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QUEST MEANS BUSINESS
Risk Aversion Causes European, American Stocks to Plummet; BA Strike Is On
Aired May 20, 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: It's that sinking feeling again. Stocks markets are falling sharply.
The strike is on at BA as the cabin crew has won its appeal.
And priceless paintings, Picasso, Matisse, they're gone! Stolen.
I'm Richard Quest, and I mean business.
We start tonight with a sorry tale from the markets. For the fourth day in a row the U.S. stock market is falling quite sharply. The Dow is down-
(DESK BELL CHIMES)
-some 9 percent since it hit a 19-month high in April. It's virtually wiped out gains for the last three months. The fear is that this is not a correction but something deeper is actually going on in the market. As you can see, from the Dow, it is now off more than 275 points.
But the problem, of course, is the signs of deepening divisions also within the Euro Zone, that has taken its toll. Not just on the New York market, but of course in Europe. We need to start with the markets that are finished for the day. And it gives you an idea of just how unpleasant the trading was.
We'll come back to New York in just a moment. Join me in the library as we look at he European markets. Here you can see the European stock market down. The London FTSE was off 1.5. The Paris CAC currant was down 2.25, very sharp gains-losses, I beg your pardon. Obviously, substantially, of course, government bonds were in demand and we saw that both in falls of yields and in rise of prices. And that, of course, was largely because there is now a flaw underneath that. The ECB is buying euro bonds and individual countries. And factoring in, as well, to that, the risk premium that has now come in as a result of equities.
Moving on, of course, we seem to have another one from the European stock markets. While we sort that one out, let's look at commodity prices over here. And commodities were very much in the tale. Gold fell by nearly .75 of 1 percent. Oil was off very sharply as well. Now this came about on economic reasons. Fears, of course, that if the European economies are not moving forward, and the U.S. is also, perhaps-we saw, we had numbers out of the United States that suggested European growth-U.S. growth wasn't going to be that good. LEI numbers, Maggie will talk about them in a second. So, oil was down. Gold was also down. Commodities took the hit on the back of the rising dollar. And there, of course, you get a number for the euro against the dollar; $1.2490 at the moment.
This is the scenario. It is all a bit ugly out there, but the question is what's behind it? Maggie Lake is in New York. Good evening, Maggie. First of all, bring us up to date, where you've got the Dow and the other major markets.
MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: Yes, Richard, I was just glancing as you were talking to me, because it is moving quite quickly again. We have sort of stabilized around down 250 on the blue chips, about 3 percent for Nasdaq. But just in intro to the show we sort of took a little bit of a leg down. We've now down about 300 points, 2.9 percent for blue chips on the Dow; 3.5 percent now for Nasdaq and the S&P 500 down 3.25 percent. Quite a significant move from where we were just at the top of the show. So, you are getting that sort of afternoon churn right around this 2:00 o'clock period again, Richard.
QUEST: Maggie, this-the market reasons, we had the LEI number out today in the United States which was disappointing but frankly, it wasn't, I mean it wasn't-thank you very much. We had the rise in jobless claims, which again, it is a bit-it's a bit mish-mash-mosh. But when we see the reaction it raises the question, what is underneath it all?
LAKE: Yes, it really does not have much to do with the U.S. data out today, Richard. The markets are really moving off of the European situation, the currency situation, and more broadly the way to put it is the risk aversion is now on. It is all about risk aversion. You have so much uncertainty out there for investors. Europe is paramount, you mentioned the deep divisions within Europe. How are they going to tackle this debt problem.
QUEST: OK, but just a second.
LAKE: Not speaking with one voice.
QUEST: Just a second. You talk about risk aversion. But Maggie, we had gold, which traditionally, gold goes up, but we had gold down by 0.75 of a percent. Oil is also off $5 and change.
QUEST: A strengthening of the dollar, that seems to be a little bit contradictory.
LAKE: Right, so when every one is risk averse, what do they do? They move-they horde cash and they move into the safest thing they can find. And sometimes that means selling your winners. So, people are cashing in on everything that was doing well for them. All the trades that were working, the winners that were working, and that counts for commodities, too. That's what people are nervous about. You have everything moving in the same direction. You know, you see that at times, those stress in the market. Doesn't mean it is anything but a correction and maybe this is a good time and excuse for people to take some profits from those-all those markets who have seen big rallies. But nonetheless, that is where people aren't sure. Is it just a correction? Or is it sort of entering into that sort of liquidity, hoarding cash phase?
LAKE: People here aren't sure. It has been orderly and it is calm. But it has people concerned that everything is moving in one direction, Richard.
QUEST: And, of course, Treasuries are usually the ultimate beneficiaries of this, as we have seen today. Maggie, many thanks to you. Maggie is at the-remind me quickly before we pass on, Maggie. Where the markets are?
LAKE: Right. So, right now, we are back again below 300, down 300, just under 300 on the Dow. The Nasdaq off 3.5 percent. The S&P 500 off in excess of 3 percent. Watch that market. People are watching technical levels there. If they sort of breakthrough, that could spur another spurt of selling this afternoon.
QUEST: But no flash crash, at least on this-
LAKE: No, very importantly, we are not seeing that right now.
QUEST: No, flash crash, Maggie Lake who is in New York.
(DESK BELL CHIMES)
Many thanks for that.
Now, today, the German Chancellor Angela Merkel ramped up the rhetoric. Chancellor Merkel is pushing for coordinated action to reform and regulate the financial system. And that includes a global tax on banks. CNN's Diana Magnay is our correspondent tonight, in Berlin.
DIANA MAGNAY, CNN INT'L. CORRESPONDENT: The German Chancellor Angela Merkel and her finance minister, Wolfgang Schaeble, brought together international economic leaders for a conference on financial regulation. Regulation of the financial markets ahead of next month's G20 summit in Toronto. And really what the Chancellor said she was trying to prove here, to the public, was that progress was being made on trying to put through effective regulation, across financial markets and to make that kind of approach, a coordinated one. She also said that she would be encouraging G20 leaders to back her in an idea of a banking levy.
Let's listen in.
ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): At the G20 summit we will campaign for a tax that the finance markets have to pay in addition to their dues.
MAGNAY: This banking levy or financial transaction tax, whatever actual format it will take is obviously a populist move designed to tell the German public and the public across Europe, that they are not the only ones who are going to have to foot the bill for any kind of European country's bailout. That it will also be banks who are paying the price for their role in the financial crisis.
And another thing that the chancellor called for was for a European ratings agency to be established that could compete, more effectively with other global ratings agencies. Diana Magnay, CNN, Berlin.
QUEST: Chancellor Merkel has repeatedly said that at stake is the survival of the great European project, monetary union. I spoke to the global chief economist at the banking titan, HSBC, Stephen King. He is now firmly of the view that Europe has many different interest rates, at a time when of course, it should have just one based on the euro. But if you look at government bonds you have Greece over 7 and 8 percent, you have German bundes down at 2 and 3 percent. So, I asked Stephen King, if there needed to be root and branch reform of the Euro Zone?
STEPHEN KING, GLOBAL CHIEF ECONOMIST, HSBC: Everyone knows that the fiscal numbers in Greece, and perhaps Portugal and Spain, are looking very, very troublesome. There isn't a mechanism at the moment which is, if you like, pre-ordained, which tells you how to deal with this particular problem. The problem has become vast because the amount of debt that was built up during the crisis has been absolutely enormous. And there is actually no solution.
QUEST: There is no solution other than to change the fundamental foundations upon which the euro has been built.
KING: Yes, that's right. Effectively what we are going to see over the next few years is I think a recognition that sovereign debt risks are higher than they used to be. At which it means you are going to end up with different interest rates in different parts of Europe, which is not really part of the single currency idea in the first place.
But I think eventually what we recognize is there has to be a tougher fiscal arrangement to go alongside what is a relatively tough monetary arrangement.
QUEST: So, through the backdoor, and by necessity being the mother of invention, we are going to end up with a United States of Europe by default.
KING: I'm not sure it will be called that, but it would be a similar kind of thing.
QUEST: An economic united Europe.
KING: Yes. I mean, the truth of the matter is if you are looking about, say, California. California is not going go bust because it is actually part of the United States of America, it is held (ph) by Washington. I think what Europe will eventually need is some kind of mechanism that will effectively insure that the same kinds of risks don't get repeated, as we have seen over the last two or three years.
QUEST: Isn't the problem though, there is a raft of policies, regulations from treaty on this to Maastricht on that, to everywhere else and the other, that should have prevented this from happening and didn't.
KING: Well, the problem of course is party that the policy makers fail to see, as indeed, many people fail to see the scale of the crisis. What is happening with the crisis, not just in the Euro Zone, but in the U.K., and in the U.S., is that governments have ended up with enormous amounts of debt. Now, the alternative would have been economies might have collapsed two or three years ago. So in one sense it was right to take on this amount of debt the unanswered question was once you get this debt, how do you pay it off?
QUEST: But in those years before the crisis there were those countries that were building up debt and they weren't running their economies properly and we didn't know about it.
QUEST: There were thousands of people who were looking into it.
KING: Yes, but part of the problem pre-crisis was that people couldn't see the crisis coming thought they could be fairly relaxed about-
KING: -about the fiscal rules, and even Germany was quite relaxed about the fiscal rules.
QUEST: Why does it matter if Greece's bonds attract a higher interest rate on sovereign debt than German bundes or U.K. gilts?
KING: Well, the answer in once sense, it doesn't matter. I mean it is a cost effective way of being fiscally profligate. And look around the world that have relatively high borrowing costs have them because there is a risk of some kind of default or another.
But of course the problem in Greece, and indeed, in Spain and Portugal is if market interest rates go up, the cost of servicing existing debt rises, which means the amount of austerity that is required to actually sort the problem out, becomes greater. So, it becomes politically very difficult.
QUEST: Are you optimistic, pessimistic, about what happens next. Because clearly the way the Germans introduced a ban on naked short selling, without all reference or will to anybody else, doesn't beggar well for the rest of us.
KING: Well, I'm neither optimistic nor pessimistic. I'm a realist, I think it is fair to say. I think what is beginning to happen and we are seeing this in all sorts of walks of life, is that politicians and policymakers are beginning to say we're not happy about market solutions. So, you have to move away from the market towards political solutions of one sort or another. And, of course, ultimately, if it is a case that we are moving toward the United States of Europe, or some kind of fiscal consolidation, ultimately that is a move away from the market toward policymakers deciding which countries get which bailouts, which kinds of fiscals transfers (ph). It is a political solution rather than a market solution.
QUEST: That is Stephen King, the chief economist of HSBC.
In a moment, bad news for the flyers and the airline. British Airways, United union could turn the screws on the airline after all, after winning an injunction, all the while getting the injunction overturned, in the court of appeal. We'll explain all in a moment.
QUEST: Welcome back. The story of British Airways won't go away. A new strike after the court of appeal has overturned an injunction preventing the airline from going on strike. The appeal court will now allow the cabin crew to walk off the strike (sic). The Unite union has set the date for next week, of the strike, British Airways says it is very disappointed by the decision of the court of appeal to overturn the injunction and to allow it to go ahead, the strike to go ahead.
The union-I'm sorry, the airline is now making plans to run up to 60 percent of its long-haul schedule from London Heathrow, Gatwick and London City, will run normally. The case has been the-from the union's point of view. Basically there have been balloting problems in two of the three ballots that they've had so far. You know, BA won the injunction last week. Now that has been overturned. The union was absolutely spitting feathers when the injunction was originally issued, on the flimsiest of reasons. The 11 spoiled ballot papers that hadn't been put into the information to members.
So, this is now the new deadline. Monday May the 24th. It is a five- day walk out that is planned. And then, of course, comes the question. If the two sides do not reach an agreement the rolling strikes for the rest of the May will continue. In total, 15 days of strikes are planned.
It is all about grim and all a bit unpleasant. Perhaps that isn't the politest way to introduce Jim Boulden.
JIM BOULDEN, CNN INT'L. CORRESPONDENT: This is an unpleasant story for everybody, I think.
QUEST: Absolutely. But not yourself.
BOULDEN: No, what-yes, these actually the strikes that continues that go into June. I mean, we're talking about going for another week, into June as well. So, three, five-day strikes, basically we're talking about the rest of this month.
QUEST: OK, Jim, they got the injunction British Airways and then they lost it. What happened?
BOULDEN: Well, I was at the court hearing on Monday when they got the original injunction, and I think I said on this air it was quite a surprise when the judges overturned it. We are basically back to where we were on Monday.
QUEST: It was the flimsiest of reasons to grant an injunction.
BOULDEN: It was, it was. It is even more technical than just the spoiled ballots. And the judge said actually people at Unite use Internet and they can look on the Internet and find out the results. So, let's get that out of the way. We go back to where we are, the two sides had talks on Monday. But let's listen to Derek Simpson from the union, because he was very pleased at the ruling today.
(BEGIN VIDEO CLIP)
DEREK SIMPSON, JOINT GENERAL SECRETARY, UNITE: The case brought by BA were trivial. In my opinion, irresponsible. It is cause us difficulty, it has caused confusion, but most of all it strikes at the heart of the Democratic right to strike in a properly conducted ballot.
(END VIDEO CLIP)
BOULDEN: Also we had a comment just a moments ago, really, from Willie Walsh, the CEO of British Airways. And British Airways put a statement on YouTube, and this is his reaction to today's news.
(BEGIN VIDEO CLIP)
WILLIE WALSH, CEO, BRITISH AIRWAYS: I would urge Tony Whatley, Derek Simpson, and everybody at Unite, to reflect on the progress that we have made. And to look for the opportunity to bring this dispute to an end.
(END VIDEO CLIP)
BOULDEN: And you heard him say, "the progress that we've made". In fact, both sides would pretty much agree that the majority of the issues have been resolved in the negotiations. But they can't agree to stop this from happening.
QUEST: It's a bit-
QUEST: Well, is it?
BOULDEN: Yes. It is.
BOULDEN: And it is getting nasty and some of the cabin crew who are striking are nasty. British Airways fired several cabin crew.
QUEST: Are you certain?
BOULDEN: And that gets into there as well. They say it is not because they struck, it is because they were bullying other members of staff, blah, blah, blah.
QUEST: Is this going to just-I mean, get your crystal ball out-is this going to run? Is the strike-not just this one, but will there be more of them? Are they going to settle this?
BOULDEN: It doesn't seem to be anything that is going change Willie Walsh's mind. The union is going to have to come to a decision, is it worth continuing to do this over what seem to be minor issues to the airline, what seem to be major issues to the union, but obviously inconveniencing so many people. The government doesn't like it. The previous government doesn't like it either. There are not a lot of people on the union side. But, of course, the cabin crew are overwhelmingly voting, every single time, to strike.
QUEST: That is the fascinating part, isn't it?
QUEST: No one can claim that they are being driven to this?
BOULDEN: No, it is not 51-49 or anything like that.
QUEST: All right, Jim, many thanks. Will you be-where next week?
BOULDEN: Monday, Heathrow, again.
QUEST: I'll buy-I was going to say I'll buy you a scarf, but you won't need it.
It will be summertime.
BOULDEN: Suntan lotion.
QUEST: I'll buy you some suntan lotion.
QUEST: Mustn't make fun of that.
Tomorrow on QUEST MEANS BUSINESS, on this program, I'll be talking to the chief executive of British Airways, Willie Walsh. They are having results, I'll be asking Mr. Walsh how he hopes to keep the airline flying during next week's planned strike. That is tomorrow, QUEST MEANS BUSINESS, with the chief exec of British Airways.
When we come back, more chief execs, this time SAB Millers, the results weren't bad, but the market reaction was flat to disappointing.
Why does the maker of Grolsch and Perini, not have more spice and spirit? Chief exec in a moment.
QUEST: Welcome back. Brewing giant SAB Miller has predicted consumer spending won't recover in earnest until the autumn of this year. The maker of Peroni and Miller Lite, actually saw its stock slide by almost 7 percent in London trading, after its full year results missed estimates. But they weren't that bad. SAB Miller posted a net profit of just over $1.9 billion. It was at 1.5 percent on last year, and there was some good growth in volumes. The second-biggest brewer makes most of its profits from emerging markets. And saw strong growth in areas like Latin America. So, a 4 percent rise in revenue, was down to price rises and volume growth.
I spoke to the chief executive of SAB Miller, Graham MacKay, and frankly, with these results and with the market just basically pouring water all over them, he's obviously not seeing signs of a recovery.
GRAHAM MACKAY, CEO, SAB MILLER: What one reads, for instance, about the U.S., is all thing appear in recovery, that certain kinds of employment are coming back, and so on. At the heart of the beer market we don't really see that. We don't see construction industry starting up again. Mass consumer goods, such as beer, which have their center of gravity, if you like, relatively low in the socio-economic scale. Those are not doing well, as yet. And we don't see employment in the sectors that are important to us yet.
QUEST: Do you fear there is a second leg of the crisis? Not as dramatic, not as dramatic, but it could be predicated for something light, for example, the euro shenanigans that we are currently seeing.
MACKAY: I don't think that there is a real-I hope there isn't-we don't think there is a real double dip coming. But I think, and this is in fact, implicit in the messages were have been getting today. We also don't see a rapid return to normality, or what we regarded as normality before the crisis. And we think that the recovery, such as it is, and such as it turns out to be, is going to be long and slow and painful.
QUEST: So, neither an optimist, nor pessimist, but realist?
MACKAY: I would like to think so, yes.
QUEST: The World Cup? You must be hoping for some sort of boost or benefit from that?
MACKAY: Nothing-in a trading sense, nothing spectacular at all. I think that South Africa itself will benefit. I think the profile of the country will benefit. We are associate with South Africa, obviously, the effect on actual volume is going to be pretty modest. We think 4 to 6 percent, uplift, something like that, during the time of the tournament, in South Africa.
Perhaps a little bit in the rest of the world as people gather around soccer occasions, TV and that kind of stuff.
QUEST: But it is important for you to capitalize on that, on the event?
MACKAY: Yes, it is. It is important if are associated with the local team, the national team in South Africa. We are also, as it happens, sponsors of the Italian team and the Honduras team, to list two other qualifiers for the World Cup.
QUEST: Are you going to tell me which of the three teams that you are sponsoring you hope will win?
MACKAY: For the-
QUEST: Of the three, of the three you are going for, are you-
MACKAY: Well, obviously, I would like to see a final with South Africa on the one side and either Italy or Honduras on the other. But I-
MACKAY: That is probably unlikely.
QUEST: If that doesn't do stuff for your margins-
MACKAY: That would do a lot. Then I would take back all my previous remarks.
QUEST: Graham MacKay, and if that were to happen, in that scenario, well, I think he' probably be buying the drinks, all the way around.
North Korea is making threats. The country says it won't be held responsible for a deadly attack on South Korea's navy. What does the world think, in a moment.
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS, this is CNN, where the news always comes first.
QUEST: President Calderon blasted Arizona's harsh new immigration laws. He stressed the security benefits that will follow a comprehensive reform of U.S. immigration laws.
The markets in Europe were down between 1.5 and 2.5 percent. It was a bit of a sorry state of affairs. At one point, the London FTSE had lost 3 percent in value. It was our old friend, the Greek debt worries, that also took its toll.
And now, of course, we're seeing the New York markets following on suit, down 2.3 percent.
Don't get too alarmed about this. The market had been off more than 300 points. So it has pulled back with just over an hour-and-a-half before the end of trading.
Out of control computerized trading could have exacerbated that so- called flash crash that we got on Wall Street around this time two weeks ago. You and I were talking together, along with Stephanie Elam, when it happened.
Now, the Securities and Exchange Commissioner, Mary Schapiro, has told lawmakers before Congress a human factor is needed when technology has run amok. She avoided making definitive statements about what happened on May the 6th, the day the Dow briefly plunged almost 1000 points.
But she did say her agency is sifting through 17 million trades on that day in a hearing on Capitol Hill. Senators asked what would happen if the same chain of events happened today.
(BEGIN VIDEO CLIP)
SEN. JIM BUNNING (R), KENTUCKY: If we get bad news out of -- of the IMF or Greece or Portugal or something that would have an adverse effect on our own markets, we could see the exact same reoccurrence and we haven't done anything.
MARY SCHAPIRO: I -- I share your sense of urgency and we are moving very quickly -- quicker than I've seen the SEC move in a very long time...
BUNNING: I know that but...
SCHAPIRO: -- to get this done.
BUNNING: But that's not quick enough.
SCHAPIRO: But it's (INAUDIBLE) -- I understand, it's not quick enough. The existing circuit breakers we have will just have to be the -- our fallback...
BUNNING: Well, I think...
SCHAPIRO: -- until we can get it done.
BUNNING: I think...
(END VIDEO CLIP)
QUEST: An honest exchange. Schapiro says news rules that would halt trading in certain stocks for five minutes if a stock was down more than 10 percent won't be and place until next month.
With jobless numbers going up, you would think that employers would find it easy to fill vacant posts. Not so, says the latest survey by the recruitment company, Manpower. According to their numbers, there's a talent shortage across the globe. In the U.S., 14 percent of employers can't find the right person for the job.
Bosses in Japan suffer the most. Seventy-six percent say they're unhappy with the choice of applicants on offer.
In Asia, talent shortages are 10 percent higher than the global average.
In Europe, Poland is the most problematic, while Ireland and the U.K. find it easiest to fill the posts.
This is fascinating.
Jeff Joerres is the chairman and chief executive of Manpower.
He joins me now from Milwaukee, Wisconsin.
Good evening to you, Jeff.
Always lovely to have you join us on these interesting questions.
JEFF JOERRES, CHAIRMAN AND CEO, MANPOWER: Yes, thanks, Richard.
QUEST: Let's -- look, a talent shortage and yet no shortage of em -- of potential em -- applicants and employees.
So where does this mismatch come from?
JOERRES: Yes, I think you used the exact word. It really is a mismatch. And it's a -- it's a mismatch that is going to cause lots of issues. It's causing lots of -- lots of issues for companies because there's a frustration of the amount of applicants they're getting, you know, candidates coming in. And then, of course, you know, even today, we announced a survey and you see the unemployment claims go up in the U.S. You're seeing 10 percent in the U.S. unemployed, 20 percent in Spain. The numbers are pretty dramatic.
And -- and yet you can't get the satisfaction on either side. And a lot of it has to do with that companies are very specific right now. They are not going to hire somebody in any kind of compromise. They're looking for the exact skill fit. So they can do that now. Maybe two or three years from now they can't do it, but they can do that now.
JOERRES: And as a result, what. You're going to see is this mismatch continue for some time.
QUEST: OK. Sales reps is one of the misra -- mismatches that they're looking for. I mean I assume you're not -- or you're not talking about people selling clothes in The Gap. You're talking about proper sort of sales reps and in high levels in companies.
JOERRES: Right. What's happening in the sales positions, it's really interesting, because it's evolved. For the five years that we've been doing this specific survey, sales reps have been up in that one, two, three, four position. And the reason is, is that companies are becoming more sophisticated. That sales rep no longer is going from door to door knocking and selling brushes.
What they're doing is talking about justification -- financial justifications, value. And this is requiring a different kind of salesperson...
QUEST: Hang on...
JOERRES: -- and a real sense of need.
QUEST: OK. But companies traditionally -- look, I'm old enough and - - to remember companies trained you. They took you on. They gave you training. They had a career structure.
Are you saying that they just want you if you're good for now?
JOERRES: Yes. And absolutely. I went through that same system. I was trained for a year before I was allowed to sell a product in my first job. Companies don't have that margin anymore. And when their product lifecycle is reduced, whether it be manufacturing or service -- if your product lifecycle went from, let's say, five years down to 18 months, there is no time in between. Everything has been accelerated.
So they need the talent now in order to get productive and sell that product or to engineer that product or to put that Web site on.
So the -- the skills get antiquated faster, companies don't have the money to train, though they're still doing some of that, they don't have the money to train. So what's happening is you get this churn and you get this mismatch.
QUEST: Catch-22 for those people out of work without the right skills. They can't get a job to get the skills and they haven't got the skills to get the job.
What do they do?
JOERRES: Yes, a couple of things.
One is, it will take a little longer because companies will cherry pick.
The second is they have to take -- which is very tough, because they're in a tough spot. But they have to take on some responsibility whether they like it or not. They've got to train. They've got to get access to it. They've got to get a part-time job. They've got to go get a contract job.
JOERRES: They've got to get into the flow of this somehow and they've got to take some initiative to do that because they're just not going to be plucked by companies.
QUEST: With Spain at 20 percent unemployment, the U.S. de facto 10 percent, everywhere else, de facto, 10 percent, this is just downright depressing, Jeff.
JOERRES: I would have to say that, you know, my weekends are spent trying to recharge my battery to go after the weeks because what we've got is -- is this environment where we're not going to get the economy moving at the pace we want with this high unemployment, but yet we're not going to hire people because we're not going to hire and anticipation because margins and un -- are low and uncertainty.
So we're in a little bit of a stuck sticky spot right now. And my view is, is we're growing out of it but it's going to be slow and hard.
QUEST: Jeff, always wonderful to have you coming on the program to talk about these issues.
Many thanks for joining us from Milwaukee.
When we come back, heavy oil is hitting the Gulf Coast. The brown ooze from the Gulf of Mexico could travel even further around the United States. Now it's in this current.
Well, who knows where it will end up?
In a moment.
QUEST: Now, what's currently a threat for the states ringing the Gulf of Mexico may become an environmental nightmare for the whole U.S. East Coast. Experts now really fear oil from the ruptured BP well is flowing into strong ocean currents that swing around Florida and end up on the U.S. Eastern Seaboard.
It had been originally thought that the distances were simply too great and it was most unlikely.
David Mattingly now with me from New Orleans.
But they're reversing that view, aren't they -- David?
DAVID MATTINGLY, CNN CORRESPONDENT: All of those views, all of that argument about where the oil is going to go, how much of it's actually out there, all academic at this point, because the state of Louisiana, more than 40 miles of the shoreline have already been impacted by this oil. And now state officials here want the world to know of what kind of oil they're seeing.
It's not a sheen, as they've talked about in the past, but heavy oil.
And they took us out there to give us a firsthand look.
MATTINGLY: Look at this right here. This is some of the thickest sheen that I've seen out here.
(voice-over): I had already seen oil washing ashore in Louisiana several times before, but nothing like this -- a thick, syrupy slug of oil oozing into delicate wetland.
It's -- it's getting even worse. Take a look at this, over this way. Look at that -- solid black. Look at that.
(voice-over): It's exactly what we were promised -- an up close look at a pool of crude oil poisoning an environmentally sensitive marsh. Louisiana Governor Bobby Jindal led us here to show the Coast Guard and anyone else who will listen attempts to contain the BP oil slick aren't working well enough.
(on camera): Do you feel like they're listening to you?
And do you think they'll listen to you now?
GOV. BOBBY JINDAL (R), LOUISIANA: I hope -- I hope we get approval for the permit today. I hope that people see this heavy oil, they see the impact this is having on the marsh. Let's be very clear -- this it's not tar balls. This isn't sheen. This is heavy oil.
MATTINGLY: (voice-over): Oil that is coating everything it touches, killing plants, just like it could kill any fish, turtle or bird that gets caught in it. This is the first time a patch of heavy raw crude has made contact with land since the disaster began.
(on camera): The big question is how did it get here?
How did it get past all those booms?
How did it get past the dispersant and the skimmers?
This is exactly the kind of spot where they did not want to see this coming.
(voice-over): This oil not only hit land, it made its way into the fringes of Louisiana's estuaries -- the vital birthing areas of Gulf fisheries -- something the state is trying to protect at all costs. This trip is part of a political I told you so, as Jindal wants federal approval and BP money for a massive plan to restore eroded barrier islands -- natural barriers to storms and oil slicks.
(on camera): The oil is here.
How do you get it out of here?
Cleaning it off a beach is one thing, but how do you get it out of the mss?
JINDAL: That's exactly right. You know, they've got folks out here with shallow water skimmers and absorbent booms, but the reality is this. It's much, much easier to fight this off of a beach or off of a rocky island. It is much, much tougher. And many of our wet -- wetland areas, many of our marsh areas, the clean up efforts could probably do more damage than the actual oil itself.
MATTINGLY: (voice-over): This is one marsh that may never recover in a month old disaster that continues to get worse.
(END VIDEO TAPE)
MATTINGLY: One top BP executive looking at those pictures that we brought back from out of the mss of Louisiana, he said it was absolutely devastating what he saw. And the pictures, Richard, just don't seem to do it justice. This stuff is as thick as any kind of chocolate syrup you might have seen -- thick, heavy and killing everything it touches out there.
QUEST: OK. David, we're running out of time, so I'm just going to throw a few questions for some quick, surefire answers.
Firstly, do they believe there is more of that stuff heading their way?
MATTINGLY: There's obviously more of that stuff. They just don't see it every single day, as some of these heavy patches pop up somewhere in those sheens.
QUEST: Is there any -- is there any evidence that there's an easy way to deal with it within the mss?
MATTINGLY: No. Once it gets in there, it is harder to clean up. The best approach is to keep it from getting in there and those efforts clearly aren't working.
QUEST: And so that takes me to my final question, how much more marshland is there that could become threatened very shortly?
MATTINGLY: That is the hundred thousand dollar question right now. They did not see this pool coming until it was actually in the mss. They don't know exactly what they're dealing with because this oil has been dispersed over such a wide area and throughout the water column. So every day is a new piece of this disaster.
QUEST: David, many thanks.
David Mattingly, who's in New Orleans with that side of the story.
Now, the oil spill threatens to become an environmental nightmare. We are a business program and we need to put it into economic consequences.
The Gulf of Mexico is rich in seafood. More and more of the Gulf is being closed to fishing -- 19 percent, at least, of the area has been banned.
Joel Knox is the chief executive of Inland Seafood.
Joel joins me now from Atlanta.
Joel, we need to put this into context.
How dangerous is this for the fishing, the seafood industry on the Gulf?
JOEL KNOX, CEO, INLAND SEAFOOD: This is the worst nightmare we could imagine. This could be the end of a lot of seafood that we know, that we've grown to love and -- and cherish our whole lives growing up.
As you see pictures of people shucking oysters, those could become a thing of the past.
QUEST: But tell me about...
QUEST: Tell me about your company, though, and what you -- you know, the -- the direct economic impact that you are feeling at the moment.
KNOX: Right now, we've seen prices rise on just about every item that comes out of the Gulf, from oysters to shrimp to crabs. And, more importantly, we've seen a lot of pullback from people that are not along the Gulf Coast being afraid of eating fish that are from the Gulf, like grouper and snapper. And that economic thing is hurting not only my company, but everybody along the Gulf who's not impacted.
As you said, only the Gulf -- only 19 percent of the Gulf is closed to fishing. And a lot of the Gulf is still open. We don't know where the oil is, but I can tell you, the fish do that are in the water and they're avoiding it. And the fishermen who are above the water are not going to fish where the Gulf is polluted with oil.
QUEST: But that...
KNOX: So the Gulf...
QUEST: But that, of course...
KNOX: -- is...
QUEST: That, of course, doesn't -- that, of course, doesn't take account of that aspect once it gets into the food chain. You know, you're -- you're familiar, the plankton, which then gets into the grubs, which then gets eaten by the crustaceans and onwards and upwards.
KNOX: Oh, this is going to be something that we'll see for generations of seafood. Now, a generation of seafood is not like a generation of man.
KNOX: But it could affect things for the next three to six years, as the fish that would be here are not there, as the bait that the bigger fish eat are killed in the mss...
KNOX: -- as you see.
QUEST: Joe, you're...
KNOX: And it...
QUEST: You're one stage...
QUEST: -- removed in the sense of not being a fisherman actually out with -- with the lines and the rods. But you're obviously going to have an economic impact for your company.
Will you or have you thought about going to BP for compensation?
KNOX: We haven't thought about it as of yet. And I'm more concerned about our restaurants on the Gulf Coast; our restaurants in New Orleans, where we have a plant; our restaurants in Birmingham, which is only 150 miles from the Gulf Coast. These restaurants that are along the Gulf Coast are down right now 20 to 30 percent compared to this time last year. And last year was not exactly a boom time because of the economy.
So these poor guys who run the restaurants and the poor people that own fishing fleets and that own businesses and that own charter boats, they're going to be really, really seriously impacted by what's going on.
We'll be able to find fish from around the world, but it won't be the same fish that we're used to getting.
KNOX: The other problem is, there's a -- there's a local movement in all the chefs and their local fish is going to be impacted. Their ability to get local fish...
QUEST: Thank you.
KNOX: -- is going to be severely impacted by what's happened here.
QUEST: Joel, thank you for coming in and talking to us.
We will follow up with you in the days and weeks ahead, certainly, as the -- as the season gets underway, the -- the main tourist season.
Many thanks for joining us.
Joel Joerres is from CNN Atlanta.
Now, the long-term forecast is all about the Loop Current and the impact on Florida. We will also update you with the weather where you are, because you need to know that if you're going out and about with your business.
But Guillermo is at the World Weather Center.
GUILLERMO ARDUINO, CNN METEOROLOGIST: The big thing about Florida that I can tell you that we need, we have like 10 days. So the Loop Current may drag the oil slick into those areas, but not before 10 days.
There's one aspect that we look and we take into account. These are eddies. You see the Loop Current is here. The eddy is like an individual formation that runs -- that turns counter-clockwise and may drag a portion of the oil slick toward one section. So look at the overall pictures. The Loop Current here, quite fast, but nevertheless, it's like 10 days from this to make it into Florida -- 10 days at least.
We need to remember that those eddies may play here a role and parts of it may go toward those areas. I'll keep you up to date, of course, this is a very complicated, very serious story. There are things we do not understand. So our viewers need to know that. But we are doing our best and we will continue to deliver as much as we can.
Now, the storms that we have in the east of Europe are another concern, though I must say that in Poland, things are getting better.
And you know where things are getting better for our international viewers?
With the ash cloud toward the north. This weekend, Richard, is going to be good for -- for flights operating in Europe. For Thursday, things are fine. You see that it -- that the jet stream is actually taking the cloud to the north.
And now, let's see, Friday it continues to be pretty good. Northern Russia, Northern Scandinavia may see a little bit of it. Then on Monday, we may see a change toward Scotland, maybe getting some of it. But only the Midlands and Scotland. And it is not a dense concentration. So good news concerning operations this weekend.
The weather is good. The weather is good in the west especially. The weather is good in Britain, toward the south.
The east continues to be affected by some rain showers. Poland was under a very severe flood threat. Now things are getting better. Vladislavas (ph), Slovakia is following that river very closely because we have had a lot of rain. We may see floods there, as well, scattered showers will continue. Nice in the west -- Richard.
QUEST: Guillermo, many thanks for bringing us up to date.
ARDUINO: Thank you.
QUEST: When we come back, masterpieces ripped from a Paris museum. You couldn't write it. Well, if you did, people would say it could never happen, but it did.
And how do you actually get rid of a masterpiece?
In a moment.
QUEST: And today we have the new Britain prime minister, David Cameron, on his first -- I was going to say overseas visit. He's popped across the English Channel to -- or The Channel is maybe more neutral to call it, where he's with President Nicolas Sarkozy of France. They've been having bilateral talks.
(BEGIN VIDEO CLIP)
DAVID CAMERON, BRITAIN PRIME MINISTER: I think we got off on the -- a very good foot tonight with tonight's dinner. We thank you again for making me so welcome and my team so welcome here in the Lysee (ph) for the very good, very fruitful, very focused discussions that we've had tonight.
(END VIDEO CLIP)
QUEST: No doubt in the hours ahead that we will hear what they were talking about and get some -- look, I -- I wonder whether on their agenda tonight will be the question of police in Paris wanting to know how a masterpieces were stolen from the city's Museum of Modern Art?
Just have a quick look over here. These are some of the pictures. This is the Picasso that was taken. This was the Matisse. My ignorance forbids me from reminding you which one that was. But my guest -- my guest will certainly (INAUDIBLE) over there. Views differ on how much they were all worth. Collectively, some say $100 million, $500 million. It's the old story that it's worth what somebody would pay for them.
But this gentleman, my next guest, is going to be very much concerned with making sure they don't get into any wrong hands.
The chairman of Art Loss Register is Julian Radcliffe.
He's with me now.
Good evening to you.
JULIAN RADCLIFFE, CHAIRMAN, ART LOSS REGISTER: Good evening.
QUEST: The way these were taken is just breathtaking. You couldn't write it.
RADCLIFFE: Unfortunately, there is a conflict between really good security in a museum and the maximum public access. And security in old buildings such as this is never going to be as good as the security for a vault in a bank.
If you really don't want any pictures at risk...
QUEST: Leave them in a vault.
RADCLIFFE: Leave them in a vault.
QUEST: But they knew that the re -- the security was down in the -- whatever happened. I mean the alarms were off, in blunt terms.
RADCLIFFE: I'm sure that the people who did this had a very sophisticated plan and they weren't just one man. They would have done endless reconnaissances. They would have known a lot about electronic security. And they are probably connected with gangs, either in the Balkans or overseas...
RADCLIFFE: -- who will help them.
QUEST: You're -- you're that sure that you already know where -- where they may have gone to and from?
RADCLIFFE: I wouldn't like to say we know where, but I would say that over 50 percent of all the major recoveries of stolen art are in a different country to where they were stolen.
QUEST: Right. Let -- you stay where you are, Julian.
I'm going to walk over to it. I mean of the pictures, I've heard sort of the Matisse and the Picasso are probably the gem de la creme, if you like.
RADCLIFFE: That's probably correct. But don't try and put a monetary value on them. They've already oscillated between $100 million and $400 million.
QUEST: Right, but how are you going to -- how do you prevent a relatively famous piece like this from coming onto the market and being sold?
RADCLIFFE: Because all the reputable members of the market search with us before they buy. And that will stop it ever getting into the top end of the market. The danger is it gets into the bottom end of the market.
QUEST: And they don't really register with you. And they don't really care where they're coming from.
RADCLIFFE: Because reputation, to them, is not that important. But probably these will not be offered to anybody in the art market for 10 or 20 years.
Julian come back and talk more about this in the future.
Many thanks, indeed for that.
When I come back in a moment, I'll have a Profitable Moment about flying high with British Airways, in a moment.
QUEST: Tonight's Profitable Moment.
British Airways, the strike back on. Without commenting on the merits of who's right and wrong in this dispute, it's astonishing that both sides have failed to reach an agreement.
These -- B -- B.A. says it's not out to break the union.
The union says it's not trying to bankrupt the airline.
But as we come out of the Great Recession, it is surely reasonable for us to ask, why is it proving so hard to reach a settlement?
We'll talk about that tomorrow night on this program, when my guest will be the chief executive of British Airways, Willie Walsh, who has results. But we'll also be talking about where he hopes to take the airline and why it's proving so difficult to solve this strike.
And that's QUEST MEANS BUSINESS for tonight.
I'm Richard Quest.
Whatever you're up to in the hours ahead, I hope it's profitable.
WORLD ONE is next.