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QUEST MEANS BUSINESS
CNN Exclusive: Greek PM Says He Will Not Default On Debts, Will Reform Tax Codes, Slash Deficits
Aired December 3, 2009 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ADRIAN FINIGHAN, CNN INT`L. ANCHOR, QUEST MEANS BUSINESS: We won`t default. The prime minister of Greece tells CNN in an exclusive interview, they don`t need an EU bailout.
Getting America back to work, U.S. President Barack Obama turns his attention to the U.S. economy.
And bank bonus battle. The U.K. government finds itself caught between a rock and hard place.
Hello, I`m Adrian Finighan, in for Richard Quest. This is QUEST MEANS BUSINESS.
A very good evening to you. Greece is at the center of speculation over its solvency. Some fear it could become the Dubai of the Aegean. Like Dubai, there are fears that the nation could have trouble repaying its debts.
Well, the Greek budget deficit is expected to swell to some 12.7 percent this year. That is way above European Union guidelines of 3 percent. The government newly elected in October needs to implement major structural reforms and reduce public spending. Now, in January Greece will put forward a plan to shrink the budget gap to 9.1 percent next year. Policymakers plan to achieve this by widening the tax base and making spending cuts.
According to Reuters.com, Euro Zone ministers will then set a deadline for Greece to bring the deficit below the EU ceiling of 3 percent of GDP.
Now, it has been a pretty rocky year for investors in Greece. Come over here. I want to show you something. Here is how the benchmark Greek index has been performing over the past 12 months. The Athens composite has gained 33 percent since January. Now you can see how stocks rallied in October, following the election of a new government. And then, towards the end of November, there was a sharp fall, when Dubai World announced that it wanted to delay repaying its debts. The index dropped more than 6 percent on the day that Dubai told the world about its problems.
Well, the prime minister of Greece, George Papandreou, has inherited an economy which is facing its worst recession in 16 years. And CNN`s John Defterios, at "MARKETPLACE MIDDLE EAST", spoke to him earlier today. He asked whether it is fair to link Greece with Dubai?
GEORGE PAPANDREOU, PRIME MINISTER OF GREECE: I think not. First of all, there is a jittery situation around the world, because of the economic crisis, now for a whole year. And obviously, when you have something like a Dubai, it does create ripples throughout the world.
But Greece is very different from Dubai. We are a sovereign state, we are a member of the European Union. We are a member the Euro Zone. And certainly, we are determined, as a government, shore in our deficit and our debt. And we have already made the first steps. We are a responsible country.
JOHN DEFTERIOS, CNN INT`L. ANCHOR, "MARKETPLACE MIDDLE EAST": How would you classify the risk then, of Greece defaulting on the debt? That is the big question mark, as you know, right now.
PAPANDREOU: There is zero risk of defaulting. And first of all, because as I said, we are a responsible country, a country with great potential. We are taking all measures and determined to shore up whatever deficit problems we have. That we also have the backing and the recognition of the European Union, high officials. Only recently, beyond the program we have on our budget for next, year and our plan to revamp the Greek economy, to make it an economy which is not wasteful, but also an economy which is vibrant and moving into a new era of green development.
DEFTERIOS: Would you say that the ECB may need to step in? Would you say that an ECB bailout, in fact, may be necessary because of the budget you have been left to clean up?
PAPANDREOU: No, we have a good cooperation with the ECB, as with the European Commission. They have made very important statements recently, saying that there is not possibility of a default of the Greek economy. And they have approved our basic plan, moving forward and not only for 2009, but we have important changes to make concerning the revamping of the tax system. We have wide tax evasion. We also have a lot of waste. I would say clientalism (ph) and corruption. These are some of the basic platforms on which we came into power, by the will of the Greek people, who want change -want these changes. So we are determined and we have the backing of our citizens.
DEFTERIOS: You alluded to your initial budget, some would say that budget is too reliant on tax collection, and not enough on budget cuts?
PAPANDREOU: Well, we are doing both. As I said, there is a huge tax evasion. And so we can broaden the tax base. That, I think, is very important. We will, at the same time, in 2010, be brining in a revamping of the whole tax system, making it more just, more transparent. And as you know, when you have lack of credibility in a tax system that fuels tax evasion.
DEFTERIOS: In fact, you are left with a budget deficit of 12. 7 percent, the highest within the EU by a long shot. You are projecting just over 9 percent by the end of 2010. Is that realistic, considering what you have been left?
PAPANDREOU: Well, if we could do more, we would be able to -we`d like to even get it lower. But that percentage we can get. And we are determined to make any necessary changes, even during the year, to make sure that we have at least that, 3 to 4 points lowering of the budget, of the budget deficit.
DEFTERIOS: You made a move, a bold move, to freeze public wages during this crisis. But the left wing of your party, the populous end of your party, is rejecting that move. How do you modernize the party when you have a budget crisis of this magnitude?
PAPANDREOU: I`ve got the backing of the party. And not only the backing, but that was the mandate which brought me to government, to power. And we have a very substantial majority, both in parliament; also a wide support, I would say beyond our party lines, in public opinion to make these change and to take the necessary measures. Sometimes difficult, but certainly just in making sure the Greek economy is on a viable and productive and competitive path.
DEFTERIOS: As you know they markets in London and Europe, overall, got quite excited when they heard that you may raise $40 billion in bonds from Chinese investors to deal with this budget deficit. Can you confirm the reports now?
PAPANDREOU: What I can confirm, only, is that obviously I think many countries are looking to diversify their debt portfolio. But with whom, and how, is simply speculation.
FINIGHAN: George Papandreou, the prime minister of Greece, speaking to CNN`s John Defterios. John, of course, anchors, "MARKETPLACE MIDDLE EAST."
I know that wasn`t a Middle East story.
FINIGHAN: But it has been a crazy week for you. You got some good stories on this week, what with Dubai. And now securing an interview with the Greek prime minister.
A 12.7 percent budget deficit, this man has got quite a job. Of course, this coming weekend, marks the start of the anniversary of the nasty riots that they had in Greece last year, after the accidental shooting of a 15-year-old protestors.
Is the economic crisis adding now to tensions as we approach that anniversary?
DEFTERIOS: Yes, no doubt about it. In fact, I was on the phone with a number of people in Athens that said that the tensions are there. And I addressed that with the prime minister at the end of the interview. It is a delicate balancing act. Because he has been in office less than two months. He wants that freedom of speech, but one thing he did say is that "we have to have equal rights of protection", quote, unquote, "for all citizens."
There was scathing criticism of the previous government for letting those riots carry on for a better part of three weeks, right into the Christmas holidays, and the damage to businesses. So, he is basically saying we can have the discussion, we can have the protest, but it has to be civil. And leaving the door open to make sure all people are protected in that process. It was really out of control, in a sense, for a better part of 10 days to two weeks.
FINIGHAN: And there we see Mr. Papandreou, sleeves rolled up. This is clearly a man who means business. He inherited a lot of these problems. What is essential, now, for them to do going forward?
DEFTERIOS: I like to draw the comparison to Tony Blair. You know, when he came into office in 1997. He had to modernize the party. And that is a big question mark. It is something I posed to the prime minister during the interview. Can he modernize the left half of the party to along with real spending cuts? And that is what the market wants to see.
Adrian, he needs to raise about $40 to $45 billion in new debt. That is only going to happen when the credibility comes back into the market. So, number one, a credible budget; modernizing the parties, number two; number three is dealing with unemployment. It is not higher than the EU average, that is around 9 percent. But the youth unemployment is around 20 percent. And this is a big problem that he knows he needs to address. And there are trying to, first, rebuild credibility.
I looked at a number at the end of 2008. The European Commission target for the budget deficit at the end of 2008 was 2.5 percent. So, we have gone from the 2.5 percent target to 12.7 percent, because the books were completely inaccurate.
FINIGHAN: And none of that, of course, I mean, all of the things that he has to do, are likely to cause a fair bit of pain to ordinary voters. The very people who brought him to power.
DEFTERIOS: Yes, but as he said during the interview, he came in with a mandate to shore things up. There is a lot of discussion about corruption there, during the interview, and tax evasion. Some believe he is relying too much on tax collection. So he has to get the spending cuts in.
He does need to modernize the party. And if he can deliver that, then the fundraising and no need for ECB intervention, which is the key here. If he can pull it off in the next two to three months.
FINIGHAN: All right, John. Many thanks. The John Defterios, host of "MARKETPLACE MIDDLE EAST." You can see John on that very show. Tomorrow, here on CNN at 19:45, right after "QUEST MEANS BUSINESS."
Now European stock markets ended the trading day on a pretty mixed note. Investors here cautious following some new U.S. jobs data. We`ll have more on that later in this hour.
In the meanwhile, let`s look at the closing numbers. Here in London, the FTSE 100 fell by a .27 percent, with mining stocks among the worst performers here. Over in Paris, the CAC Currant managed to stay in positive ground, but only just. And in Frankfurt, the Xetra DAX slipped by 0.20 of 1 percent. Dragged lower by Siemens, in particular. The German engineering giant reporting $1.5 billion in losses for the fourth quarter.
And the European central bank has left interest rates unchanged today. Policy makers voting to hold rates at a record low of 1 percent, just as analysts had expected.
Now let`s get you up to date with what else is making news around the world. Fionnuala Sweeney joins us live from the London newsroom.
FIONNUALA SWEENEY, CNN INT`L. NEWS ANCHOR: Adrian, international condemnation is growing over a suicide blast in Somalia. The male bomber disguised as a woman attacked a graduation ceremony for medical students in Mogadishu.
The African Union says 19 people were killed. Among the victims, government ministers, students, doctors and journalists. Dozens more are wounded.
Somalia`s president says the Islamist group, Al Shabaab was behind the attack.
An explosion in Damascus has killed at least three people at a petrol station. The blast tore through an empty bus that had been carrying Iranian pilgrims. The Syrian government says the blast was caused by an exploding tire, not a bomb. That counters initial reports from eyewitnesses near the scene.
Russian Prime Minister Vladimir Putin says he is not ready to retire. He is even considering a run for the presidency in 2012. Mr. Putin fielded questions about his plans for the future during a four-hour long call in show. Many people have long considered the prime minister is the real power behind the President Dmitry Medvedev.
And Stevie Wonder has a new gig as United Nations` Messenger of Peace. The American singer, who was born blind, will raise awareness for the rights of people with disabilities world wide. Wonder said it makes no sense to me that, in this new millennium, we have not made the world accessible to people who can`t hear or see.
And those are the headlines. Tune in for more on these stories on "WORLD ONE" at 8:30 pm, London time. In the meantime back to you, Adrian, in the studio.
FINIGHAN: Fionnuala, many thanks.
Now, unemployment in the U.S. has hit double digits for the first time in decades. President Obama is tackling it head on, right now, with a jobs forum, at the White House. The details, when we return.
FINIGHAN: It is a summit designed to tackle unemployment. Barack Obama is hosting a jobs forum at the White House this Thursday. And let`s face it the numbers are pretty bleak. The jobless rate hit 10.2 percent in October. That is the highest level it has been in almost 30 years. And the latest monthly jobs report, due out on Friday, isn`t expected to be much better.
Now, Mr. Obama is eager to brainstorm with top business leaders and economists for ways of boosting employment. This is not just an economic headache, though, but a political one, too. If he can`t find a solution it is bound to put a damper on next year`s midterm elections. And he needs no reminding that in November last year, when George W. Bush was still president, unemployment stood at 6.8 percent. Well, Dan Lothian is keeping tabs on the summit at the White House. He joins us now, live.
So, Dan, the president has got some of the best business brains in the country in there with him today.
DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: He really does, Adrian. You have executives from Google, from FedEx, union members, mayors, small business leaders. About 130 of these folks here at the White House, meeting with the president, the vice president and his Cabinet members.
And as you pointed out, it really is a brainstorming session. A chance for the president to hear from the people on the front lines, the ones who will be doing the hiring, to find out exactly what it is that they need. And also a chance for the White House, in a sense to field test some of their ideas.
What are some of the things that they are doing? Will they work out in the field? Will they really create jobs? What are they talking about, the economic team here at the White House, they are talking about investing more in infrastructure; building bridges and highways as a means of creating more jobs. Also, tax credits for small businesses, perhaps that will spur hiring as well. Weatherization, you know, fixing up houses, making them more efficient. Will that also spur some hiring, as well? So, these are some of the ideas that the White House will be discussing with all of these officials who are here today.
But as you pointed out, this is obviously controversial. There is a lot at stake here. Because there is criticism coming from Capitol Hill, specifically from Republicans, who think that this is really just another effort by this White House to do more talking, without any real substance to it. In fact, listen to what House Minority Leader John Boehner had to say earlier today.
(BEGIN VIDEO CLIP)
REP. JOHN BOEHNER, (R) HOUSE MINORITY LEADER: The biggest problem that we heard from our economists, with regard to why employers aren`t hiring, it is all the job killing policies that are being offered by this administration and this Congress; and creating an awful lot of uncertainty for American employers.
(END VIDEO CLIP)
LOTHIAN: And this, from the Republican National Committee, the chairman of the National Committee, Michael Steele, who said, "The White House job summit is just another example of President Obama`s PR presidency, where he stages photo ops and events to distract citizens and the media from his administration`s failures; so, some very harsh words coming from Republicans.
The president says that he understands that the critics are out there, but he is not going to just sit by and do nothing. That now is the time for action. And that even just getting all of these leaders together and talking about the problem, coming up with ideas, that is one part of eventually creating more jobs out there.
So, certainly a big test for this White House as it really tries to get a lot of unemployed Americans back to work.
FINIGHAN: Yes, but Dan, is this anything other than a talking show. I mean, what is the president going to do next? How does he follow up on it?
LOTHIAN: Right, no initiatives coming out today`s forum. It really is just a chance for them to brainstorm and talk about some of these ideas. But what the next step is, for the White House , is to take the show on the road. The president heads to Allentown, Pennsylvania tomorrow, where he will be at a community college, a chance to talk with locals there. And again, it is to hear their concerns. He will no doubt hear from people who have been struggling, trying to get a job. Can`t find employment out there. Need help, economic assistance. So, this is something that is sort of kicking off this road show. The president will be making several stops over the next several months, trying to listen to Americans and hear, specifically, what it is that they need. So they can bring it back here, hopefully come up with a plan to get people back to work.
FINIGHAN: Dan, great to talk to you. Many thanks for being with us.
Dan Lothian, live there at the White House.
Did you see the squirrel? The first squirrel, I suppose. Behind Dan, there? Have you seen the movie, "UP"? Squirrel! Go see the movie.
Now, one of those attending the jobs forum is Carl Schramm. He is president and CEO of the Ewing Marion Kaufman Foundation. I spoke to him earlier today and asked him how on earth you can go about creating jobs in a recession?
CARL SCHRAMM, PRES., EWING, MARION KAUFFMAN FDN.: This has become an entrepreneurial society. I call it entrepreneurial capitalism. If we don`t have new firm growth, we won`t have new job growth.
And, Adrian, the most worrisome thing is my foundation, the Kauffman Foundation, has been tracking firm growth for 30 years. This is the first time in a recession we have watched firm growth go down and not up. If that trend continues it will be a very bleak future for civilian job creation.
FINIGHAN: What can the government do, then, to help entrepreneurs create those employment opportunities?
SCHRAMM: Well, I think, there are a number of things. My view is for brand new firms, firms perhaps up to five years old, there ought to be a tax holiday, both on payroll taxes and on ARM (ph) taxes at the local level. There ought to be some relaxation of let`s say labor regulations.
I think also, and this is a particularly American perspective on it. One of the things I will argue for most vociferously for, today, is the United States should relax its immigration standards. Particularly, as regards to foreigners who are highly trained in economics - excuse me, in engineering and in technology, so that they may come into the United States and start new businesses. You know the pipeline of people who want to still come into the United States to start business is enormous. And our immigration policy is really quite incomprehensibly misdirected.
FINIGHAN: How do you think those suggestions will go down, when you bring them up?
SCHRAMM: We have immigration policy in the United States that allows foreign venture capitalists to come into the United States. Now, we have a huge surplus of venture capital assets. One of the simple things I think we could do is change what we call the HB-5 visa, and make that, instead of venture capitalists friendly, it should be made entrepreneurship friendly for foreign entrepreneurs.
It is hard for me to judge how these suggestions will be taken. They are a lot of folks coming who have a view that the expansion of public employment is the first step that should be taken. But public employment doesn`t have the same multipliers as new firm creation in the private sector.
FINIGHAN: You shouldn`t forget, I suppose, the United States universities. You have an ability to churn out highly educated, highly talented people and if there are no jobs for them to go into then that is a bit of a waste, isn`t it?
SCHRAMM: Our own view, the Kauffman Foundation`s perspective, actually, involves policy that would do everything possible to induce these graduates to get into the business of starting their own business. So, for example, we are very, very committed to the notion of reducing debt upon graduation, for folks who want to start a business. And parts of our government policy, for example, if you come out of a graduate school or medical school and you take certain jobs, or certain fellowships, your debt is relieved. And I think this should be extended to youngsters who come out of college, graduate school, and want to start a business.
FINIGHAN: Carl Schramm speaking to me a little earlier. He is currently inside the White House at that jobs forum. We`ll have more on why weak U.S. employment continues to dodge the economy, right after the break, when we will be speaking to the chief economist of the ratings agency, Standard & Poor`s. Stay with us.
FINIGHAN: So, we are less than 24 hours away now from getting the latest monthly jobless number from the U.S. Some analysts expect the unemployment rate to stay at or near the 26-year high of 10.2 percent. Now, David Weis is chief economist at Standard & Poor`s. He joins me now for more on what we can expect from Friday`s report.
David, thanks for being with us. To what extent is employment the key to getting the U.S. economy back on track?
DAVID WYSS, CHIEF ECONOMIST, STANDARD & POOR`S: Let`s face it, jobs are pretty much the bottom line. It is a consumer society. If you don` t have any income you can`t go out and spend money. If you don`t have a job, you don`t have the ability to participate. You don`t - you are not producing anything. So, jobs are really the most important single indicator.
FINIGHAN: But it is another chicken and egg situation, isn`t it? As we have been hearing from this jobs forum at the White House today, employers don`t want to start hiring until consumers start spending again. But consumer can`t spend again if they don`t have a job.
WYSS: Right, although to be fair, this is the same we have in every recession. At the bottom of the economy you have got to start seeing the economy is turning up. We are starting to see that. Employment usually lags a few months, but this time it is lagging more than usual.
FINIGHAN: So we are, now, as far as you are concerned, out of recession?
WYSS: I think we are probably out of this recession, not certainly yet, because we are seeing some pretty good numbers. We are seeing things stabilize. Layoffs are going down. But even though we are not seeing as many layoffs we are still not seeing a lot of new hiring.
FINIGHAN: All right. So, things are getting better. We are not seeing the new hiring yet. That begs the question, how long before we start to see some relief on the jobs market?
WYSS: I don`t think you are going to see any new hiring until the first quarter. My guess is you will see some positive numbers as we turn the year. But I think tomorrow`s number will be down and I think probably the next month`s number will be down.
FINIGHAN: And then the question that immediately follows that one is, what are the dangers if the jobs market doesn`t get moving quickly enough, and us falling into a double-dip recession?
WYSS: Well, I think that is a real risk. I don`t think that will happen unless something hits the economy like say a big oil price hike. But there are certainly -it`s a fragile recovery, especially `til you see some job growth.
FINIGHAN: A fragile recovery in the U.S., then. And to what extent does the global recovery depend upon the U.S. jobs market. And the employment market right around the world?
WYSS: Let`s face it, the last few economic recoveries have been lead by the U.S. consumer. The rise in exports from places like China, Japan, to the U.S., really pulled those countries out of recession. This way, it can`t happen that way. This way China is going to have to supply its own demand. The consumer in the U.S. isn`t strong enough to do it again.
FINIGHAN: So, as far as a global recovery is concerned, perhaps, we shouldn`t be looking to the U.S. economy this time?
WYSS: Certainly, if you look at Asia now, the growth is being led by China. And the recoveries you have seen in Japan, Korea, are largely based on exports to China, not exports to the U.S.
FINIGHAN: All right, David, it has been great to talk to you. Thank you so much for your insight. It is always great to get an expert opinion. Many thanks indeed. David Wyss, chief economist at Standard & Poor`s.
Now, changing the media landscape: U.S. cable giant Comcast and NBC/Universal join forces and we`ll look at how this could change what we watch on screens, both silver, and small. We`ll be right back.
FINIGHAN: Welcome back.
Live from London, this is QUEST MEANS BUSINESS from CNN.
In for Richard Quest, I`m Adrian Finighan.
Now, Ben Bernanke is defending the role of the U.S. Federal Reserve in its handling of the financial crisis. He made the comments at his reconfirmation hearings in front of the Senate Banking Committee on Thursday.
The Fed chief said his institution had played a vital role in bringing the U.S. economy back from the brink of disaster. He kept open the possibility of future interest rate hikes should a firm economic recovery take hold.
(BEGIN VIDEO CLIP)
BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: The Federal Reserve`s actions have contributed substantially to a significant improvement in financial conditions and to what now appear to be the -- the beginnings of a turnaround and both the U.S. and foreign economies. Having acted promptly and forcefully to confront the financial crisis and its economic consequences, we are also keenly aware that to ensure longer-term economic stability, we must be prepared to withdraw the extraordinary policy support in a smooth and timely way, as markets and the economy recover.
(END VIDEO CLIP)
FINIGHAN: Well, in the first part of this two part session appearance, the Fed chief, for the most part, took only light questioning about the role of the Fed in the overall handling of economic policy. The chairman of the committee, Senator Chris Dodd, even kicked things off by saying that Bernanke had his vote for renomination -- a significant endorsement.
Other senators, however, were not quite as supportive.
(BEGIN VIDEO CLIP)
SEN. JIM BUNNING (R), KENTUCKY: I will do everything I can to stop your nomination and drag out this process as long as I can. We must put an end to your and the Fed`s failure and there is no better time than now. Your Fed has become the creature from Jekyll Island.
UNIDENTIFIED MALE: do you care to respond to that?
(END VIDEO CLIP)
FINIGHAN: Incidentally, that senator was the only one to vote against Bernanke`s initial nomination four years ago. And I think it`s fairly safe to say that there`s no love lost there.
All right, let`s show you what`s happening on Wall Street right now. Stocks seesawing this hour. Investors eyeing a drop in weekly jobless claims ahead of the bigger monthly jobless figures that we`re going to get as we were telling you on Friday. And they`re also considering news today from Bank of America.
With details on that and the rest of the market action, let`s join Susan Lisovicz, who`s live in New York -- hey, Susan.
SUSAN LISOVICZ, CNN CORRESPONDENT: Hi, Adrian.
That`s right. Well, stocks are having trouble picking up much momentum. You know, we opened higher on improving -- yet another improving sign of stability in the labor market. But we lost -- the bulls lost momentum on some disappointments from the services sector, which is the broadest part of the U.S. economy and some disappointments from retailers, even though November included that important Black Friday shopping day.
But the news out of the financial sector is better. And, specifically, it involves Bank of America and its plan to repay every bit of the $45 billion loan it got from the federal government.
It`s important for a couple of reasons. B of A cannot only repay the loans -- that`s a good sign. But the fact that it can also raise new capital, which is a dramatic sign of progress in just one year.
Let`s not forget that Bank of America, along with seven others, received what is called exceptional assistance from the government. B of A had some of the toughest restrictions, including having its executive pay set and reviewed by the Treasury Department.
And therein lies the incentive, because Bank of America is in search of a new chief executive. Ken Lewis is on his way out. And some of the people on their way in don`t want to have their pay set by Ken Feinberg, the so-called pay czar.
In any case, what`s happening with B of A is going to put pressure on other banks, like Wells Fargo and Citigroup, to pay back their own bailout money.
What we`re seeing in the financial sector in terms of stock moves, financial shares are mixed. And Bank of America`s shares are higher. They`re up by 1.5 percent. But they opened much higher at the -- at the open, about 6 percent. So losing some steam, as did -- as has the overall market -- Adrian.
FINIGHAN: Yes, I mean it`s good news, I -- I suppose. But Bank of America is paying a -- a high price for it, isn`t it?
LISOVICZ: That`s right. You know, it -- it could -- you know, let`s face it. I mean the economy is still not in good shape, still every financial company is seeing rising loan losses. And Bank of America, though, felt that it was more important to break free from the government`s leash.
What it means specifically is it will raise nearly $19 billion in new equity through securities sales, which is a move essentially required by regulators to secure that the bank has sufficient reserves, will not come back with its hand out down the road.
The remaining amount will come from its current balance.
Treasury officials certainly eager to allow the repayment. A big stipulation is proving it -- its capital base through that securities sale. And we`ll see if other banks have the same strings attached.
We certainly know that they want to remove the stigma, as well.
Citigroup`s CEO, Vikram Pandit, is quoted in "The Wall Street Journal," Adrian, as saying that the company would "like to repay the government as fast as possible with a debt of gratitude and a good rate of return."
And, you know, actually, that`s the thing. I mean, you know, the government gets interest if the companies pay -- pay the government back. There is -- they make money on it. The catch is, they have to repay that money.
FINIGHAN: Yes. But I suppose, you know, at a good rate of return. I mean, but it`s -- it`s the shareholders who are paying it, the shareholders are the taxpayers, aren`t they, I suppose?
Susan, great to talk to you, as always.
Many thanks, indeed.
Susan Lisovicz live in New York.
Now, after months of negotiations, the hookup between NBC, Universal and Comcast is finally a done deal. The two sides announced their partnership on Thursday in the hopes of creating a brand new media superpower. The deal is valuing NBC properties at more than $30 billion.
Our Maggie Lake has more on what this means for all the parties involved.
MAGGIE LAKE, CNN CORRESPONDENT (voice-over): Big news at 30 Rock. After nearly a quarter of a century in the media business, General Electric is selling a majority stake in NBC/Universal to cable giant, Comcast. It`s a merger that brings together a venerable creator of content with a powerhouse distributor of content.
At a recent media conference in New York City, attendees called the deal historic.
MICHAEL BURGI, "MEDIAWEEK": This is the end of an era in that now, NBC is going to be majority owned by a cable company. And I think to a lot of people in the media business, that would have been considered anathema as recently as five years ago.
LAKE: But not so outlandish now.
BURGI: I think Comcast makes a great fit with NBC. It`s got the cable systems. It -- you know, it reaches, I believe, more homes than any other single multi-channel operator.
LAKE: A better fit, many say, than G.E. Which will still hold the minority stake in the new firm for some time.
NELLIE ANDREEVA, "THE HOLLYWOOD REPORTER": Comcast is very good at knowing how to distribute cable channels. And they also know how to link video on demand. I think we`re going to see a lot of interesting new media-related developments that they`re going to be able to parlay once they own all the amazing assets.
LAKE: Assets like MSNBC, CNBC and USA. Experts say these properties have become NBC`s crown jewels, as its network TV ratings suffer.
CHRISTOPHER VOLLMER, BOOZ & COMPANY: And the cable networks within NBC/Universal really provide the bulk of the profit and have provided the vast majority of growth over the last few years. And if you look at a lot of the rationale for the deal, it comes down to the fact that cable networks themselves have been the most recession-proof part of the media business, because the cable network piece of this is really probably the most important part of the deal.
LAKE (on camera): This deal has its detractors. They say the size of the new entity will hurt competition and force new media mergers.
Still, the companies remain confident the hookup will be approved after what`s likely to be a lengthy anti-trust review.
Maggie Lake, CNN, New York.
(END VIDEO TAPE)
FINIGHAN: Now, there`s quite a rumpus going on here in the U.K. at the moment -- the battle over banking bonuses. British bankers pile the pressure on Prime Minister Gordon Brown.
But will the government give in?
We`ll explore the issue in just a moment.
FINIGHAN: Hello again.
The British government is being urged to back up its tough words on bank bonuses with some action. Opposition parties say that the prime minister mustn`t back down, even if the bankers are applying pressure.
Now, as the year end approaches, when bonuses are decided, it could prove to be a flashpoint. Some media reports say directors at the Royal Bank of Scotland will consider resigning over the issue.
One of the opposition parties here in the U.K., the Liberal Democrats, says that in that case, we should call their bluff.
(BEGIN VIDEO CLIP)
VINCE CABLE, U.K. LAWMAKER, LIBERAL DEMOCRATS: The government should accept the resignation. The government was right to insist that it should have a veto over these bonuses. There is now a general acceptance that bonuses paid in cash to traders doing high risk activities are dangerous and that it has to be stopped within the government`s own institutions, at the very least.
And the government should veto it. If the directors say they want to resign, well, the government should accept their resignation. It mustn`t allow itself to be blackmailed.
(END VIDEO CLIP)
FINIGHAN: Well, the U.K. government has more power over pay at RBS because after bailing out the bank, it`s become the controlling shareholder.
But Prime Minister Gordon Brown says that it`s not just RBS that has to accept limits on bonuses.
(BEGIN VIDEO CLIP)
GORDON BROWN, BRITISH PRIME MINISTER: Every country is going to legislate for that. The idea that any country is going to escape these proposals, we will legislate for them in the Financial Services Bill. And I think most sensible people around the world would accept that if we come to a worldwide agreement about what the bonus structure should be, then every major bank in the world will want to follow that. And nobody is being discriminated against, because every bank is having to follow these procedures.
(END VIDEO CLIP)
FINIGHAN: Now, last month, Chancellor Alistair Darling announced that the treasury, as the major shareholder in the bank, would have the right to consent to how much RBS pays in bonuses and also how they are paid.
Well, earlier today, I spoke to ITN`s economics editor, Daisy McAndrew and I asked her why the RBS board feels so strongly about this issue of bank bonuses.
DAISY MCANDREW, ITN ECONOMICS EDITOR: Well, the board of directors feel they have a legal, if not a moral duty, to try to make as much money for the Royal Bank of Scotland, obviously, partly to pay back the debt that it owes the government. It, therefore, says that if it can`t have the power to set the bonuses and the pay structure for its employees, it`s doing it with its hands held behind its back and it will lose its top talent and won`t be able to retain the talent it`s got and, therefore, won`t be able to build and grow.
FINIGHAN: A lot of people are very unhappy about this.
Is the government likely to back down or -- or what happens if it forces the issue?
MCANDREW: Well, of course, you can see it from Alistair Darling, the chancellor`s, point of view. He has a real dilemma here. On the one hand, he can see how the likes of me, Joe Public, find these huge bonuses totally abhorrent given that we, the taxpayer, have bailed out the Royal Bank of Scotland to the tune of 45 billion pounds. So that`s Problem A.
But the Problem B is he knows that the Royal Bank of Scotland needs good people if it`s going to succeed in building, growing and paying back that money it owes. And the Royal Bank of Scotland says -- and I believe it from other (INAUDIBLE) experts I`ve spoken to -- that it has already lost a number of top people, that it already pays the lowest salaries and bonuses to investment banks in the city and it simply must correct that if it`s going to get those top people to turn that bank around.
FINIGHAN: So what are industry players saying about this?
Would the government be criticized or applauded if -- if it forced this issue of bonuses?
MCANDREW: Well, as with so much in politics, it`s damned if it does and it`s damned if it doesn`t. People like Vince Cable, who I think you`ve already heard from, are saying fine, let them resign. You know, they -- basically they`re a nationalized bank and they should be doing what their major shareholder tells them to do. And if that includes cutting back on bonuses, so be it.
Other people are saying all we want is our money back. We just want to be as successful as possible and pay the taxpayer back.
But, of course then there`s another problem in that these banks have been told to lend more to the public and yet they`re being told to build up their -- their core money that they`ve got in their own bank accounts.
So some of the advice, both from politicians and the public, is quite schizophrenic when it comes to what the banks should and shouldn`t be doing.
FINIGHAN: But is the government trying to deflect the criticism, if you like, by drawing in other banks and bring them into line as far as bonuses are concerned?
MCANDREW: Yes, it`s trying not to -- to pick on the one -- the one bank in question, but so, you know, banks across the board should be responsible and shareholders should be responsible.
But, of course, they are the number one shareholder in RBS, so other people are saying not only should the RBS directors -- board of directors resign, they should be sacked because basically what they`re doing is ignoring the wishes of their major shareholder, which is not the role of a board of -- of a board of directors.
So very confusing advice coming from every side on this argument.
(END VIDEO TAPE)
FINIGHAN: ITN economics editor Daisy McAndrew there.
It will be interesting to see how this one plays out.
Right. Let`s get a weather forecast from Guillermo Arduino, weather editor.
That`s a good title, isn`t it?
GUILLERMO ARDUINO, CNN METEOROLOGIST: It is.
FINIGHAN: And -- and -- and birthday boy yesterday. I`m sorry, it was your birth. I meant to say happy birthday but belated happy birthday.
ARDUINO: Thank you.
FINIGHAN: I hope it was a good one.
FINIGHAN: And, hey, it stopped raining here in London.
ARDUINO: It did. And yours is some time around now, right, these days -- or it was, your birthday?
ARDUINO: When was it?
FINIGHAN: Well, yes, just a couple of weeks time.
ARDUINO: Oh, there you go. Happy belated then.
OK, well let me -- let me tell you what`s going on in here. We have rain here into France and Great Britain. It`s turning cooler. That`s the problem that we see here. But when I arrived at CNN today, I was comparing North America with Europe. And honestly, North America looks much worse.
So the rain has stopped for London. On the weekend, it`s coming back. We`re going to see some winds. We`re going to see some effect on airports, anywhere from Dublin into Paris, Heathrow, Brussels. We will see the wind and the rain coming back on Sunday, as you see for London.
There`s a system -- that`s it. So two days, here it comes again -- boom, Ireland first and then into the southern parts of England.
Now, some winds in Copenhagen. Cold and snowy into Scandinavia, into Finland. Also, we are seeing cold conditions filtering in in here, especially in the north. And the rain that especially affects Italy right now, another system.
Now, look at these numbers -- not that bad if you compare that with the negative figures that we have in the United States. Some winds in Barcelona, too. But the cold air that is filtering into the United States now, it`s going to go as far south as Houston. We may see a lot of snow here in these areas, so watch for that. And rain into Northern Mexico, Tamolitos Nocios (ph).
Look at the tempts.
Remember what I was talking about in Europe?
Look at minus three in Denver; Chicago, minus one with the wind.
We`ll see you on the other side of the break.
FINIGHAN: Now, most stock markets in the Gulf region are closed today for the holidays. Traders in the region can only hope that by the time they return to their desks, the Dubai debt crisis will have eased a little
The state-run investment company, Dubai World, is still working on the best way to tackle its debts.
And as CNN`s Cal Perry reports now, its richer neighbor, Abu Dhabi, has so far been a steadfast friend.
CAL PERRY, CNN CORRESPONDENT (voice-over): The Atlantis Hotel in Dubai putting on what was billed as the biggest fireworks display in history -- a major celebration in a boomtown known for over the top displays of wealth. Of course, that was just a year ago.
This year, on the 30th anniversary of the United Arab Emirates` National Day, a more modest mood in Dubai. The market here has been in upheaval, as Dubai World, the city-state owned conglomerate, faces a debt crisis.
On Monday, the Dubai market fell more than 7 percent. Its neighbor, UAE`s rising star, Abu Dhabi, followed, down more than 8 percent. The impact of the decline cascaded across the region to Jordan, Kuwait and Egypt.
Even U.S. investors are worried.
SAM STOVALL, STANDARD & POOR`S: I think certainly it`s going to raise concerns about other global debt situations, because the question being, well, is this just one of many shoes that will likely drop and, therefore, do we have to worry about other situations?
So I think if nothing else, it will have a negative impact on investor sentiment because you don`t really know how many more shoes are likely to drop.
PERRY: But the leader of Dubai urges investors to remain calm, pointing to economic strength.
(BEGIN VIDEO CLIP COURTESY ARAB TELEVISION)
SHEIKH MOHAMMED BIN RASHID AL-MAKTOUM, UAE PRIME MINISTER, RULER OF DUBAI (through translator): As I have said before, the sea that became the fruitful tree of Dubai has been targeted, but there are seven other fruitful orchards, the seven emirates. I am saying just two words -- we are strong and solid.
(END VIDEO CLIP)
PERRY: Despite reassurances, concerns remain about Dubai`s future. As for now, buildings in Dubai sit half finished -- a city dealing with the housing crisis in the midst of a global economic crisis. Experts say one thing that could help is a bailout from its oil rich neighbor, Abu Dhabi, where many were partying on this independence day, with another awe- inspiring fireworks display.
(on camera): Will Abu Dhabi bail out the sprawling metropolis of Dubai?
Well, recent reports suggest it may not be an all-out rescue. Rather, the federal government here may pick and choose the economic sectors that it wishes to save.
Cal Perry, CNN, Abu Dhabi.
(END VIDEO TAPE)
FINIGHAN: Now, we`re going to take a quick break.
But when we return, we`ll update you on the market numbers on Wall Street and we`ll recap the action here today in Europe.
Stay with us.
We`ll be right back.
FINIGHAN: Let`s show you what`s happening on Wall Street.
Stocks are having a pretty much a seesaw sort of day. Investors are eyeing a drop in weekly jobless claims ahead of the bigger monthly jobs figures that are due out on Friday. They`re also considering news today from the Bank of America, which we were talking to Susan Lisovicz about. The Dow Jones down 14 points.
On European markets today, they all closed, well, disappointingly today. Losses across the board despite a rally for bank stocks in London. Shares in mining companies like Xstrata seem to have outweighed gains for the Royal Bank of Scotland today and Lloyds Banking Group.
In Frankfurt, Siemens` shares took a hefty -- a hefty tumble today after the company announced a quarterly loss of more than $1.5 billion.
In Paris, Peugeot`s shares lost 2.7 percent today. The company is thinking about making a major investment and Japan`s Mitsubishi Motors.
And in Zurich, Swiss banks lifted the SMI well above the rest today.
And there was one other bit of news out of Europe today, in that the ECB held interest rates, much as economists had expected, at record low levels.
You know, that will just about do it for the Thursday edition of QUEST MEANS BUSINESS.
In London, in for Richard Quest, I`m Adrian Finighan.
Do you know I`m feeling rebellious.
I`m going to ring the bell.
Don`t tell him.
As he`d say, whatever you`re up to in the hours ahead, I do hope it`s profitable.
Christiane Amanpour is next up on CNN, right after the headlines.
We`ll join Hala once again at the I Desk.
And I`ll see you the same time tomorrow.