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QUEST MEANS BUSINESS
Rescue Plan With Strings Attached; India's Maverick Impresario Suspended
Aired April 26, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ADRIAN FINIGHAN, GUEST HOST, QUEST MEANS BUSINESS: A rescue plan with strings attached. Germany ups the pressure on Greece.
Cricketing controversy, India's maverick impresario is suspended.
And the balloons are back as we kick off our Q25.
Hello, I'm Adrian Finighan in for Richard Quest. This is QUEST MEANS BUSINESS.
Greece is under growing pressure tonight. It faces paying a painful price for the emergency loans that it so desperately needs. The German government says there are conditions to be met before they'll agree to hand over its share of the funds. Now, on Friday, Greece finally ran up the white flag over its debt, but initial relief over Greece's appeal has proved short-lived and traders came back feeling more skeptical than ever on Monday.
So, the German response: Chancellor Angela Merkel says that Germany will help but only if Greece meets certain conditions. These include more cost saving measures, long-term commitment to cutting the deficit. German's finance minister says that Germany is working to provide the aid by May 19. That is the deadline for Greece's next debt installment, of course. Germany will provide around $11 billion in aid out of a $45- billion package.
But the cost of borrowing has risen. The spread on Greece's 10 year bonds, compared to German bonds, hit a 12-year high today. That means that Greece pays 6 percent more to borrow money on the markets than Germany does. And the yield on the two-year bonds rose to over 13 percent. Now, there are fears that the IMF EU funding may not be in place before that next 11 billion of Greek debt becomes due in May.
All of this, of course, has had an impact today on the euro which fell against the dollar to just over $1.33. The euro rose on Friday after Greece announced that it was requesting that help. Greek bank shares also fell on Monday. Now, the Greek rescue plan has sparked fierce political debate in Germany. Let's bring in now, CNN Fred Pleitgen, who is in Berlin with the latest.
It is not just politicians who are angry there. It is the public, too, isn't Fred?
FREDERICK PLEITGEN, CNN CORRESPONDENT: Oh, certainly the Merkel government is under a lot of pressure and that pressure comes from within the government itself, where some factions don't believe that Greece should get at least an easy bailout from Germany. Germany, of course, would have to pay the lion's share of the money-Germany, of course, would have to pay the money that Greece needs.
Now, as you said, German Chancellor Merkel did say that help would come, but they want to see a feasible plan from Greece, the IMF, and the EU before that money can flow. Let's listen in to what Angela Merkel had to say today, Adrian.
(BEGIN VIDEO CLIP)
ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): So, I say very clearly Germany will help if the requirements are fulfilled. This will still take a couple of days. This must be negotiated with all calmness, with all discretion, and with all resoluteness, because only if this program is sustainable will we have a chance to ensure the stability of the euro permanently. Germany feels an enormous obligation to the stability of the euro. We will contribute our part to this, but this won't work without Greece contributing its own part, too.
(END VIDEO CLIP)
PLEITGEN: And, Adrian, this is a massive political discussion here in Germany. There have been some parties, government parties, who have actually talked about excluding Greece from the Euro Zone. Now, Chancellor Merkel today came out very strongly and said there is no way that will happen. And she said helping Greece is also a matter of Germany's national interest, Adrian.
FINIGHAN: Fred, we are going to talk a little more about this on the program in just a moment. But there is the outside chance-and it is an outside chance, isn't there?-that Germany may not even end up paying this bailout money because of a legal challenge?
PLEITGEN: Yes, there might be a legal challenge. I mean, there are economics professors who said they want to launch a legal challenge against the bailout plan. Now, they say that there are provisions in the EU constitution that prevents member states from bailing out other member states. And certainly there have been court decisions, of the German constitutional court, in the past that said Germany is only allowed to have the euro because it does not have to bail out other member states who are not as good at managing their finances.
Now, this is something that the German government is taking very seriously. They say, when they come out with this package of their own, they have to take into account these considerations. One of the things that they might do is the money might not come directly from the German government. It could come from a publicly owned German bank and simply be backed by the German government, Adrian.
FINIGHAN: All right. We'll let you go and get dry. Many thanks, indeed. Fred Pleitgen live in rainy Berlin.
Well, let's get more on that possible legal action now. Public and political outrage my turn out to be the least of Germany's worries. According to those media reports, a group of professors is preparing a legal challenge saying that the Greek rescue violates the constitution, as Fred was telling us. Hans Redeker is global head of foreign exchange strategy at BNP Paribas. He joined me earlier, on this issue, but I began by asking him what he makes of the German government's overall response.
HANS REDEKER, GLOBAL HEAD OF FOREIGN EXCHANGE, PNB PARIBAS: The German government has to be very careful in the way to address this. First of all, there is the general opposition within the population. And the second point is they need to look at the constitutional court and if they say very obviously the bailout of Greece and then the constitutional court can come in and if there would be a hearing on the constitutional court it would be quite bad for the German government's position.
FINIGHAN: Yes, you are referring to this potential legal challenge, against Germany participating in any bailout of Greece, what would happen if that legal challenge was successful, and that Germany was prevented form participating in this bailout. I mean, what's the worst-case scenario?
REDEKER: Well, you could have two worst-case scenarios. The first one would be that Germany would not be allowed to participate in the rescue of Greece, which obviously would have broader ramifications on European partners and their aid, put forward in the case of Greece.
And secondly, we have to look into the constitutional court decision of 1998. And there is a very important wording in that decision. And that actually suggests that if the currency union would not work out, like a stability union, then the ratification process of magistrate (ph), of the magistrate (ph) contract, would be reversed. And that would be the worst- case scenario, it actually would effectively take Germany out of the currency union.
So, we all hope that that is not going to happen.
FINIGHAN: Yes, so-I mean, how real is the danger do you think? I mean, surely isn't this just all political posturing in Germany, at the moment, ahead of regional elections, early next month?
REDEKER: Well, I guess their concerning the constitutional court, no it is not. Because the constitutional court threat is real. And, of course, the government needs to make sure that it does win elections because otherwise you are going to loose an important power base in the case of the upper house in Germany. But the constitutional court threat is real. And one has maybe to go a little bit into history to understand that. The Weimar Republic failed, of course, people were assuming that the financial instability of the Weimar Republic did lead to a failure (ph) of democracy. Therefore the constitution written in 1948, after the Second War, had the implicit suggestion that you need to have financial stability to protect democracy. So, it is implicit in the German constitution.
FINIGHAN: But come on, I mean, Germany-one of the main architects of modern-day Europe and certainly the EMU and the European monetary system as a whole-surely it is never going to leave the euro, is it?
REDEKER: Well, this is not hoped for, but the point I'm making is the following. If there were be a constitutional court hearing and this hearing is going to take sometime, so during this period of-during this period you would have uncertainty, and during this period of uncertainty it would be very difficult to see any significant flow generated into the peripheral of Europe. That, I guess, is the worst-case scenario. It would actually meant that the flow of funds into Europe's peripheral would be further damaged.
FINIGHAN: Hans Redeker raising the unthinkable there. Well, let's get some more analysis. Vanessa Rossi is a senior research fellow at Chatham House, joins us now in the studio.
Vanessa, good to see you again. Just how dangerous for the stability of the EMU are the political rumbling at the moment in Germany.
VANESSA ROSSI, SR. RESEARCH FELLOW, CHATHAM HOUSE: Well, I think we're already into pretty disastrous territory even before these latest problems arose. Having taking all this long, over several months to even get to the point at which Greece is asking for a bailout and assistance, and now we're not even sure if they are going to get it and under what terms, is a real disaster in itself.
And then, we don't know over the next couple of weeks whether the German courts are going to deny this possibility, whether there will have to be other ways found of giving this money and assistance. And in the meantime, we are seriously facing risks that Greece could default. Hopefully before that point is reached the IMF might step in. At least they can make very quick decisions.
FINIGHAN: Are there other ways around it, around the constitutional court, if it comes out and says that Germany-
ROSSI: Of course, there are other ways around it. The last year, when we were going through the G20 meetings and there was an agreement that the IMF funding would be raised, in order to bail out other countries, including a number of East European countries, the EU put money on the table for that. Put money into the IMF to be able to assist. Now, they could do it this time around. They could do it this way. But this means putting everything into the hands of the IMF. And clearly the politicians in Europe were anxious not to quite do that. But if push comes to shove it is better than having a default in Greece.
FINIGHAN: Absolutely. And also, I mean, Hans talked about a worst- case scenario. I know politicians will move heaven and earth before the kind of thing that he was talking about would happen, Germany perhaps leaving the euro. But if that were to happened, for a moment, let's look at a worse case scenario. What would that mean for European political stability, for the rest of the EMU nations?
ROSSI: Well, I mean the implications are quite mindboggling. It is not sure how on earth people can do these things. But we already know that the Magistrate (ph) Treaty has enshrined within it the no-bailout clause. And it has enshrined within it that you can't leave the euro without leaving the EU, and all of these things. Now, it seems to me that you are either going to blow one part of this treaty or another, and we are just not sure at the moment which. I think, on balance, we'll end up with a fudged compromise or some way of assisting Greece. Because the rest of the scenario just looks absolutely incomprehensible.
FINIGHAN: Too bleak, absolutely.
All right, supposing that Germany does forward this bailout money to Greece. Can Greece, it has the political will, but can Greece actually implement the reforms that Germany is demanding. I mean, we have seen a lot of unrest on the streets in Greece.
ROSSI: Well, I think the scale of these numbers in relation to GDP, and the scale of any kind of reforms in the public sector finances increases such that it is really on a knife edge. No other country is at this brink in Euro area. Fortunately, although they may need help in other ways.
In Greece, I think the total funds which (UNINTELLIGIBLE) has been talking about, potential money, having to be extended over two years and it could add up to 80 or 100 billion, is probably more like the sums involved but the hidden story behind that, I think that perhaps they don't want to say is that some of this money may never be repaid. I mean, effectively we may end up with restructuring and some kind of permanent bailout; probably along the lines of gradually amortizing some the debts that will never be paid. It is quite difficult to see how they are going to get fiscal accounts into surpluses enough to pay back debt.
FINIGHAN: Vanessa Rossi, many thanks. There are no easy answers.
ROSSI: No, indeed. But at least we are not paying that bailout.
FINIGHAN: Absolutely. What here in the U.K., you mean?
ROSSI: In the middle of an election?
FINIGHAN: Absolutely. Many thanks, indeed. Vanessa Rossi, senior research fellow at Chatham House.
Well, Greek's stock market echoed that mood of uncertainty today. The bench mark ATHEX composite fell by almost 3 percent, with banks notching up some steep losses. But it was a different picture elsewhere in Europe. Miners were among the top gainers at metals prices rose and banks were also firmly in the black as some remained optimistic over a Greek rescue.
All right. Let's get you up to date with what else is making news around the world right now. Becky Anderson joins us live from the London newsroom.
FINIGHAN: Still to come on QUEST MEANS BUSINESS the balloons are at the ready for our Q25 is about to begin. It is our special feature to help you make sense of earnings season. Stay tuned to see who gets a green or a red balloon. We'll be right back.
FINIGHAN: Its that time again, the Q25 is back. Now, if you have never seen it before this is our very own balloon oriented barometer for the corporate earnings season. We'll be focusing on the results of 25 companies operating across the business spectrum and we'll give out green balloons for encouraging reports and red ones for disappointing numbers. At the end of the week we hope you'll have a fair idea of how things went in the first three months of 2010.
So, on our plate today, three companies, heavy equipment maker Caterpillar whose profits beat expectations by over 10 cents a share. Appliance giant Whirlpool, along with Caterpillar, it is boosting its annual profit forecast. And in the tech sector, Japan's Canon, the maker of printers, cameras and computer chips. Now, Canon, profit more than tripled as consumer demand for tech products rebounded. Canon says the market for office equipment has bottomed out, a positive development that has helped printer sales. And Canon is also raising its full-year profit guidance.
So, in light of that guidance we give Canon our first green balloon. Let's go live to New York and bring in Maggie Lake to talk about the other two. Caterpillar and Whirlpool.
Hey, Maggie. We'll start with Caterpillar, I suppose. And the market seemed to like what Caterpillar had to say?
MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: Yes, absolutely and with good reason. This is a good report, Adrian. You know every time we do this Q25 there are always seems to be lots to sort of grouse about in the details. Not so, this is looking like a very good report. Caterpillar, the first increase in earnings in seven quarters, so talk about a turn around, they beat estimates, raised forecasts and profits, sales, both. Strength really coming from the mining and the energy sector, which is interesting, and definitely from emerging countries. They saw really good order flow coming through.
There is a little bit of a cloud there, if you want to nitpick. Sales did fall 11 percent some of that is just the delay of the orders actually get booked, sort of showing up to get picked up.
The company, though, you shouldn't take this as a sign that this is a reflection of a recovery in the U.S. housing market. On the surface a lot of people did, including myself, I thought wow good news. Remember they make those diggers, a lot of construction equipment. They are downgrading their forecasts for U.S. housing starts by 20 percent for 2010. So there is a little bit of negative news in there when you are looking at housing. But for Caterpillar, this is a good story for them, a good report. And as you say, investors certainly liking it today.
FINIGHAN: All right. So, I take it, despite the negative news we are going to give Caterpillar a green. What about Whirlpool? Are people buying washing machines and refrigerators and things like that?
LAKE: Like gangbusters, evidently. Very good looking report for Whirlpool. Again, they beat estimates out there on the street, also offering positive guidance. Look at that. Quarterly earnings more than doubled. Once again, this very much a story of the developing world, emerging markets. Like Caterpillar, that is where all of their strength came from. In fact, when you look at the numbers, sales in Latin America up 65 percent, sales in Asia up 60 percent. That is tremendous. But when you look at Europe, North America, some of those more mature markets, only single digit gains. So a really good story emerging-no pun intended-for Whirlpool as the developing world, that sort of middle class growth and people are out there buying all sorts of appliances. Again, that stock on fire today. A really good looking report from Whirlpool.
FINIGHAN: So, I take it that is a green, too, Maggie? Look at that, three greens to start us off.
LAKE: Yes, yes.
FINIGHAN: The last time we did this we started off with a heck of a lot more reds. We'll look forward to talking about the Q25 tomorrow and see whether we can add to those greens and when our first red is going to come along?
Maggie, many thanks. Maggie Lake live in New York.
Now, on Capitol Hill lawmakers are in the midst of a show down right now. Financial reform is taking center stage. And that is just a day before the much anticipated Goldman Sachs hearing. CNN's Dana Bash is there, for what is shaping up to be a momentous couple of days on the Hill.
Dana, as far as this financial reform debate is concerned, are the parties, the Republicans and the Democrats agree on anything?
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: They do agree on a lot and most importantly they agree on the ultimate goal, which is not easy to do around there these days, when it comes to the partisan nature and atmospherics here in the United States Congress. And that goal is that the United States' taxpayer should not be footing the bill in the future, the next time-hopefully it won't happen, but the next time big Wall Street firms brink-are teetering on the brink of collapse.
So, what is going on is the Democrats have a bill, which in about three hours from now they are going to try to put on the floor of the United States Senate, just to start debate, Adrian. And Republican sources tell us that they have enough votes, all they need is all of the Republicans to vote no and they think that will happened, to just not even allow this debate to go forward.
Why is that? There are a lot of political reasons domestically, internally, that both sides actually think that there is some advantage, believe it or not, to having this vote fail later tonight. But I think, ultimately, in talking to sources on the Republican and Democratic side, they also do believe-both of them-that it is to their political advantage, ultimately, to do something, because the U.S. voter is just so incredibly angry about this whole concept of bailing out Wall Street, furious at Washington, and furious at Wall Street. And it is incumbent upon member of Congress to try to fix that. So, there will be negotiations going on, in fact, there are probably negotiations going on as we speak between the senior Democrat and Republican leaders on this. But it probably will take more than a couple of days to try to work this out, if that.
FINIGHAN: They're angry, too, about the Goldman Sachs fraud accusations, aren't they?
FINIGHAN: All of this happening just 24 hours before Goldman Sachs executives appear there to answer these charges, the SEC's charges, to talk about that?
BASH: Absolutely. And Goldman Sachs really has become the poster child, of sorts. You remember back, I guess, about a year or more ago, it was AIG, that became the target of people's ire and anger. Now it has become Goldman Sachs. There are some political allegations among Republicans that this is on purpose, that Democrats and even the Securities and Exchange Commission did this on purpose to give Democrats political advantage to move reforms forward but this is going to be a very interesting hearing tomorrow. All of the Goldman Sachs executives will be there. And you have the Democratic chairman, who in no uncertain terms, is saying that he believes that this firm was too focused on greed and not enough focus on what happened with the economic crisis. And he says that they're to blame.
FINIGHAN: Dana, many thanks, indeed. Dana Bash live at Capitol Hill and we'll have more on that appearance before the Senate tomorrow on QUEST MEANS BUSINESS.
Now, from inner cities to "Future Cities" size matters, but bigger isn't always better. We'll look at the next tall tower on London's horizon. Its architect says it is a landmark in the making. But some critics aren't so sure. We'll be right back.
FINIGHAN: London is getting the tallest tower in Europe. Some critics are wondering what Christopher Wren might have thought as The Shard gets ready to dominate his dome at St. Paul's and the rest of the capital skyline by 2012. In our series, "Future Cities", Richard Quest examines why the man who designed the Shard believe it will give London the edge.
RENZO PIANO, ARCHITECT, THE SHARD: You know, architecture is a very funny art. It is the art of the frontier of art. You have to play with technology and energy.
RICHARD QUEST, CNN INT'L. ANCHOR, QUEST MEANS BUSINESS (voice over): By 2012 one building will dominate London's skyline. Renzo Piano's tower The Shard, at some 300 meters high, when completed it will be the tallest building in Europe.
PIANO: The intention of this tower has never been to beat any record, or to be powerful. It is not really power in the sense of the massiveness or arrogance, it is power in the sense of lightness in some way. It is that kind of thing. It is fighting against gravity.
QUEST: For the developers this spiky piece of architecture is a sign that London is emerging from economic downturn.
IRVINE SELLAR, DEVELOPER, THE SHARD: It is a symbol for coming out of the recession. And having the confidence in this great city and it is a great city.
We knew we would never, ever have a chance of getting at tall tower in this location unless we had a world-class signature architect.
QUEST: Building upwards has long been a solution that town planners facing increasingly denser populations. Critics have said The Shard is simply too tall and would be a scar on the London skyline. Renzo Piano disagrees and says there is a place for the skyscraper.
PIANO: Everybody knows, sometimes towers are phallic symbols. They don't represent something very interesting-(LAUGHTER)-but going up to breath fresh air is much better story. So the idea is that in the middle of the city, you go up and you reach a point where the building disappears. (UNINTELLIGIBLE) sometimes are very good because they consume very little land. And if you are generous, you take from the city, the air, but you give back land. When you are in the building that is luminous, and you fly above ground, 200 meters, 300 meters above ground, there is something magic there.
From outside, especially when you are around a building and you look up, because the surface of the glass are tilted like that, you will always see the reflection of the sky. So, it will be probably a quite every changing object in the sky of London.
QUEST: The Shard will have a mixed use. There will be a luxury hotel, office space, penthouse apartments, restaurants, even a place right at the top, where you can just contemplate the clouds.
SELLAR: This building will be a building, if you are a Londoner, you'll own it. Every Londoner will own it and every visitor will own it because you can get into this building. You can eat there, view there, sleep there, or work there. It's public, it's got public accessibility.
PIANO: One thing is for sure, that building is not a castle. It is not a palace separated from life. People will be able to enjoy that building. And people will also be able to go up to the observatory that will be on the top floor.
SELLAR: When we started it, we were in good times. By the time we were in the recession or the middle of it. We were already half way across the Atlantic. So, what do we do swim back to shore, or carry on? So, we carried on, because that is the only way to go.
PIANO: He called me very two weeks and he said we are in trouble. But we have to get out of this trouble. And he is very, very nice because he's very pragmatic but at the same time he didn't give up one second. Never gave up, always optimistic and always, we have a problem, OK, we have to solve that problem.
SELLAR: This one has been the mother of all challenges, I have to say. But it will be worthwhile. I mean, we are building something that will be a landmark for London and will last for a long, long time.
PIANO: London is the place where madness is not impossible. Things may happen in London that will never happen somewhere else, that's for sure. I think this building will represent something for London.
(END VIDEO CLIP)
Now, bowled out after three seasons at the top -- the corruption scandal gripping Indian crippet -- cricket. It's the highest level of the sport. We'll look at the impact on this billion dollar business next on QUEST MEANS BUSINESS.
FINIGHAN: Welcome back.
Live from London, this is QUEST MEANS BUSINESS from CNN.
I'm Adrian Finighan.
Now, the face and founder of the ultra profitable Indian Premier League has been suspended. Lalit Modi is the biggest name so far to become embroiled in a corruption scandal which is gricking -- gripping Indian cricket. You try saying it quickly.
So, who is Lalit Modi?
Well, he founded the Indian Premier League in 2008. He became chairman of the tournament just two years, three seasons later, he was suspended -- caught up in a nationwide probe into allegations of bid rigging, money laundering and tax evasion.
So, the scandal itself, as well as money laundering, the scandal has involved speculation of auction rigging, betting, tax evasion. India's junior foreign minister resigned amid allegations of auction rigging. The cricket board gave no official reason for Modi's suspension and Modi himself has denied any wrongdoing.
But, the IPL itself is worth more than $4 billion, according to Brandt Finance. That's -- it's more than doubled in value since 2008. And players are paid up to $1.5 million a season.
Five weeks. It's one of the highest paid sport leagues in the world.
Let's get more from CNN Center on all of this.
Mark McKay joins us to talk about what is a major blow for Indian cricket, isn't it -- Mark?
MARK MCKAY, CNN CORRESPONDENT: Yes, no doubt about it, Adrian. And the president of the board of control for cricket in India said that the suspense of Mr. Modi should be seen not as punishment, but as the necessary action to ensure both a fair and a free inquiry.
The board, as you just listed there, Adrian, involving and investigating a number of issues with this brewing scandal involving Indian cricket and the Indian Premier League.
Perhaps the most troubling, though, to cricket fans, you have the allegations of match fixing which are out there. The president of the BCCI says that the ethics and transparency are much more important than the brand.
Mr. Modi, who's been suspended, claims the IPL is just that, both transparent and clean. But this really gets to the heart of the matter. Back in 2000, Adrian, investigators in India uncovered widespread corruption among Indian bookmakers and several key players.
So this does touch a nerve.
FINIGHAN: And you can't underplay just how big a deal this is in India. I mean the IPL is huge, not just in -- in terms of business, but in -- in terms of popularity, too.
MCKAY: No doubt about it. In fact, before its loss, Adrian, the Indian Premier League actually took a page and it investigated what you have going on in England, the English Premiership and the popularity of the Barclays -- now Barclays English Premiership, at least in its ability to bring in overseas star players, worldwide television interests and, of course, increased revenue.
Is that the -- the bottom line when you speak to this venture?
But the IPL really went a step further and they involved another industry which is huge to India, that being the filmmaking industry. In fact, no fewer than three Bollywood stars own IPL teams. Of course, it is a shortened, made for television version of the grand old game and it's brought in -- it's brought in, really, a new generation of cricket fans -- a lot younger and, boy, they're -- don't the advertisers relish that. The younger fans, they want them on board -- Adrian.
FINIGHAN: All right, Mark.
Great to talk to you.
Many thanks, indeed.
Mark McKay at CNN Center.
And it's got everything, this story. It's better than the plot of a - - of a Bollywood movie. I heard somewhere today that an IPL team can sell for more than an English Premier League site.
Now, Britain is about to go to the polls. And U.K. businesses are pretty worried. It's not only about who wins, but whether anyone wins at all. We'll talk you through what that means in just a moment.
FINIGHAN: Now, British businesses are worried. A majority of U.K. firms are anxious about the impact that a hung parliament could have on the economy, as the country struggles with recovery. That's according to the British Chambers of Commerce, whose survey shows that 65 percent are either concerned or very concerned.
But not everyone is anxious. Among the 300 or so companies surveyed, 22 percent aren't concerned at all by a potential hung parliament, while 13 percent said that it would be a good thing.
Well, Britain's main political parties are trying to convince voters that a hung parliament would create uncertainty.
David Taylor is the author of several books about leadership and success.
One is "The Naked Leader."
And David is with us now in the studio.
David, it's great to -- to have you with us.
Thanks for -- for being here.
DAVID TAYLOR, AUTHOR, "THE NAKED LEADER": Thank you very much.
FINIGHAN: Now -- all right, so the polls would have us believe that, potentially, we're heading for -- for a hung parliament at the moment. And I want to get your opinion on this.
Let's -- let's brush poli -- policies aside for the moment.
Could one element be the fact that none of the three party leaders is inspirational enough or shows the qualities of leadership that makes them instantly electable?
TAYLOR: Voters are looking now for leadership. And leadership to them means they look people right in the eyes, politicians and otherwise, and they think, do I believe what you're saying?
And Nick Clegg has soared to the front because he's, perhaps, come across as the most genuine. This is not my opinion. It's...
TAYLOR: -- it's what's happened in the opinion polls.
TAYLOR: And that's caused an interesting situation, because the three are now effectively neck and neck. And -- and -- and nobody knows quite how to respond to that. Nick Clegg is in a position where he doesn't know well, do I keep doing that? Will that help?
And -- and David Cameron and Gordon Brown are in a place they've never been before.
And I think the reason that people are saying they're worried about a hung parliament -- apart from the political reasons, vote for us so we don't get one -- is because we've never had one before. We -- well, we've had hung parliaments before. We've never had a sort of coalition before.
TAYLOR: And if we have a hung parliament this time, we're likely to go into a coalition, which will probably lead to electoral change in terms of the voting system. And people have never been there before.
So it's so exciting.
FINIGHAN: Yes, absolutely.
All right, let's look -- look individually at some of the party leaders.
Now, you mentioned Nick Clegg. He's the -- the leader of the Labor Democrats, the third force in British politics, if you like, the -- that's enjoyed a resurgence thanks to his appearances on television.
David Cameron from the Conservatives, the leader of the Conservative Party. He's perceived, perhaps, as being, well, a bit posh, we'd say here in Britain. He's from a privileged background -- a wealthy background, a private school education.
Is that a good or a bad thing these days?
TAYLOR: Well, I don't think it's good or bad. But, of course his operations are going to make the most of it. I mean I'm a believer that you can achieve anything you want in your life without a privileged education, without, you know, have -- having a silver spoon in your mouth from the day you were born. And that's been proved by people who do achieve success.
But it's quite fashionable in the U.K....
TAYLOR: -- and certain countries in Europe, it's quite fashionable to have a go at people who are perceived as being better off than others. And I think it's actually quite cheap to do that.
FINIGHAN: Yes, absolutely. I mean wealth is not what it once was. It is...
TAYLOR: It is...
FINIGHAN: I mean in -- in -- well, once upon a time, political parties would -- would promise you conditions that would allow prosperity, that would allow -- allow you to do better, to make the best of yourself. Now, after the -- the banking scandal -- accusations of greedy bankers, that's -- that's not perceived as being such a good thing anymore, is it?
TAYLOR: No, I know. I mean David Cameron can't help his background. No -- nobody can. And -- and having a go at that. And I'm not making a point in his favor. I'm saying it's just bad to have a go at his background for being posh as it is to have a go at somebody for being in poverty.
Your wider point is fascinating, this whole thing toward wealth.
TAYLOR: Let's be honest, in this country and, by the way, throughout Europe, everyone is talking about what they're going to -- not, you know, they're going to keep spending on -- on -- on the public sector.
Gordon Brown was there at the nurses' conference this morning, saying I'm not going to freeze your pay, you're safe with me.
Well, how can he make those statements?
TAYLOR: In the -- in Britain, we have a deficit of $900 billion, which is three times the figure of the 1,000 most wealthiest people across Britain and -- and Ireland. So if that's not going to work -- and, quite frankly, you'd have to shut the police down three times over...
TAYLOR: -- to sort of create the sort of savings you have to make, you have to look at the other side, across the whole of Europe, which is to encourage private enterprise. And it may not sound very politically correct, but we need to change our whole approach to money, because if they're going to tax us more...
TAYLOR: -- then they need people to tax and they need people to stay in this country to tax.
FINIGHAN: Yes. I mean we talked about Nick Clegg then and David Cameron, who have experience of leadership in terms of their -- their own political parties.
Gordon Brown is the only party leader who's own -- who's got the experience of running the country.
What -- what sort of leader is he?
I mean -- I mean you work with leaders all the time. You coach them, you -- you -- you help them overcome opposite -- I mean Gordon Brown is not a man without problems ideologically. He's sound. He knows where he's going and what he wants.
He finds it very difficult to -- to -- to adopt the body language of the leaders, doesn't he?
TAYLOR: I mean I will say one thing for Gordon Brown.
TAYLOR: He demonstrates persistence.
TAYLOR: And all leaders need to have persistence.
TAYLOR: I mean he's overcome opposition from other parties. He's overcome opposition while he's been prime minister from his own party, right up to the day that the election was called. And you -- you have to admire him for that.
Quite frankly, the bottom line on leadership is voters are looking at these three just saying who is telling us the truth?
TAYLOR: I don't think any of them have told the whole truth on the economy yet.
TAYLOR: But who is telling us -- shall we say -- most of the truth?
My point of view on the election?
I wouldn't want to win this election if I was one of the leaders.
TAYLOR: But, of course, Gordon Brown has never won an election, so he's desperate to win it.
TAYLOR: David Cameron knows he won't last if he doesn't win this election. Nick Clegg is in an area where he's never been before. He truly thought he was not going to come to the fore and he has.
FINIGHAN: A 10 second answer.
He -- what -- how do you think it's going to go?
A hung parliament?
Who -- who do you think will -- will come out with more votes?
TAYLOR: I -- I think hung parliament with Tories the largest party in a working coalition with the Lib Dems.
FINIGHAN: All right.
It's really exciting, though, I agree with you.
TAYLOR: It is very exciting.
David, we really appreciate you coming in.
Many thanks, indeed.
TAYLOR: A pleasure.
FINIGHAN: David Taylor.
And we'll have more, of course, analysis of the election campaign here in Britain in -- on QUEST MEANS BUSINESS over the coming days.
Now, it's not only businesses based in Britain that are taking a keen interest in who ends up running the British government. The election's outcome could have an impact on the pound. And this week, we're taking an international perspective on the U.K. election and U.K. PLC.
KUNAL SADARANGANI, PRESIDENT, TROPICAL CLOTHING COMPANY: I am Kunal Sadarangani. I'm the president of Tropical Clothing Company.
We're a leading ladies nightwear manufacturers to the United Kingdom, to stores such as Marks & Spencer, La Senza and Doff Shoppe (ph).
I reside in this fair city, but unfortunately I think I love most of my life on a plane between Mumbai and London.
It might surprise you to know that I think some of us here are keeping a closer eye on the U.K. election than the general public in the U.K. The reason being is it affects business in general.
Confidence at the moment is at an ebb. And as such, an event such as the U.K. election needs to be finished and done with for us to proceed with business as usual.
I'm hoping for change. Sometimes the only way to reinstill confidence is change. I'm hoping the Conservatives win.
Currency fluctuation has affected us greatly. It's created price pressure, which in turn has created margin pressure on the retailer and, thus, possibly it will increase prices even for the end consumer.
The reality of the situation is we're hoping that the election the catalyst that creates a sense of recovery, for confidence in the United Kingdom, which will, in turn, increase the value of the pound.
Well, I think anyone who says their business has not been affected is lying. It's just been a question of degree. We treat our business as a partnership. The retailers and us have lived out good times together and now are suffering the bad times together. But we can see a light at the end of the tunnel.
(END VIDEO TAPE)
FINIGHAN: It's shaping up to be a fan -- a fascinating election contest here in the U.K.
Right. Time to get some weather.
Guillermo Arduino is with us live at the CNN World Weather Center -- hey, Guillermo.
Now, I heard you earlier talking to Hala about some violent storms. It's always -- there's that saying that everything's bigger and better in America. And that includes the weather, it seems.
GUILLERMO ARDUINO, CNN METEOROLOGIST: At times. Most of the time, that's the way it is.
But the reason why I want to talk about this is because I imagine that there are many international travelers that are coming to the United States and they look at the video that we show of the tornado effects in the Southeast of the U.S. and they want to know if they're going to be affected.
Well, good news. The system that actually caused all the devastation still lingering in Miami, that area, with some tornadoes. This is where the low is.
So in the Northeast, if you are flying into JFK, Newark, LaGuardia, Boston, anywhere there, you're going to encounter bad weather, but it's not going to be terrible. Just some rain. Improving in Miami, too.
It seems that now things are getting a little bit better. But I want you to know that April, May, June and July are -- are months where we see a lot of activity, especially next month.
Now, what about the volcano?
Where is the ash going, if there's any ash at all?
Well, you see, this is the area where we had a warning, but now it's shrinking and we're talking about surface to 20,000 feet all in this vicinity. Good news.
If there's a big eruption, you know where the -- the winds are moving to?
To the north. So the ash would be taken all the way into the north, not into these areas.
We're taking care of you. At the same time, Spain is going to see warm -- a warming trend. France, the same thing. Right now, the weather is not that bad. We see in Poland some action and the same system affecting the Alpine Region.
So, look, this high is promising a high of -- a temperature of 29 degrees for tomorrow. Actually, in Spain, we're going to go above average, the French Riviera, the Italian Riviera, the Barcelona area here, even the Pyrenees, parts of France, into Paris, are going to be above average. You're going to love it.
Also, time to go golfing to El Garve (ph).
That's a beautiful place. So the high 29 in Madrid for tomorrow; 22 in Paris; a sizzling 19 in London. That's more or less what we're getting. And all across the board, except for Stockholm at single digits.
Now, try to convince Indians about what's going on with the temps. The heat wave continues. There's no change in store. We're talking about 43 degrees where -- while the average is 37 in Delhi. And we have to wait for a long time, until those refreshing rains kick in.
This is the rainy season in -- when?
June -- Adrian, it's going to -- in June.
So you see, we have June, the beginning of the rainy season in the south. And Delhi is going to get just a little bit. June. The temps are going downward.
FINIGHAN: Yes. Yes. Another, what, six weeks away. You know, if it rained all through June here in England, we'd moan like stink.
ARDUINO: Well, maybe you'll get it. You never know.
FINIGHAN: No, exactly.
Guillermo, many thanks, indeed.
ARDUINO: Thank you.
FINIGHAN: Now, it may eat into profits, but recession can make a business stronger. We speak to the CEO of a leading Westphone (ph) group on how the downturn has boosted his appetite for success.
FINIGHAN: The glitterati of fine dining is celebrating the best in class at the world's top 50 restaurant awards in London tonight. But celebrations aside, it's been a brutal year for the industry.
Earlier today, I went to check out one of London's finer restaurants high above the city of London and to find out from an expert if the future looks any sweeter.
UNIDENTIFIED MALE: (INAUDIBLE) coming up.
DES GUNEWARDENA, CEO, D&D: D&D London has got 30 restaurants where -- where in the world, 22 in London. And then we have a restaurant in Paris, in Copenhagen, New York and in Tokyo.
FINIGHAN: All right. So how has the business fared throughout the downturn?
I mean some restaurants have gone out of business. I mean people have found it pretty tough.
GUNEWARDENA (ph): Well, I mean across -- across the -- really, every single city in the world, where -- where we trade, I mean the downturn at more or less the same time, the time of -- when Lehmans went -- went down in September '08, our -- our revenue went down. And roughly, overall -- and in some months were worse than others. Roughly, we lost about 10 percent of our business. And so that was in September. And, really, that -- that recession lasted -- lasted at that sort of level for about six to nine months.
Since then, we -- we've been trading ahead of last year for about the last six months or so. So we're trading, you know, five or six or seven ahead of last year. So roughly, we -- we pulled back about half of the downturn.
FINIGHAN: So the business is -- has now -- is well on the -- on the way to recovery after suffering that -- that 10 percent dip right back at the start.
But what did you have to do to the business?
Did you change the business model in any way to -- to help bring the revenue back up again?
GUNEWARDENA: Well, I think innovation -- I think we have to work harder, because it's more competitive and -- and so, yes, we've had to work harder. We've had to -- I think what we've seen is a -- is a flight to quality and a flight to value. So we've had to make sure that throughout our restaurants, that we have been giving good value for money, whether it's the 25 pounds a head or 100 pounds a head, it's very important that the customer left our restaurants feeling they'd had a -- they'd had good value.
FINIGHAN: To what extent has -- has the recession actually been good for your business?
GUNEWARDENA: The recession has been good in that we've had to, obviously, manage our costs and -- and housekeep and run our businesses a bit more tightly because we were getting less revenue from our customers. So, yes, from that point of view, I think it's been good. And as we -- as we have seen now, the recovery, with those disciplines of -- of cost management and so on being in place, it -- it really puts us in a better place from that point of view than we were before going into the -- the downturn.
(END VIDEO TAPE)
FINIGHAN: So those restaurant awards, the top -- the world's top 50 restaurateur awards are tonight in London.
And here at QUEST MEANS BUSINESS, we've been asking you whether the economic downturn has affected your eating habits.
Are you eating out less and the restaurants with a $200 head average just too much?
And here are some comments.
Kiloea (ph) says: "Yes, my habit changed. I ate out less at lunchtime. But then again, I could never afford $200 a head anyway."
Trevor (ph) says: "It hasn't really changed any of our family's headaches. Then again, I wouldn't waste $200 on a meal anyway. No food is that good. It all turns to asterisks, asterisks, anyway." And you can guess what the word is.
Just ahead here on QUEST MEANS BUSINESS, we'll get a check of European, U.S. and Greek markets.
Stay with us.
FINIGHAN: Before we go, I just want to tell you about a story that's developed while we've been on air. More than a million female weekends have got the green light to pursue a huge sex discrimination case against Walmart. The U.S. Federal Appeals Court has said that the case can go ahead as a class action suit, meaning that one case can be pursued on behalf of all the women involved.
Now, these workers, past and present, claim that Walmart paid them less and promoted them less than their male counterparts. They're seeking back pay and other damages.
Walmart had fought against class action status for the case, which could turn into the largest gender bias lawsuit in U.S. history.
And before we go, let's just show you what's happening on the markets.
The Dow Jones gaining slightly this hour, up about 20 points, lifted by strong earnings from Caterpillar. You saw the numbers earlier when we did the Q25. Whirlpool, as well, good results for them today.
It's a big week for investors, of course. Lots of corporate results and the economic reports to take in. And we'll tell you all about them on the Q25 with those balloons as we continue to do that throughout the week.
That's it for QUEST MEANS BUSINESS.
In London, I'm Adrian Finighan.
As Richard would say, whatever you're up to in the hours ahead, I do hope it's profitable.
"AMANPOUR" is next on CNN, right after the headlines from Ralitsa.