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Federal Reserves Raises Interest Rate

Aired February 19, 2010 - 14:00)00   ET


MAX FOSTER, CNN ANCHOR, QUEST MEANS BUSINESS: Over the hump, the Fed says the worst of the financial crisis is behind us and raises a key interest rate.

Nothing for months, then a 1,500-word confession. Has Tiger convinced everyone that he's changed his stripes?

And music history up for sale. Alan Parsons (ph) was a recording engineer for the Beatles. What a (INAUDIBLE) says the Abbey Road studios go on the block. I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS.

Hello to you. The Fed took everybody by surprised. It nudged the rate to charges for emergency loans a fraction higher. It's the first of the big three central banks to raise rates since the financial crisis began. So why now?

Also on the program.


TIGER WOODS: For all that I have done, I am so sorry.


FOSTER: Well tonight on QUEST MEANS BUSINESS, we ask, were you convinced by Tiger Woods apology and perhaps more importantly, are his sponsors?

Now the U.S. Federal Reserve seems to be taking a small step back to normality. It is raising the cost of borrowing for banks who tap funds directly from the Fed. It's just a tiny tightening to the extraordinarily lose monetary conditions we've had over the past few years. But the fact that the Fed dares to move at all is a sign it believes things are getting better for the U.S. economy. Felicia Taylor joins me now from New York. Felicia, this was a surprise, wasn't it when it came out?

FELICIA TAYLOR, CNN CORRESPONDENT: Absolutely, there's no question about it. And mostly because it's surprising for the Federal Reserve to make a move on interest rates outside of the regularly scheduled meeting. So initially, it did spook the markets, increase the discount rate. But now that the markets have had a chance to sort of mull it over, it's being seen as more of a positive sign. As you mentioned, it sort of indicated that the economy may be coming out of the worst of this financial crisis.

Now keep in mind though the significance here is that it's the discount rate as you said. That's the bank to bank loan rate and for emergency loans. That's not the Fed funds rate which is the rate which is given to investors, businesses and individuals, households, things like that. So that's why there's a significant difference. If it was the Fed funds rate, there would have been more of a downturn in the market. Initially at the open today, the market did go downward, but now things have come back well off of their lows. So the economy overall is beginning to recover. The strength in that is being shown by the Federal Reserve by changing the discount rate and now the stock market is perceiving it as a positive as well.

FOSTER: So it's an indicator really, we shouldn't be too worried that this is going to choke off any sort of recovery.

TAYLOR: No, absolutely not. It's because it's an indication of what's to come down the road with regards to the Fed funds rate and whether or not they're going to raise those eventually. The consensus pretty much is they may do that sometime toward the end of the year, at the very earliest, by the third quarter of this year. So it's not necessarily going to choke anything in terms of a recovery whatsoever. It should be just fine. It's sort of slow and steady as she goes.

FOSTER: I guess that the Fed probably was thinking as well and let's see what reaction we get. Let's test the waters with the markets out there. So how do you think it would have read the reaction to the markets without them positive in terms of its strategy.

TAYLOR: You mean the reaction of the marketplace and whether or not they approved the Fed funds? The market never likes surprises. You don't want to throw a surprise in the marketplace so that's why this is a very small increase in the discount rate. And that's exactly like I said, sort of steady as she goes and as we can see, the markets are well off of their lows of the day. The market is fractionally unchanged, but nevertheless, that's a sign that the market does approve of what they're doing. And frankly, for the week we've had the Dow close higher for three straight sessions this week, the Nasdaq for five and we had some upbeat earnings and economic reports that have also led to gains. We saw (INAUDIBLE) on inflation today that was actually down if you exclude food and energy prices and that's the first time we've seen that small down tick in probably 25 years. So things are really beginning to be OK.

We also had a nice surge from JC Penney, the department store operator didn't have great earnings, but the long-term outlook was optimistic and those shares are up 6 1/3 percent right now.

FOSTER: Felicia, thank you so much for joining us this Friday.

Now European markets made a clean sweep for the week. I mean five days of uninterrupted gains so this session, tame inflation numbers outweighed any concern about the direction of U.S. interest rates. Banks managed to gain plenty of ground on Friday. The Royal Bank of Scotland added more than 2 percent in London. (INAUDIBLE) societe generale and (INAUDIBLE) all gained ground in Paris meanwhile. But in Frankfurt, Daimler, BMW and the truck maker MAN were the leaders.

Now there's a new man in charge of managing the debt owed by the Greek government. Petros Christodolou is taking over as the head of the debt management agency, a brave man and his first job will be to borrow more money by selling government bonds, $37 billion in all. The money is needed to repay existing bonds that are coming up for maturity. Prime Minister George Papandreou says all Greece wants from the market is the chance to borrow on the same terms as other nations. In fact, the cost of borrowing is higher for Greece than it is for other Eurozone countries and higher than at any time in the last 10 years. That's because lenders sense a growing risk that the money won't be repaid.

This Friday is the deadline set by the EU for Greece to explain a series of currency and debt transactions it carried out over the past few years. Media reports say the deals were designed to artificially lower Greek government deficits and avoid breaking EU rules.

Well, earlier, Charles Hodson spoke to Joaquin Almunia. Until recently he was the EU commission for monetary affairs and now he's in charge of competition matters there. Charles asked him if the EU should have seen the debt crisis coming.


JOAQUIN ALMUNIA, EU COMPETITION COMMISSIONER: What we knew about fiscal imbalances in 2009 was worried (ph). We knew that the Greek economy was not able to put under control the imbalances and that the Greek (INAUDIBLE) finances were suffering a lot of pressure because of lower revenues, higher (INAUDIBLE) but in 2009 we warned the previous Greek government before the elections if you don't adopt further measures, the deficit by the end of 2009 can be (INAUDIBLE) above the 10 percent.

CHARLES HODSON, CNN CORRESPONDENT: The solution that was adopted a few days ago by finance ministers was very much one that you had suggested, but is it going to nail the problem or does it simply provide a temporary solution until the day when the Greeks say, you know what, honestly, we can't deliver these huge cuts.

ALMUNIA: I cannot foresee what will happen in the future. I can tell you what is my appreciation (ph) of the determination of the Greek government. They are seriously determined to implement the program of adjustment, the program of fiscal consolidation, so (INAUDIBLE) to cut the public deficit this year 4 points from 12.7 to 8.7 percent and to continue these consolidation (INAUDIBLE) in the next years. But this will require a lot of political will, a lot of political determination and this will require in Greece consensus, agreements with the opposition (ph), agreements with the (INAUDIBLE) agreement with the stakeholders and from the European point of view, this will require at the same time pressure and solidarity.

HODSON: Well clearly Greece is not (INAUDIBLE) Italy, Portugal and Spain Euro area (ph), UK outside the Euro area, huge problems for debts and deficits. Is it necessary to suspend the (INAUDIBLE) treaty and its strictures on debts and deficit, if only to rescue the euro, which is plunging on the international exchanges.

ALMUNIA: No, no, indeed, because of the crisis and because of the stimulus packages that were a clear position (ph) of all the leaders in the EU and the (INAUDIBLE) that this is (INAUDIBLE) Greece (INAUDIBLE) and the debt levels have increased also. The question is that not all the countries and not all the economies have the same kind of reputation vis-a- vis the market, have the same kind of room to maneuver to increase their debt levels. So you mentioned the UK, I can mention also the U.S. The deficits in the U.S. or in the UK are higher than in the Greek case. But they have more confidence from the markets from the lenders to buy the public debt securities issued by the U.S. or by the UK than in the case of Greece. I think we will overcome this situation. It's not about the euro. It's not the pound. It's not about the dollar. It's about the debt (ph) crisis and the deep crisis requires among other things a clear path of fiscal consolidation over the next years.


FOSTER: Well all things sweet (ph) on QUEST MEANS BUSINESS, we are turning our attention to the economic crisis facing Europe. For many of these countries, this will be a spring of discontent trying to cope with weak growth and avoid falling into a Greek-style debt trap. Ireland is one of those countries that we're looking at, once seen as the Celtic tiger. Now joblessness is soaring in manufacturing going into reverse. Al Goodman (ph) also brings us a story from Spain where youth unemployment is the highest in the Eurozone. We'll have the view from Portugal where the government is struggling to contain rising deficits and in Italy meanwhile, there's indignation (INAUDIBLE) in the firing line. And of course we'll bring you the latest developments in Greece where workers say they'll strike against those cuts.

Now when the full extent of Greece's debts came to light, many commentators said it exposed exactly what was wrong with a single currency for many countries. We want to know what you think. Was the euro a bad idea? That's what I'm asking on our blog. So far 56 percent of people who voted said the euro was a good idea. To have your say, go to

Now let's get the news headlines for you, give you to the newsroom where we find Becky. Hi Becky.

BECKY ??, CNN CORRESPONDENT: Thank you Max, mea culpa in America, golfer Tiger Woods said it clearly. I had affairs. I cheated. Woods made his apology with a tightly controlled statement in Florida nearly three months after his status as golf great and family man was tarnished by a sex scandal. He says the plans to return -- he does plan to return to golf, but doesn't know when.

Well (INAUDIBLE) against Israel security barrier in the west bank turned nasty today. (INAUDIBLE) Israeli police responded with tear gas and rubber bullets. It's the first anniversary of the demonstrations against the concrete wall that cuts through the Palestinian territory.

A German (ph) investigation into the killing of a Hamas official in Dubai is taking another side. It's an international investigation, Britain (ph) deny reports that its intelligence service was tipped off about an overseas operation by Israel's Mossad (ph) using fake U.S. -- UK passports. Israel is not commenting on suggestions that it was involved in last month's (INAUDIBLE) in Dubai hotel room.

A military platoon commander is Niger's new leader after the military in the West African nation ousted the president in a coup d'etat. He is said to be held in a military camp. The (INAUDIBLE) Niger from membership after the change of power.

And those are the headlines. Max, back to you in the studio.

FOSTER: Thank you Becky so much and as Becky was saying that Tiger came come out of hiding and is seeking forgiveness. Has he done enough to smooth things over with his sponsors? That's up next right here on QUEST MEANS BUSINESS.


FOSTER: Deeply sorry and ashamed, Tiger Woods has apologized for cheating on his wife. A few hours ago, the world number one golfer spoke openly for the first time since his private life erupted into public view in November. In a closely controlled television segment, he apologized for what he called his irresponsible and selfish behavior.


WOODS: I know I have bitterly disappointed all of you. I have made you question who I am and how I have done the things I did. I'm embarrassed that I have put you in this position. For all that I have done, I am so sorry.


FOSTER: Earlier I spoke to Larry Woodard. He's the CEO of Vigilante Advertising and I asked him what he thought were the headlines from Tiger Woods' press conference.


LARRY WOODARD, CEO, VIGILANTE ADVERTISING: Tiger was Tiger. He showed, he did show uncharacteristic emotion but he hit all the points. He apologized to everybody at least twice. He defended his wife and children. It was obviously prepared statement and he didn't give us an action plan or a timetable. I mean those are my top lines (ph).

FOSTER: And let's look at the apologies and the sorryies (ph), because there is one particularly powerful one.

WOODS: For all that I have done, I am so sorry.

FOSTER: It's not just the words, is it Larry? It's the body language. It was pretty powerful.

WOODARD: Exactly. This was a true apology. It's a strong statement. In a true apology, the victim gets the last word, but this is certainly a start.

FOSTER: And it was interesting because he talked about transgressions in the past hasn't he and he did point blank accept and admit to what he's done. Let's listen to his words when he admitted to his transgressions as he called them before.

WOODS: I was unfaithful. I had affairs. I cheated.

FOSTER: What did you make about his frankness there?

WOODARD: Well I thought that his frankness was necessary and I believe that he knows that it was necessary and Tiger Woods -- it's consistent with his personality to be, to take on responsibilities. So I felt like that was consistent with who he is and he did it. The question of course all around how people react to what he said, not so much that he says it.

FOSTER: And he was very clear about this was about him. It wasn't about his family. He was upset about how his family was being brought into this. How do you think he handled that?

WOODARD: Well, I'm not so sure he handled that correctly. I was concerned as you know yesterday with him and I was hoping that he wouldn't sort of bring his family in and tell the press that they've bothered and chased his family, because the fact remains that the reason they did was because of Tiger's actions. So if you're truly going to take responsibility for your actions, then at a certain point you have to say, it's not the press that's badgering my family. The press is badgering my family because of what I did.

WOODS: Despite the damage I have done, I still believe it is right to shield my family from the public spotlight. They did not do these things. I did.

FOSTER: He's got a right though to some element of privacy hasn't he, despite the fact he's this huge star?

WOODARD: Absolutely. I think that the idea is right. You want to protect your family. It's certainly not anything that you did. But I think what happens and what the press is going to need to hear to in some way back off is to hear Tiger say, well see, I messed up.

FOSTER: He did get very close to it at one point when he started talking about his religion.

WOODS: Buddhism teaches that a craving for things outside ourselves causes an unhappy and pointless search for security.

FOSTER: What do you reckon of that, bringing Buddhism into his transgressions?

WOODARD: I actually think that it was a very good strategy as well as probably true to his beliefs and I'll tell you why. Because his mother front and center, his mother obviously raised him and had a great impression upon his life, but more importantly, I heard a couple of women talking about the press conference and they said, they were talking about another athlete and they said, he was born that way, but Tiger Woods really is a victim of his success. And so I think absolutely central to peoples' ability to forgive Tiger is their ability to believe that this is something that happened to him, that it's not a core part of who he is.

FOSTER: OK, this is a crucial question for you Larry. Has he drawn a line on this affair for want of a better word? Can he move on from this?

WOODARD: Well, I think that that's very important question. Listen, golf is waiting. The sponsors are watching. The most interesting thing about all of this is that golf needs Tiger Woods and sponsors certainly want him. Spokespeople are very difficult to find, particularly ones of Tiger's strength. So I believe that people who will want to see that this is a beginning will see it that way. This leaves a lot of questions but I certainly believe that it also cracked open the door a little bit in Tiger's favor.


FOSTER: Here is some of the things that Tiger Woods sponsors have been saying. A Gillette spokesman says Tiger spoke today and addressed the issues he felt were most important. His words stand on their own. We wish him and his family the best.

Gatorade says we wish Tiger well as he works through these private matters. And EA Sports is a company that makes video games including a Tiger Woods PGA tour game. Its President Peter Moore said we're supportive of his focus towards family and rebuilding his life. We look forward to seeing Tiger back on the golf course when the time is right for him and his family. Our strong relationship with Tiger for more than a decade remains unchanged.

Now a British landmark may be up for sale. It's not a castle or an ancient monument but the people who worked here left a permanent mark on musical history.


FOSTER: Now after Number 10 Downing Street, it could be London's best known address. For most people the name Abbey Road is forever associated with the image of four men, one barefoot on a pedestrian crossing, the studio where the Beatles or where the Beatles recorded most of their classic tracks and it could now be up for sale. The history of music at Abbey Road goes back a lot further than that though. The building was the world's first purpose built recording studio would you believe and created when the music company EMI bought the premises back in 1929.

The British government recorded propaganda broadcasts there during World War II. Between 1962 and 1969, the Beatles used it for the sessions that made the studios renowned throughout the world. They named their last album after the place that had been their musical home. The story didn't end there. Hosts of later artists went to Abbey Road in search of inspiration. In 1973 that produced another classic, Pink Floyd's "Dark Side of the Moon."

Well, EMI, which has run the studio since music began at Abbey Road is badly in need of cash. It recently said its loss in the latest financial year came to $2.3 billion. It was bought in 2007 in a takeover by (INAUDIBLE) a private equity firm and if EMI doesn't raise the cash to dig itself out, it may well end up in the hands of Citigroup, its lending bank. A campaign is now under way to save the famous studio and Paul McCartney is hoping a buyer will come forward. He said that and Morgan Neil (ph) now looks at who could possibly come to the rescue.


MORGAN NEIL, CNN CORRESPONDENT (voice-over): If these walls could talk, they'd sing. Abbey Road studio, where the Beatles made this recording of "All You Need is Love," was the setting not just for numerous Beatle songs and albums, but for much of Britain's most famous music of the 20th century.

Rock stars Pink Floyd and Cliff Richards, composer Sir Edward Elgar and movie sound tracks for "Star Wars" and "Harry Potter" all recorded here. Now it's reportedly up for sale by owner EMI.

(on-camera): This is a place clearly dear to the memories of fans from all over the world. Just take a look at the messages. Up here is one from Mexico. If you go down here, one from Uruguay and then over this way just a little bit, one from Poland. But it's Britain's national trust that may be the best positioned to preserve those memories.

(voice-over): Hearing of the possible sale, one radio show launched a campaign urging the country's national trust, a guardian of British heritage, to buy and preserve the studios. The public response was immediate and passionate and the trust is now considering the idea.

UNIDENTIFIED FEMALE: What it makes me think is that people really just care about perhaps what was in our hearts in a spiritual sense of what's important, because (INAUDIBLE) worried about (INAUDIBLE) and everything else. Actually the way that something like this is (INAUDIBLE) got them excited and it says to me that people really do care about our history, about cultural symbolism and about places of significance.

NEIL: Brian Southall, who wrote a history of Abbey Road studios agrees.

BRIAN SOUTHALL, AUTHOR, "ABBEY ROAD": Abbey Road is a very special place in a lot of peoples' hearts. It's obviously because of the Beatles. One has to accept that. The "Abbey Road" album obviously brought the whole thing to the public's attention.

NEIL: Because they're still working studios, tour buses don't stop at Abbey Road, but that doesn't keep fans from coming to recreate the iconic album cover or just to scribble their devotion.

UNIDENTIFIED MALE: As long as they maintain its integrity and what it is and what the magic of it is, I guess it doesn't really matter who the owner is.

NEIL: Paul McCartney says he hopes the studios can be saved, but stopped short of saying he'd put in a bid. Not so composer Andrew Lloyd Weber who says he's very interested in buying the studios. With an estimated worth of more than $1 billion, he may have all you really need. Morgan Neil, CNN, London.


FOSTER: Now there really were legendary studios. You saw those images just there, the Beatles when they played there and really, actually that Alan Parsons is joining us now. He's won a shelf full of Grammy awards and he worked with the Beatles on the Abbey Road album in those studios and again, the same studios, when Pink Floyd recorded "Dark Side of the Moon" there. A privilege to have you on the show Alan. I mean just what was it like first of all to be in those studios at that time? I mean you were part of modern music history.

ALAN PARSONS, MUSICAN AND PRODUCER: My timing was impeccable of course. I was just (INAUDIBLE) album was recorded and early days I was a trainee engineer (INAUDIBLE) engineers (INAUDIBLE) and it's an amazing time to be involved in the recording and no better recording studio to (INAUDIBLE)

FOSTER: Give us the big sell then. Why these studios (INAUDIBLE) Why do we need to keep them as they are?

PARSONS: If you ask any Beatle, you ask (INAUDIBLE) you could ask (INAUDIBLE) you could ask any famous (INAUDIBLE) artist, just what it is that keeps them coming back, it's just that it has a magic that you can't, that nowhere has. It's just this magical atmosphere there that can't be (INAUDIBLE) and just (INAUDIBLE) It would be just so tragic to see that magic disappear into (INAUDIBLE) It would be just an absolute tragedy (INAUDIBLE)

FOSTER: We don't know quite what's going to happen yet, but what went through your mind and those of other people in the industry when you heard the news that they possibly could be sold and you don't know who to.

PARSONS: The main thing is that it remains active as a recording studio. I think that's the most important thing because even if it did get sold (INAUDIBLE) so it's important that the industry and English heritage and the likes of (INAUDIBLE) keep it alive for what it does best which is being a recording studio. And I think it could be turned into a sort of shrine of recording, rather like the (INAUDIBLE) studios in Hollywood has become not only a tourist attraction but it's also still a working studio. I mean when I was running the place there was no doubt that I actually ran (INAUDIBLE) also closed up. But when I was running the place, I was trying to get interest in a museum open to the public that would be devoted to the history of the studios.

FOSTER: Take us back to that time when you were working with the Beatles or Pink Floyd maybe. What's the moment, is there something of that time that you really remember that really encapsulated those studios in your memory?

PARSONS: Everybody was very (INAUDIBLE) at the same time and we knew each other, the engineers knew all the artists. So it was just a very, very convivial (INAUDIBLE) and even the classical artists (INAUDIBLE) pop artists. It was a very (INAUDIBLE)

FOSTER: And you talk about you wanting it to remain a working studio. I guess you wouldn't want it to become a museum, somewhere where people just walk through and talk about what did happen there. You still want music to be made there.

PARSONS: I think that would be the ideal situation. Unfortunately it's the state of the industry that a lot of recording takes places on laptops like the one I'm speaking to you on right now. But the fact is that Abbey Road was perhaps getting most of its recent work through (INAUDIBLE) relegated to smaller studios and orchestras are being replaced by synthesizers which is (INAUDIBLE) state of affairs but it is nevertheless the truth.

But of course, if tastes change and if Abbey Road can continue to -- to be, you know, forcing the industry, you know, for the art of recording, then -- then it should -- it should definitely remain on the map. And if - - if Abbey Road goes, then heaven help every other studio on -- in the world.

FOSTER: OK, Alan Parsons, thank you so much for joining us on QUEST MEANS BUSINESS.

That was the man that worked -- the engineer that worked on those classic albums at Abbey Road and someone who desperately wants to see those studios remain as they are and not sold, in his words, to a property developer. That would be the worst case scenario.

We'll be back in a moment with more QUEST MEANS BUSINESS.


FOSTER: Welcome back.

I'm Max Foster in London and this is QUEST MEANS BUSINESS here on CNN.

Now, passengers hoping to fly with Lufthansa next week face severe disruption. The German airline says it will have to cancel two thirds of its flights as pilots strike over jobs and pay. The action is due to start at midnight on Sunday.

And earlier, I spoke to Hans Fris. He's a businessman who's booked a flight with Lufthansa on Monday. He says he still doesn't know whether he'll be able to go.


HANS FRIS, BUSINESS TRAVELER: Well, I booked a flight on this coming Monday, the 22nd, to fly at 2:00 in the afternoon from Koln in Germany to London Heathrow. And so far, I haven't heard anything from Lufthansa at all, whether or not the flight will take place and if not, what they're going to do in order to serve as reserve so they make sure that I get to this charity event that I have to go to on -- on Monday evening.

FOSTER: So what are you going to do?

FRIS: Well, I actually -- I think I'm going to play it cool and just sit back and wait for them to come to me. It should be in their interests to service their customers. And I'm a valued customer. I have been flying with them for years. And they have all my contact details. And until now, I haven't heard anything. I expect to hear from them. And if I don't, then I will have to contact them.

I mean, in the news -- here in Germany, at least -- there are all kinds of links that you can connect to whereby you can -- you yourself can find out what you can do.

I don't think it's up to me. I think it's up to -- to them. I'm a customer.

FOSTER: Yes. You must be furious that you're not being contacted, because you're hearing everything from the press and not from the company you booked with. As you say, you're a big customer of theirs.

FRIS: Well, I wouldn't say a big customer, but I've been a good customer. I've been a loyal customer, rather, over -- over many years. And I haven't heard a word from them yet.

The interesting thing is in the press, they have come out with telephone numbers and e-mail addresses where you can contact them or you can go on Web pages. I don't really see that as my responsibility. If I'm paying for a service, I expect to get it from them.

FOSTER: Have you looked into alternatives if you find out, eventually, that you're not going to be able to fly anywhere via Lufthansa services, as it were?

FRIS: Well, yes. No, as a matter of fact, I have. And -- and the -- the interesting thing is I had first booked British Airways, but then I would have to go to Frankfurt, which is an inconvenience because I have to go down to Frankfurt from -- from Bonn, which is about 160 kilometers away. Koln is just around the corner.

So -- and then I said, well, I canceled that flight and then I booked Lufthansa and now this comes up. So it is rather inconvenient.

FOSTER: Maybe they'll sort all of this out, though, by Sunday night and you won't be affected. Maybe that's why they're not contacting you.

FRIS: Could be. I think they are -- they're hoping, they're hedging. But I doubt that they will sort it out the way the fronts have been drawn in the sand at the moment.

FOSTER: OK. Are you going to stick with Lufthansa if you're stuck without a flight next week?

FRIS: Well, no, I'll have to change. Io have -- because I have to be in London on -- on Monday, Monday evening and Tuesday and Wednesday. I -- I have to be there, there's no way about it -- two ways about it. So in word -- in the worst case, I would change to another airlines.

FOSTER: Will you stick with Lufthansa, I mean, in future flights?

Will you continue that relationship or will this change your relationship with them?

FRIS: No, it will not change my relationship. I mean they, up to now, they have provided a fairly good service and Star Lines (ph) as such have. But also, here, over the -- the winter months, there were quite a number of cancellations which, unfortunately, were not handled as well as one could have hoped for by Lufthansa -- and other airlines, for that matter.


FOSTER: Well, if you're due to fly Lufthansa in the near future, we want to hear from you, too. If you're worried about how you'll be affected and if you're making other travel arrangements, send us your iReports and you might see yourself on CNN very soon. To find out how to do it, go to

Now, help please -- company directors often look to advisers for inspiration or guidance, but how about taking a 14-year-old's advice?

Jim Boulden introduces us to the brains behind the aps, next.


FOSTER: Chances are, if you have an iPhone, you've downloaded numerous applications for it.

But who are the people behind them?

They may surprise you.

Jim Boulden has been meeting the wizards of the tech world, including a 14-year-old who's giving tips, would you believe it, to Google and to Vodafone.


JIM BOULDEN, CNN CORRESPONDENT: One of the main talking points this week here in Barcelona has been about applications. That's why they've created this Ap Planet Zone.

Now, some of the hand set makers and software makers have decided to work together to try to see if aps can work across all these platforms. Others have decided to still go it alone.

So we thought we'd ask developers what they think.

So, Dylan, you're 14.


BOULDEN: And you've already been involved designing or producing three aps?


BOULDEN: What are they?

MARYK: The first one is Alarm Music, the second is I SPY and the third is iWay. Yes, so if you fancy someone and you see them across the room, if you're too shy to talk yourself, you can just select a wink animation and just kind of hold it up.

BOULDEN: Is that something you're going to use?

MARYK: I haven't used it yet.


MARYK: Who knows?


BOULDEN: One of the issues here at this conference is moving beyond



BOULDEN: -- is moving beyond the iPhone and the idea that maybe you could develop one ap and not have to redevelop it for every single platform.



BOULDEN: So is that going to help?

MARYK: Hopefully it will.

MICHAEL O'HARA, GSMA: Developers aren't sure where to go. At the moment, it's very clear that you develop primarily for Apple, because they have such a market share. But as you look around you, every company is running a developer conference. Everyone is trying to get the hearts and minds of those developers. We want to bring them into one platform, expose network capabilities to that platform and let them develop even cooler applications.

NEIL BAILEY, WILDKNOWLEDGE: We're just a mobile Web ap at the moment. We can have this stuff running like gears so you can go offline. We're going to do the Androids, the iPhone, because -- because you need to. But that whole move toward one Web, one development, is fantastic news for us.

The word wild comes from the fact that we let people get on with what they want with these applications. So people are using WildForm to track tigers in India. They're doing stuff in Africa.

PIERRE ELZOUKI, RAVITEQ: My name is Pierre Elzouki. I'm the founder and CEO of Raviteq. The application suite that we are showing here at the -- at the curb (ph) is a full blown application suite for capturing, editing, sharing and so on of images. So we're working on Android and Symbion and with a small bar and, of course, we're doing it for iPhone.

BOULDEN: When you heard a couple of days ago that some of the major players will work together and they'll try to give you a seamless ability - - an open platform for your aps, what did you think?

ELZOUKI: I mean it sounds like candy from heaven, I mean, if that is true. I -- I don't really believe in it. I have heard about (INAUDIBLE) many years back when you heard about java platform in the Sun (INAUDIBLE) how independent there. So if it happens, well, welcome. We are -- we love that.


FOSTER: When we're talking aps, of course, all sorts of weather aps available on your phone.

But who needs them when you have Guillermo Arduino on your TV?

GUILLERMO ARDUINO, CNN METEOROLOGIST: Come on, I need them. I need them.


FOSTER: Is that where you get your weather forecasts from?

ARDUINO: Yes. Yes, you know what...

FOSTER: I'm giving it all away.

ARDUINO: You know what my problem is?

If I have to take the plants into the garage because it's going to be freezing tonight or not. That's my problem. So the telephone (INAUDIBLE)...

FOSTER: I'm sure there's a very precise ap for that, as well.

ARDUINO: There you go.


ARDUINO: Maybe -- maybe that's -- some 10-year-old can design something for me.

OK, Max, listen to this. These two low pressure centers are going to define the craziness of this weekend. And it started already to produce some problems, especially, I'm referring to the low here over Italy. We have delays in Milano. We have delays in Trieste, in Ljubljana here in Slovenia. This low is going to bring more snow into the Alpine Region. But it's not going to stay there. You see that it's going to move into the Balkan Peninsula here, bringing also some rain and some snow into those areas here to the north.

Now, rain in the south. It's moving very fast. While in the north, we don't see a change and don't think that because this low is moving away from England, you're not going to get bad weather, because the winds are going to be in that area.

So, for tomorrow, Barcelona with rain. I was there last week, too, and I got some rain. Rome with the winds. Milano improving a little bit. And then the winds prevail into London, the Nordic areas, Amsterdam and Brussels, also in the Low Countries and toward Germany we still have the chance of some snow showers.

I'm going to tell you, it's snowing uber Praffenauf (ph) -- can I say that again -- in Germany, over Praffenhauf and in Ramstein. And then we have rain in Zurich. We also have rain in Milano, as I was saying, in Brimini (ph), Trieste, Verona, Venice. Here in Italy, you see, look, all that is producing the rain. It's moving quickly, moving away quickly. The rain stays also in Hamburg here in northern parts of Germany.

Where we see the winds is, again, in these areas in the English Channel. And as we move all the way into the Baltics. It is going to get a little bit breezier in here, like 30 kilometers per hour or so.

So that's this weekend's weather.

Back to you.

FOSTER: Good stuff.

Thank you so much, Guillermo.


Do have a great weekend.

I'm Max Foster in London.