Return to Transcripts main page
QUEST MEANS BUSINESS
Ireland's Economic Crisis; Facebook E-mail?
Aired November 15, 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 government has cash, but what about the banks? Why Ireland's economic crisis isn't adding up.
Digging for dollars. Caterpillar takes the plunge into mining.
And just when you thought Facebook couldn't get any bigger, Facebook e-mail.
The start of a new week, I'm Richard Quest and I mean business.
Tonight economies on Europe's periphery are once again the center of attention. The finances of Ireland, Portugal and Greece, in the spotlight. To Ireland, which was again, denied that its asking for a bailout saying the country's got enough left in the piggy bank to last until the middle of next year. But what's becoming clear is that Ireland's problem is not one of sovereign debt. It could be a second banking crisis. The very thought of that, of course, has sent rumbles through the economy, but it might help explain why Ireland's debt has been under such pressure in the markets.
Now the banking rescue has already taken place, Ireland has pumped more money into the banks. The government estimates the bailout so far, or could be, up to $69 billion, will go into the big Irish banks, weighed down by massive non-performing loans. The 2010 budget deficit is 32 percent. But the finance ministry is denying quite clearly that there is a bailout request.
However, when is a request just a negotiation? Indeed, the ministry says it is admitting talks with international European colleagues. Of course, the theory is if they needed to there would be cash available from the European stability funds, the ones that were set up after Greece. All of this, the rescue the denial did take a little bit of a shine to sovereign debt, which eased on Monday to around 7.9 percent. That is still more than 5 percent over German bundes, but it is 1 percentage point lower than we saw last week, or on Friday.
So, the pressure arguably might just becoming off Irish government bonds for the time being, or is it just a temporary lull. Let's go to Dublin now, correspondent-CNN Correspondent Jim Boulden is in Dublin for us tonight.
Are they saying that this is not a crisis and its over?
JIM BOULDEN, CNN FINANCIAL CORRESPONDENT: Well, they are not saying it is over because we do know that some sort of negotiation, some sort of talks are going on, Richard. What is really interesting here is that people are very mixed about this. You get some people who say, look, we need to hit rock bottom. Let's get this loan out of the way, in case we need some sort of loan, or negotiate some sort of loan, and then we can move on from there and try to get that yield on the bond back down to maybe more normal levels. Other people are saying, we should never go cap in hand to the European Union. We don't want to loose any of our sovereignty. And it is a very important issue here, in Ireland, not to be seen to be going cap in hand to somebody else.
So, you get a very mixed picture on the streets of Ireland. But what everybody knows is that the banks here are in terrible trouble. As you said earlier there may be enough money in the piggy bank for the government, but certainly not for the banks. And people here are extremely worried about what will happen to the banks. And they are not so sure that Europe is the answer, but they are not sure what else would be the answer it they don't get help from Europe, Richard.
QUEST: Is there any evidence yet that-I mean, we know austerity is taking its toll. But are you now-you've been to Dublin many times over the last two years, covering this story, are you seeing standard life differences? Are you seeing people more worried than they were, say, 18 months ago, a year ago?
BOULDEN: Certainly when you look at the unemployment rate, it is not improving. The prime minister was just on television reminding people that at least the economy has stabilized. I think that is the best word he could come up with.
And I think you are going see people here thinking, well, look, if the banks cannot recover, their houses are worth such little money compared to what they paid for them. And `til that gets sorted, `til the banks get sorted, `til mortgage issues get sorted, people here are not going to feel richer. And we will be seeing more people emigrate from Ireland. You know, one of the interesting things about the Celtic Tiger, during the great `90s, Richard, was that people were flooding into this country and unfortunately in the last year people are starting to leave again, Richard.
QUEST: Jim Boulden reporting for us tonight from Dublin, and Jim will be in Dublin, in Ireland, for most of the week. Looking at the various ramifications and aspects of that part of the crisis.
Constantin Gurdgiev is lecturer in finance at Trinity College in Dublin. And Constantin joins me now on the line. Is what we are seeing in Ireland a sovereign debt crisis or a banking crisis?
CONSTANTIN GURDGIEV, FINANCE LECTURER, TRINITY COLLEGE, DUBLIN: Well, I mean, it is one in the same in the case of Ireland, as you mentioned at the top of the episode today. Ireland is facing the cost of the banking sector collapse, which the government estimates to be around $50 billion. Although independent analysts are estimating that to be somewhere closer to 70 billion euro.
GURDGIEV: And the nexus of that, but in addition to it we are also facing years of crisis which stems from the years of unsustainable government spending increases. So in other words, yes, indeed we are also facing a very deep solvency crisis. And this solvency crisis is exacerbated by the fact that our debt mountain is not just laying on the shoulders of the government, it also is laying on the shoulders of the households. Our households are some of the most indebted in the world. (AUDIO GAP) debt, and other debts as well.
QUEST: All right. But Ireland has done two things. It has put in place an austerity package, quite a severe austerity package and it has also recapitalized and bailed out the banks. So, Constantine, why has this blown up, all over again?
GURDGIEV: Well, the recapitalization of the banks that the government has undertaken so far to date has clearly been insufficient. In fact, actually, what it has done is that it recognizes the losses that the banks recognize themselves. It has estimated some of the losses going forward, but it never realistically tallied up the real balance sheet of the banks and recognized that in the future the losses will be in excess probably of 70 billion, euro, in total. That is not yet there, but what really surprises everyone here is that we keep talking about the bailout, you know, the solution (ph) through the European Financial Stabilization Fund, of another loan. But in reality you cannot resolve the problem of the debt overhang or the insolvency by issuing another credit card. It is like giving a household, which is, you know, completely bankrupt another credit card, another line of credit.
QUEST: Whoa, whoa, but then if we adopt that point of view you are effectively saying Ireland should go bankrupt because the stability fund is designed specifically to create, well, arguably, stability.
GURDGIEV: Well, the stability fund creates stability in the case when you are facing a liquidity crisis. As far as we know there is no liquidity crisis right now. The government keeps repeating to us that there is no liquidity crisis right now. What we do know is that there is a very severe debt crisis. Adding more debt to that pile of debt is not going to resolve the problem, will it? If you think in terms of the figures that are being booted (ph) around, the $60 billion to $80 billion loans, if you look at a $60 billion loan, that would add about 33,000 euro, or $46,000 U.S., for each working person, of new debt in this country. How is that going to resolve any problem of having too much debt in the first place?
Now, of course there are conspiracy theories out there, which are trying to explain why the EU would insist on the fact that-would insist on the resolution which is trying to solve the problem of the liquidity crisis. And those are, as you mentioned, that the banks are experiencing some sort of liquidity problems.
GURDGIEV: And there have been, indeed, some significant outflow of deposits from the banks in recent months. That has been recognized, the other problem is that, of course, conspiracy theory that Germany wants to shore up the sovereign bond markets in the periphery countries, and then move on to robust reforms of the euro area bond markets.
And then there is finally, and probably the one I would lean towards, the theory that there is a risk of contagion, from Ireland overall, from Irish economy overall, from its debt crisis overall. And also sovereign debt crisis, here as well, to other peripheral countries such as Portugal, Greece and Spain; and in that case if there is a contagion of course-
QUEST: All right.
GURDGIEV: -that impact will have impacts across the banks, across the Europe area as well.
QUEST: Constantin, we'll leave it there for this evening. Many thanks, joining us tonight from Dublin. On that question of contagion, Portugal's finance minister says that debt crisis contagion could prompt it to seek a bailout of its own. Now the minister was speaking to the "Financial Times". Fernando Teixeira dos Santos said, "The risk is high because we are not facing only a national or country problem. It is the problems of Greece, Portugal, and Ireland."
Ireland will unveil its next budget on the 7th of December, and the French Finance Minister Christine Lagarde says its important that the rest of Europe pay close attention.
(BEGIN VIDEO CLIP)
CHRISTINE LAGARDE, FINANCE MINISTER, FRANCE (through translator): We have worked over the past few days on the situation in Ireland. Is there a demand for aid? No, there is no demand for aid. The Irish government has taken supplementary measures on the budget to really hold firm to a plan to return to a better balanced budget. And naturally it is necessary that this plan is well-implemented, that we are all attentive to the restructuring in Ireland, that is going on at this moment.
(END VIDEO CLIP)
QUEST: The French Finance Minister Christine Lagarde.
The markets and the euro are trading close to a six-week low, against the dollar. It has been dragged down, of course, by the Euro Zone debt. And that speculation on Ireland and a potential, although no means confirmed or even approved bailout.
Stocks were better, boosted by M&A. Scania (ph) says it is considering a merger with the German truck maker, Mann (ph). And Axelrose, the insurer, made a joint bid with A&P, the Australian Mutual, for AXA (ph) Asia Pacific Holdings.
When we come back in just a moment, did the earth move for you? Caterpillar announces its largest acquisition to date, and in doing so has accelerated an expansion into the mining sector. In a moment.
QUEST: Now that BHP Billiton has scrapped its $40 billion takeover offer for Potash of Canada, it has restarted a share buyback to return cash to shareholders. The world's biggest mining company says it will buy $4.2 billion of its own share. Now Canada blocked the hostile bid for the world's largest fertilizer maker, Potash. That left BHP Billiton with vast amounts of cash on its books.
BHP woes haven't deterred Caterpillar Construction from expanding into the mining industry further. The heavy equipment maker is staking part of its future on rising commodity prices and emerging market growth. It is a beat to-it has agreed to buy Bucyrus International, $7.6 billion. It is the largest acquisition that Caterpillar has ever made. I spoke to the Chief Exec Doug Oberhelman asked him about the logic behind this deal.
(BEGIN VIDEO CLIP)
DOUG OBERHELMAN, CEO, CATERPILLAR: There are a couple of ways to answer that question. One is the mining industry, to us, is very attractive long term. We think with the urbanization that is going on worldwide, that the modernization of so many people moving to the middle class and China, India, Brazil, parts of Africa, mining extraction has a very bright, long-term future.
QUEST: And, I mean, one can't really disagree with that point of view, bearing in mind BHP Billiton and Potash, we have seen the Rio deals. We know what's happening in gold prices. To that extent, it is fair to say, mining is hot.
OBERHELMAN: Well, we like mining short-term, medium-term and long- term. And this is really, though, Richard, a long-term play. We think that over time the extraction of minerals, copper especially, coal, everything that comes out of the ground. As people modernize around the world, there will be a demand for that in places like Australia, Indonesia, the United States, everywhere there are minerals we intend to be there with our customers, extracting them from the earth.
QUEST: Do you see, at the moment, that interesting disparity between short-term gain, because commodity prices are so very frothy at the moment, but the long-term potential?
OBERHELMAN: Well, that is exactly why we did this deal. And short- term prices are high, there is no question. They are well above what we would call the thresholds of investment. So, while this short-term fluctuation is fairly pronounced right now. The long-term trend we think is solid above those thresholds of investment.
QUEST: Doug, when I looked at your last quarterly numbers, it was one of the companies we focused particularly on, on QUEST MEANS BUSINESS, because as a bellwether of economic activity you really did seem to be suggesting there was turn around, and it might be sticking?
OBERHELMAN: Well, there is no question in our third quarter we reported that, we talked it. We see turn around coming, albeit slowly, almost in every region of the world. In fact, in the third quarter we reported that the U.S. sales of retail machines, that is our construction equipment that hits the dirt, was up the highest year over year, of anywhere in the world.
QUEST: And as chief are you shifting more production, more sales force, shifting more of your priority to those emerging markets?
OBERHELMAN: Well, certainly, the developing countries today are growing at, and have been, at twice the rate of the developed world. We are seeing recovery across Europe. Across the Americas, it is coming, and I will tell you that we do have a focus on the developing countries. Not only China, but India, as I said, Brazil and parts of Africa. Because there will be growth there. We intend to be a global leader, well into the future. So we have to be there and be strong. And you are seeing some investments there. But we are definitely not neglecting the Western world, where we-where our history lies and where we have done well. We'll continue to do so.
QUEST: The chief executive of Caterpillar, talking to me earlier.
M&A action wasn't the only thing the investors were looking about. There were very bullish retail sales numbers for October, in the United States. Alison Kosik joins me now from New York.
Looking at that October number, do we know why October had such a strong performance?
ALISON KOSIK, CNN FINANCIAL CORRESPONDENT: Well, it is interesting you say that, you know. I mean, when you think about how much money that Americans have these days. You know, it would depend on if you are employed or unemployed, but a lot of Americans do have a lot of money on the sidelines. And there is that pent up demand that has to sort of be factored in.
Something else to think about: A lot of these stores are discounting their wares very deeply to draw people in. So that really has a lot to do with why sales may have been up in October. You know, fact is, retail sales rose more than 1 percent in October. You know it is the fourth straight month that we are seeing this. It shows that we are on an upswing as far as economic growth and corporate earnings. Because, you know, when consumers are spending money it is really a big driver for economic growth, Richard.
QUEST: And has politics been put to one side? Because we are in this-I mean, I know you have Thanksgiving coming up and we have got the Christmas holiday buying season coming up. But you have also got a Congress that is gong no where fast. And a president that is perceived to be humbled and hobbled.
KOSIK: Well, you know Wall Street sees it like as well, but you know, one thing I'm seeing on the floor, Richard, is that there is a lot of optimism on the floor. Now that we have a lame duck Congress to start here. Because they think that a lame duck Congress is good for Wall Street. They in fact, say the extension of the Bush tax cuts will probably happen, because the thinking is, here on Wall Street at least, is that since Democrats faced huge losses in the mid-term elections, and they are facing a presidential election, just around the corner, in 2012, they wan to do what is good for constituents. And that includes the wealthy. So, they are predicting that tax cuts across the board are going to be extended. In fact, they think a lame duck Congress leaves more room for compromise, where the theory of what is good for Wall Street is good for Main Street holds true in this case especially, because these elected officials want to keep getting re-elected. So they want to do what's favorable for their constituents, Richard.
QUEST: Many thanks, Alison Kosik, in New York.
QUEST: Where the Dow is marginally more cheerful than it has been of late.
From the city that never sleeps, in New York, to the city that never lets its garbage go to waste.
(BEGIN VIDEO CLIP)
QUEST (On camera): Pristine plazas, and spotless streets, from Curitiba, Brazil, "Future Cities", after the break.
QUEST: Now, throughout the month of November, "Future Cities" has been in the Brazilian city of Curitiba. It is way down in the south of the country. And it is a city, as you have been hearing, of course, over the past few weeks, that has been leading the way in creating sustainable urban environments. Like every major city, it faces a huge task of disposing of the detris (ph) of everyday life. The vegetables and fruits we throw away, and the garbage that just ends up. There isn't-in Curitiba it isn't just a daily chore to actually plan what to do with all this stuff, it has become a way of life, as I discovered when I went to visit.
QUEST (voice over): In Curitiba they have been going green since the 1980s, even before it was the thing to do. And at the forefront of its green movement is the city's dedication to recycling. At 21 percent of refuse, it has the highest recycling rate in Brazil. And amongst the highest anywhere in the world.
(On camera): Here in Curitiba, they have raised recycling almost to an art. There are bins for paper. For plastics, for metals, for foodstuffs, oh, and for glass.
(Voice over): Garbage that is not garbage, Curitiba's campaign to get people to separate their recyclables. It aims to get people into the mind set that things can be reused, and not everything has to go into the trash.
ALFREDO VICENTE, ENVIRONMENTAL PROJECTS COORDINATING: We are always working with the environmental education. So we have these different bins, trying to educate people. We are still collecting everything that we get, but we are trying to sensitive people that should already separate, even in their houses.
QUEST (voice over): Claudine Nalavera (ph) lives in an outlying neighborhood of Curitiba. And for citizens like him, recycling has become more of a challenge. Narrow roads make it harder for the trucks to collect recyclables in neighborhoods like this. So the city developed the green exchange tome them half way.
VICENTE: What we do, is we go to that leadership of that community, and we say, well, let's establish a place where everybody can bring their waste here, a place where the truck can come in, we collect all the waste, and it all goes well. But why would the population is going to do that? They have to bring their waste from home. OK, let's put something together that can make it interesting for them.
QUEST: Once a week, residents at one of 34 different locations around the city, can line up to exchange their garbage for fresh fruit and vegetables. It is simple, four kilograms of trash, equals one kilogram of fruit.
The program helps keep the trash out of the river, and off the streets. Nalavera (ph) says it helps everybody.
VICENTE: Our objective is to have all of these areas urbanized and make it regular, by the legislation, so people can develop and have other jobs that they won't be depending so much on the city hall. But as long as we have these people in need, we are gong to keep this program running and try to help them. It helps us to clean the city. And helps them to have something to eat on their table.
QUEST: Government campaigns and programs aren't the only thing keeping Curitiba neat and tidy. Another group of people have found a way to make recycling a big business.
VICENTE: What we collect is a very small part of what is generated in the city. Because the cajeros (ph) come before us, they collect everything which is valuable. And then they we collect what's left from that waste.
QUEST: The cajeros (ph), considered Curitiba's freelance garbage men, collect garbage from within the city, and then wheel it, piled high, back to their houses. Here they separate the trash into different categories and then sell it back to private recycling companies. Many of the cajeros (ph) have come from rural areas surrounding the city. The economic growth attracting them here.
VICENTE: they come to the big city, because they think in the big city they are going to have the best opportunities. Sometimes that doesn't happen that way. So, the end up being in the River Margen (ph).
QUEST: Because these low-income populations have settled around the river, their trash and sewage has started to cause water pollution. And that is now flowing into the city. Curitiba is trying to help prevent this, by moving the settlements more inland, and into government housing.
VICENTE: Since 2007 we have developed a specific plan to address these people which are in danger of being in the River Margen (ph) and bring them to another place where they are going to have all of the infrastructure they need. They are going to have good lives, and good infrastructure.
QUEST: Each house costs about 23,000 to build, has a monthly rent of around $17. But even after the cajeros (ph) are provided with this new housing, the trash comes with them.
One man we met has not even lived here for a month and his trash is already infiltrating the yard. He tells us that tin cans are one of the most coveted items because he gets a little more than a dollar for one kilogram.
(On camera): If the idea was to keep the streets clean and help the poor, then the policy has been a success. But it has had the unintended consequence of shifting this rubbish from downtown to the poorer outer neighborhoods. At least for the people who live here. It is a case of not in my backyard.
Curitiba has gotten people away from the river, now the challenge is to get them to keep their new neighborhoods green.
VICENTE: What we have been doing is try to organize these people in cooperatives, and we are giving them a space where they have several small slots, where they can bring their stuff. They don't have to pay to anybody to do that. They are organized, there is no boss. They do it by themselves. And they can do it with a clean environment.
LUCIANO DUCCI, CURITIBA MAYOR (through translator): It is a challenge because these people are the great recyclers of the city. These people recycle for a living. We want the recycling and separation of garbage to happen, but not at people's homes, because that's just not the right place.
QUEST: So far, Curitiba has built 10 cooperative warehouses. It hopes this will be the answer to keeping the current heroes in business and Curitiba green.
Richard Quest, CNN, Curitiba, Brazil.
(END VIDEO TAPE)
QUEST: Fascinating stories of everyday life -- Curitiba, where we'll be next week in Future Cities, as a city with more green spaces per person than almost any other keeps up the pressure to keep developers at bay there.
Facebook's got mail -- in a moment, Facebook is setting up its own e- mail service.
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And on this network, the news always comes first.
A five story building has collapsed in New Delhi and it's feared dozens of people are dead and there could be many more people still trapped.
Sara Sidner, our correspondent in the city, joins me now.
We're hearing a death toll in the 30s and 40s.
What are you hearing at the moment?
SARA SIDNER, CNN CORRESPONDENT: The New Delhi Fire Service has told us, Richard, that about 32 people now -- 32 is the number -- have been killed so far. There are still people trapped, according to authorities. They believe about 20 people are still trapped. This happened around 8:15 p.m. Indian Standard Time. That's about five hours ago. And there is still large machinery that's out there, trying to carefully get the -- the -- the large slabs of concrete up so that they can find some of these people who they do believe are still trapped.
Forty people injured and taken to the hospital. The chief minister of Delhi is saying this is an unprecedented tragedy she hasn't seen the likes of in the recent past. She also is concerned that this may have been an unauthorized building. And there's a lot of questions now as to exactly why this building collapsed.
I do have to tell you that it was an unprecedented rainy season here - - heavy rains. And there were floods in the area. This building was located near the Yamuna River in New Delhi and there were floods in that area. There are comments coming from the chief minister, saying that there was water that had been in the bottom of this building for days and that that should never have been left that way -- Richard.
QUEST: All right, Sara Sidner, who will return to us the moment there is more to report on death toll or cause.
Sara, many thanks.
Now, in other news, Aung San Su Kyi is wasting no time in getting back to public life. The Nobel Peace laureate has told CNN she'll keep working toward restoring democracy in Myanmar and she's calling on her supporters to work together. She also says she's had no contact with the head of Myanmar's ruling generals, but she hopes to engage in a dialogue with the military rulers.
Former hostages Paul and Rachel Chandler are asking for privacy as they prepare to return home to the U.K. Somali pirates released the couple over the weekend after hold -- holding them captive for more than a year. The Chandlers are now staying at the British diplomatic residence in Kenya.
The French president, Nicolas Sarkozy, has named a new cabinet, which is headed by the same prime minister, Francois Fillon. After a weekend shakeup, the president named several new cabinet ministers. The new right- leaning government is seen as more likely to support the president's budget cutting agenda.
The death toll from Haiti's month long cholera outbreak is rising. Haitian officials now say 917 people have died. Around 14,000 are -- have been hospitalized. But the U.N. says there are now cases of disease in every part of the country, including the capital city of Port-au-Prince, where more than a million people are still living in squalid tent camps following last year's earthquake.
Facebook's walled garden just got that little bit bigger. Its half a billion users will soon be able to see their text messages and e-mails alongside wall posts and status updates. The argument is this will make Facebook a one stop online shop and in doing so, probably destroy the rivals.
Emma Barnett is the digital media editor for the U.K. newspaper, "The Daily Telegraph".
She listened and was at the media conference that just finished and she joins me now from CNN San Francisco.
Emma, the -- Facebook getting into e-mail, what -- besides just a sheer unadulterated wish to take over the world, what's the rationale for it?
EMMA BARNETT, DIGITAL MEDIA EDITOR, "THE TELEGRAPH": The rationale is, according to Mark Zuckerberg, the founder-in-chief, who I've just heard talk, is that they want to make messaging more simplified in one place. And they want to mean -- make it that Facebook is now the home for everything you really do in terms of communication online.
QUEST: So let's just pause for one second and hear from Zuckerberg himself on that conference in a media call that happened a short while ago.
(BEGIN VIDEO CLIP)
MARK ZUCKERBERG, CEO, FACEBOOK: You know, a lot of people today expected that Facebook was going to add more features to messaging. We think that we should take features away from messaging. It should be minimal, pretty similar to simple. And it should be short. You know what I mean, we -- we think that, you know, a -- a lot of what makes it so that people can share a lot of content is if they can share it in shorter bursts and not kind of have to download one huge thing.
(END VIDEO CLIP)
QUEST: This idea that shorter is better, messaging into e-mail, who suffers most, do you think, from this move, Emma?
BARNETT: Well, the direct targets are who you imagine -- Google with Gmail, Yahoo, Yahoo! Mail, all the e-mail clients, I think, will suffer the most; also, instant messenger tools like Microsoft's MSN. There's also AOL AIM, their messenger tool.
But in terms of, you've got to be on Facebook for this to work at the moment. And, yes, they've got a huge user base, over 500 million around the world. But a lot of people aren't conducting their serious e-mail messages through a site like Facebook.
And I think what he said at the end of the conference will be what will be the tipping point, if this really will make a difference, the messaging online, which will be if the service can sync with other e-mail users. And he said that's something to come on the road map in the future.
QUEST: So when the whole Internet started, there was the famous concept of the AOL walled garden. I'm old enough to remember, you joined AOL and you stayed there until something better came along.
Is this idea to keep you in the Facebook walled garden so you don't become promiscuous and head off elsewhere?
BARNETT: Well, I think there is that element, that you stay there for longer. They can charge more for advertisers -- you know, eyeballs for longer more engaged equals more money for Facebook.
But, it's really, you know, they don't have news on there.
What about getting our news?
You know, they're not sending you into a home page like Yahoo!! or AOL, where you can get all different types of news throughout the page. You're actually just still in your social world. So they haven't expanded fully to encompass everything you like to do online yet. They've certainly not cracked music. They certainly don't have a lot of video going on there, that will actually, you know, keep you in clued up on what's going on in the world.
So I don't think, you know, they're fully there, but they're on their way.
QUEST: Right. But do you think it makes sense, I suppose, is the core question at the end of it all?
BARNETT: I think it does make sense. It's quite a natural progression for them. I think today he said 350 million people regularly use their messaging service. Well, that's not everybody. So, obviously, their messaging tool hasn't done as well as they hoped. They've been working on this for over a year at Facebook. It's a big system for them.
But it does make sense. It's communication. Plus, I think what he said about having a social inbox, I mean, jargon aside, the idea of having your friends all in your in box -- you know, we've all got in boxes from years and years ago where we signed up for stuff and it's filled with junk. And you can never get to who is actually e-mailing you.
So the concept of it being people you actually like and know and regularly interact with I'm -- I quite like. But I haven't tried it yet so I'll have to let you know.
QUEST: And once you've tried it, I insist that you come back and give us that honest opinion.
Emma, lovely to have you on our program tonight.
Emma Barnett joining me there from San Francisco.
Now, the most fascinating part about all of this isn't that Facebook may -- may kill Gmail, but it might just make many e-mails shorter -- much, much shorter, as Zuckerberg suggested.
Will all messages eventually become text messages then soon with a horrible, sort of UR8 and all that sort of stuff?
Join in the debate. I've just posted a fascinating article, which, interestingly, comes from Britain's guarding -- "Guardian" newspaper. And you can read it, Facebook.com/cnnquest, where you will no doubt want to become a friend of the program and find out exactly what we get up to -- well, how we put this thing together. Meet the team, as well, CNN.com.
Now, Facebook's new service might claim to be seamless.
Will it be secure?
We'll tell you how to hold off the hackers, in just a moment.
QUEST: Keeping secure online is important whatever e-mail client you may be using, as we were talking about a second or two ago. Web security goes way beyond turning on a spam filter. It's becoming a major battleground for businesses.
Amichai Shulman is the chief technology officer at the data service firm, Imperva.
And he joins me now.
When we talk about and when you talk about Web security, are you talking about hackers for the purposes of getting into my e-mail account and ruining my computer and stealing my money or are you talking about cyber terrorism, mainly?
AMICHAI SHULMAN, CHIEF TECHNOLOGY OFFICER, IMPERVA: Well, I think that today, for most businesses, it's about that hacker using to make some easy money. And I think today, most hacking activity is industrialized. You see a lot of automation -- everything that can automate it is used to pilfer money out of your account.
QUEST: All right, I have to put my hands up at this point and say, this happened to me just four months ago. Somebody hacked into my bank account and I great there just before the money was removed.
QUEST: But how can we stop it?
Is it just buying McAfee or whatever it is...
SHULMAN: Well, I must say that you shouldn't be stopping that, because you are the consumer. And if someone is being able to take money from your bank accounts, they're hacking into the banking application, it's your bank's responsibility to make sure that it doesn't happen.
And we have to face the reality, and the reality is that your computer and my computer are going to be infected.
And the question is how are application providers going to handle business with us, knowing that we are infected?
QUEST: No, but hold on a second, isn't it our responsibility not to go to dodgy Web sites and, you know, or -- or whatever Web site you go to, are we still at risk?
SHULMAN: Yes. And -- and it's not about dodgy Web sites. And it turns out that in the past year, a lot of malware was distributed through large sites from respectable companies that were actually hacked for distributing malware.
QUEST: Various law enforcement officials have said that the biggest threat to the future is, you know, for -- forget nuclear missiles. We all like to have a few nuclear missiles under the bed for a bit of security, but our real threat, as we've seen with Russia and as we've seen elsewhere, is denial of service and ultimately a -- as Iran discovered recently, when it was -- was attacked by cyber -- by cyber warfare.
SHULMAN: Well, with modern society, indeed, technology is a sort of a soft spot for us. Imagine, for example, someone taking down the traffic light system.
What would that cause to a modern society?
QUEST: but do you believe in cyber warfare as a concept or that -- that we need to be concerned about it as a real concept?
SHULMAN: Definitely. Definitely. And the problem for us, with cyber warfare, is that it's not symmetric, OK?
One side is very technology-dependent. The other side, for example, terrorist organizations...
QUEST: Yes, but they need to have the -- some degree of sophistication to actually attack what are essentially extremely complicated systems.
SHULMAN: Well, they don't need to be that sophisticated. They need to find the right person that would sell them the technology.
QUEST: Good answer. And there we must leave it.
We will talk more about this in the future.
Many thanks, indeed, for coming in.
SHULMAN: Thank you.
QUEST: Fascinating stuff.
Listen, and I know you'll be interested in it, as well. We certainly will talk about it.
It may be November. There is already snow in the United States. There are floods in Belgium and the wind is back in Britain.
Guillermo is at the CNN World Weather Center with that -- with that litany, I'm tempted to go home early.
GUILLERMO ARDUINO, CNN METEOROLOGIST: I think that the winds are not there yet. They are about to go to Britain. So we are in between -- we are in the middle of this sandwich right now in Britain. So that in -- in Belgium in here; also, snow in Scandinavia. It's going to turn nasty in the south here, with the winds especially.
I want to show you a couple of pictures, also, what's going on. This is what I was alluding to, the -- the system that is coming into Britain very soon, Tuesday. I think London, it will be there by Wednesday and we will see some of the winds.
Here we see evidence of it there popping up discretely -- hello, I'm here, it's saying. And -- but when I compare this to what's going on in the States, we're in much -- much better shape in -- in Europe.
Also, the Carpathian Mountains, very clear right now, looking nice. Some low here over Crete. Sicily looking fine for the time being, but it's not going to get that nice in a couple of days. The low here is arriving into Ireland in 24 hours. The last 12 hours, we see some rain, especially in Wales and in the southern parts of Scotland.
The problems are in Belgium.
You see this?
And we have the floods. Three people dead. Some reports are saying that there are four dead in Belgium associated with it. I have to say that the weather is getting better, but the floods remain, of course. It rained so much, in Germany, Essen, also, we saw a lot of rain. So this is the time, you have to get ready, because even though we see nothing in the way of travel delays so far, Copenhagen with winds.
This is the beginning of the nasty weather. And it's going to happen as it's happening in North America, sooner.
Rome with some rain showers. Barcelona with some rain showers, too. This is going to deteriorate very soon.
So severe wind gusts here to the south in Corsica, Sardinia, Ayacho (ph), also, with some winds. Eight in London. The high 22 in Bucharest. I was telling you about that.
Well, briefly, Richard, our viewers who are coming to the States saw some rain in New York. Well, there are more problems. And I'm going to go to Colorado now and we're going to show you what happened today -- pileups. This is the snow that I was talking about. And most of the snow happened in -- in Minnesota. But in Colorado, we got these problems. You're going to see nasty pictures coming.
You know why this happens?
Because we are getting the ice on the ground and people drive too fast. They got used to the warm weather and they think it's over.
Well, in Minnesota it's much worse. And I'm going back to you, Richard, with these two pictures -- Saint Clair, nasty, nasty.
I think London looks fantastic today.
QUEST: Guillermo, it's Minnesota and it's the middle of winter.
What would you like, beach umbrellas and seaside resorts?
ARDUINO: Hello, it's not winter yet.
QUEST: Oh, come on now. All right. All right. Well, we'll argue about this one tomorrow.
QUEST: I can see what -- I can see the way this week is going. Good to see you, Guillermo.
ARDUINO: Good to see you.
QUEST: With us at the World Weather Center.
In a moment, after the break, another Greek tragedy -- figures out today reveal that Greece has the largest budget deficit in the Eurozone and the shortfall is larger than first thought.
QUEST MEANS BUSINESS.
QUEST: Ireland isn't the only European country struggling with its finances. Figures out today reveal that Greece has the Euro region's largest budget deficit. Look at this. The deficit for last year has been revised upwards -- 15.34 percent of GDP from 13.6.
Now compare that, as we move on, you'll see Ireland's 14.4 and the U.K. is at 11.4.
Those are pretty dramatic numbers. They do, of course, relate to last year.
To talk about it and assess the implications, Elinda Labropoulou is in Athens, where there have been more protests.
Firstly, Elinda, let's just quickly look at this. And the government said -- in fact, on this program -- that then they were not expecting a situation to deteriorate.
So can we put this 15.4 to bed, safe in the knowledge that this year will be much better?
ELINDA LABROPOULOU, CNN CORRESPONDENT: Well, it's very hard to say that simply because, you know, after this revision, it means a new upward forecast for the 2010 budget, which would be from 7.9 percent of GDP to 9.4 and that will also make the target of a 7.6 percent deficit goal for 2011, one of the conditions attached to the IMF bailout plan, even harder to achieve.
So achieving these targets at this point would be very difficult.
The revision also comes at a time, just before the government is expected to announce additional measures possibly worth about 3.5 billion euros, in its 2011 budget, which is to be presented to parliament on Thursday...
QUEST: All right...
LABROPOULOU: It seems that these new measures will not be avoided. Certainly, if you hear by anything that the Greek people have to say, and even the prime minister, George Papandreou, said over the weekend.
QUEST: But Elinda, let's...
QUEST: Let me just say jump in there and ask you, the -- have the Greek people basically now had enough?
They know they've got this budget coming along, but they also know that something has to be done and there are more protests taking place.
LABROPOULOU: Well, precisely. I mean today we had protests taking place in the city center -- in the city center of Athens, where people were protesting outside the finance ministry and calling these mobilizations as a welcome to the troika, of course, referring to the E.U./IMF inspectors that today arrived in Athens to see whether the Greek government is meeting its targets in order to ensure the third tranche of the E.U./IMF bailout plan.
The protesters have been very concerned precisely because it is hard to see how people can take more measures. At this point, there have been several tax hikes, pension and salary cuts twice this year. So it would be very hard for the government to actually implement further measures.
At the moment, we're looking at public sector spending cuts, we're looking at education and we're looking at health. And this is all at a time...
LABROPOULOU: -- where people have been severely hit by this.
QUEST: Elinda, many thanks.
We'll talk more about this in the weeks ahead.
Elinda Labropoulou joining me from -- from Athens.
When we come back in just a moment, the talk has been all about, tonight, whether it's Greece, Portugal, the peripherals or, indeed, Ireland -- Profitable Moment on the fight -- the peril facing the Irish government.
QUEST: Tonight's Profitable Moment.
We have spent -- excuse me -- most of the year talking about Greece and now we need to say what on earth is going on in Ireland?
The country's government says it is not seeking a bailout, but they are having unofficial talks and the rumor is not that it's a sovereign debt crisis as such, but the latest banking crisis, because money has been withdrawn from banks. And there are now some serious worries about the sustainability of the system, even bearing in mind the measures taken.
Whatever is going on, it's created instability once again for nations on the European periphery, like Ireland and Portugal, whose finance minister says in the F.T. that contagion is the real worry.
All right, the markets have come over all unnecessary since the European Financial Stability Fund was specifically set up to bolster confidence in euro countries.
It's their ability to pay debts that's the issue, and, frankly, that's not really in question. The fund hasn't really got started and we are now asking whether it's not working?
Indeed, it all seems a bit too soon.
And that's QUEST MEANS BUSINESS for tonight.
I'm Richard Quest in London.
We start another week.
Who knows where we'll end up on Friday?
Whatever you're up to in the hours ahead, I do hope it's profitable.
"WORLD ONE" starts right now.