Return to Transcripts main page
QUEST MEANS BUSINESS
Gulf Oil Spill; Steinbrenner Dies at Age 80
Aired July 13, 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: The cap is on, but is BP about to contain the spill?
Tonight, remembering George Steinbrenner, the man who took on the business of baseball and, of course, scored home runs.
And how to pile on the profits by shedding the pounds. The chief exec of Weight Watchers is with us tonight.
I'm Richard Quest. And hour of business, because I mean business.
The cap is in place tonight. BP is about to close the valves. And we will all find out if the project will work. Tests beginning right now on the seabed will tell us if the oil company is nightmare is about to end.
These are live pictures of the well head. The new cap, the ROVs, the entire panoply of engineering that might bring this three-month misery to an end. But it could take anywhere from six hours to two days before we know the results. The best-case scenario, the cap will contain the oil and stem the flow altogether. In the worst-case there could be damage to the well casing. Meaning the capping the will have been next to useless. Hope could disappear just as fast as the oil flows the surface once again. We need to go straight away to the region and our correspondent is Brian Todd who is there. He is at BP's headquarters in Texas.
Brian, the first question, simple really: I've seen reports today that whatever happens this is going to make a difference to the response and the reaction.
BRIAN TODD, CNN CORRESPONDENT: Well, they think it will, Richard, in any case. And what they're really hoping is that this new seal cap will contain all of the oil and not let any of it get out, until they can get those relief wells down there, probably by the end of the month, or early August. But let's get back to what they're doing now. This is a very crucial stretch of time, as you mentioned, crucial hours that they are going through right now.
That cap is in place, the new seal cap, called the 3RAM-Cat Stack, that is in place as of last night local time. Now what they're doing are some seismic tests around the well sight, moving all the surface vessels out from that area, doing some seismic testing. Then they are going to start shutting down the choke and kill lines, shutting off the valves on that new cap. The reason that you are seeing oil still coming out of there in some of the live pictures that we're seeing, from underneath the sea there, is they have not closed all the lines yet. They've got to kind of close the valve, close the lines, and then they're going to be testing the integrity of the well.
Now, I asked the incident commander, Admiral Thad Allen, a crucial question about that testing. Listen to this.
(BEGIN VIDEO CLIP)
TODD (On camera): If that sealing cap is tight enough, do you think you can-this could be the day that you shut down that well, maybe for good?
ADM. THAD ALLEN, INCIDENT COMMANDER, U.S. COAST GUARD: Well, we know that it will be a good seal. The question is what is the pressure inside the cap, itself. And the variance in pressure could be indicative of a lot of things. But the one thing we would be worried about is low pressure, but tell us that maybe there is a problem with the structural integrity of the well bore, and the casings itself. We might have hydrocarbons way out in the formation. We're going to be watching that very closely.
(END VIDEO CLIP)
TODD: Now, basically three different things could happen in this scenario. Either this new cap holds all of the oil. And they're going to know that if they can measure the integrity of the well, measure the pressure, and if there is a lot of high pressure, if there is high pressure that is actually good news because that means that this cap is holding all of the oil. It could hold maybe only some of the oil. In that case they're going to have to go back to that operation where they siphon some of the oil up to containment ships and take some of it out that way.
The worst-case scenario is that there could be further damage to the well. And if that is the case it essentially means that this cap cannot hold the oil, they're going to have to go to full-time containment. They are going to bring in four vessels to do that. And hope that they can capture as much of the oil as possible until those relief wells get there, Richard.
QUEST: Brian, last night, on this program we've talked a lot about the importance of the structure and the integrity of the well bore, the hole, literally from the seabed to the reservoir. As we move into this crucial phase, we really do need to understand, don't we that it is all about that casing deep in the ground?
TODD: Absolutely. It is, Richard. And frankly they are going into this not knowing exactly what they're going to find. They are optimistic because the placement of that cap went so well. And some of the oil got contained in it. But they don't know what they're going to find down there. And it is a very anxious time here. They have basically come right out in front and told us, inside this commander center here. There is some real finger crossing going on to see, you know, just what the pressure tests will bring.
TODD: We'll know that in the next several hours. But again, they have not done that to this depth, and that is the reason that we just don't know enough about how this is going to work yet. We should know within a couple of days.
QUEST: Brian, you will be there for us, hopefully, to keep us informed and keep us monitoring events. Brian Todd, who is at Houston, which is BP's main control point for this crisis.
On the financial world the main talking point was reports that the sovereign fund and the royal family of Abu Dhabi is thinking of making further investments in BP. Apparently, a member of the royal family, the crown prince said that they haven't made their minds up following a visit from BP's Chief Executive Tony Hayward to the region last week.
I asked CNN's Leone Lakhani, in Abu Dhabi, if the crown prince is seriously considering an investment.
LEONE LAKHANI, CNN INT'L. CORRESPONDENT: There is a slight difference from last week because we know that Tony Hayward was in the region last week he met with the crown prince, and he met with some people in Abu Dhabi. But last week we were told it was a routine visit and Abu Dhabi wasn't going to be buying anything. So there is a slight change from last week to this week. On Tuesday Bloomberg spoke to the crown prince and he specifically said, we're still thinking about it. We're looking across the board. We have been partners with BP for years. So basically, he is saying the door is still open, even though there is nothing definitive at the moment.
QUEST: If they did-and let's move into the realms of total speculation, if they did take an investment, would that be an increase on their existing position, or a deepening of their partnership?
LAKHANI: It is unclear at the moment, Richard. What we do know is that BP has had a long partnership with Abu Dhabi National Oil Company since the 1930s. And it is also, as we know, Abu Dhabi is the largest sovereign wealth fund in the region, with $0.5 trillion worth of assets. So from both points of view, it is a partnership that could be extended from Abu Dhabi's point of view. And from BP's point of view it would make a really cash rich investors, and a solid investor. So, it works on both ends and we can see why this partnership might happen. Whether it is a clear stake or whether it is buying up some of their assets. That is still not clear.
QUEST: And just let's talk about this sovereign fund, Leone. You alluded-you talk about the $0.5 trillion, wherever we look at the moment, we do see the sovereign funds of Abu Dhabi, of Qatar, of the region, making these very sizable investments.
LAKHANI: Yes, Richard, as I mentioned, $0.5 trillion for Abu Dhabi alone. If you look at Kuwait and Saudi Arabia, and you combine their assets. That is another $0.5 trillion, just there, alone. So, these sovereign wealth funds are very cash rich. They are also very, you know, sharp and very keen and shrewd buyers as well. So, they will look at these assets from BP, which are sought after as we're seeing that there are many other buyers that could be lining up to buy some of these assets. And they are quite keen and shrewd. We have seen it happen before with Barclays, for instance. And so we can understand why they would be keen to look at assets like these with their abundance of cash. And we can understand why companies would come here, as well, and seek out some of these investors.
QUEST: That's Leone Lakhani joining me from Abu Dhabi on the BP side, and the investment. And shares in BP gained around 2.8 percent in London.
Across the region, it was another day of gains. The sixth day in a row. Join me in the library and we can show you some more. And you'll see straight away that rise BP share price along with banking stocks, and mines, and you get a very robust performance by the London FTSE. With the Barclays' up 4.2 percent. RBS, Royal Bank of Scotland, it was, up 3.5 percent, a strong session in London. .
Frankfurt's Xetra Dax, it was the automakers that stood there. Now, you don't have to see a day when BMW is up 8 percent. We know that Mercedes, in the last month, had the best month ever. Now BMW is saying that it expects to sell more cars than first thought. So, it is the Chinese markets, it is export led, it is euro led, it is all to do with that. And you are seeing some very impressive performance. On the downside, let's not forget the ZEW survey of confidence, as actually it is at a 15-month low on the back of sovereign debt worries.
Quickly, to France, where the CAC currant came in again with automakers like Peugeot up 5.25 percent. And "The Tribune" is reporting that Renault is about to make a new sedan vehicle.
If you look at Athens and there was an encouraging bit of news, the Athens market rose 2.6 percent, the market rose because the government, the debt management agencies, the DMO, manage to sell over 1.5 billion euros of debt, short-term bills. They got six-month bills away at an interest rate that actually narrowed as against the last time they did this. Slightly disingenuous because Greece is still very much the beneficiary of this 100 billion euro, saving fund. But even so, the DMO did manage to sell some bonds.
Wall Street is having a very strong session. More than 150 points, when I lasted looked for the Dow Jones. And it was on the back of earnings from ALCOA, which came out after the bell, last night. Alison Kosik is at the New York Stock Exchange. Good afternoon to you, Alison.
ALISON KOSIK, CNN FINANCIAL CORRESPONDENT: If the market likes ALCOA, then we're off to the races.
KOSIK: We really are. We definitely are off to the races. You know the market started rallying right out of the gate and they haven't looked back. And you said it, it is all about ALCOA beatings earnings expectations and raising its forecast for the year, saying that demand for aluminum is improving. Also, investors have their eye on CSX. CSX also came out with strong revenue growth and an optimistic outlook. And those are two things that investors are looking for. They're looking for that strong growth from a year ago. But they are also looking for what is going to come up in the future. They want to know if these companies are more positive for the future, Richard.
QUEST: The ALCOA, because of the way in which the aluminum and the way in which the company gets into all aspects, we can't make too much of one company, but it is certainly looking rosier.
Ah, you are looking puzzled. You are looking as if you are about to challenge me on that one, Alison.
KOSIK: I do, Richard, because these are bellwether companies. You are talking about ALCOA, which has it tentacles, sort of in a lot of areas of business here in the United States and around the world, same with CSX. So these are really big bellwether companies and when they shoot out of the gate with such strong forecasts and strong earnings, sure it gives a huge boost to the market, but if we see continued earnings reports just like this. We could see this rally continue for days. Of course, we do have Intel coming in, at the end of the day today, after the closing bell. That is another bellwether for the tech industry. And its earnings are expected to be strong as well, Richard.
QUEST: Alison, many thanks. Be careful mentioning tentacles in the market, before long we'll be back with Paul the Octopus, who apparently is now worth more than $1 million, so they say. Amazing what calamari can cost these days.
All right. They called him The Boss, George Steinbrenner, who died today. He is a man who is remembered as a sporting legend behind the New York Yankees. We'll show you why he is shone also, away from the baseball diamond.
QUEST: The sporting world tonight mourns the loss of the man they called The Boss. He was the Yankees owner George Steinbrenner who died of a heart attack. He was 80 years old. Now, George Steinbrenner was more than a sporting legend. Joining me over here.
Steinbrenner, called The Boss, he was a formidable businessman. You only have to look up, perhaps, his-well not perhaps-his most famous asset, he bought the Yankees for just $10 million in 1973. By best guess, that is worth-the team is worth, $1.6 billion today. But it is more than just the team, it is a franchise, and it is arguably the most valuable sporting brand in the world at the moment. Having won seven world title series, the most recent just eight months ago. It means the franchise, itself, besides the $1.6 billion, the franchise could be worth up to nearly $0.5 billion or more.
The sporting style of Mr. Steinbrenner was not limited to the baseball diamond. At one point he also owned the Cleveland Pipers, in the American basketball league and he own thoroughbred horses. This was a renaissance man when it comes to the sporting industry. But he wanted to win. He lived to win. Winning was in his DNA.
Joining me now from New York, Jon Wertheim is the senior sports writer for "Sports Illustrated" an acclaimed sports journalists.
Jon, I'm not being unfair to the man when I say that winning was all to George Steinbrenner.
JON WERTHEIM, SR. SPORTS WRITER, "SPORTS ILLUSTRATED": No, not at all. That really defined him. And he made plenty of enemies along the way. His management style was open to question along the way, but no that was the bottom line. And he really elevated sports ownership to an art of business. And whether it was looking for a new revenue streams, or signing players before anybody else did, or figuring out a way for taxpayers to help finance a stadium. It was all in the name of winning. And that is ultimately what he'll be recalled for.
QUEST: He wasn't embarrassed about boosting the wage bill of the Yankees, either, was he? When others would be have a wage bill of $50, $60, $70 million, he would have a wage bill in the $100s of millions.
WERTHEIM: Well, that is right. He had a number of assets, one of them playing in the New York market, one of them history. I mean, even now this season the Yankees will spend, you know, four or five times more on their payroll than other teams. But again, it is all for winning World Series. And he built this brand to the point where the Yankees are really more than just a baseball team now.
And you know, again, a lot of the detractors, a lot of other owners were very upset to see the way he threw around money, but it was all in the name of pulling those World Series titles.
QUEST: I suppose, Roman Abramovich at Chelsea could arguably see something similar.
WERTHEIM: I know (ph).
QUEST: Was he-away from the Yankees, and away from baseball, was he actually a good businessman elsewhere? I mean, did he actually do much elsewhere?
WERTHEIM: Well, it is funny because he made his money in shipbuilding. And the joke when he bought the Yankees, he said, well, I'll be a hands off owner. This is really an investment. Instead, he was one of the sort of-these micromanager owners that oversaw everything, and hired and fired, had quirks. You know, the Yankees really came to define him. And I think some of that was his personality. You can see in the "Sports Illustrated" cover there, which speaks volumes. But I also think that pretty soon he realized just how much value there was. I mean, you talked about how much he bought the team for and what it is worth today, and I think very early one he realized that if he treated this like a real business, there were immense profits to be made.
QUEST: I don't-one would never want to speak ill of the recently departed, but was he a likable person?
WERTHEIM: Well, it was easier if you were a Yankees fan. I mean no question he cut the sort of blustery figure. And even in these obituaries, that are starting to come out. There are references to various feuds, and nicknames that were unflattering, that he gave players. But, again, I think, if you step back and look at what the team achieved on his watch, both in terms of winning, in terms of profile and obviously, as a business enterprise. You know, I think that sort of stands above feuds he may have had or ill-advised comments he may have made. Again, blustery seems to be the-you know, that seems to be the word of the day. But again, you look at what he achieved and I think that is really going to be his defining legacy.
QUEST: Jon Wertheim, in New York, we thank you for your time, attention, and consideration.
Now, tonight, mistake, I apologize, you will have noticed it immediately, as soon as I said it. I mispronounced the Yankees, of course, won 27 World Series, not a mere seven. Just as well Mr. Steinbrenner not around to hear me say.
Now, in just a moment I am going to talk profit and weight loss. The man who is trying get the world to loose weight. There was plenty to chew on over lunch, with the head of Weight Watchers.
QUEST: The U.S. Food and Drug Administration opening a hearing into the safety of Avandia. Once it was the best selling drug to treat diabetes. Now it is under the microscope because of studies that seem to link it to heart problems. CNN's Chief Medical Correspondent Doctor Sanjay Gupta reports.
EDWARD DARDEN, DIABETES PATIENT: Turn it on, and let it heat up.
SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Edward Darden was diagnosed with diabetes 10 years ago. In 2006 he started taking Avandia to control his blood sugar. And then came a study in "The New England Journal of Medicine". The headline, "A 43 percent increase in heart attacks for patients on Avandia."
Doctor Steven Nissen wrote that article in 2007, and an update last month. He's giving a presentation to the FDA.
DR. STEVEN NISSEN, CARDIOVASCULAR MEDICINE, CLEVELAND CLINIC: We've had evidence now for a number of years that Avandia increases the risk of heart attack in diabetic patients.
GUPTA: But in 2007 this same panel voted, 22 to 1, that the evidence was too weak to take Avandia off the market.
One reason, a large clinical trial, called "Record", it was funded by GlaxoSmithKline, the company that makes Avandia. And shows no increased risk, but it is taking some heat. On Friday the FDA posted an analysis by one of its experts, who said "Record" is full of holes. He said the researchers didn't follow up on reports of bad outcomes, even for some patients who died.
NISSEN: I've been following the FDA for 20 years. I've never seen and FDA review as blistering as his review of the "Record" trial.
GUPTA: This is Doctor Murray Stewart, a top Glaxo scientist. We asked him to come on camera. He didn't want to before the hearing. He did tell us by phone, Avandia is safe. And he said that six clinical studies, not just "Record", back him up.
It is extremely confusing for diabetes specialists, like Barbara Onumah, at Washington Hospital Center.
DR. BARBARA ONUMAH, WASHINGTON HOSPITAL CENTER: There is a lot of information out there. And we don't know which to believe and I think this is really where we rely on the government agencies to give us some direction as to whether the medicine is safe or not.
DARDEN: If there is a better alternative, something that doesn't have as much risk, I'd rather do that. And I think that is what we did.
GUPTA: Edward Darden didn't wait. He switched to another medication. And he's not alone. Prescriptions of Avandia are down by two-thirds in the past three years. Doctor Sanjay Gupta, CNN, reporting.
QUEST: While we're in the medical world, shares of the new weight loss pill are soaring now for the company that makes it. The drug developer, Vivus, is gaining around 15 percent. That is an enormous amount in New York. It is all ahead of a public hearing on its new fat fighting pill Qnexa. Now, stay with the U.S. Food and Drug Administration, they say the drug does take off the pounds. There are, though, worries about potential side effects and that will come under more scrutiny at Thursday's hearings on whether to approve Qnexa. And one wonders, of course, if that 15 percent maintains-well, it won't do if there are some serious concerns.
Earlier, we continue to talk about weight loss, as I was joined for lunch, by David Kirchhoff, he is the chief executive of Weight Watchers. Perhaps not an automatic choice if you are hungry. In fact, perhaps the thought of having lunch with the CEO of Weight Watchers, would you send you running for a Big Mac and fries.
But an insight into the diet industry was simply too good to miss. For Weight Watchers first quarter earnings had been down, just a tad, on last year. Year on year, Mr. Kirchhoff was in little doubt the company remains well placed to profit from the millions of people who are struggling with their calories.
DAVID KIRCHHOFF, CEO, WEIGHT WATCHERS: It was as tough an economic time as we have seen, an in any business that is in consumer discretionary certainly felt the affects of that. But you know, I think the fundamental thing is that the economies come and go, but the issue of obesity is not going away. And the suitability and the directness of the Weight Watchers approach for addressing this from a societal perspective, has never been more apparent and obvious.
QUEST: But let's just stay with your numbers then. If you believe it is a result of the recession, ergo, your next quarter and the rest of the year should show better. Are you seeing that?
KIRCHHOFF: We just finished our second quarter right now and we're not going to be reporting earnings for a few weeks, now. So I can't talk about what is going on in the past three months, other than to say that the fundamentals of our business haven't changed. In other words, business was negatively affected by recession, at some point, recession begins to ameliorate, that goes away. The fundamental demand for what we do is still here, and it is going to get only stronger.
QUEST: How have you had to adapt your fundamental product, which is basically people coming together to-for peer and group support, in the weight loss process.
QUEST: But more and more of us are preferring online. We are cloistered with our computers.
KIRCHHOFF: What we're finding is most effective is we're taking the best elements of online and we're combining with the best elements of face to face interaction, you know, the group. And those two things, working together, is an unbelievably powerful combination. I would suggest to you that Weight Watchers was the original social networking company. Of course, I would say that. We are dong all the things without stepping away from who we are, we are also stepping into where the future is.
QUEST: And which countries, where you are not, do you want to be?
KIRCHHOFF: Well, we have a nascent business in China.
KIRCHHOFF: Brand new. We are in Shanghai. But we think that it is- we think that there is going to be-wherever obesity is becoming an issue, we'll be.
QUEST: On the China question, as a CEO, you have seen the debate at the moment, whether it is American CEOs saying that China doesn't want them, or they are finding it very difficult. As a chief executive, how are you finding getting into China, and doing business there?
KIRCHHOFF: We're actually-it's very early days for us, but we are very pleased in what we see in China right now. We think that there is a fundamental need for what we do. We see the consumer being responsive to it. And for us, it has been a very constructive process. You know, I'm not in the business of selling wind turbines. I'm in the business of helping people about change of life. And I think that for the kind of business we're in, everything we've seen in China is terrific.
QUEST: We haven't touched our lunch. It smells very good. Look, you say, everything in moderation.
KIRCHHOFF: You know, actually I think this might be-that's a meringue.
QUEST: It is a meringue.
KIRCHHOFF: Which is a less bad choice as far as deserts go. So, your effort to stump me with calorie laden food hasn't been completely successful.
QUEST: Drat it!
Thank you very much.
QUEST: Well, at least the smoked salmon on brown bread met with favor. Although, I have to say, Dave did take the salmon off and leave the bread, which of course I promptly polished off later.
We'll have a "Profitable Moment" on the question of behavior change and profitable thoughts at the end of the program. In just a moment, when you and I come back together, a long time banker has been a dirty word. Is it time to say, enough of the blame game? The head of the British Bankers Association gets her own back on the back biters, in a moment.
(DESK BELL CHIMES)
QUEST: Hello, I'm Richard Quest, Quest means business. T his is CNN and here, the news always comes first.
The seven Cuban former political prisoners have arrived in Madrid in Spain where they will begin their new lives. They are among 52 prisoners, political prisoners that the Cuban government has agreed to set free.
The former prisoners said they see their release as a step to bringing democracy to the island nation.
Meanwhile, the former Cuban President Fidel Castro didn't mention the release during a rare television appearance but in an interview that aired on Monday on the state run network, he warned the United States confrontation with Iran risks igniting a nuclear war. He also suggested the U.S. sunk a South Korean war ship in March to stir up the regional conflict.
Ugandan police have found an explosive vest in the trash can of a night club near Kampal (ph). They say it's similar to devices believed to have been used at two venues attacked over the weekend. Those blasts killed at least 74 people.
Somali militant group Al Shabaab has claimed responsibility.
The U.S. government says an Iranian nuclear scientists is in the United States of his own free will and can leave whenever he wants. Sharam Al Mari (ph) who went missing last year suddenly re-surfaced at the Pakistani embassy in Washington in the Iranian interest section. He says he was kidnapped by the CIA agents -- a charge that the United States denies.
Moody's has cut Portugal's debt rating by two notches. It now stands at A1 and it brings into line with an assessment by another agency Standards and Poor's.
Moodys has cited the country's poor prospects for economic growth while saying that the outlook of Portugal is now stable. So the moving -- the Moody's move down to AA not surprisingly. Portugal's finance ministry is latching on to the word stable as being the key point. In this day in which it shrugged off the downgrades saying Moody's outlook meant it has confidence in the country's debt cutting efforts.
But of course, Moody's and Portugal merely follows on from Spain, Greece and others and the worries, of course, that there will be further downgrades. At the moment, only Greece is just (inaudible) stages.
It's time to stop the blame game for the financial crisis is the message from an international banking conference right here in London. Stop the blame game now, says Angela Knight, the boss of the BBA, the British Bankers Association. And also it's time for cooperation, not differences.
ANGELA KNIGHT, BBA: It's very much let's move on together. I think, from all sides, both the banking industry, our regulators and some of the internationals who've been here today. All have made exactly the same comments about working together for the next stage and parking blame games and perhaps the third bit is ensure that whatever does influence next, a very close eye is on what happens to real economy.
QUEST: And can you live with the -- the way in which the regulation is moving at the moment for British banks? The coalition has set out a very firm get rid of the (inaudible) bring it all together under the Bank of England. Can you live with that? is that -- does that make you happy?
KNIGHT: I think that there -- it's a very real case to bring it together but you know, the actual supervision of banks and other primarily prudentially supervisor institutions like insurance and the sort of bigger macro prudential role the Bank of England has. I mean, you can always lose things between gaps but if you've got those two parts together, then you're going to be less likely to lose things to the gap.
I think that's quite good. Where I believe the focus needs to be on is kind of the everything else of regulation. The regulation of markets, the consumer canard of business piece, listing authorities, the interaction with Europe as far as securities are concerned. That is left to one side at the moment and I would like and urge the government to bring that together so we've got two good, strong, main regulatory bodies.
QUEST: Did we just turn back to the blame game?
QUEST: Getting away from the blame game is proving to be extremely difficult. And I wonder whether it's inevitable if that difficulty remains by virtue of the fact that economies are still extremely slow and every month there is another reminder of how and why we got into this.
KNIGHT: You're absolutely right because of course, now we're seeing the whole of the sovereign debt problem which makes it very clear that at least a significant part of this is all about (inaudible) having spent too much in the good years.
We bare some responsibility. We don't bare all of the responsibility. The important aspect here is regulators, governments and indeed the industry itself wants to park the blame game. Because we know that there is no profit to that.
QUEST: The public -- the public doesn't want the blame game to end yet.
KNIGHT: Well who knows the answer to that question? Because actually, what we haven't had for a long time is governments and regulators being prepared to put their hand up and say yes, we were responsible as well.
Now, if we have an honesty around the piece, then there's an honesty with individuals. Because after all -- after all, if individuals think all you do is fix banking, whatever they mean by fix banking and everything will be all -- all right, then they're being -- you know, told something that simply isn't correct. And we believe that that honesty is really time (ph) especially with government change to accept what is the responsibility of governments. What is the responsibility of monetary authorities. What is the responsibility regulators as well as what is the responsibility of banks and then we'll get the right shape for the future.
QUEST: Angela Knight, the head of the BBA, the British Bankers' Association.
The relationship between government free markets and capitalism and companies -- well, not everybody puts a lot of stock in the free markets at the moment.
I spoke to Ian Bremmer, the president of Eurasia Group which helps businesses look at political risks. He is worried that governments now are the driving force in many global economies. And his book on the subject puts it exactly like that.
I said to him that we'd been forecasting the end of the free market for as long as I can remember. And it's still here.
IAN BREMMER, EURASIA GROUP PRESIDENT: But it's not a global free market. But there has been globalization over the last 30, 40 years was all about multi national corporations becoming the increasingly dominant economic actors in the world. We're not in that system anymore. We have moved to an environment where some countries support free markets, sometimes well regulated, sometimes badly, U.S., Europe, Japan.
But where the economies that are doing the best coming out of the global recession, the Gulf, for example like Saudi Arabia, Russia and of course the world's now second largest economy, China are not pre-market states. They are state capitalist countries where the state is the principal actor in the economy using markets for ultimate political purposes.
We are no longer in a global free market environment.
QUEST: So did the free market fail? Or are these people, these other markets just better at doing it?
BREMMER: I don't think the free market did fail but I think it's very hard for political leaders to stand up and say that. I think when you have a complete absence of regulation you don't end up in a situation where the free market is succeeding.
Corporate -- corporate CEOs have no interest in free markets. Let's be clear. I mean -- when --
QUEST: So have corporations got too much power today?
BREMMER: Corporations in many sectors have too much power. Corporations in the United States certainly do. They're focusing on short term compensation maximization.
Look at what happened with Goldman Sachs. Look at what happened with BP. These guys were not interested in free market. they wanted subsidies. They wanted to be monopolies. And the regulators were -- were -- were off the reservation.
That's not a free market.
QUEST: But isn't this -- hasn't it always been like this? You -- you see -- you think of advancing an argument with some naivete about things are different now than they were.
BREMMER: Things are very different now than they were because in a G7 world, the United States, Japan, Europe were the dominant actors and they got to determine how the world economy would work.
QUEST: Well that's not a free market.
BREMMER: No. I'm not suggesting that that was a free market. I'm suggesting that you had a single system where the multinational corporations were the dominant actors and you did have rule of law and you did have regulation. Now, in the last 20 years there's no question that we've lost a lot of that regulation. Greenspan heralded a move, in my view, away from the free market.
That -- that's certainly true. Hyper capitalism is not a free market system.
QUEST: The G20 is now the preferred forum for economic cooperation in the world at the moment. Neither bilateral nor really fully multilateral. Is it working?
BREMMER: Well, I mean, if you -- I wouldn't say the G20 is the preferred forum for cooperation. I'd say --
BREMMER: It's the preferred forum to meet. It's a talk shop. A security counsel is not the preferred forum for international security cooperation. It's the preferred forum -- people get together and say things and then not do anything. And the G20 is basically the security council. Why is that? Because we no longer have a single global economic system. the countries don't agree on values. They don't agree on how to run things. We see this in proliferation. We've seen climate but we see it in trade. We see the economy. This is a challenge for us and what (inaudible).
QUEST: Are you, when all is said and done, do you still have faith in the free market?
BREMMER: I do. I do. I think that as Winston Churchill would have said about democracy, I would say that the free market properly regulated free market system is the worst economic system out there except for all the others. And we need to remember that.
QUEST: It is called the jobless recovery. If you're out of work and looking for a job, perhaps a rare piece of good news for you. This gentleman might actually tell you where to get a job, which jobs are available and who's hiring at the moment.
When we come back. In just a moment.
QUEST: They call it the jobless recovery and now we have some upbeat news on the jobs front especially if you are searching on line. The Monster employment index says European online recruitment activity is at a 16 month high.
Now, the report says that job availability online jumped the most in manufacturing, maintenance and repair. Not surprisingly as you'll understand, it is Germany that registered the sharpest monthly increase across the region. June marked the fifth consecutive month of expansion for Johnline (ph) job opportunities in that particular area.
We need to put context into this at the moment.
I'm joined now by the head of Monster Euro, Andreo Baratoni (ph). And it's -- we know we've come off a low base but were even you surprised to see such an improvement in the seeking and availability of jobs?
ANDREO BARATONI, MONSTER: Yes. Yes. The most for employment index is showing a five month consecutive growth and an accelerated growth. 12% growth year on year from 8% in May.
QUEST: Are these real jobs? Are they part time jobs? Are they jobs in the imagination?
BARATONI: Yes. Predominantly permanent jobs. And the jobs were advertised. They're real job -- quality jobs across all of the websites online advertising across Europe.
QUEST: And the number one area you were telling me is manufacturing and industrial production.
BARATONI: Yes. Manufacturing, production, transport and logistics are the sectors that have seen the highest growth year on year and month to month.
QUEST: I'm not trying to denigrate these jobs, but are they grunt jobs? Or are they skilled jobs? Are they people digging roads and -- or rather, are they actually higher up the scale.
BARATONI: There is a mix of both. There is plants and machine operators. There is also many elementary jobs which are more of the type you just mentioned.
QUEST: OK. So that is the scenario. Let's put that on the front burner. That's the scenario that's going to frame the rest of our discussion. A lot of those jobs are on the back of economic growth, good growth that we saw at the end of last year and the beginning of this year.
QUEST: We know that growth is evaporating.
BARATONI; The growth continues but the pace of the growth is slowing down. The growth of the last five, six months from an industrial point has been a unprecedented growth.
QUEST: But it's been inventory restocking lead and that was never going to be sustainable.
BARATONI: No, and in fact, there was also a portion of that growth led by increased demands. And this is what we are left with. So the fact that after the inventory and the stock has been revealed, there is still growth and means that there is an increased demand. And we are seeing these in many ways. (Inaudible) just announced today that in September, in UK, they're going to take 10% more graduates than last year.
Retail figures improved in June and this just showing a little bit of a positive trend.
QUEST: And I thank you again, (inaudible) rain on the parade of better job numbers but these numbers will not, of themselves, bring down the large numbers of unemployment, will they?
BARATONI; Not on themselves. Job creation is not yet stronger than job disruption. Having said that, we are seeing unemployment rate coming down. In U.S. the unemployment rate came down. In Germany, the unemployment rate came down.
QUEST: All right. Not sure you've done this before but I'm sure you're getting the idea.
Red, amber or green for what you think the Monster index is showing on jobs.
BARATONI: (inaudible) is before (inaudible) in January.
QUEST: Yes. It was.
BARATONI: Then was amber.
QUEST: You're amber. All right.
BARATONI: And today and green.
QUEST: You're going for a bit of a green.
QUEST: You're not sure that's a false green?
BARATONI: No, no, is green. I think the market is recovering. And is positive.
QUEST: I'm not going to give you a flash again we'll wait until (inaudible). Many thanks indeed. (Inaudible) OK.
We've talked about earlier in the program the new oil well cap that is in place in the Gulf of Mexico. There's a lot of hope. The damage that's already done is going to cost a serious amount of money. We'll look at the devastating ripple effect the spill is having on the Gulf Coast economy.
Good evening, (inaudible).
QUEST: BP has announced it has received the fourth bill from the White House towards the cost of the cleanup and repair operation. The bill has been sent for $99.7 million to BP. It's part of the charges to stem the oil spill in the Gulf of Mexico.
Tonight, we're waiting for reports on whether the new cap that has been placed on the well head actually will contain or curtail the oil spill.
It won't matter for many people in the gulf region who are still suffering the effects from the vast amount of oil that is already in the sea and washing ashore
CNN's David Mattingly visited some of the businesses along the Gulf Coast. It had been hit hard.
DAVID MATTINGLY, CNN CORRESPONDENT: The BP oil slick is a long way from Slidell, Louisiana, but restaurant owner Ray Alfred can see it every night in his dining room. Where is everybody? This -- this is supposed to be one of your busy nights, isn't it?
ALFRED: Yes. Thursdays and Fridays and Saturdays are usually pretty good night for us.
MATTINGLY: He's trapped by a BP double whammy brought on by lost jobs and lost fishing. Fewer customers have money to spend on seafood dinners that get more expensive by the week. It's a vicious ripple effect that's forced Alfred to lay off half his staff.
ALFRED: We used to have four chefs in here and right now we have one chef and one dishwasher.
MATTINGLY: And there have been changes to the menu too.
ALFRED: All the ones that have -- have shrimp and -- and oysters on, we -- we -- we increased the price two to three dollars.
MATTINGLY: That's about half your menu.
ALFRED: That's correct. Because everybody in this area loved us but we're out of seafood. Bar-b-Q shrimp, who chose the bar-b-q shrimp? Aah, you chose the bar-b-q shrimp.
MATTINGLY: At this point every move is risky. Each price increase pushes Alfred out of reach of more potential customers. And he's not alone.
UNIDENTIFIED MALE: Normally, this back wall would be stacked. Those blue containers would be three and four high.
MATTINGLY: Supply at this seafood distributor in New Orleans is down by half. They're trying to fill gaps with frozen imports.
MATTINGLY: How much of this is imported right now?
UNIDENTIFIED MALE: I would say imported fish in here right now is probably about 40%.
MATTINGLY: A big part of Ray Alfred's problem is that when he comes here to his distributor, he's competing with 700 other restaurants and retailers for the same diminishing supply of fish. So this is pushing the prices up 10%, 20% in some cases for those legendary Louisiana shrimp and Louisiana oysters, the things that his customers want most.
ALFRED: You're out of oysters?
UNIDENTIFIED MALE: We're out of oysters.
MATTINGLY; Inventory at Alfred's restaurant is running thin. He can't afford to have any fresh seafood that might go bad.
Do you see an end to this ripple effect?
UNIDENTIFIED MALE: With hurricane season blooming in on us right now, I'm just praying that we don't have a major storm.
MATTINGLY: Long accustomed to bouncing back after hurricanes, Alfred says the oil disaster has stolen his resilience and left him vulnerable.
David Mattingly, CNN.
QUEST: Now, well, would you believe it there's hot weather in Europe, it's a Tuesday in July and Guillermo's not on vacation!
(Inaudible) Good evening.
GUILLERMO ARDUINO: That's a surprise, huh? Yes, it is.
QUEST: I'd dearly like to go and lie down in a darkened room!
ARDUINO: I took it all at the beginning of the year. Well I still have some weeks left.
Well, I was thinking that we have no hurricane things to the next 48 hours or tropical systems in the Gulf of Mexico according -- well, nowhere in the Atlantic according to the national weather service. Now, we do have the winds developing here in Britain but I think, Richard, that Friday's going to be a nice day. The weekend is going to be nice. We'll see some more rain on Wednesday, Thursday. But let's see, the winds and the heat continues.
The heat continues especially in Germany so now moving into the east, you see as an example I have Helsinki here, St. Pete's Burg, Italian and (inaudible) also. All records that oh no all the high temperatures -- yes, records that we beat today, Tuesday. The weather will remain warm here in central parts. This is what's going to provide some rain showers for Great Britain, this low pressure center and also it's going to be a little bit windy. But again on -- I think the weekend is going to be nice, in London, we see some more rain in the midlands and as you see over here that system continues to spin around and bring some clouds here and there but it's not only London in the midlands where we see some bad weather. In Amsterdam we see some too, in Dublin.
Paris, we'll see some you know, for a change but not in Madrid. Not in Berlin. It was actually extremely hot and will continue to be hot in Berlin. We have in the eastern parts of Germany and also Hungary and pats of Poland some heat advisories because it gets to dangerous levels.
No clouds in the Mediterranean sea. If you're watching right now from there, it is anywhere from 8, 9, 10 PM and things are fine. If you're on a cruise here, Mediterranean sea, lovely, wonderful weather, very warm for tomorrow.
QUEST: That tropical storm has gone right over the land mass there, hasn't it?
ARDUINO: Yes. It has.
QUEST: Very interesting. All right. We'll talk more about that tomorrow.
Many thanks, Guillermo, at the World Weather Center. The weather beautiful in one part, not so in the other.
When we come back in just a moment, behavioral changes and why it's a profitable thought.
In a moment.
QUEST: Tonight's profitable moment. At the end of the show I always say to you whatever you're up to, I hope it's profitable. Some of you think I'm talking about investing and making money. Frankly, nothing could be further from my thoughts. And we've got good examples tonight with David Kirchhoff, the chief executive of Weight Watchers.
After he became chief exec, Mr. Kirchhoff lost more than 25 pounds. He knows about making behavioral changes. BP too is making some major behavioral changes largely related to safety and the way the company manages risks. The banks say they're making behavioral changes in the way they run their business to avoid risk.
Throughout tonight's show, people and companies making behavioral changes just about everywhere which is why I say to you tonight. Whatever you're up to in the hours ahead, I hope it's profitable.
That's Quest Means Business. I'm Richard Quest. Coming up in just a moment, World One. In fact, right now.