CNN CNN


 

Return to Transcripts main page

QUEST MEANS BUSINESS

Wall Street Responds Positively to Latest U.S. Unemployment Numbers; Interview With Iceland's President Olafur Grimsson

Aired March 5, 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: Blame it on the weather, the U.S. labor market improves, but could it have been better?

Germany says it will stand by Greece but with political and not financial help.

And I speak to the president of Iceland, as his country prepares to vote in a referendum.

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

Good evening.

First, bad news, the United States is still shedding jobs. The good news, though, it has lost fewer than analysts had expected. The U.S. Labor Department said the American economy had shed 36,000 in February. That is worse than the previous month, but the government said adverse wintry weather may have skewed the results. Construction continued to be one of the worst hit sectors. But there is a silver lining here. Several industries, including the health care industry shed solid gains in employment. The jobless rate held steady at 9.7 percent.

So, how are the results being read in the U.S.? And how will they resonate elsewhere? Let's bring in Jeff Joerres, he is CEO of chain and service provider, Manpower. He is in Milwaukee, in Wisconsin.

Thank you so much for joining us. The government pointed toward the wintry weather and Wall Street doesn't seem to be put off too badly by these figures. So, they are they looking at weather as well as a temporary factor in the joblessness?

JEFF JOERRES, CEO, MANPOWER: I think what they are really looking at is when you dig underneath some of these numbers, there is some stability, if not growth. I mean, no doubt the weather, in the Northeast that got hurt, that got hit pretty hard for probably three or four, five days, does have an affect. But I think when you beat consensus, which was minus 65,000, you come in the minus 30,000 range, what you are showing that there is some improvement.

No doubt about it, hours worked didn't shrink that much, though it did a little; overtime, same thing. So, I think what you are seeing overall is not anything gangbusters. This isn't a big robust number, but it is not a bad number. And as a result I think Wall Street is reacting relatively positive.

FOSTER: What do you make of the number of temporary workers getting work, right now? Because on one level you can be pessimistic about it and say companies are committing to fulltime workers, but another level, perhaps they are dipping their toes in the water, right?

JOERRES: Oh, it is just so classic. If we didn't have temporary help recovering right now, what we would see is really no recovery. Because what companies are doing is they are responding to the demand that they have. And as that demand for their products or services comes in, they are filling it in with talent. The talent is coming from us right now, because there is uncertainty about how long the demand will last, or how robust the demand. So, it is classical and it is actually a good sign that now for the last four months you have seen almost 250,000 jobs added in that temporary payroll section.

FOSTER: Will many of those temporary jobs turn into permanent jobs, do you think? If the recover continues? Is it that type of job?

JOERRES: Yes, I think what really happens is that before it returns to the permanent jobs is you are going to see more temporary. So, what you are going to see is as demand starts to expand, companies are going to respond to that and add more temporary into it. And almost all countries, with some having some slight different labor laws, you are running between 60 and 70 percent of those people on assignment as a temporary ends up getting an offer as a permanent employee. So, it is a great way to get into the company. And it is a great way for a company to kind of hedge that uncertainty that is in the air right now.

FOSTER: But what are employees saying to you? I guess they are still dissatisfied with the type of jobs, or the type of contracts, the type of pay they are getting right now?

JOERRES: Well, I think over all what you have is you have millions of people still out of work, the unemployment number, which stayed the same and a relatively low rate, given where we are right now, at 9.7, is also telling us something. What it is saying is that are still not new entrants into labor market. Because, again, you don't get counted as unemployed unless you raise your hand and I want to work. So, you still have a large discouraged worker population. You have those that are working part-time. And you have those that are working temporary. Realizing that, you know, what I'd like some more. But the market and the economy just isn't giving more right now.

FOSTER: Give us sense of the picture around the rest of the world. Is it similar to what is happening in America?

JOERRES: It is. There is some pretty good public data. And if we were use, you know, the temporary help need that companies are using right now, as a proxy for what's happening industrial production, light- industrial production, you would see the French numbers are going up. U.K. numbers are going up. What is happening in the Dutch market, it is going up. Again, all maybe at a little different paces, but what we are seeing now, across the world is really the exception of Italy and Japan, is that we are in an upward trend, some more robust than others.

FOSTER: OK, and let's just go back to that wintry weather. It seems, we covered it all on CNN, they are extraordinary scenes, but we are really getting a sense now about how much that costs the economy because vast waves of the population actually couldn't get into work. It is quite extraordinary the sort of impact, the economic impact they had, right?

JOERRES: Yes, no doubt. There was lost productivity, which is really interesting because if you look at the productivity numbers in the view of lost days (ph), it has gone up. And it has gone up with fewer days. So, you are really getting, really, much more productivity.

Secondly, when you look at those being hired which is really what is in this survey, and those being from unemployed to hire, there were job interviews schedule that day. There were processes that were underway that were put down, on hold and were on hold, in some cases in Washington, D.C, for an entire week. In New York three, four days. So, it has an element to it. What I wouldn't do is chalk it all up and say, it would have been just the panacea without it. I think it would have been slightly better. It would have showed some better information, but overall, what we are seeing right now is stable, pretty good, and slightly improving.

FOSTER: OK, Jeff Joerres, we'll speak to you again. Thank you very much for joining us from Manpower.

Well, today was the day that Wall Street had been waiting for all week and that was the release of those February jobs figures. Alison Kosik is at the New York Stock Exchange with a look at how the investors were taking the news we have just been talking about.

How did it go, Alison?

ALISON KOSIK, CNN FINANCIAL CORRESPONDENT: Max, investors feeling pretty good about that much-better-than expected news on the jobs front. Employers cut 36,000 jobs last month, while the unemployment rate, holding steady, at 9.7 percent. Most analysts were expecting to see a loss of more than 60,000 jobs, much more. And that is because the two blizzards, that you were just talking about, that hit the East Coast last month, kept a lot of hourly workers at home, kept them from getting paid and counted as employed. But the Labor Department says it is not really possible to quantify the total impact of the storms on today's numbers.

And even though the job losses are not huge, most analysts say, the storms had at least some effect. So we could tweak (ph) that up, though, for an even better jobs report next month.

Stocks are rallying on this news. Go ahead and take a look at the Dow industrials, up 86, the NASDAQ Composite up 28, and the S&P Composite-S&P 500, rather, up 12 points. We could end in the green today.

FOSTER: OK. And take us through the Toyota story. It is still rumbling on, isn't it? And the company actually announced an incentive program. And you have already got some tentative results from that.

KOSIK: Yes, this is interesting, as you know people are always looking for a good deal. Edmonds.com, that is the automotive website. It is reporting an increase in traffic among people who are seriously interested in buying Toyota vehicles following Tuesday's announcement. Purchase intent, measures pricing, research done by potential buyers on its web site. And the purchase intent for Toyota vehicles skyrocketed, 40 percent on Tuesday, to a 14-month high. Didn't think that was going to happen. Kelly Blue Book, also reported a rise in shopper activity for Toyota vehicles. Up 44 percent between Tuesday and Thursday, in comparison to the previous week.

But Toyota isn't out of the woods just yet. The National Highway Traffic Safety Administration has received more than 60 complaints from Toyota owners, who have had their car's gas pedals fixed, but they say they are still experiencing that sudden acceleration. Government officials are contacting those people. And if the automaker's remedy isn't addressing the problem it is supposed to fix, then the agency can order Toyota to provide a different solution. So, of course, that saga continues, Max, even as people are interested in buying Toyota vehicles, in the midst of all of this.

FOSTER: Fascinating isn't it? Alison, thanks for joining us from Wall Street.

KOSIK: It is.

FOSTER: We are going to get the headlines for you, now. The news headlines, Becky joins us from the newsroom.

(NEWSBREAK)

FOSTER: Now the Greek prime minister has gone on the road seeking help. He's not asking for money, just moral support. And with scenes like this back home it is not surprising. Find out what kind of reception he's getting in Europe, in just a moment.

(COMMERCIAL BREAK)

FOSTER: Now, the Greek parliament approved new austerity measures aimed at defusing the country's debt crisis on Friday. A plan to shave billions off the budget deficit, would hike consumer taxes and slash public sector pay. But the package sent more than 7,000 angry protestors onto the streets of Athens. The most violent demonstrations started outside the Greek parliament. Masked youths threw stones at police officers and officers retaliated with tear gas.

Meanwhile the country's prime minister began a diplomatic quest of sorts. First George Papandreou traveled to Luxembourg to meet the prime minister, Jean-Claude Juncker, the head of the group of Euro Zone finance ministers. Then Papandreou took his plans to Germany. The idea? To drum up support from other EU nations, but so far results are mixed. Fred Pleitgen joins us live from Berlin, for more on this.

Fred, what did you find out?

FRED PLEITGEN, CNN INT'L. CORRESPONDENT: Hi, Max. Yes, at the press conference, with Angela Merkel, and Greek's prime minister, just finished actually a couple of minutes ago. And the two things that these two leaders really wanted to point out was that, number one, Greece was not asking for direct financial aid. But they also said that if bad comes to worse, all European countries are going to stick together to ensure the stability of the euro. So that, in effect, means that if bad comes to worst countries like Germany, soundly financed countries like France are not going to let Greece fall. Now, let's hear one sound bite from Angela Merkel, from that press conference.

(BEGIN VIDEO CLIP)

ANGELA MERKEL, CHANCELLOR OF GERMANY: And if necessary, we will together do everything in order to stabilize the euro. It is our common currency. We will keep this in mind, but as was the case, it is the case today, Greece has not asked us for financial support.

(END VIDEO CLIP)

PLEITGEN: So, Max, in effect these leaders are walking a very fine line here, because the essential thing for them is they don't want to loose the stability of the euro, but on the other hand they also cannot let Greece fail. So, what they have to do is they have to create the impression, at least, that all countries are behind Greece. That Greece is stable. That Greece will not fail. That essential for Greece to borrow money on international markets to help refurbish its finances. On the other hand, however, they also have to make it seems as though Greece is not getting any direct aid. It has to be apparent that Greece is coming out of this crisis, by itself to keep the stability of the euro. Because that is essential to the stability of the euro that every country fend for itself, Max.

FOSTER: And lots of economists using lots of very big words on this issue. But I'm just wondering, people on the street, you know, they might be a big confused about it. But how do they feel about it, where you are, for example?

PLEITGEN: Well, you know, a lot of people are very confused. And there is also a lot of bad blood, really, between these two countries, in the past couple of days. You know, the Greek crisis actually comes at a time when Germany is also having a lot of economic troubles. They have also had to do some very painful reforms here, as well. They have also had to take on a lot of debt. So, certainly, on the one had the Germans were saying we don't want out country to pay any money. On the other hand, the Greeks are saying, who are the Germans to tell us to save? Well, we have been looking and asking people what they feel about all of this. Here is what they had to say.

(BEGIN VIDEOTAPE)

PLEITGEN (voice over): Giorgios Antonakopoulos, understands the Germans. After all, he has been serving them wine and Ouzo at his Greek tavern in Berlin for more than 40 years. He believes Germany will help his native country.

"It is like in college, when one person fails an exam," he says. "All the others come to help him, because they don't want to see a friend drop out."

But not all Germans are so keep to help their Greek Euro Zone classmates. Some German politicians are seriously demanding Greece sell of public infrastructure, including some of hits islands, instead of asking for European money.

FRANK SCHEFFLER, LIBERAL DEMOCRAT (through translator): In Germany we call it selling the family silver. Greece owns a lot of infrastructure, like ports and airports, or power plants. That could get them short-term cash.

PLEITGEN: Many Greeks, for their part, are angry at what they perceive as German arrogance. Some even demanding the Germans pay more reparations for atrocities committed by the Nazi during World War II. The Greek government says it doesn't want direct cash aid, although it does need support.

DIMITRIS DROUTSAS, GREEK FOREIGN MINISTER: Greece has shown whatever is necessary, has done its part, to address this challenge. Now it is the time for Europe to do its part and show the necessary solidarity with Greece.

PLEITGEN: Experts believe measures could include a public show of confidence for the Greek economy, boosted by austerity measures announced by Athens this week. However, if things really do go bad for Greece, it is believe Berlin will have to step in to save Europe's common currency.

IRWIN COLLIER, FREE UNIVERSITY, BERLIN: The leverage that the Greeks have is the euro project is very near and dear to the German heart. The Germans were principle architects of the euro. And they will not let anything happen that will endanger the euro.

PLEITGEN: Some of Giorgios' German customers, however, don't want to see their government spend money to salvage Greece's finances.

"We shouldn't make it too easy for them," this man says, "Although we have always had good relations with Greece, we must now call them to order."

But even though Giorgios and his customers may disagree on some issues, that has never hurt their friendship. And they say they hope their politicians feel the same way.

(END VIDEOTAPE)

PLEITGEN: And by the way, Max, at the Papandreou and Merkel press conference, Papandreou did say those islands are going to stay with Greece. However, both leaders also reiterated, they said, the austerity measures that Greece has now put in place, or is now putting in place, they believe those are going to work. They believe Greece is on the right track and they do believe Greece will not need a bailout. However, the next coming months are going to show whether or not that is actually the case, Max.

FOSTER: Indeed, everyone watching that one. Fred, thank you so much for that.

Now, relief is on the way to solving its debt problems, or the sense of it, did help drive European stocks higher. Shares also got a boost from that better-than-expected U.S. jobs picture. Financial stocks, miners and carmakers lead the overall advance. Let's check then, on all the major indices around the place.

Here's the London FTSE, up 1.31 percent, so pretty positive there. Higher finish to the session, just below 5,600, as you can see. Xstrata (ph) up 5.5 percent, BHP Billiton up 3.7 percent, WPP up 3.5 percent. We'll hear a bit more from them in just a moment.

Here is the DAX in Germany. Adding almost 1.5 percent to the trading day. Commerze Bank up 3.4 percent, Daimler, 3.3 percent up, Volkswagen, up 3.2 percent.

And the Paris CAC currant climbed more than 2 percent, 2.14 percent, a very strong finish to the week. Societe Generale up 4.8 percent, Renault, 3.9 percent up, Aslaw(ph) Metal, up 3.8 percent. So, strong end to the year here in Europe.

Now, bouncing back after a brutal year, here, why the head of the world's biggest advertising group, WPP, say his company is no longer staring into the economic abyss. That is what he said last year.

(COMMERCIAL BREAK)

FOSTER: The world's biggest marketing company says key events, like the World Cup, have raised its hopes of a more stable year to come. A WPP posted 2009 annual net profits of $658 million this Friday. That was slight dip, though, compared with 2008. But the result was better than expected. WPP said job cuts and the pick up in advertising revenues in the second half of the year helped them ride out the economic downturn. WPP chief executive, Sir Martin Sorrell, has described 2009 as, quote, a "brutal" year. When I spoke to him, a little earlier, I asked him how he felt about these latest results.

(BEGIN VIDEO CLIP)

MARTIN SORRELL, CEO, WPP GROUP: I think the second half was much better. I mean, we were pretty gloomy. I think our profits were down about 25 percent and we were flat to up, a bit, in the previous year, in the second half. And margins in the second half got back to where they were in the second half of '08. So, I think that was a very credible performance given the difficulty we had in the first half.

So, I think we are sort of set fair, but we have gone from staring in the abyss, into the abyss, to less worse. And now it is stable. So, what we are now looking for is growth. And there are parts of the world, there are the fast-growing markets, the BRICs, Russia, Brazil, India, and China. And the next 11, as Goldman calls it. There is the digital business, as you know, as well, which is growing faster than the traditional business. And last but not least, there is our market research business, which is strong, and will see some growth I think this year.

FOSTER: So when you talk about those growth areas.

SORRELL: Yes.

FOSTER: Are there new clients coming into you, with more money, or are they existing clients-

SORRELL: Both, it's both.

FOSTER: -expanding in those areas?

SORRELL: It's both, I mean, it is the big multinationals, expanding into China and into India, and Brazil and Russia. And it is Brazilian and Russian multinationals and Indian and Chinese multinationals expanding in their markets, domestically and abroad. Digital it is old users, clients, old client using them, and then new clients coming up.

FOSTER: Social networking?

SORRELL: Social networks. That is really having an impact on the public relations industry. I mean, that is about 10 percent of our revenues, about 1.2 billion of revenues. And that has grown over the last five years, remarkably I think, because of polling, political polling techniques being applied to public relations. And also because social networking is a form of editorial publicity, really. And so the PR companies have benefited as a result.

FOSTER: You have worked out a way to make proper advertising revenue through social networking?

SORRELL: Well, it is difficult. And that is why I say it is more editorial. I mean if I can get CNN to say something nice about WPP it is probably even more effective than buying an ad on CNN. And so, I think, the issue really is with social networks we have to remember they are personal media. It's me writing to you, instead of writing you a letter, I'd-I'd write you on Facebook, or MySpace, or send you video, whatever it happens do be. So, it is a form personal communication.

If you invade that space to abrasively, with commercial messages, sometimes people get upset. We saw that with Beacon on Facebook, and others-

FOSTER: How do you think you are going to do that then, because-

SORRELL: No, we're doing it. We're doing it.

FOSTER: Yeah.

SORRELL: I mean we are working with social media.

FOSTER: How do you find a way around that privacy invasion?

SORRELL: Well, it's not-privacy invasion is another issue.

FOSTER: You take a way the intimacy from the message?

SORRELL: Well, that is more the point. The point is how do you influence people in a subtle and a sophisticated way, that to use those media, to build positive messages about it. So, it is another touch point that you have to deal with. I mean, your view of any product or service or company is put together by, in the course of a day a week, or a month, or a year, a multiplicity of different messages sent you in different ways. It may be, you know, you may meet the chief executive of a company and form an impression about the company from that meeting. So, it is really managing all these different touch points in an effective way. It has become much more complex, therefore. Me, I'm much more important, actually than I think we ever have been.

(END VIDEOTAPE)

FOSTER: And you are getting some Martin Sorrell, there.

We are going, now, to Chile, though, in the aftermath of that country's earthquake and the tsunami. Sarah Sidner joins us live from Iloca, where there was a carnival going on, Sarah, when disaster struck.

You can't imagine it now, can you?

SARAH SIDNER, CNN INT'L. CORRESPONDENT: Yes, it really is a mess here and you know that most of the coastal cities are the ones that got the brunt of the damage, because not only did they deal with the earthquake but the subsequent tsunami. This town is not an exception.

If you take a look over my shoulder, here, you will see the main attraction of the carnival. Actually it was a small amusement park that was here, and that was the Ferris wheel. Now that Ferris wheel is sitting in the middle of the main drag of this town. It is still sitting here, six days after the quake hit. So, you can see just how much damage and how much work there is left to be done here.

And if you want to talk a little bit about cost when it comes to this little amusement park here, it was worth around $110,000. And in this town, that is a whole lot of money lost. And a lot of jobs, about 20 people will loose their jobs because the person who owns this amusement park says it will take years for him to rebuild, Max.

FOSTER: Sarah, just-you are talking about the costs there, and that is just one small area of a very large country. I'm wondering if any figure can be sort of placed on the huge cost of sorting this mess out?

SIDNER: Yes, the costs are huge. About 20 percent of Chile's GDP, we understand economists are predicting about $15 to $30 billion U.S. worth of damage in this country. And you know this is the country that is really believed to be one of Latin America's most developed countries, but the damage is extensive. And obviously we are just talking about one small amusement park, the homes in this area have been decimated. The homes in many of the cities that we visited, have been completely, completely knocked down. It is just sticks and stones, really just rubble. So, there is a lot do to. And this country has a lot to work on at this point in time, because of the tsunami and the earthquake that started all of this, Max.

FOSTER: And I guess years, Sarah, before this is going to look anything like the way it looked before?

SIDNER: No, doubt years. We are about an hour way from a city called Constitucion and in that city there is so much damage that you can literally walk down any street of the city and most of the buildings have either caved in or they are just not there, because they were swept away by the water. So, you can imagine how much work is left to be done and how much money has to be spent to try to get this country and the areas that were hit by this disaster back to, at least, close to the way they were, so the people can live and try to go on with their lives, Max.

FOSTER: Sarah Sidner, thank you so much for joining from that scene of utter destruction. Thank you so much.

Now, a contentious bill, a looming vote, as Iceland gears up to go to the polls, we'll talk live to its president about the prospects for recovery.

(COMMERCIAL BREAK)

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

We are going to have a look at the Big Board right now, we are going to see what Wall Street is doing. Because there was actually a pretty positive reaction to some pretty gloomy employment figures, but the employment figures weren't as bad as expected. And actually you could attribute some of the negatively to just wintry weather, in large parts of the United States, which had a large impact on the way people could get to work, or otherwise, in the United States.

As you can see the Dow is up 0.8 percent and that follows a very strong end to the week, in Europe.

Now, Icelandic negotiators in Europe are due back home tonight, after- it is after they failed to reach an agreement with the U.K. and with the Netherlands over compensation for saving lost in the banking crisis. Icelanders are about to vote on a contentious law aimed at resolving the dispute. So, Jim Boulden has more on the story.

(BEGIN VIDEOTAPE)

JIM BOULDEN, CNN CORRESPONDENT: On Saturday, Iceland will go to the polls to vote on a bill passed by parliament to pay back $5 billion to Britain and the Netherlands. You may recall the two countries had to step in and guarantee the money of 400,000 of their citizens deposited in Icesave. That's an Internet bank that collapsed, along with Iceland's three main banks, in October of 2008.

There was a rear -- real fear back then that if depositors lost their money, the global banking system could have suffered even more than it did.

Now, since then, the Netherlands and Britain have been negotiating with Iceland for it to pay the money back. In December, Iceland's parliament narrowly agree to a 15 year repayment plan, with an interest rate of 5.5 percent. But there was a severe backlash within Iceland's 300,000 population, who say taxpayers should not have to pay for the actions of the country's private banks.

They were also shocked by what they say was harsh steps taken by Britain to get its money back. So nearly a quarter of Iceland's electrics signed a petition to block this bill and the president vetoed the agreement in January. That veto sparked Saturday's referendum.

So what are the possible outcomes?

Well, the voters could back this bill, though the polls show that is highly unlikely. And a no vote could lead to the government falling and new elections being called, since it had actually backed the bill. And Britain and the Netherlands could raise the temperature on Iceland to pay this money back and that could hamper Iceland's need for IMF funding and, some say, its desire for fast track entry into the European Union.

Jim Boulden, CNN, London.

(END VIDEO TAPE)

FOSTER: Well, the president of Iceland, Olafur Grimsson, joins us now from Reykjavik with his view of tomorrow's scheduled vote and what may happen after the referendum.

And we ask that question -- Mr. President, thank you for joining us -- because it's almost certainly going to be a no, isn't it?

OLAFUR GRIMSSON, PRESIDENT, ICELAND: I can't hear you now.

FOSTER: Just -- the result of this referendum is almost certain to be no, isn't it?

GRIMSSON: Yes, I think so. The public opinion polls indicate a very strong no vote.

FOSTER: What happens then?

GRIMSSON: Well, what will happen, hopefully, is that the negotiations will continue with Britain and the Netherlands, because what has happened since I took the decision of the referendum in the beginning of the year, is that Britain and the Netherlands have moved -- moved toward the Icelandic position. And, in fact, the deal which we will be voting on tomorrow is now recognized by everybody, including the British and the Dutch, not to be a fair deal.

FOSTER: OK. But when you go into these negotiations, they're going to be extremely difficult, aren't they?

Here in the U.K., for example, we're gearing up for a general election. There's going to be a sense that no one wants to be soft on Iceland at this time, when we've had this fierce financial crisis.

So those negotiations are going to be even harder than the last set of negotiations, aren't they?

GRIMSSON: No, I don't think so, because what the referendum has done is to wake people up to the essential elements of this case. And in the last two or three weeks, the negotiating teams have moved a long way. And I believe that if, following the referendum, both the British and the Dutch governments and our leaders show statesmanship in finalizing the deal, it's possible to do it within one or two weeks.

FOSTER: That's very unlikely, though, isn't it?

I mean what -- what happens if the Netherlands and the U.K. decide to play hardball and -- and refuse to support your accession into the European Union unless you reach a deal that they like?

And then that has huge repercussions for you politically back home.

This coalition, effectively, you got together, isn't going to last, is it?

GRIMSSON: No, of course not. That's a completely false picture because the negotiations with the European Union will take two or three years. And this issue will be solved long before that. And I don't think they will play hardball because if you look at what the Dutch and the British have been doing in the last three or four weeks, is that they have been moving a long way toward the Icelandic positions.

They put on the table a week ago a new offer, which is much better than the deal which we will vote on tomorrow. The only problem with that offer was that in addition to Iceland paying over 20,000 euros for its depositors at a reasonable rate of interest, they were asking Iceland to pay a profit to the British and the Dutch, which, if you put it within the size of the British economy, would be equal to over 90 billion pounds in sheer profit.

And we are simply saying, that's not fair. Let us reimburse the British and the Dutch for over 20,000 euros for each depositor, a reasonable rate of interest and -- and get a deal on that basis.

And I hope, following the referendum, the prime minister of Britain, Gordon Brown, will show a similar type of statesmanship on this issue as he did a year ago on the international scene with respect to the global financial system.

FOSTER: But he's not going to budge. He's got an election coming up. And, at the same time, Icelanders aren't going to budge because they're absolutely furious with the situation, aren't they?

They don't -- they -- they're probably at the point now where they don't want to give anything away to the U.K. and to the Netherlands.

GRIMSSON: Well, I don't think it is very wise for the British or the Dutch to have this issue still on the table coming up to the election, because, in essence, what this is, is Britain and the Netherlands using their strength to pressure a small country and ask the people of Iceland -- farmers, fishermen, nurses, teachers and everybody -- to pay enormous taxes for the coming years in order to compensate for the greed of bankers and their operations in other countries.

Because, in essence, this is a question of how far can you press the taxpayers of a country to shoulder the burden of the actions of irresponsible bankers. And -- and what I say is that it is, in fact, quite remarkable how willing the ordinary people of Iceland are to come forward and share in this burden with the British.

But you can't press the people of Iceland too far.

FOSTER: OK. And, finally, I just want to ask you about the -- the money, the loan you're expecting from the International Monetary Fund, which is absolutely crucial, isn't it, for your economy?

You need that to survive. But that -- and that's being linked to your ability to repay international debts, of which the U.K. and Netherlands is part.

And what did he say about the feelings around this?

If you don't get a deal very quickly with the U.K. and the Netherlands, you're not going to get the IMF money and you're going to be extremely vulnerable.

GRIMSSON: Well, this is a very interesting aspect of this issue, because when Iceland made the agreement with the IMF, there was a certain program -- a certain criteria that Iceland had to measure up to. And, in fact, today, Iceland has outperformed on every aspect of the IMF program.

But the Britain and the Netherlands are using their position -- their -- their strength within the IMF to block the further loans to Iceland unless Iceland accepts the deal that Britain and the Netherlands want to adopt.

And I don't think the IMF can, in a legitimate way, be utilized in this way. And I know for a fact that the professional staff within the IMF, including the leadership of the IMF, is extremely unhappy with the bullying tactics of Britain and the Netherlands within the IMF board.

FOSTER: OK, President Grimsson of Iceland.

Thank you very much, indeed, for joining us on the program today.

GRIMSSON: Thank you very much.

FOSTER: We'll be back in just a moment.

(COMMERCIAL BREAK)

FOSTER: The president of Toyota rallied his troops on Friday. Akio Toyoda donned a white staff jacket for a pep talk to workers. The world's biggest car maker is trying to boost morale in light of recent massive recalls and ongoing complaints.

Toyota's speech was beamed to more than 9,000 employees across Japan.

(BEGIN VIDEO CLIP)

AKIO TOYODA, TOYOTA MOTOR CHIEF EXECUTIVE (through translator): We were surrounded by critical they've and other media reports. It was very demoralizing. But amidst all this, I received support from the 20,000 Toyota employees in the United States and from amongst the 20 million Toyota customers there. Company leaders and team members accompanied me to the Congressional hearings. And in Japan, I got support from the employees, showroom staff and their families. You all supported me at a very hard time.

After the hearing, when I had a chance to talk with the U.S. Toyota leaders and team members, they were all encouraging me and were determined to fight on. The fact is, being protected and supported by these people, I thought it was really great to be a Toyota person.

(END VIDEO CLIP)

FOSTER: Well, the world's biggest car maker has recalled more than eight million vehicles worldwide in the -- in the past few months.

From that, we go to the Weather Center, where we find Guillermo -- hi there, Guillermo.

GUILLERMO ARDUINO, CNN METEOROLOGIST: Hey, I'm looking at Europe and I see that the bad weather continues. And I'm not talking about the eastern parts of the country, as you see in Turkey, only, but I'm talking about the west. I mean there are alerts posted for Spain, Madrid, again, with a chance of snow. We have now rain in Madrid, rain in Brussels. You see the system descending in here.

Believe it or not, Schleswig-Holstein doesn't have any alerts posted. But the rest of Germany has alerts -- alerts because of the snow, significant at times.

And we have Sarajevo, Ramstein in Germany, Hanover, Hamburg, Dusseldorf, Dortmund, Koln and Bremen now reporting snow. Also, cold conditions in Britain and in Scandinavia, across the board. This high is actually pumping the cold conditions. Below average temps in Northern Europe.

I mean, when is this going to end, you must be asking, right?

We don't know. It will continue. And funny enough, in the United States, things are a little bit better. But look at the snow all over into the south in Austria and Switzerland and Italy. We have alerts also for Portugal here, with windy conditions. Galicia here in the north, windy conditions and high seas, as well.

Some snow probably in Madrid, but look, compared to what we're going to see in the Carpathian Mountains, nothing, you know. It's going to be really snowy over there.

We have delays at airports, less than I thought originally. We will see Milano with the chance of snow; Berlin, of course, with snow, and the delays over there; Munich. If temperatures goes -- go below one, below freezing, then we'll have deicing of planes and you know what that means and you're waiting for your plane there to be de-iced is one hour.

What about Turkey?

The systems keep going in here. Also, the high temperature of the day in Istanbul 8 degrees for Saturday. So morning and evening, it's going to be colder; 8 in Madrid; 1 in Berlin.

Look, if you live anywhere or you're going anywhere here, remember that temps are going down. So it's going to be very cold, indeed -- Max, back to you.

FOSTER: Guillermo, thank you very much, indeed.

Somewhere where the temperatures are rising, QUEST MEANS BUSINESS will be live from the kingdom of Bahrain as part of CNN's new series, I-List. We want to hear from you if you have visited Bahrain or if you live there. Share your experiences of what sights and sounds give people a true flavor of the city. Find out how and send your photos and figures to iReport on CNN.com/ilist.

That is it for QUEST MEANS BUSINESS.

I'm Max Foster in London.

"MARKETPLACE MIDDLE EAST" is next.

END