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QUEST MEANS BUSINESS
Stocks Surge; UAE, Saudi Arabia Set to Block BlackBerries
Aired August 2, 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: Shares start the week and the month with a bang. And it's all thanks to the big banks.
Staying with Bs, and Blackberry gets blacklisted. Business is depending on the device in the UAE, will be bang in to trouble.
And BP gets ready for a static kill. Plug the oil leak once and for all.
I'm Richard Quest. You and I start a new week together, because I mean business.
Summer's bright spot has emerged. The Dow is up sharply. It has gained nearly 190 points and it is all because economic data and a raft of interesting earnings which has given optimism around the markets. The Dow now up 188 points, a gain of 1.8 percent; we can easily work that out at 10,654.
Don't get too carried away. Ben Bernanke is still warning there is a considerable way to go in the economic recovery. The head of the Fed has been listing the reasons to be cautious, explaining in part, why the economic crystal ball seems to be so cloudy right now. He's even facing calls from analysts for a second bout of the so-called quantitative easing. Our correspondents are looking at our major story tonight. Maggie Lake is in New York, and following the Fed chairman's statements, Felicia Taylor is at the New York Stock Exchange.
Felicia, briefly, has this rally got legs?
FELICIA TAYLOR, CNN FINANCIAL CORRESPONDENT: That is the biggest question of the day. Certainly, just today we've seen what we've had for the gain of the Dow, just in one day. The gain of the Dow is up about 2.1 percent. Today we're seeing a gain of about 1.8 percent. The biggest question now focuses back on the economy. We have seen corporate earnings. Now the question will be what will the economy be able to do for us, and show us moving forward. And that is exactly what Ben Bernanke was talking about earlier.
QUEST: And that is exactly what Maggie Lake is going to bring to us. Felicia, don't go too far away. We'll be back with you and the markets.
Maggie Lake, in New York, Ben Bernanke talks about considerable way to go. It follows on from his testimony before Congress where he talked about unusual uncertainties. So what do we make of it?
MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: Yes, you know, I mean, he'd have to say this. You only have to look at the unemployment rate to realize that we do have a long way to go. But the interesting thing, Richard, is this time, although not much was different, he did take pains to point out the fact that there are some underlying supports, some positive factors that should keep growth on track. Have a listen.
(BEGIN VIDEO CLIP)
BEN BERNANKE, CHAIRMAN, THE FEDERAL RESERVE: While the support to economic activity from stimulative fiscal policies and firms restocking of their inventories, is going to diminish over time. Rising demand from households and businesses should sustain growth. In particular, in the household sector, growth in real consumer spending seems likely to pick up in coming quarters from its recent modest pace, supported by gains income and improving credit conditions.
(END VIDEO CLIP)
LAKE: There you go, according to Ben Bernanke, the U.S. consumer is not down and out. And this stands in sharp contrast to some of the things we're from former Fed Chairman Allan Greenspan, who was on the weekend talk show circuit warning that it is possible that the U.S. is going to face a double-dip recession, if housing prices continue to fall. So, he sounded a bit more concerned and it is not that Bernanke was overly bullish, but he was just pointing out: Yes, we have a long way to go, but there are some positive factors here and demand is going to rise.
So, on balance, Richard, you know he certainly sounded maybe a little bit more upbeat than somebody who was worried about an eminent double-dip recession.
QUEST: OK, double-dip is now moving, perhaps, to a 20, 15, 20 percent, onto the back burner, some would say. But the slowdown that we saw, with GDP last week, and is reinforced this discrepancy between good earnings and poor economic performance.
LAKE: Yes, it is a little bit of a chicken and an egg. We're used to the consumer leading and see that they are waiting for the cue from corporate America. Every consumer we talked to, and we were out last week covering the consumer story, said, I'm worried about employment picture. Not their own jobs, but employment as a confidence barometer. If businesses are doing so well on the corporate side, if they start to hire, when they start to hire, if business spending leads the recovery then consumers will be quick to follow. So, it may be just that we're at one of these junctures where you don't have the two sides caught up with each other yet. That is the big question.
Or, we're in for something more serious. No one can decide. Certainly something that the Fed is going to be discussing, but Ben Bernanke did not mention anything about a second round of quantitative easing; the Fed seems reluctant, they seem to be sticking to their forecast, that the recovery is bumpy, but it is still on track.
QUEST: Felicia Taylor, at the New York Stock Exchange, more than 60 percent of the S&P 500 reporting so far this year-in this quarter-are up- to, or better-than-expected. Is that what's fueling this rally?
TAYLOR: OK, there is a little bit of a two-fold question there as well. Today we saw, not only have we heard in the last couple of weeks, some good corporate earnings. That is what a lot of July's strength was. Today we heard some economic news that was a little bit better. The manufacturing index came in a bit stronger than we expected.
There are also buy programs that are in effect which, because this is the first day of the new trading month of August. Oil surged past $80 a barrel. That is the highest level that we've seen in a few months. So that is showing some return in risk appetite. That is helping to push stocks higher.
But at least one trader that I spoke to earlier today said, this could really just be a house of cards. As Maggie was saying, you know, Greenspan really didn't say anything bullish. Bernanke has pointed to a long bumpy ride ahead, saying that, you know, the recover is on track but it is not going to be an easy ride by a long shot.
Americans are still dealing with lost savings, the weak job market; we have another jobs number coming out on Friday. That is supposed to tick up to 9.6 percent. This trader basically said that in order to temper those fears of a double dip recession the economic numbers have got to either stabilize, be inline, or actually improve. Take a look at that level on the S&P. We have seen it close right around 1120. Right now it is 1122. If we can break through that level, the markets should trade higher. But we have been stuck at the upper end of that range for a while now.
Also, keep in mind, this is August. A lot of the traders have gone on holiday for the rest of the summer, or will be in the next couple of weeks. There is low volume. That means there is very little commitment. This is a trader's market, not an investor's market. And that's a key thing. We are likely going to see a lot of volatility for the rest of this month. So, does this rally have legs? I'm not so sure.
QUEST: If it doesn't, then we are in a very thin ice situation. Because if it doesn't-I mean, what I am reading, and you are seeing the same data, and reading the same analysts-some suggest we are about to go for another nice gain on the Dow, and the S&P, other suggest there is a tumble awaiting. We simply don't know.
TAYLOR: No, we don't know. I mean, that is the problem with the month of August, in particular. Like I said, you are going to see very thin volume. That is going to lead to the volatility. Until we see some consistency in the economic numbers. And again, it is too soon to tell. That number coming out on Friday is likely to tick upward in unemployment. People are still dealing-and also coming out, you've got this back to school shopping season. That is a precursor to the Christmas shopping season. They have been restocking shelves, in terms of inventory. However, they've actually not anticipated that the consumer isn't really willing to spend yet. So that inventory is going to be marked down quite aggressively. So, consumers are not spending the way they used to-yet. The numbers haven't proven it yet. We soon will see what August has to tell.
QUEST: You have just committed the cardinal sin, in the middle (sic) of August, you have mentioned Christmas.
QUEST: Felicia Taylor, Maggie Lake, many thanks indeed.
That is enough to-enough of that. There will be plenty of time for you and I to get to grips with Christmas, before we're finished.
The other big talking point was about the banking sector. Europe's biggest bank, doubled its money. France's largest lender beat the estimates. The results were from BNP Paribas, in Paris. And HSBC, and it triggered a rally in financial shares across the continent.
Let's start with HSBC. First half, six months, net profit more than doubled at $6.8 billion. Chief Exec Mike Geoghegan in Hong Kong said the banks should be allowed to compete for the best talent if it wants to stay on top.
(BEGIN VIDEO CLIP)
MICHAEL GEOGHEGAN, CEO, HSBC: This is the second best level (ph) by free market (ph) performance that we have ever had. And it is important that we keep the people who produced those results across the world. And I do believe that here in London, London is beginning to realize that its raison d'etre is to build a strong financial services industry in this very critical city. And to do that they need to be able to attract and keep the best talent in the industry from all over the world.
(END VIDEO CLIP)
QUEST: BNP Paribas second quarter profit jumped 31 percent. France's largest lender surpassed market expectations with sharp improvement in its retail banking sector operations, lower charges, to cover loans going bad. Similar story at HSBC.
Both banks surged more than 5 percent on the session. The financial sector was a really bullish move. And if you look overall, over Europe, then you see the markets were on fire for the first trading day of Europe (sic). Surging to three month's high. It was banks and minerals in London. It was banks and industrials in Paris, same in Frankfurt. And of course, insurance played a factor in Zurich.
Still to come, they are calling it QE2, not that it has anything to do with a life on the ocean waves. We'll discuss whether the Fed Chairman Ben Bernanke is on board, after this.
QUEST: Blackberry users face a blackout in the United Arab Emirates, the UAE. And there will be a messaging shutdown in Saudi Arabia, it follows a two-year struggle by a telecom's authorities in those countries to persuade Research in Motion, RIM, the maker and the owner and the runner of Blackberries to open up the data, and the traffic, to the authorities in those countries. The authorities say it is all about security and as well, sovereignty. Joining me in the library and it will all become clear.
Let's begin with what is being threatened, the UAE, United Arab Emirates, says it will suspend messenger, e-mail, and web browser service, whereas Saudi Arabia is threatening to suspend the messenger service. The fundamental problem that affects the UAE, Saudi Arabia, and other countries to be sure, the fundamental problem is because the data is encrypted and then sent offshore. The servers running Blackberry in these countries, is not within the country in some cases I believe it might even be in the United Kingdom.
The authorities believe that if they wanted to they would be unable to get proper legal recourse to access that data without maybe going through another country, Canada, the United Kingdom, Germany, for instance. And they say that is an attack on their sovereignty. However, this is the deadline for the UAE, which of course, remember the point about the UAE it is Dubai, and it is Abu Dhabi. October the 11th is when they say they will suspend Blackberry's right to offer service and that has created a discrepancy between those who are using the domestic providers through (UNINTELLIGIBLE) and those who would be roaming in the region.
According to the telecom's provider, by the regulator, roamers will also be affected. But that is a bit under confusion tonight. So, you get the idea. Tonight, Blackberry, firmly under threat in these countries at the same time as the UAE saying that their sovereignty is being impinged.
Now, more than 1 million people in Saudi Arabia have Blackberries; almost 700,000 in Saudi Arabia, half a million in the UAE. Totally, that is only about 3 percent of Blackberry users worldwide. In Saudi the gadget is popular with young people because of the possibilities for social networking in a country where the code of behavior is on the conservative- is very conservative.
Millions of business travelers and tourists will see services blocked. AP says it will extend to those who are using roaming. Even more so, important, when you think about the UAE's significant tourist trade and Emirates. It means if you land at Dubai airport in October, who knows what you will be able to see, send, or use the Internet on your Blackberry. That's the situation. It is a case of sovereignty versus commercialese.
I caught up with Stan Grant who present's CNN's "PRISM" from Abu Dhabi. I asked him if the UAE is actually asking for something that basically Blackberry and RIM has given to other countries.
STAN GRANT, CNN ANCHOR, "PRISM": That really depends, Richard, on what you are actually asking for. Now, the UAE says that is precisely what they're saying. They're saying that other countries, that the maker of the Blackberry, the Research in Motion company, is able to work with other companies (sic) and deal with some of their concerns. That is what they are saying is not happening here. Now, they've negotiating with RIM, this Research in Motion company, for the past three years to try to get around this security problem.
However, if you look at the company themselves, this is the way they operate. Now, what happens is that highly encrypted data is stored offshore, in what is essentially a closed global network, operated by RIM, the company that manufactures the Blackberry. They say that it is actually a security virtue. It makes it safer for the user of the Blackberry. They can have more trust that their information will not be spied upon. Now, the UAE is saying that actually creates a security threat right here.
So, it really comes down to this, Richard. In other countries they are quite happy to live by the standards and the procedures set in place by the maker and the distributor of the Blackberry. Here, they are saying they want to access that information themselves. They want either a proxy server set up here, or greater access to the information held by the manufacturer, the company RIM.
QUEST: Whichever way this plays out, what does it mean for the business traveler when they go to the UAE, particularly Dubai and Abu Dhabi, of course. I mean, foreign Blackberries will still work, it is the domestic ones that won't.
GRANT: That is right. That is what they are saying here. That the one that I'm holding here, basically, come October 11 I may as well throw this away. I can use it as a phone, but I certainly won't be able to swap e-mails or won't be able to use the instant messaging service. I won't be able to web browse. Keeping in mind, of course, that this is happening in a place has presented itself as being one of the hubs of world business.
And this comes at a time when Dubai has taken an almighty beating from the global economic turn down. We know about the debt crisis here. We know the security issues they've had with the killing of that senior Hamas figure in Dubai, earlier this year. The finger being pointed at Mossad, the Israeli intelligence agency. So there has been a lot of bad news and now Dubai is getting more criticism, because many people are perceiving this, the crackdown on the Blackberry, as once again an indication that Dubai, the United Arab Emirates, is not as free as it would like to advertise.
QUEST: Is the UAE, even if they have a valid point, and other countries to have access to the information-which is their point-is the UAE in danger of shooting itself firmly in the foot, whatever the rights and wrongs of their challenge on Blackberry?
GRANT: Well, that is precisely what some of the critics are saying, Richard. Because they are saying, look at this, Blackberry operates the world over. It has enormous markets in Asia. It has enormous markets in the Americas and in Europe. Really? The United Arab Emirates, it doesn't figure all that highly, I would imagine, in Research In Motion's business plans. So, it can get by without the UAE. That is point number one.
The second point is this, terrorists? People who do pose a security threat? Well, we know that they are able to operate in all sorts of environments. We know that they are able to operate right under the noses of law enforcement; that terrorist groups are able to transfer money, to be able to swap information online. To be able to plan and execute terrorists attacks the world over. They are not going to be that worried, say the critics, about whether or not they can use a Blackberry in the United Arab Emirates. So, you right, there. There is the risk of the UAE shooting itself in the foot. Of being accused of being too secretive, of trying to crack down on citizens here and people trying to use the Blackberry here. While at the same time of not achieving its aim of actually making the place more secure, Richard.
QUEST: Stan Grant, and just to emphasize, since I spoke to Stan, earlier in the day it is a little uncertain the difference between the roamers and the domestics, within that. No doubt it will become clearer in the weeks ahead, about the exact situation, assuming of course that they don't reach an agreement.
The Indian city of Delhi, now here is an interesting fact, nearly 150,000 new residents arrive in Delhi, on average, every single day. They arrive for the same thing, a chance to make a new life, but as we report after the break, for those who run Delhi, this mass urban migration really does raise the question, what will this future city look like?
QUEST: Welcome back.
One of the world's biggest cities, Delhi's population is growing at a breakneck speed. The result is a housing shortage, on a scale that you won't find in many other places. Delhi is gearing up for the major international sporting event, the Commonwealth Games. So, this week, as we start a new series of "Future Cities", we're going to be looking at how the swelling capital is meeting tomorrow's challenges.
QUEST (voice over): New Delhi, a city on the fast track to modernity, that has become a symbol of India's economic prowess. As it has grown, it is a magnet of the country's huge workforce.
More than half a million people migrate here every year, arriving from rural areas and neighboring states into the hot, hectic heart of the Indian capital.
DUNO ROY, HAZARDS CENTER: People will continue to come into urban areas, because that is where work is, that is where water is, that is where electric is, and when people sitting here, electricians, plumbers, carpenters, painters, these are jobs that the city creates. So, people will come, there is not doubt about that. They are required for the city.
QUEST: They may be required, but for a city that is already struggling to cope with 17 million people, this massive influx exerts huge pressures on the aging and crumbling infrastructure. This is the story of Delhi's swelling population, and how to cope with the future.
SHEILA DIKSHIT, CHIEF MINISTER, DELHI: It is tough, very tough, but there is nothing we can do about it. It is India's capital, so it is everybody's right to come here.
QUEST: Manish Kumar left his family in West Bangle, and move to Delhi two years ago. He was driven by the desire to be a part of new India's rapid but unequally shared economic growth. He managed to rent a rickshaw for a $1 a day. Ferrying people to and from railway stations, and about town, he earns 150 rupees, that is roughly $3 a day.
MANISH KUMAR, MIGRANT WORKER (through translator): In my village there were others who had worked in Delhi and returned. They bought farms, some bought houses, opened shops. Looking at them, I understood, I must also leave and see and learn. So, I thought, let me go to Delhi.
QUEST: As people like Manish arrive here every day the housing situation becomes urgent. Just under a third of Delhi's population lives in housing like this. Another 200,000 don't even have that. But the rising flow of immigrants, they live on the streets. As part of the Delhi master plan, the government is building new housing to deal with the influx.
DIKSHIT: We are going to build houses for those who are today living in shanties and slum areas. We'll build about 300,000, 400,000. Put them into that. We have worked out a system, already about 10,000, 15,000 have been made.
QUEST: Delhi's chief minister, Sheila Dikshit, has been at the helm of this city for more than a decade. It is her job to shape the city's future. The government I relocating residents to designated areas. Many on the outskirts of the city. And slum areas have given way to gleaming new stadia and access routes for the Commonwealth Games, which begin in October.
Newanna (ph), North Delhi, it is a two hour drive from the city center. Here advocates for the poor say many people didn't want to move.
They just evicted overnight, the bulldozers came and just, you know when over the houses. I've seen those slums. There is no question of them being better, because there is infrastructure there. There was water there, sanitation, schools, health dispensaries, transportation and most importantly livelihoods. None of that is available there.
QUEST: Designing the Delhi of the future, the chief minister says they are doing all that they can to accommodate those who must relocate. There are challenges, still, she believes the city is serving the interests of the poor.
AS Delhi presses ahead, with its massive reconstruction and transformation projects the people just keep coming. And whether the authorities like it or not this massive migration to the Indian capital makes Delhi truly a future city.
QUEST: And we will be in Delhi for our "Future Cities" throughout the month of August. More from the Indian capital this time next week.
In a second or three, when you and I come back together again. BP is about to begin the static kill then I'll explain what it actually means. And they're quite optimistic this time it will work.
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And on this network, the news always comes first.
The International Red Cross says record flooding in Pakistan has now affected some two-and-a-half million people. Many of them are homeless after monsoon rains swept away entire villages in the northwest. The government estimates as many as 1,500 people may have been killed and that number could rise as more rain is in the weather forecast.
Wildfires have killed at least 40 people in much of Russia, as the country is blanketed in smoke. Authorities have declared a state of emergency in about 500 towns and villages in the western part of the country. Extreme heat is fanning the flames and it is expected last a few more days. An emergency official says around 115,000 hectares are now burning.
As promised and on schedule, U.S. President Barack Obama says he's going ahead with his plans to end the American combat mission in Iraq by August the 31st. The drawdown will leave 50,000 U.S. troops on the ground and they will switch to a support role training Iraqi forces.
BP says it could begin its attempt to kill the ruptured oil well in the Gulf of Mexico later target. BP's senior vice president says it will first test the well to see if it can be sealed from the top with mud and possibly cement. It's a procedure known as static kill. If it works, five to seven days later, a relief well would be used to reach the damaged well from the bottom and plug it there, too.
We need to know more about static kill, bottom kill and the reasons why BP are doing it.
David Mattingly is in New Orleans, Louisiana.
David joins me now -- David, why would they do this static kill?
The well is capped. Bottom kill is just days away.
Why risk the well with static?
DAVID MATTINGLY, CNN CORRESPONDENT: Well, the static kill, as it's called, is actually an intermediate step. It's going to help them finally kill this well when that relief well is done. So it -- they've found a lot of good reasons to try this. And if -- it's best to look at this -- and if you want to indulge me for a moment, it's a very long metaphor here.
If you look at this spill as if it was some sort of beast terrorizing the Gulf of Mexico, it -- this beast was caged over a couple of weeks ago, when they finally put the cap on that well. They got control over it. They were able to keep it contained. But this well was still active. There's still force behind it. There's still pressure building up every day.
So this static kill is a way to put this beast, so to speak, to sleep. It's going to essentially drown this well in drilling mud. It's going to force that oil back down into the reservoir and completely eliminate the threat of this well. And having to do that now will make it easier for them when they finally intersect this well with the relief well to fill it in with cement and end the threat for good once and for all with that cement.
But right now, it was a good intermediate step. And when they're done, this well isn't exactly killed, but it is smothered and it will not be a danger that it is now, even though it is still caged up.
QUEST: Let's just talk about the cleanup operation, which continues. Florida, the Keys, now large parts of that side of the Gulf and the Atlantic are now pretty much risk-free from oil.
How about Louisiana, Mississippi and those other Gulf States?
MATTINGLY: We are seeing a lot of commercial fishing and sport fishing opening up in this portion of the Gulf of Mexico, as well. And this is all the result of finally getting the cap on that well. No new crude oil to come up and get caught into the currents and move its way around the Gulf. So once the oil that was there cycled its way through and no new oil behind it, that meant they could finally start making some progress on getting these waters reopened...
MATTINGLY: -- after a number of days when they don't see any oil out there, that's when they open it back up. They go out there and make sure they do testing on the fish to make sure there's no health hazard from the fish that are being caught. That's when they say go ahead and do it.
QUEST: David, we are a business program, so I'm afraid you and I now need to just put some dollars and cents into this.
Is it at all possible -- just possible -- that the $20 billion that BP has put aside actually might be a conservative amount?
MATTINGLY: There has been a great deal of discussion that that $20 billion was just a downpayment. In fact, you hear that from the Obama administration, as well, that this was just the first step. They are calling it a downpayment on a long time commitment to make things right, as BP has been saying. They still have a lot of people to look at for long- term compensation. They have battles to fight in court about what type of compensation they're going to do for real estate values. There are so many things -- so many questions to be answered here and so much more money to spend, even though that oil is not flowing -- so much more oil to spend -- money to spend by the people who have been affected by this oil.
QUEST: David Mattingly once again putting it into perfect context for us in Louisiana, in New Orleans target.
Now, in just a moment, QUEST MEANS BUSINESS continues, as we look at more capital, less risk taking. In a picturesque Swiss town, some of the world's most powerful regulators.
Have you ever heard of Basel?
No, not Basel salty, the Basel Accords. I'll explain what that's all about as we take the road to Basel.
QUEST: As we've been reporting, a bright day for Europe's banks, with gains of more than 5 percent for HSBC and BNP Paribas. The banking sector is doing extremely well, thank you. Hard to imagine that it was all nearly down and out a year or two ago.
What happens next?
Well, that could be decided in the Swiss city of Basel. The rules of banking are made up, as they have been for three decades, in the Swiss behind closed doors by a select committee of bankers -- Jim, when we said to you, look at the Basel, because everybody is -- the important thing about this is everybody is talking -- in the banking sector -- about the Basel agreements, the Basel Accords. And you need to know about it -- Jim.
JIM BOULDEN, CNN CORRESPONDENT: And it's really difficult to explain this, but we're going to do it our -- as best as we can.
Now, let's start out with the Bank of International Settlements, created in 1930. That's in Basel, Switzerland. That's where this all comes from. And then there was a banking crisis in Germany in 1974. So they decided to create the Basel rules.
They didn't come into effect, really, until 1988 and then from there on. And these were to increase the capital requirements for banks -- so- called buffers.
Also, how would a bank handle a loan book failure?
The idea was we weren't supposed to see taxpayer bailouts of banks. The banks were supposed to be able to handle these crises if they came up.
So between 1988 and until 2004, there were the Basel 1 rules. They were decided it wasn't enough, there were too many loopholes. So starting in 2004, we had so-called Basel 2. They -- each country that was a part of these requirements were supposed to change their legislation. The bank governors got together. The regulators were going to get together and change the rules to close the loopholes.
And also, one of the effects was to bring in the rating agencies more.
The important thing about Basel 2, even in the United States, most of the rules had not been put into place when we got into the banking crisis of 2007-2008, the recession of 2009.
So here we are, Basel 3 supposed to come into effect in 2012. The theory is to increase the quality and the quantity of capital requirements and also to be able to bring in some more mature market discipline and also to try to keep the risk from entering into the market. Risk was not thought of in Basel 1 or Basel 2.
QUEST: Jim, how far off are we from Basel 2 actually -- or Basel 3...
QUEST: -- actually being passed?
Because my understanding is the banks, the regulators, the government are all a mess over it.
BOULDEN: On July 26th, the put out a press release from Basel and said they had the broad -- broad...
BOULDEN: -- decisions have been made. We're going to get more details come October. The G20 discusses it in November. But some of the rules may not come into place until 2018.
QUEST: But isn't the importance of it -- I can -- I can feel some of our viewers, maybe their eyes glazing over.
BOULDEN: Oh, I hope not.
QUEST: Not because of you -- no. But I mean let's -- let's take Basel...
QUEST: -- itself. It's not the most...
QUEST: -- it's not the most -- yes, it's not something they go out on a Saturday night and say, have you heard about the Basel Accords?
QUEST: But when Basel 2 was passed, no one cared.
QUEST: No one really gave a hoot.
BOULDEN: Yes. They were still deciding in the U.S. in 2007 and 2008, can they put some of this into place?
QUEST: Would you agree that -- or could you tell us whether Basel is now more important than it was when these two came along?
BOULDEN: Here's the thing, if Basel 3 goes into effect and the banks are forced to do this, many people say the banks will not be lending as much, they will have to have too much capital on their books, so it will slow down economies.
So the critics say they hate Basel 3, because it could actually take some of the GDP out of the some of the big economies.
QUEST: And -- even I'm not cruel enough to get -- to make covering Basel 3 your -- your beat -- your beat. Basel 3.
BOULDEN: I gave it my best.
QUEST: Is it Basel or Basel?
QUEST: Because the city, of course, some people say...
QUEST: And that's a subject for another day.
Jim, many thanks.
We might even send him to Basel or Basel if he's not very good to us.
All right, the weather forecast says some pretty horrific heat and fires in Russia. That much you know about. The floods in Pakistan are downright deadly on a large scale.
Guillermo Arduino is at the CNN World Weather Center.
As we look around the world, where do we need to start with?
GUILLERMO ARDUINO, CNN METEOROLOGIST: In Britain, because I was thinking, if we take yesterday's segment and we play it today, the same thing. You're going to see nice conditions here and there. I was checking it out. No significant rain today. Tomorrow is going to be the same thing. Perhaps here at night, when you're getting ready to go home, Richard, you may see some rain showers. But nothing compared to what's coming up for here, the northern sections, for later tonight and tomorrow. But compared to all other countries, we are doing perfectly well.
Heat in Spain, you mentioned the terrible heat in Russia. Actually, let me show you that we are now seeing significant disruptions at airports. Munich with some clouds and Vienna with rain showers; Berlin with some rain showers; Dublin with those clouds moving in; Amsterdam, the same thing. But you see Madrid 35. Look at Kiev at 35. And I have to say that we are still under this terrible heat wave. But I should emphasize on the heat more than on the fires, because it's a very prolonged heat wave that we have seen -- three weeks or so with these temperatures above average. It should be 22. We are way over 38, 39 degrees. It's now 30 dangerous in Moscow. The last hour, it was 35. It went down a lot. But try to tell those people over there that, oh, you know what, it's better than the last hour, because still way above average.
And what happens now is this high pressure prevails. It's not allowing the storms to go here, which are -- actually are going to go along with the jet stream here and go through the border of the Baltics and go into the north. So no rain at all in here. It's going to be breezy. But that breeze is going to come from the south.
Now, look at the United States. Look at the heat index right now in the vicinity of New Orleans -- 45 degrees. In Mississippi, coastal parts, 46 degrees. So this is very dangerous, too, especially with all the cleanup operations on the coast. And many parts of the United States, if you're coming here in the next day, the heat continues, too.
You mentioned the rain and the floods in Pakistan. Significant rainfall. It's the monsoonal season that will continue. But we are going to see now in the -- in toward Wednesday now more significant rain into Pakistan, with this area that is approach. Of course, you know, it's not going to be what -- the amount of rain that we saw a couple of days -- three days ago. But anything adds to the already very severely loaded rivers, especially the Indus River that is flooding all these towns along its path.
It is the monsoonal season. We're going to continue to see that all across India and Pakistan for weeks -- Richard.
QUEST: We thank you, Guillermo, who has his work -- you have your work cut out for you in the days and the week ahead. And we will be back with you tomorrow.
Now, when we come back in just a moment, look, we talk about it constantly on this program. It's called the jobless recovery. The reality is certain things are taking on an added importance -- the resume, the job search, how we perform. But we need to put our best foot forward in the interview. A roundtable where we show you how to do it, next.
QUEST: Now, some breaking news that I need to bring you here at CNN.
It's been reported by the Interfax News Agency that a Russian plane -- an Antonov 25 passenger plane -- has crashed in Siberia. There were 15 people on board. And early reports suggest there are no survivors. Five crew are also believed to have -- have perished.
The facts, frankly, are few and far between. And CNN hasn't managed to independently confirm it. But as we stand at this hour, it does appear as if there has been a plane crash in Russia with the death of at least 15 people. And when we get more details, I will, of course, bring them to you. And I regret, I can't tell you what type of -- of what airline or what routing or anything like that just at the moment. But when I can, I shall.
Now, as we move on, we talk analyst about the jobless recovery. Barack Obama has said finding a job remains a huge problem. The president, in a CBS Television interview, says long-term joblessness is a major issue and he predicts what he describes as a bumpy road ahead.
The president's popularity has been battered by the high levels of unemployment in the U.S., which is now 9.5 percent. If we stay in the U.S., the chairman of the Fed has also spoken about jobs and the economy. Ben Bernanke, just today, says it's important to learn from the Great Depression. We need to make sure monetary policy continues to provide support until sustained growth and growth in jobs.
Add into all of this melee the very high rate of unemployment in countries like Spain, and you start to understand that getting a job is a job in itself. And that comes from the dean of UCLA's Anderson School of Management in Los Angeles.
I led a roundtable on what job seekers fresh out of university need to know if you want to find gainful employment.
JUDY OLIAN, DEAN, UCLA ANDERSON SCHOOL OF MANAGEMENT: Well, Lana, thanks for coming in, first of all. And I'm understanding that you want a job immediate.
Tell me why your background -- and you already have a substantial background -- prepares you for this job at, let's say, CNN.
LANA KATHERYN ALICIA SHAYLOR, GRADUATE: I think it's really important to have work experience as well as an academic degree. And I've felt that from my work experience, that this is something that I -- an area that I do really want to go into. And I mean I think a lot of my experience is -- is mostly in writing rather than necessarily television. But I think that that's an important skill to have, and also to focus arguments which I think for someone like CNN News, it's important to have a focus.
And I think from my work experience, I -- I've really learned that.
QUEST: Gregg at HSBC?
GREGG CARNAFFAN, MANAGEMENT DEVELOPMENT MANAGER, HSBC: What from that work experience do you think sets you apart from your peers who are graduating with you this year?
SHAYLOR: Yes, I -- I think that I can offer something different, because a lot of the people I graduated with don't, like I said to Judy, is they don't have work experience and work experience is really important. So you kind of have a grasp on -- even though, I suppose, as a trainee, you would -- you have -- you -- I mean you're not qual -- you're not qualified like everyone else. But it does give you an insight into how the industry works.
QUEST: Let me interrupt at this point.
Judy, tell us what is it, at this point, that you are starting -- and I understand you've not really experienced the full range of line of experience and education -- what is it, at this point, you are starting to feel?
OLIAN: The key is to customize yourself to the nature of the position that you're looking for and to show how your background adds to that company.
The second part that I think we would look for and suggest that you make sure that you amplify is what else do you do that signals that you're a team player, that you're a leader, that you have certain values that are consistent with the company's values?
Have you done particular international things that make it very interesting?
QUEST: All right -- all right...
OLIAN: So use every opportunity to amplify yourself in -- in each of those cases.
QUEST: Gregg, you must see an enormous number of people.
What is it when people like Lana sit in front of you in a more traditional environment than this, that you really look for?
CARNAFFAN: I think, like Lana, we look for people who've actually been proactive and looked for opportunities to gain work experience, as -- as Judy said, to work in -- in teams, people who have really made an effort to research the role that they're applying for and look for the qualities that -- that are important.
QUEST: OK, Judy, it's very tough and you are one of the people that have to give, admittedly, the MBAs and the upper echelons, the skills to get those high paying jobs.
OLIAN: Well, you know, we say to everyone looking for a job is as job. And you have to do all of your pre-work for that particular company that you're going to apply to. Don't send out any blanket letters or resumes. During the interview, you have to convey why you fit that company. Know something about not just the employer, but the person you're interviewing with. And then follow-up. For example...
QUEST: That's right.
OLIAN: -- does Lana have a project that she might be able to send with a thank you letter that conveys that she is, in fact, more qualified than the rest and particularly interested.
QUEST: Gregg, how important is the performance aspect of what Lana is doing now, because I often think, well, for goodness sakes, you can read the CV, you know what they've done, you know they've got the degree.
How important is it when they stand in front of you and say this is me?
CARNAFFAN: In that window of opportunity, Lana does need to get across her experiences, how she's demonstrated, when she's worked in the team and the leadership and how she's really considered the role that she's applying for and fits with the values of the organization, as well.
QUEST: Lana, you get one question to each of them, because I know the last bit is always where the interviewers always say, have you got anything you'd like to ask us?
What would you like to ask them?
SHAYLOR: What -- what do you both think is the absolute cardinal sin in an interview?
What shouldn't you do as a graduate?
QUEST: Let's start with you, Gregg, the cardinal sin that you shouldn't do -- and the question I should have asked.
CARNAFFAN: I would say stating that things are obvious, repeating yourself and not having thought carefully about the examples that you're using. So many -- many interviews will use criteria based on look (INAUDIBLE) and talk through examples. It's really important that you do your preparation beforehand and have those examples well prepared.
QUEST: And, Judy, the cardinal sin when you're interviewing students or you're sending them into the world, that you should never do at an interview.
OLIAN: Well, two things. First of all, that you don't have a clear idea of what the company is looking for and what the business of the company is; that you have to understand very precisely, not just what industry it is, but what this company's strategic goals are and how you will fit precisely into them.
And the second thing is that you're not crisp with your answers. And I think Gregg alluded to that. You have to -- you only have, people say, four minutes to make a first impression. You have to get your points across very quickly and very crisply and make sure that you rise above all of that other pool of competitors that you have in those first few minutes with crisp answers showing how different you are and how much better.
QUEST: Lara, many thanks, indeed...
SHAYLOR: Thank you.
QUEST: -- for joining us.
Gregg, many thanks, at HSBC.
Judy from UCLA.
We thank you all one and all for joining us and shedding light on probably, in this jobless recovery, one of the most important things of all -- getting a job.
SHAYLOR: Thank you so much.
(END VIDEO TAPE)
QUEST: Now, there you have the graduate, Lana Shaylor, being put through her paces from Judy Olian, the dean of the UCLA Anderson School of Management and Gregg Carnaffan, the development -- the management development manager at HSBC. That was, of course, the jobless recovery.
When we come back in just a moment, a Profitable Moment on the BlackBerry.
QUEST: Tonight's Profitable Moment.
It is difficult to know where the rights and wrongs properly line the dispute between the UAE and Blackberry's Research In Motion. At first blush, it does sound rather heavy-handed, the way the government wants access to private e-mails -- at least that's how it seems.
But look further. People familiar with the situation have told me negotiations have been going on for nearly two years. They say the UAE is asking for no more than other countries have already been given, that RIM servers are located in the host country.
RIM are hiding behind some very obscure language in their statements about what they have agreed elsewhere. They simply won't tell us. We're really none the wiser about what is going on between RIM and governments.
The UAE sees this as a matter of sovereignty. But in making their point, they seem to have shot themselves in both feet. However this is resolved, all executives will remember is that the country that tried to ban the BlackBerry was the UAE.
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" starts now.