with the different stimulus, which has been put in place, is that the U.S. households are saving more than in the past, consuming less, with less deficits. And at the same time, that we need to have another part of the world consuming more, probably, in the emerging countries.

QUEST: It won't last. We saw consumer numbers rising in the U.S. already yesterday. You're -- I don't want to be pessimistic here, but you're destined to fail on this one.

STRAUSS-KAHN: Well, maybe. You know, the IMF has no other tool than the quality of its advice and of its analysis. We're trying to help our membership in telling what we believe is true. Truth-telling is the only way we can work.

And so it will be difficult, you're right, in rebalancing the global economy. But it's absolutely needed. And what I felt during the G-20 in Pittsburgh, which is for me the biggest, most important, interesting thing is this will by all of the global leaders, including from Mr. Obama to Hu Jintao, just to talk about the U.S. and China, to try to go on working together trying to find solution to global imbalances, which is very new.

I don't know how long it will last. There is a risk that people are working toward together where they are scared by the global economy, but when recovery is there, that they just forget and go back to their domestic problem. This may happen.

But it also may happen that throw in some lesson from the crisis, the global leaders decided to work more together than in the past. And that will be big news. And in this case, you may be next time we meet more optimistic.


QUEST: That was the managing director, Dominique -- of the IMF, Dominique Strauss-Kahn, talking to me at the -- from Istanbul, the IMF meetings get under way in this weekend.

We have seen him basically in tears at the way his country has now won the Olympic Games in 2016. And now he has just received the dish upon which the decision envelope was carried to the podium. President Lula of Brazil received it from Jacques Rogge, the president of the IOC.

And we'll be back, QUEST MEANS BUSINESS.


QUEST: For the 21st month in a row, the United States has been losing jobs instead of creating them. Excluding the farming sector, payrolls fell by 263,000 last month. Now that's an extraordinarily large number, especially when analysts thought it would actually be under 200,000.

So for the U.S. unemployment, the rate inches closer to 10 percent, it has ticked up. This is not -- the severity of the rise is not in surprise, from 6.6 really at the beginning of the crisis, now we're at 9.8 percent and it's still going to go higher. It's a 26-year high, 9.8 percent.

September job losses were horrible, but they were nowhere as bad as January, when three-quarter of a million jobs were lost. But look at this particular trend. From here, very, very severe, it has got less, less, then you get these little blips. But the trend is now not necessarily -- is it a blip, basically, that it's now down 263,000?

Is it a blip? It's a question. Joining us from New York to give his take on the picture is Tig Gilliam, the chief executive of Adecco Group. Adecco is the world's largest staffing company.

And analysts had looked for a number under 200K, they got a number of 263. A blip, a trend, or what?

TIG GILLIAM, CEO, ADECCO NORTH AMERICA: Well, Richard, 263 is a surprise in terms of the losses. But I think you also have to look at the -- beneath the numbers. We had 210,000 losses among private employers, and 53,000 losses among the government.

So when you compare the private sector employment change from last month to September, it really isn't much of a change at all, fairly flat. So it's a bit of a surprise on the downside, but we're moving in the right direction. And I think we'll see a narrowing number of losses over the coming months.

QUEST: There is a serious risk in weeks and months ahead that as governments cut back to beat budget deficits, then that public sector job loss number gets larger at a time when private sector is not creating jobs.

That, to me, seems to be the biggest downside risk in the future.

GILLIAM: I think that certainly is a risk. But we did even see in September that we gained jobs in health care, 19,000, we gained jobs in engineering and in IT. Small numbers. But we're going to need to see small and medium business and professional skills fuel this jobs recovery.

QUEST: So let's put aside to one moment the actual totality of job losses, because employment numbers also look at things like, for instance, part-time working, in some cases, number of hours in the day, hourly rate, cap utilization.

When we look at the totality of employment data, are we seeing any improvement?

GILLIAM: Well, Richard, these are all signs that it's going to be a slow recovery. So I think we need to prepare ourselves, as you said, we're going to have losses over the coming months. The unemployment number is going to rise. We need to see the average work week increase, and that still declined again in September. We're down from 33.7 hours a year ago to 33.0 now.

We also have 9.2 million Americans who are working part time and would prefer to work full time. So even in the employed capacity today, there is room for increased utilization. So we'll see those numbers improve before we really see significant job additions to the labor market.

QUEST: All right. Tig, many thanks, indeed. Tig Gilliam, joining me from New York. Thank you very much. Please come back again. Help us understand these numbers and these.

GILLIAM: Good to see you.


QUEST: . in the future. We thank you for that.

When we come back, it's one thing to win the right to host the games, it's another thing when somebody gives you the (INAUDIBLE). Brazil starts getting ready, find out how the earlier host cities managed financially.



I'm Richard Quest and this is CNN.

Now, the Olympics -- you'd have to be on another planet if you don't know that Rio was earlier awarded the 2016 Olympic Games.

Earlier, I was talking to Pedro Pinto about which would get the -- who of us who get the chance to attend the Rio Olympics. No doubt, we're not the only ones thinking about spending time in Brazil.

The question is what is the effect of the Summer Games to countries that have held them before?

OK, this is where I put my miserable Grinch hat on and I have a reality check. Forget all that parking and all that samboing on Copa Copa and on a beach. There'll be plenty of time for that. But somebody's got to pay the bill. And this, I'm afraid, is an example of the sort of misery that has been left behind, both good, bad and indifferent.

Take, for example, Montreal. This is probably the example. Montreal is the example of a country -- or a city -- the Montreal Games, '76. There was a boycott. The Games went into debt. It took Montreal the best part of 30 years to pay off their Olympic Games.

Now, in Seoul, 1988, a different story. Seoul saw its economic performance grow by 12 percent. The significance of the Seoul Games was that it was the first opportunity, really, in a way that -- that things had improved. It was the first time there had been Olympics in Asia, where things were looking considerably better. So everybody jumped on the bandwagon and Seoul got up by 12 -- I think people were just simply glad that all the misery of Montreal and then Moscow and so on.

But if you want to talk about Games where things really got a rocket and things got going, you've got to look at Barcelona. In 1992, 300,000 new jobs were created. This, in many ways -- Los Angeles '88 proved there's -- '84. Los Angeles '84 proved you could make money at the Games and you could run them and not go bankrupt after Montreal.

But Barcelona was the one that really gave that oomph that people thought, hang on, it's quite nice to the Olympic Games. And that, of course, went ahead all the way through to Sydney in 2000.

If all goes right, they can be memorable. They'll take place in spectacular settings. There are landmark, massive (INAUDIBLE) and the outstretched arms, of course, of the Christ statute. But that's if it goes right. Much preparation and building to do and money to be spent.

To look ahead, I'm going by Ed Hula, editor Around the Rings Web site.

Ed, first of all, let's check the communications.

You can hear me?

ED HULA, EDITOR, AROUND THE RINGS: I can hear you very well, Richard, even from all the way over here in Denmark.

QUEST: You probably will -- if I can hear my colleagues, they're probably without use of the telephone or communications (INAUDIBLE). Listen, Ed (INAUDIBLE).

HULA: I wouldn't say that, Richard.

QUEST: They would.

Let's be blunt. Montreal, disaster; Los Angeles proves it can be done; and since then, Olympic Games have always held a political purpose, whether it's for Barcelona or for Sydney or elsewhere.

HULA: Well, I think and Rio de Janeiro is a perfect candidate for the stimulus that the Olympics can provide. And let's not forget, the World Cup is coming in 2014, as well, to Rio -- to Brazil. And Rio de Janeiro will host the finals.

Yes, I've been going to Rio de Janeiro for more than 10 years. Every time I go, it seems the place just seems to slip a little bit more. It's not a place that has a lot of progress. And I think the Olympic Games and I think the World Cup will be the sort of thing that -- that Brazil needs - - that Rio de Janeiro needs to improve its infrastructure, because its aging badly, frankly.

QUEST: Is it one of those situations where everyone says Brazil will get there, and yes, they'll get there in time for the Games, but the legacy will simply not be there?

HULA: No. I think there is a very important -- an important legacy that could come out of this. It's not guaranteed...

QUEST: No, but that's (INAUDIBLE)...

HULA: ...they've got to spend their money wisely.

QUEST: Let me jump in there. You just made the point, though, it could. I'm asking you if it will.

HULA: Well, I think we just heard from President Lula just a few minutes ago, holding a press conference here. And this man is dead certain that these Olympics are going to bring about a change in Brazil that hasn't happened yet and it's going to provide the sort of ina -- infrastructure that's needed to make Brazil, to make Rio de Janeiro a truly modern place.

And it needs a new airport. It needs new hotels. It needs new roads. I don't see any other inspiration coming Brazil's way or Rio de Janeiro's way besides the World Cup or the Olympic Games.

So I think there's pretty strong government commitment to make sure the promise becomes reality.

QUEST: The U.K. and London have had a reality check in the sense that a 3.2 billion sterling budget within hours or days and weeks became a 9 billion sterling government guarantee. Now, Rio says that they need and they're estimating $15 to $16 billion U.S. For this.

Why do you think the final bill will be?

HULA: I think it will be upwards of $20 million -- $20 billion, rather, $20. And I've heard talk of up to $30 billion that would need to be spent in Brazil and Rio de Janeiro to make everything ready for the 2016 Olympics.

So you're right, the -- the bill is not accurately or perhaps totaled to reflect the current conditions, to reflect what they really are going to try to do over the next seven years in Rio de Janeiro.

QUEST: I can hear some wag of a viewer saying, hey, that's just the bailing out of one Wall Street bank.

Let's talk, finally, how important is it, do you think, that when they chose the place to go, they wanted to use a place that has a happy feeling?

I remember Sydney. People thought, yes, Sydney, Australia. The same thing with Rio. People were just willing Rio because it's exotic. It's Copa Cabana. It's (INAUDIBLE). You name it.

HULA: That was -- that was the tenor. That was the tone that they projected during their final presentation today -- a happy Rio. We heard the samba music. We saw Copa -- the Copa Cabana. We saw people dancing and having a great time. And -- and people in Rio de Janeiro feel that this is the spirit that they want to share with the rest of the world.

And I think IOC members want to get in on that, as well, and, as well, make an historic statement here by bringing the Games, for the first time, to this part of the world.

QUEST: Ed, you may -- thank you for joining us.

Thank you for making sense of all of this. And we -- you and I will talk many times more, I assure you, between now and the London Games.

Many thanks, Ed Hula, for joining me from Denmark.

HULA: I look forward to it.

QUEST: We thank you.

All right. We'll be back with more in just a moment.


Back in a minute.


QUEST: Now, we'll turn our attention to serious matters and storms in Southeast Asia, as if there hasn't been enough misery from matters meteorological, whether it was earthquakes or storms.

Guillermo is the at World Weather Center to bring you up to date -- start there, please.

GUILLERMO ARDUINO, CNN METEOROLOGIST: The problem is in the Philippines that it is already flooded with a previous system. Ketsana, we've been reporting on. And now we get Parma or Pretem (ph), as they call it in the Philippines. And we are hours from landfall.

Of course, the observations right now are not that dramatic right at this very moment. But, look, we have another cyclone in the back that is still (INAUDIBLE). Malorius (ph) is the same, pretty much the same strength. So we're talking about a very severe typhoon in both areas.

But we have to focus on what's going on in Luzon. As I said, it's already flooded. And if you pay attention to the pictures that are coming from there, the water has not receded yet from the previous storm. And on top of that, we're going to get a lot of precipitation with this and tropical storm force winds.


Hours from now. So that's concerning the official landfall in northern parts of Luzon. The complication is that we have mountains in the north. So with an already saturated terrain, we're very likely to see landslides in the area.

Manila here to the south is out of the path of the storm, but it is going to get some rain and also intense winds. So far so good, because the cyclone is far enough. But the next hours are crucial.

So, so you can understand, manila is reporting now 50 kilometer per hour winds. Of course, the tropical storm force winds here, 93 kilometers per hour in this area, are about to arrive into the coastal parts of Luzon here, east and north of Luzon. It's a matter of hours and we will see that.

Let's take a look at the other system that we have behind this. I was telling you, there is another significant storm. We don't think it's going to actually make it into the Philippines. It's far enough from there. But it is very close to Guam and Saipan. Again, north of Saipan, so it's going to bring battering waves there, winds, and also floods.

As for Europe, we're going to see OK conditions. Some clouds throughout the weekend in London. Monday, some things appear to approve -- to improve a little bit. But still, we're not dealing with warmth. It's actually cool and it's cooling down dramatically.

But the severest of the storms are going to be in the southern parts of Italy. We already have landslides there because of the intense rain over such (INAUDIBLE) to rain again. So watch out, because in the next show, "WORLD ONE," roughly one hour from now, I'll be showing you pictures of that and the problems that we're dealing with in Italy -- Richard.

QUEST: Guillermo, many thanks.

You've got a busy weekend ahead of you and your colleges.


I'm Richard Quest in London.

I do wish I knew the Portuguese, but whatever you're up to in the hours ahead, I do hope it's profitable.


I'll see you next week.