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Will Europe's Austerity Plans Cause Double-Dip Recession?; Madrid Metro Strike Brings City to Standstill

Aired June 30, 2010 - 14:00:00   ET


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: An economic minefield. The threats to recovery, tonight we lay them bare.

The price of failure, World Cup dreams turn to nightmares in Nigeria and France.

And making an exhibition of itself, the art gallery that is showing off the fakes it bought by mistake.

I'm Richard Quest, back in the chair, where I mean business.

Good evening.

Half the way through 2010, and the year was always meant to be the year of recovery. It is turning out to be a painful process. And tonight, as we look at the numbers, you might wonder it things are really getting any better. Or are we just about to go down for the second leg of some sort of double dip? And even if we don't have a double dip, just how painful will the recovery be?

We need to put perspective into this. Come, and join me, over in the library. Where you will see, straight away, some interesting numbers showing the markets as they've traded for the first part of this year, the first six months.

The year-to-date shows that the London FTSE is up over 9 percent. The Xetra DAX the only market, by the way, that is poking its head above water. And, of course, the Paris CAC currant down even further. If that looks bad enough, let's put what we might call the peripheral markets in. Well, no surprises or prizes, the Athens market is off nearly 35 percent. But the PSI is also down very sharply. The IBEX, in Madrid, is off 22 percent. And this is one that we're going to watch very closely in the days ahead as we work out the refueling-the refueling?-the refinancing jargon. Same thing, different they expect, but Spain in the months ahead.

There was a touch of good news. Now the ECB, 12-have been lending money on a 12-month basis. More than 400 billion euros had been borrowed. Tomorrow is the day for that money to be paid back. But, what we discovered today is that only 160 billion had to be lent by the European Central Bank, to those member banks to roll over the debt. This was the litmus test. You see, if the banks had required to-literally, robbing Peter to pay Paul, if they have to borrow it all back to pay the ECB we had known things were pretty grim. But the fact they only required 160 billion was an improvement. I say, "only", who'd have thought it?

Ireland is out of recession. The economy grew in Q1, up 2.7 percent. This was one of the worst and most brutal recessions of any industrialized country. GDP had dropped around 14 percent over the past two years.

So, are you getting an interesting picture of the scenario in Europe at the moment? Whether it is Ireland or the banks, or these horrific numbers from the markets, we know the issue is pretty clear cut. On the one hand it is austerity, on the other hand it is whether to have pro- growth policies. Policymakers are walking a tightrope. For the most part economies have emerged from the slump. The job is to keep them from slipping back and getting on top of the debts they've piled up.

So, what is likely to happen? Peter Westaway is the chief economist for Nomura Bank, joined me, and I asked him where he felt the balance lay between austerity and growth.


PETER WESTAWAY, CHIEF ECONOMIST, NOMURA, EUROPE: I think the balance of the argument at the moment is that these austerity measures are going to be necessary, because otherwise financial markets are just going to loose confidence and we're going to end up with an even worse situation.

QUEST: If that is correct, then the discussion about whether or not it pushes double-dip, and the effect is moot, because there is no choice?

WESTAWAY: Well, I think there is an extent to which that is true. There is no choice. You have a choice between slightly slower growth because of the fiscal consolidation or slower growth because of the loss of confidence and the increase in long term interest rates. You pays your money, and you takes your choice. And I think in the long run the fiscal consolidation route is the only one that has to happen.

QUEST: So why are there so many, do you think, eminent, distinguished economists who have come out with apocalyptic predictions of what's going to happen as a result?

WESTAWAY: Well, I think that obviously-obviously that is a risk that coordinated consolidation-if one country does this on its own, perhaps it is OK. It is the fact that everybody is doing it at once. It is the fact that even countries like Germany, a surplus country, is talking about really donning the hair shirt. And I think that is where I perhaps argue that it is not quite so necessary. It is important that the surplus countries don't screw their economies down to the ground in quite the same way.

QUEST: And Peter, when do you think that we will get evidence one way or the other, of the which side of the fence this argument is falling?

WESTAWAY: I think it is going to come gradually over the next year or so. But I mean, I don't want to come over as a rosy-eyed optimist. I don't think we're going to get a double dip recession, but I do think we're going to have a long drawn out, slow grind back to full potential. It's going to take two or three years, at least. We're not going to get back to the sorts of growth rates that we were used to in years gone by.

QUEST: Now we have one thing that we just need to put on our viewers radar, right now. And that is, of course, the refinancing that Greece is deciding it is going to undertake in July. It is a risky strategy to try and go back to the market. Especially when they do have the European Union funding. Why are they bothering?

WESTAWAY: Yes, it is a rather risky strategy. If it works then it will be a big confidence boost for the market. But, personally, I think it might have been, might have been more wise to sit on the hands for awhile.

QUEST: And if we just look one more bit of data today, the ECB and the banks refinancing. Now, there was always plenty of money about. They could always refinance their 12 month debt with six debt from the ECB. So what was the fuss all about?

WESTAWAY: Well, I think the fuss was that having this 12-month debt, whether it was just going to all get rolled over into the three-month debt, which is what they've done today, so there was originally 440 billion, or so. So if that same amount had been carried through there would have been a feeling that we hadn't really moved forward. The fact that it was such a lower number, much lower than people were expecting, means that perhaps the euro area banking system isn't in quite such bad shape after all.


QUEST: So that is a bit of encouraging news from Peter Westaway at Nomura. Yesterday, on the Tuesday session of Wall Street, frankly, down more than 2.5 percent. Today, the stocks are falling to the end of the second-second quarter.

Do beg your pardon.

It has been a deadly quarter for the markets. Alison Kosik now joins me from the floor of the New York Stock Exchange.

Good afternoon to you. We will not waste too much time talking about today's market, because you are up just 7 percent. And you've got the July the Fourth weekend coming up. Instead, what are people saying on this question of how serious the downturn, or the next leg of this crisis, could be?

ALISON KOSIK, CNN FINANCIAL CORRESPONDENT: Richard, you know, let's look at the economy as a whole here in the U.S. I mean, sure, what is really weighing down this market are the worries about the debt in Europe and jobs. It is all about jobs, especially today. You didn't even want to talk about the numbers, because we are pretty much in waiting mode for that Friday jobs report. We did get the ADP report, sort of the precursor to the U.S. government jobs report coming out Friday. Finding that 13,000 private sector jobs were added. That is way below the 61,000 that were estimated.

But I just talked a trader, and to answer your question directly, about how serious of a funk we're in, I just asked this trader: Are we going to see a double dip recession? He says, no. He says, you are going to see changes come at mid-term elections. You are going to see a change in the landscape in Congress.

And once you see that happen, he's predicting, once you see more Republicans get elected to Congress, you are going to see the tax laws rewritten, and even health care rewritten. So the prediction is the waiting is on for the mid-term elections, Richard.

QUEST: We must point out, of course, we are no sure how that trader votes. Or indeed, which way, necessarily, he would-

KOSIK: We don't.

QUEST: No, we don't.

KOSIK: He's prognosticating.

QUEST: Well, yes, yes, quite.

The-I think I've lost my train of thought at the-at the thought of that.

Let's talk about the question of this jobs report, because it is crucial. We do have this ADP-which is slightly more suspect as a report- than the main data on Friday. But unemployment remains the key worry.

KOSIK: It really does. And actually the ADP report the last time around was right on. ADP predicted we would only have an increase of 40,000 private jobs and that is what the U.S. government came out with during its jobs report. So there is a little bit more weight on this ADP report today. But, yes, we are expecting the unemployment rate to tick up from 9.7 to 9.8. And we also are expecting that it is going to show a loss of 100,000 positions. But that is not because of mass layoffs, Richard, it is because of the fact that tens of thousands of those temporary Census jobs. Those are going to be going away. It is going to be a matter of looking beyond the headline and looking deeper into the government jobs report coming out on Friday, Richard.

QUEST: And you and I will do that as the week moves on. Alison, many thanks.

Alison Kosik at the New York Stock Exchange.

Now, 2 million people missed the train in Madrid today. There were no drivers, and the guards, the ticket masters, they are on strike, on the picket line. We'll tell you why in just a moment.


QUEST: Welcome back. So, 2 million in Madrid had to find different ways of getting to work today as the city's Metro system was at a standstill. It was the second day that that had happened. So commuters crammed into buses. They took to their cars. It is a strike by Metro workers which resulted in a complete shutdown.

The strikers are protesting against a 5 percent pay cut. It is part of the Spanish government's drive to reduce public spending. Its own austerity measures. There are other measures and there are other promises, of industrial action to come. Almudena Gomez joins me now from our sister station, CNN +. She is in Madrid.

Almudena, let's just begin, the strike today, I mean how badly did it grip the city?

ALMUDENA GOMEZ, CNN +: Very, very bad. You know, today there was no subway at all. And as you said, there are 2 million people using the subway on a daily basis, here in Madrid. And we have around 5 million people if you count all the big city. So this is very, very bad. People, they don't know what to do. They took everything they could. Buses, private cars, bikes, going walking.

QUEST: Sure.

GOMEZ: I don't know, whatever they could. Because they need to move, you know. This is a city, people need to go to work, or whatever.

QUEST: Right. But the interesting thing-

GOMEZ: You can imagine, very , very bad.

QUEST: The interesting thing about this strike is, it is really just one part, isn't it? Of opposition against the government and its austerity and its program of cuts?

GOMEZ: Yes, this all becomes what the local authorities decided to cut salaries of these people, these workers of Metro. We call it Metro here, Metro workers. They decided to cut, 5 percent, their salaries. They are not really public workers. They work for a public company, which is not the same. So this was kind of a difficult thing, because now the person in our local government says that these workers are against Zapatero, which is our president, which is the one that cut these salaries for all public workers. And it is not really the same, you know?


GOMEZ: This union, Metro workers, they are very tough and they decided to go to strike, so they did. They began on Monday-on Monday it was not really that bad because they respect minimum services. But what happened on Tuesday, on Wednesday, it that there were no minimum services, no subway at all. So no one could take the subway here in Madrid.

QUEST: Let's just look at and talk about Mr. Zapatero for just one second. We know the measures, whether it is the jobs, whether it is the spending cuts. We know they are going to be unpopular. But Almudena, is there any feeling in Spain that these cuts are necessary to improve the economy? Is there any support for it?

GOMEZ: I don't know. I think people think that we need to cut from somewhere, but really, I don't know if these ones are the ones that we need. I don't really know exactly, you know? There is a big debate between the ones that think they are, and the ones that think that it really needs, maybe, more talk about it.

QUEST: Excellent. Many thanks, indeed, Almudena. Good luck, tonight, getting home from work.

GOMEZ: Thank you.

QUEST: If you were going to take the Metro.

GOMEZ: I think I'm going to take my car.

QUEST: Well, there we are. All right. Take the car and send me the bill. All right. Take a tax instead.


QUEST: Almudena joining me.

GOMEZ: OK, I will.

QUEST: Hey, hang on.

Joining me from Madrid.

When we come back in just a moment, the French clearly take their football seriously, as well as the image of their players that they project on the international stage. The coach of the national team has been called to account in front of the country's politicians. Le blur, left that country red-faced. And we'll be in Paris, in just a moment.


QUEST: Welcome back. The disappointment of France's World Cup campaign has also turned into a subject of national debate, from the fans to the politicians. Jim Bittermann now reports on the aftermath of a tournament that didn't just end in defeat, but national embarrassment.


JIM BITTERMANN, CNN INT'L. CORRESPONDENT (voice over): The French are passionate about a lot of things. Football and politics are two of them. And so perhaps it was inevitable that after what some call here the dishonor beyond words brought on by the behavior of the French team in the World Cup, refusing to practice, riding away in what one commentator named the "bus of shame"; skulking back to France in what another called the "plane of shame". After they were eliminated from the World Cup perhaps it was inevitable after all the discredit brought to France by its national football club that politicians would want to have their own look into what happened.

So, first player Thierry Henry went off to explain the team's actions to President Sarkozy. And now, soon to be ex-coach, Raymond Domenech, and soon to be ex-president of the French football federation, Jean-Pierre Escalettes, were invited to appear before a parliamentary committee, which as one member said, just wanted to try to understand what happened.

And after a three-hour hearing closed to the public and cameras, a session described by one of the lawmakers as more like a news conference than an inquiry. The understanding seemed to be that those who were supposed to be in charge of the team, weren't.

MICHEL HERBILLON, FRENCH NATIONAL ASSEMBLY: We have some answers about the way the French team is managed. And I think we have, on this subject, improvements to make.

LIONEL TARDY, FRENCH NATIONAL ASSEMBLY: It was not a question about winning or losing, it was really a question about education, and the image.

BITTERMANN: As much as the French politicians might love to do something about the French football team, they restrained themselves at the parliamentary hearing and seemed content just to gather the facts.

(On camera): One reason they held back, a warning from FIFA President Seth Blatter, that the French team could be suspended if the government started meddling in team management.

(Voice over): But there is not doubt the team's behavior has had a lasting impact here. Even on young aspiring players who teachers say are now left with not a positive example of good sportsmanship, but the negative image of football stars who some officials here said behave like spoiled children. Jim Bittermann, CNN, Paris.


QUEST: Now, there have been one or two other interesting developments on the question of the World Cup and how, basically, managers or chief executives of teams, for want of a better word, are being punished. For example, in Nigeria, the price of failure was a presidential decree banning the team from any more competitions for two years. Now, apparently, according to the sports minister, he tells CNN Nigerian football deserves to take a break and use time to regroup. And it is just being reported on the news wires at the moment, that the Mexico coach quit after the World Cup exit. So, we've got Nigeria's coach, gone.


The French coach, or boss, gone.


Mexico's coach, gone!


We know that the English coach, the English manager, I beg your pardon, is under pressure, Fabio Capello is under pressure and we'll know his fate in two weeks from now. And later in this week we will look at whether or not these managers really-is it a case of a chief executive who has to go?

Look, also, if you have been watching us over the World Cup, you know it is very important, and we like to know what you are doing. So, how about this picture? This was sent to us from Justin Waldman, from the University of Quaza (ph) Zulu Natal (ph), at Peters Maryburg (ph). Justin was behind the camera. They were there all waiting for their World Cup.

Silly glasses time, and vuvuzelas, from these fans. Tanya, Ernest and Tracy, I wonder which is Tanya and Tracy. I suspect that is Tanya and that is Tracy. They have thrown their weight behind Ghana. That is the last African team in the tournament.

And, of course, this photo was sent in from Nari Changlasian (ph), showing the local fishmongers in Madrid, who are clearly more interested in selling fish than they are perhaps in watching football.

If you want to join in, and have your picture in one of these, in our Economic World Cup. The e-mail address is Quest@, and you too, will be part of our economic family at the Economic World Cup.

Coming up in just a moment. Thailand is rebuilding after the protests that shut down its capital last month. It is struggling to deal with the damage to its economic reputation. We'll be in Bangkok after the break. QUEST MEANS BUSINESS, good evening to you.


QUEST: Hello, I'm Richard Quest. QUEST MEANS BUSINESS, this is CNN, where the news always comes first.


QUEST: Bangkok is under a state of emergency, officially it is set to expire next week. But the government could renew it. The protest and the damage mostly happened in this area, and it covers roughly four square kilometers in the heart of Bangkok's shopping district. You will remember, of course, the turmoil, the violence and the economic repercussions; enough to say, of course, the deaths and injuries that were caused at the time.

CNN's Dan Rivers, in Bangkok, on the progress of the recovery.


DAN RIVERS, CNN INT'L. CORRESPONDENT (voice over): Central World Mall in Bangkok has come to symbolize the political divisions in Thailand. The charred remains a daily reminder for everyone here that the anti-government Red Shirt protest that started over three months ago. Part of the mall has reopened, rebuilding the rest will take up to a year.

But the damage to the Thai economy goes beyond this one mall. These images have put off many from coming to Thailand all together. Initial government forecasts put visitor numbers at 16 million this year, but that has been revised down to 13 million by the tourism association.

Chai Srivakorn owner of Jayson Mall, opposite Central World, which Red Shirt protestors tried and failed to burn down. As president of the local trade association, he says the protests cost local businesses $300 million in lost sales and much more in bad PR.

CHAI SRIVAKORN, RATCHAPRASONG SQUARE TRADE ASSN.: The thing is it is the image factor that has been affected. If people feel that, is it safe in Thailand, now, to come? What abut the Thai people? If you look at people around here, in this area now, this is very peaceful. Things are pretty much back to normal very quickly now.

RIVERS: The Dusit International (ph) Hotel was right on the frontline. It had to close for eight nights after a grenade attack, thought to have been launched by the protestors. Now, staff say, guests are slowly coming back.

JENNIFER CRONIN, VICE PRESIDENT, DUSIT INTERNATIONAL: Business has been better. Obviously, we would like to see it back to previous years at this time. But we're cautiously optimistic that it is picking up slowly.

RIVERS: In the short-term, the protests appear to have done little to dent the wider economy. Exports are booming, with government growth forecasts just revised up for the second time in three months. Ministers say Thailand's GDP may surge 5 to 6 percent. Long-term, though, things may be different.

SUPAVUD SAICHUEA, ECONOMIST: In the short-term, you know that GDP can grow because of exports. In the longer term, it is sustained through investments. Over the longer-term, the political risk in Thailand has risen and that would deter investment and that would imply, you know, a much lower GDP growth in the medium-term.

RIVERS: The economy is being kept humming not by foreign businesses, but by exports, most electronics and cars. As long as people in the U.S., Japan and China keep buying products that are made in Thailand, there's a good chance the country will achieve the government's growth forecast of 6 percent this year, regardless of what the red or yellow shirts do next.

Dan Rivers, CNN, Bangkok.


QUEST: Investing in a worthwhile work of art can be a stroke of genius, as it enters your portfolio. Caveat emptor -- it's always the moral if you're at risk of getting a fake. And we'll show you some corkers, after the break.


QUEST: The exhibition that opened today at London's National Gallery is not quite what it seems. Half of the works on show are fakes and forgeries. They've been brought together to show how even astute buyers very often get it wrong. As the art market enjoys a renaissance after the dark days of a couple of years ago, you'd do well to pay attention if you want to know how to spot the genuine article.

CNN's Ayesha Durgahee, who knows a thing or two when she sees a fake, went to see this behind the scenes.


AYESHA DURGAHEE, CNN INTERNATIONAL CORRESPONDENT (voice-over): Just off Trafalgar Square, at the National Gallery, some detective work is in progress analyzing masterpieces, their pigment and varnish, to get into the mind of the painter. With infrared cameras and x-rays, it's possible to see right through the cracks. The evidence is all here -- if a painter preferred his muse as a blonde, not a brunette; or that a portrait of a man was painted over and reused as a canvas for another painting.

ASHOK ROY, SCIENCE DIRECTOR, NATIONAL GALLERY: What the painter has done was to paint this painter then turn the canvas 90 degrees and paint the genre scene on top. But you can see from the x-ray very clearly the image of this painter underneath. And the reason that that registers on the x-ray is it contains an x-ray end or x-ray opaque pigment called lead white. And lead white blocks the passage of x-rays to the film. And so that then registers as white on the photograph.

DURGAHEE (on camera): What if one of these Lenan (ph) brothers didn't want anybody to see this?

Why is it important to discuss that this is behind that painting?

ROY: Well, I think it tells you something about the life of that artist, the way they -- their attitude is to paint in. And, indeed, it tells you something about French 17th century portraiture which we didn't know. So I think discovering more about pictures doesn't harm the reputation of painters at all.

DURGAHEE (voice-over): The findings so far are in the new National Gallery's new exhibition, "Fakes, Mistakes and Discoveries." The touchups, the copies and forgeries are all on show -- even the ones the gallery itself bought and discovered decades ago they were fake, like this faux Botticelli.

ROY: There was a great scandal about the acquisition of this picture. It was bought by a man called Charles Lock Eastlake, who was the keeper of the Gallery at the time. And it really pretty well ended his career at the time. But it was bought by the National Gallery as a painting by Botticelli in 1874 at the same time as this picture of Venus and Mars was bought.

DURGAHEE (on camera): Did the Gallery pay the same amount for each painting or...

ROY: Unfortunately, in the 19th century, we paid more for that one, which is an interesting thought -- 600 pounds more.

DURGAHEE: You have the power to change the perception of a painting.

ROY: Yes. That's true. And there's a great deal of pleasure in that, to be able to say what is correct, one hopes, what is correct about a picture and to inform people about paintings that they love.

DURGAHEE: Science can help us understand the evolution of art. So if a picture paints a thousand words, perhaps by unpicking the process, we can learn the whole story.

Ayesha Durgahee, CNN, at the National Gallery in London.


QUEST: Fascinating. I was just looking online and that Botticelli that was just there that they -- the Gallery paid 1,627 pounds for. That would be about $2,000 at today's rate of exchange. It would have been a lot more then, of course, with the pound in 1874.

Fascinating stuff.

Now, Guillermo is at the World Weather Center -- look, Guillermo, I was in...


QUEST: No, it is not funny. It really isn't. I -- the bad weather is following me around the continent of Europe.


QUEST: I went to Budapest a couple of days ago. Beautiful weather in London, chronically awful weather in Budapest. I've come back and it's flip-flopped.

ARDUINO: Do you think that we didn't talk about you when you were gone?

We did.



ARDUINO: Well, but it's not going to be terrible. And, you know...


ARDUINO: It's not going to be terrible. On Friday, you'll see rain showers. Dublin is going to be bad tomorrow. Northern Ireland, in general, it's going to be bad. Britain will hold up for you. It's going to remain hot. I think that on Friday is when we'll see the change.

The reason being this jet stream that is going to descend. It's going to bring cool conditions. It's going to allow the new system to go through. You're going to see it here. Rain for Richard. But it's on on Friday.

And then, things are going to get better again. It's going to be 28, 29 degrees, I think, tomorrow. And then after the storm, we're going to go down to 26.

I like the way Richard is taking this. Well, you know, there's nothing we can do about it. And also, the other thing that I was thinking about was Wimbledon with a new roof -- expensive roof. No rain. So, well, one day they'll use it.

And also we have problems here to the east, especially in the next hour, "WORLD ONE." We will bring somebody from Romania who's going to talk about what's going on in the country with floods. We will continue to see the bad weather there. And toward -- look at the temps for tomorrow -- 32 in Paris. We know for sure that Richard is not going there; 35 in Madrid. So we are dealing with the heat in that area.

Look at this. This is a hurricane, you know?

Hurricane Alex that is expected to make landfall tonight or tomorrow in Mexico in the Tamaulipas State. This is the state of Tamaulipas. This is Texas. There are cities like Matamoros right there south of the border. Is it going to probably become a category two right before making landfall. Now the winds are 137 or maybe a little bit more. And we will see landfall. But we're not expecting a -- a really massive system in the area, just rain and the winds -- Richard, welcome back.

QUEST: Many thanks, indeed, Guillermo.

I'll be looking for an individual forecast for me tomorrow as I go away at the weekend.

Guillermo, many thanks.

ARDUINO: Thank you.

QUEST: Look, gold -- a lot of gold in today's shop -- gold tie, gold signs, everywhere is gold. Prices are up 13 percent this year and some believe they can't rise much more.

Who would you believe, your banker or your grandmother?

India's eldest ladies have a tradition of giving and receiving jewelry as presents because they're convinced that whatever the times, the metal never loses a single ounce of sparkle.

And sparkling for us tonight, Mallika Kapur in Mumbai.



ARTI SHAH, GRANDMOTHER: Yes. Yes. Everything.

KAPUR (voice-over): As a young bride, Arti Shah wore gold -- gold necklaces, bangles, earrings -- all given to her by her family. Back in 1978, she wasn't sure it was the best gift.

SHAH: On the wedding day, we wear gold. Then we think sometimes, nah, there's so much gold, where am I going to wear it?

Instead I'll buy this and that. But we never -- when the prices go up, we feel it's very good.

KAPUR: Thirty-two years later, the price of gold has gone from $200 to $1,200 an ounce. Now a grandmother, Shah is sitting on, well, a gold mine. She says you can never go wrong by investing in gold jewelry, even though, at its current rate, many find it unaffordable.

Tamars (ph) are thinking twice about buying gold. Here, in one of Mumbai's oldest markets, jewelry stores are virtually empty. Store owners say they get just one or two customers a day.

While we visited this jewelry shop, a customer dropped in. She wanted to buy two gold rings weighing five grams each. She could afford rings only half that weight. She picked them up, saying they were essential for a family wedding.

Would she buy gold as an investment?

UNIDENTIFIED FEMALE: Not at the moment. I'd think about it.

KAPUR: If people do invest in gold, it should make up just a fifth of their overall investment portfolio, says this wealth manager. The bulk should remain in equities. He says the gold price is hovering around an all time high because of the recent downturn in global equities. And that can change any time.

ASHISH KEHAIR, ICICI SECURITIES: This crash will go down. But this market really, we will see it start going up like the way they did in the past. Then gold will not -- you know, gold prices will not move up that fast. They may actually come down, because people will move money out of their investments in gold and they will park it in the markets.

KAPUR: Since Grandma Shah got married, India's SENSEX share index has gone from $100 to $17,500 -- a bigger jump than gold. But she's still not impressed.

SHAH: Gold is a good investment. We can cash it any time we want.

KAPUR: She's confident gold will always retain its value.

And these family heirlooms?

She's passing them on to her children, just like her mother did.

Mallika Kapur, CNN, Mumbai.


QUEST: And finally, tonight's Profitable Moment.

The battle lines are now quite clearly drawn between those who believe austerity measures mean economic calamity and those who see no option other than to begin cutting deficits hard, fast and now.

It's no longer really useful to question who's right, because the ingredients have been mixed. And this economic cake is starting to bake. But we won't know how it tastes for several more months. And you can bet your portfolio everyone is looking through the oven door to see if the cake is rising or falling flat. And every bit of data is going to be analyzed to the nth degree to see what it means.

We always knew that this recovery would be slow and painful, frankly, after last week's G20, we are none the wiser about what it means for the proper, safe way forward.

We are not in comfortable times.

And that tonight is QUEST MEANS BUSINESS, our midweek edition.

I'm Richard Quest.

Whatever you're up to in the hours ahead, I hope it's profitable.