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QUEST MEANS BUSINESS
Greece Admits It Needs Financial Support; Britain Posts Weak GDP Numbers
Aired April 23, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Greece caves in to market pressure and finally admits it needs financial support. The G20 might as well stand for Greece; G20 finance ministers are meeting.
And limping along the road to recovery, Britain's GDP numbers are weak at best.
It is a glorious day in New York. It's Friday. I'm Richard Quest, and I mean business.
Good evening from New York.
Tonight, Greece has finally bowed to the inevitable and asked the financial world for help. The announcement from the Greek government said it can no longer keep the country afloat without help and financial support from the European Union and the International Monetary Fund.
They've already agreed to standby with a cash lifeline of up to $60 billion. Greece badly needs to plug the hole in its finances. On Thursday that hole was found to be bigger than thought. Equal to 13.5 percent of Greek's GDP last year. It is getting worse. Greece also has a credibility gap, which has caused its borrowing costs to skyrocket. The Greek prime minister said that the Greek economy was sinking like a sinking ship.
(BEGIN VIDEO CLIP)
GEORGE PAPANDREOU, PRIME MINISTER OF GREECE (through translator): The government and the Greek people have inherited a country that is like a boat ready to sink. A country without prestige or reliability that had lost the respect of its friends and EU partners; an economy that was left unprotected to the appetites of the profiteering.
(END VIDEO CLIP)
QUEST: Over the course of this program we are going to look at the economic impact of all of this and whether or not Greece will actually get the bailout it seeks. But before that, let's just get the mood from Athens tonight. Elinda Labropoulou joins me on the line, a reporter with "Time" magazine.
Elinda, the financial world knew this was coming. What are they making of it? What are ordinary people are making of it, in Greece, tonight.
ELINDA LABROPOULOU, REPORTER, "TIME": Well, Richard, according to the first opinion polls, for reactions, the first reactions, so far this opinion polls was conducted today, after the announcement of the mechanisms activation. And 91 percent of the respondents said that they believe the IMF will ask Greece to take further austerity measures. And only 4 percent said they did not think more austerity measures will be taken.
This is, obviously, as you can understand a reason for concern here. Now, according to the same poll, about half of the respondents said that they consider the IMF involvement to be a negative development. And only a quarter said that they saw it as positive. So, the first reaction is not very positive. At least, popular opinion has been very much against IMF involvement from the beginning.
We had already a number of rallies and we have more rallies coming up over the last package of austerity measures. Yesterday the civil servants union was on strike and that is about 20 percent of the country's workforce. And we are expecting a lot of reactions. And, obviously, the tougher the measures the stronger the reaction they are likely to cause.
That is the people, the political parties have also come out with initial responses. The main opposition, the conservatives, have said that at this point the activation of the mechanism was simply inevitable. So although they did not support it, as such, they gave it their consent and they sort of treat it as a necessary evil; while the leftist parties have expressed strong disagreement and described it more as a premeditated crime. So, still a divided opinion there.
And obviously, until we hear the final package it is hard to tell how people are going to react.
QUEST: And there we leave it, Elinda. Elinda Labropoulou, joining us now, joining us there from Athens.
Before any money is actually dispersed by either the International Monetary Fund or the European Euro Zone analysts say the aid package will give Greece a breathing space, but it is not going to fix the underlying rot. Details are being put together. It is likely to include $40 billion from the EU and $20 billion from the IMF, all at comparatively manageable interest rates of around 5 percent. The repayment will be a period of 3 years.
The managing director of the IMF, Dominique Strauss-Kahn, says he is prepared to move expeditiously, but before Greece can get a cent, all 15 members, or other members of the Euro Zone must give their consent. And tonight, the question of consent rests firmly in the hands of Germany. Where the Chancellor Angela Merkel has been giving some very negative soundings on exactly how quickly that consent is likely to be reached, talking a great deal about the mechanisms that need to be taken, to take place, before she'll sign on.
Our correspondent Diana Magnay is in Berlin tonight.
Diana, what exactly does Angela Merkel want before she'll sign the check.
DIANA MAGNAY, CNN INT'L. CORRESPONDENT: Well, Richard, the long and the short of it is that she wants proof and evidence that it is not just the Greek economy that is at risk. But the actual stability of the single European currency, the euro, and thus a great danger to the German economy as well. She wants various conditions that seem still have to be satisfied.
First of all, that austerity package that you were still talking about. She wants that to be finalized. And then, once that is finalized, for a final assessment to be made about whether it really does endanger the euro. Let's have a listen to what she said earlier.
(BEGIN VIDEO CLIP)
ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): I made clear that a decision on how and how much aid Athens will receive, as well as other questions, cannot be answered before the austerity plan is on the table. At the same time, a judgment of the ECB and the IMF should make clear that it is all about the stability of the Euro Zone, meaning the euro.
(END VIDEO CLIP)
MAGNAY: So, Richard, only when those conditions are met, are we able to start talking about the numbers, the German chancellor said. And pushed on how long she expected that to be, well, she said, well it will be a few days. And once we have firm evidence that this is a crisis of the single European currency, then I can assure you that we will act fast. But until we do, we will not release a cent, Richard.
QUEST: Diana Magnay, joining us there from Berlin tonight.
Ken Rogoff is professor of economics and public policy at Harvard University. Ken joins me now.
The process of inevitability of Greece asking for the money, now that has become clear. But I wonder, Ken, do you think that all of this-the time it is going to take to sort it all out, is going to do more damage. That actually, they should be paying the bill sooner?'
KEN ROGOFF, PROF. OF ECONOMICS, HARVARD UNIV.: Yes, I think if they are going to do it, it would be better to go ahead and do it. But they have reached a cross roads, I don't think it is going to stop at $60 billion. I think the final tab will be much higher if they really want this to be successful. And they have to ask themselves are they prepared to do it for some of the other countries in Europe. It is a very tough position.
It's funny, Angela Merkel said that she concerned about whether this is necessary to preserve the strength of the Euro. I think there are many people who think that if some of the weakest members were put on sabbatical, that would preserve the strength of the euro.
QUEST: You see, that is the big get out clause. If we look back to when they had the meeting of economic-of the finance ministers, and at the summit, they always said they would only bailout a country if the stability of the Euro Zone and the single currency was at risk. Do you think that is the "get out of jail free" card?
ROGOFF: Well, yes and no. I mean, if Greece were to default it is going to spread to other countries in Europe. And if the Euro Zone doesn't figure out what it plans to do about that, it is in trouble. I mean, I think this is a huge political crisis in Europe. The question is, is it sustainable. I think what they are inevitably going to do is give Greece the money it needs and then give it more, hoping to buy time, for the European economy to recover and cushion some of the other countries before its spreads. This is certainly not about Greece, it is about all of Europe.
QUEST: You see, that is the interesting point there, Ken. Because the other-what we hear and if you look at the credit default swaps and you look at the rates in the market, as yet, there is the hint-there is the scintilla of suggestion that others may suffer contagion. But we are not seeing a full throttle attack yet on these other countries.
ROGOFF: No, but these things strike swiftly. It is never something that just creeps up very slowly. I mean it wasn't so long ago that the Greeks spreads were small. If investors figure out that it can happen to Greece, it can happen to others. Let's not forget there is a risk premium in Greek bonds, but it doesn't reflect the certainty of default. We are nowhere near that yet. I think if investors had to bet, they are still going to be that Greece is going to make it through. I don't know if they are right, but that is where the bets are lying.
QUEST: One-OK, one final question and sorry to end on a down note here, Ken. Would we be better off if Greece just simply defaulted, went back to square one, sorted it out, built up from bottom up, instead of all these shenanigans of trying to bail out?
ROGOFF: Honest answer, Richard, is Greece might be better off, but I think Europe probably wouldn't be, because who knows where this would go. This is a problem about Europe. It is a problem about contagion. That is what they are worried about. That is why they are going to have to cave and give Greece the money it needs to sort of plug things along for now.
QUEST: Ken Rogoff joining me from Harvard. Have a good Friday. Have a good weekend. Many thanks for joining us.
ROGOFF: You too, Richard.
QUEST: Lovely day.
Now, here is now the traders reacted and responded to the news that Greece was finally asking for money. In Athens the market ended just down slightly. Of course, so much is priced into the market. It had been up as much as 4 percent earlier in the session, the gains evaporated and investors took profits. In the rest of Europe markets closed higher for the first time in three days. It is a sign of relief that Greece has finally asked for help that it needs, whether or not it gets it is another issue.
Corporate results also gave stocks a lift. Volvo better-than- expected. Germany's business confidence is bubbling up. It might have helped the DAX pick up a few extra points. And the euro is up strongly, bouncing back from a one-year low on Thursday. It now fetches almost $1.34.
So the U.S. market trading at the moment, where stocks pretty much flat at the moment. Up 26 points for the New York Stock Exchange, all weighing on Greece's decision to access emergency funds. Interesting how a crisis in Germany (sic) is now having an affect, of course, around the world.
Now, when we come back in just a moment, the latest numbers on the British economy, GDP is up very slightly. This would be interesting, but with an election less than two weeks away, it has taken on a new importance. QUEST MEANS BUSINESS, we're in New York. Back in a moment.
QUEST: Delightful weather, people in New York taking the opportunity to have lunch outside. And I'm told it is going to be a glorious weekend, even those tourists who were stranded here didn't seem to mind too much. QUEST MEANS BUSINESS, we're live on the last day of our stranded week, here in the Big Apple.
Jonathan Mann is at the CNN Center. He brings us up to date with the world news.
QUEST: Now, the second debate in the British general election, between the three leading party candidates, has now taken place. And post debate it is confirmed that there is a three-way split, currently, in the United Kingdom. With the economy very much on the voters' minds as issue number one, the hung parliament seems to be the more likely outcome.
And at the same time, economic numbers out today showed the U.K. economy grew in Q1 by 0.2 of a percent. It is a slow down from the 0.4 of a percent in the last quarter of last year.
Economists had expected a stronger showing. Reaction was swift. Look at sterling, retreated against the euro after earlier touching three-month high. The pound also fell against the dollar. Gilts, that is government bonds, British bonds, were on the move. The yield on the 10-year note rose from just below 4 percent, to just above it. Put that into perspective, Greece yields are some 9 percent. It is fairly typical response to signs of economic prospects are wavering.
To discuss all of this, one of our experts who is helping us guide our way through the economic morass of the U.K. economy, at the election, is Sir David Blanchflower, a former member of Britain's interest rate policy committee, he warned of recession long before it was apparent to most of us. He joined me on the line from Dartmouth, where he is a visiting professor. To discuss these economic numbers and what they mean.
DAVID BLANCHFLOWER, PROFESSOR OF ECONOMICS, DARTMOUTH COLLEGE: I think they actually probably helped Gordon Brown and the Labour Party. My view is that if it had been a strong negative that would have really hurt the government. It would have said, you know, your strategy isn't right. We are still in recession, it hasn't helped. And if the number was a large positive. Then the Tories could really say, well, now is the time to pay back the deficit, pay back the debt. So a strong positive, I think, would have been good for the Tories. And I think now Gordon Brown can say the numbers, our strategy is kind of working, the recovery anemic, but you have to keep going. And any attempt to cut would be a problem.
And I think he said this morning this amounts to about 600 million pounds of stimulus, which-and the attempt to cut 6 billion pounds, by the Tories, he said you are trying to cut 10 times that. So, I think the-in a sense this weakish economic number probably helps the incumbent government.
QUEST: Do you feel, we always knew the economy was going to be the big issue. But now it has to some extent shifted the nuance of the economic question. It is no longer just about national insurance. It is no longer just about economic growth, isn't it? It has become far more sophisticated the issue.
BLANCHFLOWER: Well, I think it is rather more sophisticated. And if you look at the data this week it really is-it really is clear that the data are mixed. There is no real strong evidence of recovery. OECD, last week, even said that Germany is probably going to go back into double dip recession. So, the public finance data said yes, the public finances are- it is the biggest borrowing number for-for almost ever. But then the government can say, well, it is actually less than we predicted several months ago.
So, it is quite complex. And when the labor market data came out, the first numbers say, "Oh, the claimant count are really improving, and then you get a better look at the data. And that is really rather mixed. So, I think yes, it has changed, it is rather more complicated, harder to read. But there really isn't at this point, evidence that the strong recovery is coming. And I've said many times that this is driven by public stimulus. We really need to see the private sector setting up, investing, and hiring. Until this moment, we haven't seen that.
QUEST: Just over one and a half more weeks to go and it is still all to play for, but I'm guessing that you will probably-if the smart money, you'd still be going for hung parliament.
BLANCHFLOWER: Well, that's the way it looks. I didn't manage to see the debate in the U.S. It was hard to find anywhere that I could actually look at it. It certainly looks like the thing has been shaken up, but I think a hung parliament looks to be about where we are going to be.
And I think, actually, what is interesting despite people saying, David Cameron says, oh, you can't have a hung parliament, the effect on the markets. But actually if you look, the markets haven't really moved very much. They pound certainly hasn't moved. The stock market had quite a good move today. So, I think markets have discounted that. And I've said all along, in some ways the great benefit of a hung parliament is that it will prevent anybody from doing anything completely stupid.
QUEST: You can always get good common sense from Professor David Blanchflower. And he'll be with us next week to help with the final touches to the economic look at the U.K. elections.
When you and I come back together in just a moment, we'll consider the role that was played by the ratings agencies in the debacle on Wall Street. And President Obama has been talking a great deal about economic reform. One top banker thinks he knows exactly what has gone wrong and what needs to be done.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: It is very unpopular to say that you have to pay regulators more money. You get better quality regulators. But that is a lot cheaper than paying for the damages.
QUEST: QUEST MEANS BUSINESS, we're live in New York. And we're back in a moment.
QUEST: Welcome back to New York.
Now the banks we know have taken so much of the rap for the crisis that took place. But what about the role of played by the ratings agencies, who of course, gave their blessings to the various mortgage backed securities that were called into question. Were they duped? Were they incompetent? Should they bear more of the blame for what took place? Our Senior Correspondent Allan Chernoff joins me now to talk about that.
We've always known that there was this role played by the ratings agencies. But they have done a very good job of deflecting the criticism.
ALLAN CHERNOFF, CNN SR. CORRESPONDENT: A huge role played by the ratings agencies. And in fact they are getting lots of criticism today from the Senate subcommittee on investigations. In fact, the sub-committee is giving an F to those ratings agencies for having failed to properly assess those mortgage-backed securities that Richard was referring to; those were, perhaps, the most important financial instrument in the downfall that we had a year and half ago, and the financial meltdown, those pools of mortgages, many of which, probably shouldn't have been given in the very first place.
The Senate investigation found that the ratings agencies absolutely did not use accurate models, but perhaps worse, actually pressured their analysts to rate these mortgages and to rate them favorably. A clear conflict of interest.
(BEGIN VIDEO CLIP)
ERIC KOLCHINSKY, FMR. MD, MOODY'S INVESTOR SERVICES: At Moody's the source of this conflict was the quest for market share. Managers of rating groups were expected by their supervisors to build or at least maintain market share. It was an unspoken understanding that loss of market share would cause a manager to loose his or her job.
(END VIDEO CLIP)
CHERNOFF: Now how badly did the ratings agencies do? Well, if you look back to 2006 and take the universe of the sub-prime mortgages, those are not quality mortgages, but sub-prime mortgages that actually had a Triple A rating, well, now, 93 percent of them are rated junk. Go to 2007, 91 percent of those that had received a Triple A rating, now junk. That basically sums up the situation. Richard, the analysts, say, look they were pressured and the chief executives are speaking right now, before the Senate, and they are saying, Look, we simply did not anticipate the severity f the problems that-that the market experienced.
QUEST: Isn't the real issue here, though, the ratings agencies are the one-they are Caesar's wife, they are above suspicion. They are the ones that give that stamp, it is the gold standard.
CHERNOFF: They should be above suspicion. And all of a sudden, now we see, my goodness, even the ratings agencies were in on this-felt the pressure to increase their revenues, just like the firms on Wall Street.
QUEST: Allan, many thanks, indeed. Keep watching this for me. Also, keep watching the Goldman Sachs case for us. We need you to stay on top of that one.
CHERNOFF: I will.
QUEST: Allan Chernoff, joining me here in New York.
Talking about this, the U.S. government maybe about to close one of its most unpopular chapters in the post-crisis management. Media reports citing sources close to the matter say the Treasury is considering getting rid of its 80 percent stake in the insurance giant AIG. It is a two-year plan, it would involve converting stock into common shares. And gradually selling them off, at the height of the crisis, well, AIG was rescued with more than $170 billion.
The former chairman and head of AIG is Hank Greenberg. He left the company in 2004. He's been very critical of what he sees as the way the company has been dealt with. The way it has been wound down, and he says, by the current management. Hank Greenberg spoke to me here in New York.
HANK GREENBERG, CHAIRMAN, STARR INT'L. & CO.: I have always felt that the way to repay the taxpayer would be not to sell off important parts of AIG, but to really rebuild AIG, so that you can pay back the taxpayer.
QUEST: But how much of that view, and I ask this respectfully, is because you built the company up, versus not wishing to see its dismantled?
GREENBERG: The bailout terms of AIG were just impossible. So the terms have got to be more pragmatic if you want to get paid back. And why would you give up the best franchise in the world, in the insurance industry, and hope to get paid back.
I would have thought that the best way of doing this would be to rebuild it.
QUEST: Let's talk about reform.
GREENBERG: There were plenty of regulations in place, had they been followed, it would have avoided much of what happened. Regulators were not doing their job.
The quality of regulation has got to improve. That is the first thing. And how do you do that? It is very unpopular to say that you have to pay regulators more money to get better quality regulators. But that is a lot cheaper than paying the damages that have been done.
QUEST: Well, that of course, brings us to the two big to fail, doesn't it?
QUEST: I mean, at some point there has to be either too big to fail, or there has to be bank levy, or there has to be something that-
GREENBERG: Well, if you are going to have a too big to fail policy, it can't be selective. Can't say, OK, we are going to save, you and you, but not you. I don't know you well enough, so we are going to let you go. There was a clubby approach to it. Those who had the relationship, and whatever, were saved. And those that didn't, let go. And some paid for all of them.
QUEST: The principles, though, as you go forward, as I understand your views are that strengthening regulation is where the primary focus needs to be rested.
GREENBERG: Regulation is not-not so much strengthened, it is just implementing what we had. There was a regulator, in New York, over the banks. Do you blame the banks, or do you blame the regulator, or do you blame both?
QUEST: Probably blame both.
GREENBERG: Should the regulator-OK. But shouldn't the regulator have been on their toes to see what was going on? And blow the whistle early on.
QUEST: Why do you think they didn't?
GREENBERG: I don't know. That is one of the questions that has to be asked. Why, you know, in the hearings that are taking place, you have got to get to the bottom, as I said earlier, you have to get to the bottom of why it happened. Did the regulators just miss it? And how could they miss it for such a long period of time?
QUEST: Hank Greenberg making sense. The former chairman and chief exec of AIG.
The G20 finance ministers are meeting in Washington, D.C. When we come back in a moment, Maggie, is this meeting of any importance, bearing in mind Greece's decision?
MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: I know you want a one-word answer, Richard. But you are not going to get it from me. You'll have to wait and come back and see what we have to say about the G20. We've got a lot.
QUEST: In a moment.
I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN, coming to you tonight from Columbus Circle, the Time Warner Center here in New York.
They were supposed to be getting together to talk about the global economy and financial reform. But when G20 finance ministers meet this weekend, they'll have something else on their agenda, no doubt -- the question about bailing out Greece. The country has now asked for financial support from Eurozone countries and from the IMF. A process will now begin, as they decide whether or not Greece should be given the money.
What do the G20 make of it and how far is financial reform likely to go?
Maggie Lake is here with me in New York -- Maggie, Greece now, obviously, takes on a new importance on the agenda.
LAKE: It certainly does. And it -- and it is, to a certain extent, going to overshadow some of the other discussions. We're not hearing a whole lot of detail yet. Everyone is sort of, you know, keeping their cards close to their chest. But for the Europeans, they try to hammer out a deal.
But, you know, the G20 is going to have to issue a communique about some of the other things on the agenda.
The last time they met, Richard, September, clearly they were very concerned about the sustainability of recovery. They were vowing to keep those stimulus measures in effect until they were sure.
This time, expect a little bit more of a confident tone coming back. Some of the -- the draft communiques kicking around Washington say the global economy is regaining its footing, though at an uneven pace.
So definitely a more confident tone coming through.
The other thing that's likely to come up, which it does every time now, global trade, specifically, rebalancing the global economy and growth and flexibility in currency.
What does that mean?
They want China to look at the yuan, let it increase, appreciate in value. And they want them to get that surplus down. They're not going to say China, but that's what that means.
QUEST: China is part of the G20.
LAKE: Yes. That's why they're not going to say specifically, but, you know, it is that broad statement...
LAKE: -- you know, to get the engine going.
One more thing that's going to come up -- and it's last but not least, as you know, financial reform.
LAKE: A huge issue, especially here in the U.S. They're considering their own measure going through Congress. You know, coming into this meeting, there was a bit of confidence that maybe you were going to get some sort of coordinated global action.
QUEST: All right, let's just break this down, though. The G20 did a rather good job during the crisis -- four summits or something in 2009.
Is there any evidence that this disparate, ragtag group of countries with different politics and geographical spreads can do the same in -- out of the crisis?
LAKE: That's exactly the point, Richard. And you're right. They surprised many with the ability that we're standing here, the world didn't end, they -- they got together in a central crisis.
When that starts to fade, you see the individual country interests really come back into play.
And that is happening with financial reform. At the time of the crisis, they said we've got to fix it so it doesn't happen again. But now, coming to an agreement proving difficult when you don't have that sense of crisis.
QUEST: The only dangerous part is Maggie Lake's a little too close for comfort. She's probably (INAUDIBLE)...
QUEST: I can't be as -- I can't be as rude to you as I am normally.
LAKE: That's right. That's right.
QUEST: Because -- because -- give me a second.
Maggie, lovely to see you.
LAKE: Same here, Richard.
Nice to have you in New York.
QUEST: Maggie, many thanks, indeed.
When we come back in just a moment, the question of trust in the financial world by business leaders. Richard Edelman always has some thoughts on that. We'll be taking to him after the break.
QUEST MEANS BUSINESS live in New York.
QUEST: What a glorious day in the sunshine here in New York. A little brisk if you find yourself in the shadows.
Now, we started tonight's program talking about a country that has seen failure because of the way it has been managed. We're talking there, of course, about Greece.
Over the course of the program, you've heard from AIG, a country -- a company that saw failure because, perhaps, of the way it had been managed.
One man believes that companies are now very much rethinking the way they do business and the whole question of the trust factor.
He's Richard Edelman, the president and chief executive of the P.R. Company, Edelman.
I asked him what he was telling his customers and clients, and, more crucially, the mood that they were telling him back in return.
RICHARD EDELMAN, CEO, EDELMAN: You definitely see much more confidence in client spend. You start to see that they're committed to a growth scenario. They're not committed to a defense scenario. And I also see much more of a dispersion of spending, that they're interested not just in the classic ABC, NBC, CBS, they're interested in the obvious cable networks, but also starting to really advertisements on blogs.
QUEST: When they decide where they're spending, are they -- are you seeing the amount of spend still much lower than before or are they basically heading back to where it was?
EDELMAN: I think that they're heading back to where it was, but it's different and it won't go back, meaning the idea that it will be a TV- oriented only is -- is now over.
I think that there's a real change toward a commitment to digital. And also, I think that that's going to be a future where a company takes an idea that they can be their own media company, that, in fact, their own Web site can be something substantive.
QUEST: When you're convincing companies, I assume that most CEOs and CMOs do not need to be convinced of the importance of digital these days, but they do need to be convinced as to the strategy to be implemented with digital.
EDELMAN: Yes. I think that the idea of putting an embassy onto Facebook or onto Twitter is now a very sort of relevant -- you know, we're going where the conservative is. We're not going to wait for people to come to the establishment media. That's a new phenomenon.
QUEST: If you intrude into that conversation, it is risky.
Do you think we understand yet how to intrude into the social networking conversation?
EDELMAN: I think companies are recognizing that their place is not to be the owner of authority, that they are adding their viewpoint. And that is a hard thing because companies have been command and control. You know, we do advertising. We make sure that we know what comes out the other end. This is a fundamental change in dynamic.
QUEST: Turning to trust, when we spoke in Davos, you weren't as pessimistic as I've heard you before. But optimism was still a long way from your -- your vision.
EDELMAN: Well, the reason I was nervous for business is that three quarters of people said that they think business is going to go back to business as usual as soon as the recession is over. That's a real concern. And that three quarters also said they expect government to be very active in monitoring the financial services industry in the wake of the recession.
So these are cautionary moments.
QUEST: They're right, these people.
EDELMAN: Well, I think they also have a different expectation of business. I think that the idea that corporate reputation was founded upon making great numbers, having an outstanding CEO and making great products is no longer the new -- the normal.
It's now am I a transparent company?
Am I a company I can trust?
And do I have great products?
At the bottom are the financial results. So the numbers are an outcome.
QUEST: The debate at Davos seemed to be shifting not just to CSR, corporate social responsibility, but whether or not, you know, the totality, the holistic approach for the corporation in terms of environment, in terms of society, all these sort of issues. I believe that as the market gets back to normal, that will back slide.
EDELMAN: Well, there is another point of view that the new normal is going to be business and society and that the shock that happened in 2008 forces shareholder capitalism evolving to stakeholder capitalism. And that, in fact, the idea of a sustainable business, the license to operate, the need to talk to employees, customers and not just to shareholders, is the new normal for CEOs.
(END VIDEO TAPE)
QUEST: The new normal from Richard Edelman, who we will be checking in with throughout the course of the year on this question of the trust factor.
The search continues for the 11 people missing after the oil rig fire and sinking off the coast of -- the southern cost of the United States.
Let's find out what the weather forecast and the weather conditions will be as that search continues.
Jenny Harrison at the World Weather Center -- good evening.
JENNY HARRISON, CNN METEOROLOGIST: Hello, Richard.
Yes, well, so far, the weather conditions have actually been pretty good, because they've been calm and quiet. Let's have a little look again so you're sort of are -- are really clear as to what we're talking about.
There, of course, was the rig on the surface. And then drilling way down here, 1,500 meters, to the sea floor. And now we have this oil slick -- 700,000 gallons of a diesel crude mix. And it is leaking. And they're not sure exactly, actually, where the oil is coming from. But there is concern about the wellhead, looking for leakage from there.
Now, there are three things they're doing and have been able to do up until this point, because the weather has been cooperating. So they've actually floated a device called a hard boom. It's like a huge big skirt that literally is surrounding the oil slick, which, by the way, is one mile by five miles in size, which is about 1.6 kilometers by 8 kilometers.
They've also got these skinner boats that are literally sucking up the oil from the surface to help them do that, as well, breaking up that huge amount of oil -- that huge surface area -- by actually using airplanes to drop some chemical dispersants.
And this whole -- this is all taking place about 80 kilometers offshore.
But, in the last few hours, the storms have really got going across the Southern Plains. Here's a look at some of this video, because it's incredible. The huge tornado. This is in Texas. Oh, it's that bad. It's pictures, of course. That was the oil rig.
This is the tornado. And now this is near Good Knight in Texas. These are storm chasers chasing this tornado. I know we say it all the time, but we're going to say it. You do not want to do this unless you really do know what you are doing.
And in the hours up to 2:00 a.m. This morning, there were 32 reported tornadoes across the Central Plains. It is that season. Let me show you the number of tornadoes, the reported damage in the last few hours. We're getting to that season, of course. But this is a system that is on its way eastwards producing these severe thunderstorms.
At the same time, you see that cold front?
That is going to sweep through the Gulf of Mexico. And that could really cause some problems, churning up the waters, producing thunderstorms, more of those tornadoes and, of course, as I say, it is that time of year. So we've seen 32 in the last few hours. It's been quiet so far in April, but we look at over 100 on average every year in that portion of the United States -- Richard, back to you.
QUEST: Jenny Harrison at the World Weather Center.
And that is our QUEST MEANS BUSINESS from New York.
Much more than we'd intended, but that's what happens when you get stranded overseas.
I'm Richard Quest in New York.
All being well, I'll be back in London on Monday.
Whatever you're up to, I hope it's profitable.
I'll see you on the other side of the Atlantic.
Good night from New York.