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QUEST MEANS BUSINESS

Affordable 3D TV?; Interview With World's Best Finance Minister

Aired January 7, 2010 - 14:00:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


MAX FOSTER, HOST, QUEST MEANS BUSINESS: Coming to a living room near you, affordable 3D television. We have the latest from the Las Vegas Consumer Electronics.

Six months of uncertainty, British investors buckle in for political turbulence.

And the stresses of managing an economic crisis; we speak to the man voted the world's best finance minister.

I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS.

Hello there. Right now you are watching me in the same two dimensions TV as we have all gotten used to, but soon I could be jumping out of the screen at you. It's a scary thought. But 3D television is just one of the new technologies launching this week at the Consumer Electronics Show in Las Vegas.

Now, it really is the race to be in your face with TV's best known brands fighting for leadership. We have Sony, Samsung, LG, and Panasonic. They have all either launched 3D projects already or they will do so any day now.

Other products are also lighting up the tech fest. Although, let's look at that. It might be tough for competitors in computing to swallow, but this is a new tablet size computer made by Hewlett-Packard, but running a Microsoft Windows 7 system, which explains why Microsoft CEO Steve Ballmer showed off the device. No word yet on when you can buy one of those, though.

On to gaming: And earlier Microsoft announced a new add on to the Xbox entertainment console. Project Nital (ph) coming out later this year. It will gamers control on screen characters using their body movements, would you believe, rather than using a hand set. Now technology writer Jon Fortt, from "Fortune" went on a tour of the Microsoft stands, with the CEO Steve Ballmer. And he asked him why they are getting rid of the handsets, which most games systems have right now?

(BEGIN VIDEOTAPE)

STEVE BALLMER, CEO, MICROSOFT: If you want to continue to make any systems more approachable, one of the key things you have to do is reduce the amount of learning time. The best way to do that is to let people interact the way that is natural for them and have the computer do a better and better job. Or have the device do a better and better job in figuring out what you meant.

Even search engines, that is what they are all about. You type something in, you know, unless you are very explicit, most of these search engines try to guess what you meant. And you know, you type, bars in Las Vegas, you probably want a place to go and have a drink, but not if you are looking for steel bars and you live here. You are looking for something else.

(LAUGHTER)

And the search engine has to got try and parse and figure and learn. We have to figure out, rather than have you learn A, B, whatever, on the controllers, how to operate this thing. You do want to be able to just sit there, like this, and have - you know, visual clues, tell the computer what you are up to.

JON FORTT, SENIOR WRITER, FORTUNE: I remember the old days when there was just two buttons, and a D-pad, things - it was a simpler time then. But tell me, with these user interface enhancements, what does that does on the business side? The model has been start off selling the console, actually below cost and make money on the games. As we get into more of these user, interface enhancements, does the model stay the same, or are you able to get more margin.

BALLMER: No, this is a PC, actually. Nital (ph) will be out on the console.

FORTT: Yes.

BALLMER: you know it is a complex. You are trying to-over the life of the console, between the peripherals that you sell, the console itself, the games you sell, the royalties you drive on other people's games. You are just trying to make that whole equation add up.

And Nital (ph), at least, in some cases, will be another opportunity to make a little money.

FORTT: So, it will be on the accessory side?

BALLMER: We'll see.

(END VIDEOTAPE)

FOSTER: Steve Ballmer, there.

Turning to the other big dimension of the show, that is television's third dimension. One of the manufacturers making the leap into the new market is Sony. Stan Glasgow is the president of the company's U.S. electronics arm and he also spoke to John.

(BEGIN VIDEOTAPE)

STAN GLASGOW, PRESIDENT, SONY ELECTRONICS, INC: We are very involved in the professional in cinema content, for 3D. That creates the initial excitement, for 3D, in my opinion. Now we are working with broadcasters and other content providers to work on content for television, for the home. And we'll have a set of home televisions coming out in the middle of this year, that are both HD fully -3D fully integrated, with the emitter built in, and we'll provide a pair of glasses with it. And we'll also have a set, a complete line of TVs that are HD capable. That you don't pay a real premium for, but later on you can buy the emitter and glasses later.

FORTT: So, you are talking about a real premium. Of course, we all want the real deal, the full 3D experience. How much is that going to set us back? And when we get it?

GLASGOW: I can't give you an exact number right now, but it is going to happen for us in the middle of this year, in June.

FORTT: What is it going to take to really bring that 3D technology into the living room, in a mainstream sort of way. Is it the cable channels? Is it Blue Ray, what?

GLASGOW: It is all of that. All different content and different forms are going to have to be developed to motivate consumers to make the investment to go into 3D at home. It has got to provide a useful viable entertainment experience, at the right cost.

So, at the cinema, we are very comfortable with what is going on. The directors are pushing it hard. They see the value. Theater chains see it. They can make a little more money and provide a great consumer experience.

We've got to be able to be able to develop enough content, as an industry, to get consumers really wanting to spend money and go out and buy 3D televisions or 3D capable televisions.

(END VIDEOTAPE)

FOSTER: So, larger than life TVs and tiny PCs to help us size up the outlook for the technology this year. Nicholas Thompson joins me from San Francisco. He is senior editor of "Wired" magazine.

Thanks so much for joining us.

The whole of the content industry, the TV technology industry has really putting a lot into 3D TV but are we really going to be sitting in our living rooms with those glasses, watching this stuff?

NICHOLAS THOMPSON, SR. WRITER, "WIRED": A few people are this year. People who are fanatic about sports events. I mean, ESPN has a 3D channel that is launching. There will be some narrow uses for it. But it is actually going to be quite hard for regular people to upgrade their TVs to 3D, like you have upgrade your cable, if you have TIVO, it will have to somehow be compatible.

And then, think about the people watching the show right now. Probably watching in airports, at their offices, while they are cooking. Are they going to be wanting to be wearing glasses while doing that? So for a lot of things like news, we're a long way away from 3D, but for some things like sports, maybe it will start to happen this year and get big next year.

FOSTER: Are there screens available, or will there be screens available one day where you don't have to wear the glasses?

THOMPSON: Not with current technology. I'm somebody will be able to invent it, eventually. I mean, maybe we're five, 10 years away from that. But right now, everybody is going to have to wear the glasses. And so if you have friends over and you all want to watch a sporting event, they are all going to have to bring glasses or you are going to have to buy glasses for them. So, it is a logistically complicated proposition.

FOSTER: OK, let's look at Microsoft now, because what has really grabbed everyone's attention is this new gaming system, where you are not going to have a hand device. You are going to be moving around, also responds to you voice as I understand it, as well. Do you think that is a game changer?

THOMPSON: Uh, yes and no. It is wonderful. The Wii is the company, Nintendo's Wii, which allows you to play tennis by swinging your arm, it was the company that started in this direction. Microsoft has taken it a step further. But again, there are logistical issues, right? A lot of people want to play a game for 10 hours straight, next to a bucket of popcorn. Now, are they going to want to be swinging their arm and punching the screen for 10 hours? So, there are situations where this control will be great. And there are games with this control that will be great. But there are a lot of situations and a lot of games where you really just want to sit back on your couch and relax.

FOSTER: Yes, and finally the tablet. That is the other big talking point, isn't it, in Las Vegas today at least?

THOMPSON: Yes.

FOSTER: These tablet computers. Everyone is trying to get in on the game, but actually Apple owns this one, doesn't it?

THOMPSON: Well, we don't know -everybody just expects it, because Apple has done so well with the hardware they have released in recent years. Everybody expects that when they release their tablet, which will likely be at the end of this month, it will be far better than all the other tablets out there. We'll see. I think people should remember that there are a lot of companies making these things and it will be very competitive and very interesting.

These could change, for example, the way magazines are read. Magazines don't work that well on web browsers. But they could really well on tablets. It is something that "Wired", where I work, is very interested in.

FOSTER: OK, Nicholas Thompson, thank you so much for that. We'll be back with you as more developments continue in the world of tech. You can watch longer versions of the interviews with Microsoft chief executive, by the way, and the president of Sony Entertainment, on CNNmoney.com. Worth a look.

Now, what went wrong? Who is responsible? And how will it be fixed?

U.S. President Barack Obama is due to talk about the attempt to bomb a U.S. airliner on Christmas Day. Ed Henry is just ahead to put us in the picture on that story.

(COMMERCIAL BREAK)

FOSTER: Welcome back to QUEST MEANS BUSINESS. More business headlines in just moment, but first the new headlines with Fionnuala, who is in the News Room.

FIONNUALA SWEENEY, CNN INT'L. NEWS ANCHOR: Thanks indeed, Max.

So many foul ups, on so many levels. Within an hour U.S. President Barack Obama will address the American people. He'll talk about the failed Christmas Day bombing of a U.S. airliner. Senior White House Correspondent Ed Henry joins me now -Ed.

ED HENRY, SR. WHITE HOUSE CORRESPONDENT: Well, Fionnuala, what we are hearing from a top aid to the president is that he is likely to take full responsibility for the foul ups that lead to this attempted terror attack. But we are also told that the president is not planning to fire anyone for those mistakes. And that may anger some people here in the United States, who have heard the president talking about accountability in recent days.

What a senior administration official told me is the president, in little less than an hour he'll be addressing the American people and the world. He will say, here are the warts. Here is what went wrong, essentially, and I am responsible. That is what he is going to say, according to a top aide.

The official also saying that the president believes that previous administrations have not been direct with the American people about foul ups like this, he wants to be very direct, lay it out, take responsibility. But also this official said, specifically that the president doesn't want to get into finger pointing. He wants to focus, instead, on what needs to be fixed so they can protect the American people from future attacks.

I pressed this official, though, on the fact that the president, just last week, promised the American people he was going to seek accountability at all levels of the U.S. government. Will that mean anybody being fired? This official said no. Instead what the president is talking about is accountability of the system, within that system, so that they can actually fix what went wrong and make sure they make adjustments that can make the American people safer in the days ahead.

Obviously, a lot of finger pointing has already taken place. And, in fact, today one of the president's top aides, his National Security Advisor General Jim Jones said, that when the American people see the details of this report they are likely to be shocked about how so many U.S. officials had intelligence suggesting the suspect was tied to terrorists and yet they just did not connect the dots, Fionnuala.

SWEENEY: And just how much heat is on the U.S. president for taking this decision veering towards accountability, rather than firing people?

HENRY: Well, you know, he is facing a lot of political pressure right now. There are Republicans here in the United States who have been saying that he should have acted much sooner. You remember he was on vacation in Hawaii, when this happened. And it took him a few days to come out and address the American people about it. He's been facing that pressure, but when you talk to White House aides they say, look, he is not dealing with the politics here, he is just focused on how do you fix this? How do you make it work? But there is no doubt that there is a lot of pressure on him right now, Fionnuala.

SWEENEY: All right. Ed Henry, at the White House. Thanks, indeed.

HENRY: Thank you.

SWEENEY: Now, this is a just released photo of the man suspected of carrying out last month's deadly attack on a U.S. base in eastern Afghanistan. Officials say Jordanian Doctor Humam Khalil Abu-Mulal al- Balawi was a double agent when he was allowed into the camp. Once inside, he allegedly detonated an explosive vest, killing seven CIA officers and his Jordanian handler.

The stand off lasted nearly 24 hours, and ended earlier today. Indian troops shot two militants to death in Srinagar, the main city in Indian control Kashmir. The militants ran into a hotel on Wednesday after throwing grenades and opening fire in Srinagar's main market area. A policeman and a bystander were also killed.

Many parts of Europe are bracing for more snow and frigid temperatures in one of the most brutal winters in decades. The weather has wreaked havoc on roads, rails and runways. Many flights have been canceled. Driving is difficult on a snow-packed roads. And another high-speed Eurostar train broke down in the channel tunnel today, between France and England.

And those are the headlines. We'll have details on what U.S. President Barack Obama has to say about the botched Christmas Day airliner attack. That is coming up on "WORLD ONE" at 8:30 p.m., London Time.

In the meantime, Max, back to you in the studio.

FOSTER: Fionnuala, thank you so much.

Now, one more thing that seems to have broken down, the new year rally in the stock markets. After a lively start to the week, Europeans shares gone to sleep pretty much. And Thursday was another flat session.

London's FTSE 100 slips below the break even line, despite gains from banks and retailers. The Bank of England held interest rates steady at 0.5 percent here. And there will be no extension of the money printing program this month.

In France Assurances Generale, and BNP Paribas were among the best performers. And Commerzbank did well in Frankfurt, but couldn't lift the DAX out of the red.

Now, let's have a look at the Big Board, head to Wall Street, it is up, but only very slightly. Stocks on hold as well, here, pretty much as investors wait for a monthly U.S. jobs report. That is due out on Friday.

Financial stocks among the best performers this hour. Bank of America, JP Morgan, Chase, and Goldman Sachs, are all leading the gains there.

The U.S. labor market numbers on focus this Thursday. New claims for unemployment benefits rise by 1,000 to 434,000, but a big jobs report is out on Friday. So we will bring you that, as we get it. We'll find all the reaction as well.

Now, out of recession and already on the road to recovery, we speak to the man who steered Thailand out of economic crisis, earning him accolades from the other side of the world. You are watching QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

FOSTER: Now compared to the fast-growing giants of India and China, Thailand doesn't get the same degree of attention, but it is recent record shows it is an economy very much to watch. By the end of last year, unemployment had fallen by half, down to just over 1 percent of the workforce; a pretty good figure there.

That was at a time when economic output actually shrank by 3 percent. But this year they are expecting a return to growth and the government forecasting 3.5 percent, or more, in growth.

But economies don't exist in a vacuum, of course, and Thailand has significant political concerns, which puts a question mark over financial stability. A verdict is expected soon in a court case against the former Prime Minister Thaksin Shinawatra, bringing fears that large-scale protests, or the kind that we got last year, maybe reignited.

So, a bit of a mixed bag there for Thailand, but the country is in safe hands it seems. "The Banker" magazine has named Thailand's Korn Chatikavanij, the finance minister of the year. He spoke to me earlier about how the country is coping with the economic downturn.

KORN CHATIKAVANIJ, FINANCE MINISTER, THAILAND: It is unique, actually, this crisis, in that virtually every economy in the world is in the same boat. Every finance minister faces the same, or very similar challenges. And in fact, arguably in Asia, although we are seeing very dramatic collapse in GDP figures, and very dramatic recoveries in GDP figures, arguably our job was somewhat easier than finance ministers in the West, who had to contend with both the economic impact of the crisis, of the financial crisis, and the impact on the financial sector itself. In Asia, we had our own financial crisis, 11 years ago, in 1997.

FOSTER: And you learned from that?

CHATIKAVANIJ: Significant lessons were learned, in terms of the importance of regulation, in terms of the right level of control. And the private sector learned lessons from that. Not the least, the danger of overleveraging.

FOSTER: And you are a politician, all politicians, finance politicians are facing a similar problem. There are opposition parties in each of those countries is really going in for the kill right now, because they don't have to deal with it. But they can criticize you in it, and they are bringing you up all the time, whilst you are having to deal with it.

CHATIKAVANIJ: It's true. It's the same here in the U.K. I watched Prime Minister (UNINTELLIGIBLE) time yesterday and was having a good chuckle. Because it is very similar scenes that we see in our own parliament, basically the opposition talking about rising levels of debt without, frankly, giving a credible alternative as to -what it -how it was that they would have tackled the crisis.

A year ago, there was no alternative, other than the government is increasing its level of involvement in economies around the world. And that is what all governments did.

FOSTER: Why then do you think you are being credited with handling all of this very well, as a finance minister?

CHATIKAVANIJ: Well, I think, we had our own unique difficulties and challenges in Thailand. Politically it was a very challenging environment. We still have very fractional politics, with the opposition, you know, pretty much hell-bent on causing maximum disturbances other than -rather than helping us in steering the country and economy through the crisis. So, I think that posed a particular challenge for the Thai government.

Other than that, actually we had lots of laws that made it difficult for us to use the fiscal space that we have. And so we had to also issue challenging and somewhat controversial bills through parliament in order to allow the government to do what was necessary.

FOSTER: And you are having some success, because the economic figures are suggesting that the economy is starting to recover now.

CHATIKAVANIJ: Yes.

FOSTER: But you talk about those political problems and they are not going away, are they? Because there is another court cause coming up, which is likely to cause anti-government protest to flare up again, that is what they are suggesting. Just take us through that and how you are preparing for that and making sure that isn't going to have the same sort of economic impact that it did last year.

CHATIKAVANIJ: Last year, exactly. Well, first of all, I think the government is much better prepared to face up to physical challenges, from the protestors. Secondly, and most importantly, the basis, in terms of broad popular support for such kind of political activity has really very sharply declined. People want to move on. People want to get on with their lives. People are seeing the results and benefits of allowing the government to do its job.

FOSTER: You basically don't think you are going to get the reaction you had last year?

CHATIKAVANIJ: Yes.

FOSTER: A very different level of popular support, for such a movement?

CHATIKAVANIJ: You are right, though, there is a very important court case, the verdict being handed down on --

FOSTER: So this is the verdict about the assets of Thaksin Shinawatra, that were seized, and whether or not that was lawful?

CHATIKAVANIJ: Well, whether - his assets were frozen and the verdict was basically to see whether those were ill-gotten gains through corruption during his time in power. And the verdict will be handed down in January. There is broad expectation, given the evidence that has been presented to the court, that the verdict will be a guilty one, which would lead to assets seizure. But we'll see.

(END VIDEOTAPE)

FOSTER: Finance Minister of the Year, finance minister of Thailand speaking with me earlier.

Now, things maybe looking brighter in Thailand, but here in Britain it is definitely still deep, mid-winter in the economy. And political plotting is sending shivers through the markets here in London.

(COMMERCIAL BREAK)

FOSTER: Welcome back. I'm Max Foster in for Richard Quest and this is QUEST MEANS BUSINESS here, on CNN.

Now, Britain is in the grip of a bleak mid-winter, with an election just months away, government finances are in a complete mess. And there has been no growth in the economy since 2008. And on top of all of that, it is snowing.

Even the Bank of England has put a freeze on policy, holding interest rates at 0.5 percent, and deciding not to increase its program of printing money. The government is attempting to dig us all out of this problem.

The main problem we have here is the budget deficit. It is very large by international standards. Peter Mandelson, who is the business secretary says growth, economic growth, will have to get us out of that one, although opponents plan to make spending cuts. And he criticizes that the government is committed to halving the deficit by 2013.

Now, Mandelson also warns severe cuts could spark a rise in unemployment. The unemployment rate is at a 30-year high at 7.9 percent, nearly 2.5 million people are unemployed. The latest increase was the smallest in 18 months and the number of people claiming jobless benefits did actually fall.

We have also got political instability and turmoil to deal with. There has to be an election before June. And the unofficial campaign has very much started. Two Labour ex-cabinet ministers have called for the prime minister to be put in a vulnerable position. Effectively what they want is a secret ballot on his leadership.

All of this is having an impact on the financial markets, most notably the currency markets. As you can see, the pound falling in value against the U.S. dollar, and the analysts very much saying that that is all down to the fact that people are concerned about political instability.

Jim has been monitoring all of this. It is pretty complicated when you start mixing all of the politics in with the economics, but you can avoid it if you are an investment analyst or an investor.

JIM BOULDEN, CNN INT'L. CORRESPONDENT: Indeed, and I think this is going to be the most interesting and the most worrisome election in the U.K. for a generation. If you are thinking about the markets you are thinking about bills (ph), you are thinking about currencies, and even maybe the stock market because people have to buy the stocks, you have get into the currency.

And so the analysts are watching this very carefully. A lot of them are saying this budget deficit is shocking. That's the word I keep seeing. And so you've got that side of it, because we don't know if any cut -- cuts are going to be announced even before the election.

Then you have a new budget with whomever is the next leader. And that budget would be, what, June or July of this year. So we've got a six, seven month period of total uncertainty. And the markets are scared by that. You can see from that currency, just one thought that maybe something would happen to Mr. Brown causes a fall in the currency markets. I mean it was an e-mail. It was a text message and that caused the currency markets to -- to -- to react.

And so a lot of people are saying that the pound is very vulnerable over the next four or five, six months. And that's something that anal -- that investors need to be very careful. They have to watch what's going on in the politics here very closely.

FOSTER: I know people will say there's not really much between the parties, but what they don't like is the instability.

BOULDEN: Yes.

FOSTER: They're not that worried about who wins, they're worried about we're not going to know who's going to win for months and months...

BOULDEN: Well...

FOSTER: And there's going to be loads of arguing up until that point.

BOULDEN: You could say Labor says they're not going to make any cuts in the deficit -- in -- in the budget.

Well, how do you do that? How do you follow the rules of the European Union about getting your budget deficit back down at this amazing amount of stimulus that all these countries have been going through?

And, you know, they have to get it down. The U.S. doesn't have that rule. They don't have to get down to a 3 percent, but the U.K. does, not until the next, you know, three or four years. But still, they've got to come up with some credible program or some analysts are saying that the possibility that the guilds (ph) -- the very nice treasury bonds that come from this country, which have a wonderful rating, could be in jeopardy. And then that would cost the government even more money if they -- when they go out and borrow. They've been borrowing very well this year the -- last year and this year. The markets haven't had too much problem. They haven't had a problem selling -- getting their bottom sold.

However, there's worries that that could become more difficult later this year.

FOSTER: Tell the markets to just ignore all of this, because actually, when you look at what the politicians are saying, they're not actually saying that much, either of the main parties, are they?

They're not actually saying what they're going to do, because they're afraid of saying it because they don't want to lose the vote.

BOULDEN: Right. So we know that's going to be the way. So we know there's going to be instability. But they're most worried about hung parliament -- what happens come election, there isn't a clear leader, maybe some -- the finance minister, whomever that may be, could come in with a whole -- without any political mandate. And that scares the markets even more than the uncertainty of the next few months.

FOSTER: And Gordon Brown himself, arguably, hasn't got a public mandate, has he, because he was just elected by the party?

BOULDEN: Yes.

FOSTER: OK. Jim, thanks very much, indeed.

Well, market watcher David Buik, from the brokerage BCG Partners, told me the mood in London's financial district is pretty grim right now for the very reasons that Jim has been pointing out.

(BEGIN VIDEO CLIP)

DAVID BUIK, BGC PARTNERS: The City of London and the trading markets, particularly the bond markets, are extremely uncomfortable with what is happening at the moment. We know that next month, we will hear what is going to happen with positive easing. And, as a result of what happened in the United States yesterday with the FOMC, I can't see any way that the $200 billion facility will not be renewed. And I don't think it would come as any surprise to anybody if the 25 extra billion that some people want to go in there isn't granted, for the simple reason that our economy here is in a very brittle state and we're a long way from coming out of this recession.

It will be slow, painful and torturous.

FOSTER: And we could have this uncertainty for something like six months.

So the British and foreign investors investing in the U.K., you've got to be pretty brave to be in the market right now, haven't you?

Are you advising or would you advise someone to wait until after the election to put their money into U.K. investments?

BUIK: The market's always right, I'm afraid. And the great thing about the U.K. market, in terms of equities, first and foremost, Max, they bear no correlation to the performance of the U.K. economy. So you can be objective in looking at them. Seventy percent of the FTSE 100 companies are international. They have all their earnings through dollars or euros or yen and they come from, obviously, the mining sector, oil, pharmaceuticals, banking, drink, food. And they're hugely international. And therefore we mustn't be too concerned about investing in U.K. companies, because they're not a reflection of the U.K. economy.

(END VIDEO CLIP)

FOSTER: David Buik speaking to me earlier.

Now, the war in Sudan ended five years ago. But battles over massive oil reserves still rage on. After the break, an inside look at the new conflict in Africa over black gold.

(COMMERCIAL BREAK)

FOSTER: Now, on Saturday, Africa's largest country, Sudan, marks the fifth anniversary of the agreement that ended 20 years of civil war. One campaign group is speaking up on what it thinks must be done to maintain the fragile peace there. Global Witness says a fair and transparent arrangement for over oil revenues is vital to prevent fresh conflict. An existing oil sharing arrangement comes to an end in 2011. Also next year, Southern Sudan will hold a referendum on independence.

While technically not now at war, Sudan is still torn by rampant violence. Last year, 2,500 people were killed in Southern Sudan alone.

Well, Sudan has proven -- has proven reserves of five billion barrels of oil. Those potential riches have much to do with the long civil war between the mainly Muslim north and the mainly Christian south of the country.

David McKenzie has been to the region and discovered that oil is still a divisive issues for many reasons.

(BEGIN VIDEOTAPE)

DAVID MCKENZIE, CNN CORRESPONDENT (voice-over): Civil war raged here for two decades. Now, there's a fragile peace, but also a new conflict. At the heart of it, oil and whether it's poisoning the people who live here.

UNIDENTIFIED MALE: And shall we show you the -- this facility -- this is -- this is Unity oil fields.

MCKENZIE: The governor of Unity State, Taban Deng, takes us inside one processing plant for the first look ever by western media. He's worried by the oil's impact.

TABAN DENG, GOVERNOR, UNITY STATE: Here's what worries us.

FOSTER: Visitors here are rare and not very welcome. A company's security agent photographs our every move. This plant is run by Greater Nile Operating Company, a consortium of Chinese, Malaysian and Indian companies in partnership with Khartoum. Deng is concerned pollution from the oil fields is making people sick.

Greater Nile says it has conducted tests that refute these claims and told CNN their plants comply with international environmental standards.

But tests in an oil field run by another company have come up with disturbing results.

(on camera): Recent scientific studies show that there are very high levels of mineral content in the water around here. They presume it's because of seepage from these oil facilities.

(voice-over): This is Africa's largest fresh water wetland. A German NGO says it found "persuasive evidence" here of contamination from oil fields operated by White Nile Petroleum.

Over nearly two years, the group Sign of Hope had more than 50 water samples tested by an independent scientific. The study found salinity and nitrate levels in drinking wells near the oil fields at many times the international recommended level for humans. It blames water from the company's processing facilities.

Sign of Hope also found that abandoned drilling sites contained high concentrations of chemicals like cadmium and lead, that could find their way into the drinking water.

White Nile did not return our calls, but on its Web site says that the study is baseless and unjustified and says its facilities are not the source of the alleged contamination and continuously tests the quality of is wastewater and that it complies to the strictest international standards.

But in the village of Riel (ph), people are wary of the water.

"Before, our cattle didn't die," he says, "and our children didn't die. Our water was good. Now the water is bad."

There's no independent evidence that the oil company's operations have caused sickness or death. The companies deny it. But the governor of Unity State says that the story of oil in Sudan comes down to one word.

DENG: Mismanagement of the -- of the resources (INAUDIBLE). Mismanagement in the area of protecting the -- the environment.

MCKENZIE: And, he says, it's the people who suffer. They live alongside what is commonly known as the best road in South Sudan, built by the oil companies. Sudan has a billion dollar oil industry, but on the edge of the road, some of the world's poorest people collect reeds to survive.

UNIDENTIFIED MALE: Life is really difficult here. That's why it's easy for here -- I walk on this, it's for the life. We are suffering a lot from the -- they are starving.

MCKENZIE: For now, they only see oil as a curse.

David McKenzie, CNN, in the oil fields of unity state.

(END VIDEO TAPE)

FOSTER: And there are many people around the world very concerned about the cold snap, particularly in Europe and the U.S.

And to give us the very latest on all of that is Guillermo.

He is at the World Weather Center -- hi, Guillermo.

GUILLERMO ARDUINO, CNN METEOROLOGIST: Hey, Max, yes, I think that it's improving for Britain, though. I must say that now the problem, as you see here on this forecast map, it's going to be in the northern parts of the continent here, anywhere from Poland into France and into Spain again. I'll explain why.

But, again, the -- what you're going to be dealing with in Great Britain is no more snow or no more significant snow but very, very cold temperatures. And the winds are coming your way, as well, so it's going to emphasize that a little bit more.

Look at this graphic and explaining exactly what's happening -- France, the Low Countries, in Ireland, in Brussels there, in the Low Countries again, with more snow. Madrid is seeing some snow. We may see some more -- Milano, Berlin.

So that area here into the northern parts of the continent, it's because of this low pressure center here that it is promising bad weather into Spain and bringing heaven -- heavy snow into the Alpine Region -- Germany, Poland, again and the winds that are coming from the north. And those winds are going to impact Britain, as well. So the snow is going to be more toward the continental side but the cold air and the winds into Britain.

Look at London, getting a little bit better, going up gradually on the weekend, still below average, but doing a little bit better. If you take another town, like Madrid -- we're not going to see that. Needless to say, in the United States, even worse.

Well, let's see, Southern France here with snow, the Pyrenees, Andorra over there with snow; the Cantabrian Region of Spain, the southern parts of France, the Alpine Region. Copenhagen with more snow. Vienna with more snow. And then here, we get a little bit of a break.

The problem that we have in here is that it has snowed before significantly and now, with the temperatures rebounding just a touch, it is melting away and it's flooding outside Sarajevo. So long-term is the concern. We'll see what happens.

Biting cold in Glasgow for tomorrow, minus two; the high, minus eight in Stockholm, 12 in Rome.

And these are the counties and states in the states that have winter watches or warnings or blizzard warnings. And the snow is getting down all the way to Atlanta. In fact, many people are flying out of the busiest airport in the world, Atlanta, earlier, because we're getting snow. At anytime, it's going to fall on the city.

And behind that, the temperatures will plunge. So I think that the U.S. is in better -- in worse condition in general terms. Canada, needless to say, Winnipeg minus 19 the high for tomorrow; 23 in Miami, rebounding just a tad.

But still, I have to tell you something about Asia, that temperatures are rebounding this weekend; also in Beijing and -- and all those cities. But this is promising very, very cold conditions for next week. So you know it's all across the Northern Hemisphere. The story is not over. You've been warned already.

Stay with CNN.

After the break, more QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

FOSTER: The new chief exec at General Motors is turning his rose- tinted glasses and he looks to the year ahead. Ed Whitacre says he expects the government-controlled automaker to turn a profit for 2010. The last time G.M. posted an annual net profit was in 2004. Between 2005 and the first quarter of last year, the company rang up nearly $90 billion and losses.

Whitacre certainly has his work cut out for him, though. On Wednesday, G.M. said December sales were down a further 6 percent from a year ago, bringing the total decline to 30 percent for 2009.

Let's get more on how G.M. and Detroit in general are going to get through this year.

Maggie Lake is following that story for us.

She joins us from CNN New York.

It is going to be a good one for them?

MAGGIE LAKE, CNN CORRESPONDENT: Well, there certainly -- hoping so and no one more so than Whitacre. He's raised a lot of eyebrows, Max, I have to tell you, when he came out with that statement. And all of this ahead of what is the industry's -- one of the biggest events for the industry, the Detroit Auto Show, that kicks off on Monday, is when they put their best products forward.

Whitacre coming out and saying he expects G.M. to be profitable, as you said, in 2010. That's notable for two reasons. First of all, that stepped up the time line from the predecessor, Henderson, who was saying that they would be profitable maybe in 2011. So he's speeding that up. And it's even more aggressive than Ford, their rival. Ford not committing to anything in 2010, although a lot of people think they'll get there. They're still sticking to that 2011 prediction.

And remember, Ford's sales in December were really looking very good, up some 30 percent compared to some of those figures you saw for GM.

So Whitacre, you could say, really, going out on a limb here.

The other reason it's notable, Max, is remember, he's only the interim CEO. They are looking for a permanent replacement. Nobody has been singled out yet, although Whitacre himself saying he likes the idea of Chris Liddell, the one -- the man who was just given the position of CFO, the chief financial officer, from Microsoft. But so far, he's certainly not been named.

But whoever takes that very tough job is now going to have to live with that kind of forecast that analysts have heard. So interesting that Whitacre would come out and do that. But, you know, I guess he's saying it as a vote of confidence for GM.

FOSTER: And what are impartial observers saying, though, looking ahead?

Are they expecting more layoffs?

LAKE: Yes, you know, it's a good question, Max, and a little bit of a surprise when the survey came out because, you know, we did see those December numbers looking pretty good af -- after the Cash for Clunkers went away, people were really worried. Especially Ford looking good.

But even those things that seem like they are improving and turning the corner and we've seen so much cost-cutting. There was a survey done for -- by KPMG, the management consultancy. They say 88 percent of auto industry executives still say that there's over capacity when it comes to North American plants. In fact, many of them say it's a bigger problem today than it was a year ago, which really is striking.

So that it likely means that we are going to see even more pain when it comes to traditional plants. And GM, in fact, maybe even brands -- G.M. coming out in that same period, this last 24 hour period, saying they're probably going to Saab. They don't see a viable buyer there, so that will be yet another brand sent to the cemetery.

there is a little bit of hope, though. G.M. did open a battery plant for the Volt, the electric car. They unveiled that today. So maybe a little bit of hiring in those green technology areas. But when it comes to traditional autos, it looks like we could see even more lay-offs ahead.

FOSTER: We'll wait to see.

Thank you very much, Maggie, for that in New York.

Now, do you ever get the feeling about something that turned out to be right?

Well, some companies will pay big money for instincts like that.

Poppy Harlow from CNNMoney.com caught up with a woman who's turned her gut feelings into actually quite a big business.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Concerns of a deep recession...

POPPY HARLOW, ANCHOR, CNNMONEY.COM (voice-over): When it came to calling the financial crisis, most of Wall Street got it wrong. But Laura Day says she got it right.

LAURA DAY, INTUITIONIST: I woke up and it had actually been a couple of weeks. The market had really been bothering me, but bothering me the same way like a scab will itch you. I just sold everything into cash.

HARLOW: She felt the stock market crash coming literally -- and then, the oil sell-off.

DAY: I said I wouldn't be buying the oil futures any time soon. And then two weeks later, the oil market tanked.

HARLOW: So how did they do it?

She says by harnessing her intuition.

DAY: I literally do this in my sleep.

HARLOW: And she makes millions doing it. Day says major corporations and hedge funds pay her $10,000 a month not for her business acumen -- she's the first to admit she knows nothing about the market or the economy -- but for her gut feelings.

DAY: What they really are hiring me for is to predict, is to troubleshoot in the moment so problems don't happen.

HARLOW: (on camera): What are some of the example questions, I mean, that you've gotten in the middle of the night from a business leader, for example?

DAY: They're saying they're going to pull the deal if we don't give in on this point.

Do you feel they will?

HARLOW: Are they...

DAY: That...

HARLOW: Are they bluffing?

DAY: Exactly. I'm not a risk factor to them, because if I'm completely off, they would probably know.

HARLOW: (voice-over): But is there science to back it all up?

Dr. Joel Voss and Dr. Ken Paller co-authored a study focusing on unconscious memory and implicit recognition at Northwestern University.

KEN PALLER, PROFESSOR OF PSYCHOLOGY, NORTHWESTERN UNIVERSITY: Our thinking about intuition is that there can be intuitive useful -- useful intuitive ideas that come out of some actual implicit knowledge.

JOEL VOSS, BECKMAN INSTITUTE POSTDOCTORAL FELLOW: And what I'm skeptical of is the notion that someone can make an intuitive decision that's accurate in a field in which they have no expertise. That is completely against any known findings that I can think of.

HARLOW: While celebrities like Nicole Kidman, Jennifer Aniston and Brad Pitt all praise the work on Day's Web site, on Wall Street, the feeling is mixed.

UNIDENTIFIED MALE: No, I don't -- I don't trust that.

HARLOW: (on camera): What do you trust for that?

UNIDENTIFIED MALE: I trust the history, not the future.

UNIDENTIFIED MALE: Sure, why not?

Most people are pretty much akin to throwing a dart at a board anyway?

(END VIDEO TAPE)

FOSTER: And Poppy joins us now after New York -- Poppy, of course a scientist is going to be skeptical because there's no evidence here.

But we're going to play along with it, aren't we?

What does...

(LAUGHTER)

FOSTER: What does she say about the economic recovery?

That's what we want to know.

HARLOW: Right. I mean, we all want to know that. So when I interviewed her, I spent the day with her. And I pressed her and I said we all want to know what your gut instinct is about where the economy stands right now. And she said, listen, you're not one of the my clients, I don't do that on camera. Of course, we're not paying her $10,000 a month. But she said I would suggest to people not to look just at what the broader economy is doing and the stock market is doing, Max, but to look at where the opportunities are in that economy.

She said, listen, there are opportunities in every economy. She's right. It's just hard for us to know exactly what they are.

But listen, this is a woman that sold all into cash right before the U.S. market crashed and she called the oil sell-off and she says she doesn't know anything about the economy. I beg to differ. She's much better at calling it than most of us.

FOSTER: There's something going on there, isn't there?

I'm just wondering what types of companies are hiring her.

Are they the big companies or...

HARLOW: Sure.

FOSTER: ...small businesses?

HARLOW: Major Fortune 500, Fortune 100 companies have hired her. I know one specifically. We can't give you the name, it's off the record, but we're talking about a major, major U.S. technology company that brought her into their headquarters to talk to hundreds of their employees and try and teach their employees gut instincts; major hedge funds. She's working with an emerging market fund right now overseas because she says she senses that will be a strong area come March.

So it's just fascinating to hear who she meets with, celebrities and these major corporations. And I've got to tell you, she's made tens of millions of dollars doing this over the last decade or so -- Max.

FOSTER: Poppy Harlow, thank you so much.

It's fascinating stuff, a different perspective there for you.

Now, just ahead, we'll check on the market action on Wall Street and here in Europe.

And we're also keeping an eye on the White House for you. U.S. President Barack Obama is due to speak in an hour or so about the failed Christmas Day bombing of a U.S. airliner.

(COMMERCIAL BREAK)

FOSTER: Let's check on the markets before we go, particularly on Wall Street. Stocks pretty much on hold as we wait for those monthly U.S. jobs reports. The numbers coming out on Friday. The market up slightly today. We did get some labor market news today. U.S. labor -- new claims for unemployment benefits rise by 1,000 to 434.

Now, after a pretty lightly start to it, European shares have gone to sleep, as well. Pretty quiet over this end of the pond. And Thursday was another flat session for everyone. London's FTSE 100 took below the break even line, despite gains for some banks and retailers. The Bank of England holding interest rates on hold. No extension of the money printing process, either this month.

In Paris, the CAC 40 closed up a little and the DAX (INAUDIBLE) was down .25 of 1 percent.

That is QUEST MEANS BUSINESS.

I'm Max Foster.

Christiane Amanpour is next after the headlines from the I Desk, watching the White House now.

END