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QUEST MEANS BUSINESS
Prodi: Europe's Response to Debt Crisis Inadequate; Black Friday Rush; 100-Year Embargo on Mark Twain's Autobiography Lifted
Aired November 26, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, HOST, QUEST MEANS BUSINESS: Unprepared: Former EC Commission head Romano Prodi tells program Europe's response to its debt crisis was inadequate.
Shop `til you drop. The rush is on for the best Black Friday deals.
And, worth the wait. Why Mark Twain's 100-year-old biography is a modern-day hit.
I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS.
Hello to you.
A European government-as European governments push ahead in the fight against sovereign debt the markets are pushing back at them. In the last 24 both Portugal and Germany have passed national budgets bringing in deep spending cuts. Ireland's ruling coalition has lost bi-election as the prime minister battles to close a bailout deal with the EU and the IMF.
Markets around the world have taken a collective beating on fears this is only going to get worse. And on tonight's show we'll be hearing from the former European Commission president Romano Prodi, as well as voices from some of the strongest and weakest points of the Euro Zone.
Europe's debt concerns are taking a major toll on the markets. Let's look at the stocks first. After dipping, actually around 1.5 percent earlier in the session. The major European indices pulled back a little later on. Now, all closed with solid losses and banking and mining shares, which were some of the Thursday top gainers, were the biggest losers today. All of those indices are down for the week as a whole.
Now, 10-year government bond yields in at-risk nations rose again today. We are now seeing record highs for Ireland and for Spain. The euro sell off is also continuing. It is dipping at third of a cent against the U.S. dollar, not trading at two-month lows of around 1.324.
Now European officials have been keen to playing down fears that the euro itself is in jeopardy. But I asked the former European Commission president Romano Prodi what he thinks.
ROMANO PRODI, FMR. EUROPEAN COMMISSION PRESIDENT: The Irish case was a little less of a surprise because it came-it was expected. It came a little quicker than the politicians expected. But you know, I think that the answer as it happens in Europe it is slow, and in some way inadequate to the speed of the problem. But the answer will come. And in any case, I do think that Germany has no interest to disrupt the euro. And when there is a split between the, say the declarations, and their deep interest in a country, I am inclined to follow the deep interests. And I consider that Germany has been helped by the euro and I do think, as an economy, why Germany didn't have any surplus before the euro, and now has a huge surplus.
FOSTER: But the euro, in many ways, doesn't seem to be working right now, does it? And some people suggesting that if Germany left the euro, then it could devalue and everyone throughout the zone would be much better off. I'm just wondering what you make of how Chancellor Merkel has been handling the situation, because she is facing some criticism within the country, certainly.
PRODI: No, but people, somebody thinks that-uh, Merkel is trying devaluating, is trying to devalue the euro. I don't think that. Because the German (UNINTELLIGIBLE) is so high, that there is not really a pressure to have even more exports than now. You know, this is not the first problem of Germany. The first problem is to demonstrate to the German electorate that Germany will not be damaged by unpaid (ph) behavior by other countries.
FOSTER: I think one of the other things that has confused people during this crisis, as it is, and seems to make things worse, is that we are not entirely clear on who actually speaks for the euro. We have the European Central Banking speaking at one moment, a finance minister speaking the next, the Angela Merkel speaking the next. Who actually should be leading this? And the political effort to retain faith in the euro?
PRODI: Well, you know, this is not a new message. You know, on the contrary (ph) we have built the euro, but without the walls of a common policy, a common economic policy, a common tax policy. And but step by step you have seen after the Greek crisis, when a problem starts, in the end of the story, the solution is found. We shall need some other time in order to have a clear set of authority inside Europe, you know.
FOSTER: We don't have time, do we? The markets are working against the euro. The euro is falling in value, bond yields are getting more and more difficult for the countries most affected.
PRODI: Look, look-.
FOSTER: There isn't time.
PRODI: Look, when you have the euro to 130 to 133 to the dollar is not a devaluated euro. You know, this is completely out of any idea, you know? The euro is-I think that the rate of exchange is fair enough. And nobody can talk of an undervalued euro now.
FOSTER: Now Portugal's parliament has approved spending cuts for next year. Prime Minister Jose Socrates says the 2011 budget will allow Portugal to post one of the lowest deficits in Europe. It is designed to trim the deficit from 7.3 percent of GDP to 4.6 percent next year. The spending cuts which include pay for public sector employees sparked protests on Wednesday. Unions described them as Portugal's biggest ever national strike.
Germany's lower house approved the 2011 federal budget this Friday. The borrowing target has been revised four times. Due to Germany's solid economic growth it will now borrow 16 percent less than originally envisaged. CNN's Diana Magnay, in Berlin, if the country really is back on track?
DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT (on camera): Absolutely. Germany is experiencing pretty strong growth. But I think you have to see this in the context of the fact that it suffered pretty badly during 2009, loosing 5 percent of GDP. So it is really making up for lost ground right now. But certainly doing a lot better than other people within the Euro Zone.
But you know, Max, sometimes it is not-being the strong man in Europe is not all it is cracked up to be.
(voice over): As Germans set their (UNINTELLIGIBLE) this festive season, financial storm clouds darken the horizon.
(On camera): Are you more worried about the terror threats, or about Ireland?
UNIDENTIFIED MALE: Not really worried about either, but I would say out of those two, probably Ireland.
UNIDENTIFIED MALE: The Ireland.
UNIDENTIFIED MALE: I'm afraid more Ireland, I think.
MAGNAY: Many Germans, rightly or wrongly, can't shift the feeling that they are Euro Zone paymaster, their tax dollars and fiscal strength covering the cost of mistake made by other weaker Euro Zone economies, like Ireland. The chancellor treads a narrow path between Euro Zone stability on the one hand and her own domestic concerns.
HENRIK ENDERLEIN, HERTIE SCHOOL OF GOVERNANCE: Obviously there is a lack of understanding of those rescue packages. The Greek rescue was very controversial in her own government. And if she now talks about a generalized bailout for the euro area, yes, there would be political costs for her. But the alternative scenario of seeing the euro fall apart, would destroy her historical legacy. And I'm quite convinced she is not going to take that risk.
MAGNAY: Mrs. Merkel has taken a lot of flack for her handling of the Irish situation, mostly for scaring bond holders by insisting time and time again, that politics lead markets and not the other way around.
ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): Do politicians have the courage to make those earn money share in the risk as well? Or is trade and sovereign debt the only business in the world in which there is no need to take risks?
She is saying the right thing but probably not at the right time. Because, I guess, that one should just restructure the debt when it is necessary, but not talk about it beforehand.
MAGNAY: While the euro stumbles from crisis to crisis, the German economy has been recovering by leaps and bounds. Exports are booming, the weak euro helps. Business confidence is up and GDP almost back where it was before Lehman Brothers collapsed.
(On camera): So it would seem that not only is the Germany economy rebounding but the notoriously spendthrift Germany consumer is digging into their pockets and starting to spend. But the question is, is this just economic confidence with a bit of festive cheer? Or are they going to break a habit of a lifetime?
(voice over): Alas, say the economists, it probably won't last.
ENDERLEIN: I would look at this as a correction effect after that very bad year, 2009, that people now consumer things they didn't consume in 2009. But this obviously does not tell us how much they will consume in 2011.
MAGNAY: Reluctant guardian angels of the Euro Zone, Germany maybe doing the best it can at firefighting, but don't go expecting miracles from a country used to selling more than it buys. Even if that is at the expense of its weaker EU partners.
MAGNAY (on camera): Max, it is difficult, really, to persuade German consumers to spend more just for the sake of ironing out structural imbalances across the Euro Zone.
FOSTER: And how do Germans feel about Germany taking the lead in this whole euro crisis, effectively speaking for the euro?
MAGNAY: I think that Germans recognize that they have to. They understand that the position that Germany has as the Euro Zone strongest economy. They don't feel quite as sort of vehemently opposed to a bailout as they did with regards to Greece. Not least because Ireland's problem is really a problem of a property bubble rather than a sort of problem of the profligate south, which is how many here in Germany perceived that crisis at the time. I think also there is a growing understanding now that they're in fact only providing guarantees rather than actually shelling out cash, as it were.
And there is also, of course, this safety blanket that they have. That the fact that their economy is doing so well so all in all, although they are watching this, and are extremely worried there is no real sense here that we're looking at a collapse of the euro right now. I think that they feel that the way that Angela Merkel is leading this, is in any case, safeguarding their interests, Max.
FOSTER: Diana Magnay speaking to me earlier.
Now, in the U.S. stocks only had half a day to trade, but that was enough to take the Dow Jones down 0.8 percent. So shares have been falling in response to Europe's debt crisis, which has intensified this week, of course, with Ireland's bailout, and fears that there is more to come. Tensions in Korea are also pushing the market lower. The Dow closed at 11,092.
In Asia there were losses across, almost the entire region, really. Possible steps by Beijing to curb inflation weighed on investors minds in Hong Kong and Shanghai. They both closed down, along with the Japan's Nikkei, which lost almost half a percent.
Traders might be reluctant, but on the streets it is time to buy, buy, buy. It is Black Friday in the U.S. and these shoppers couldn't wait to get those cold hands on a hot deal. We'll find out what is says about the climate for retailers, in a moment.
FOSTER: That is the sound of bargain hunters on the scent of a good deal. You are looking at shoppers in Macy's, the New York department store, early this Black Friday morning. Retailers in the U.S. are now midway through one of their busiest days of the year. The day when traditionally retailers go from the red into the black; something like 6 percent of all holiday spending happens on Black Friday.
Now is it worth paying close attention to those cues? Investors see Black Friday as a barometer for overall holiday spending. All the signs are just November and December will deliver a decent payoff for retailers. The National Retail Federation in the U.S. predicts sales will be up 2.3 percent year on year. The big draw for shoppers is, of course, the big price cuts. That is what gets people lining at midnight, or 3:00 a.m., or even 4:00 a.m. This year the most popular deals were on items like games, consoles, mp3 players, a tablet computers. To give you an example of how much money it is possible to save, Wal-Mart is selling a laptop for $198. We also found an HD TV at Best Buy, marked down from $749 to $498, actually. And Apple is knocking $41 off the price of iPad, making it the cheapest at $458. There are bargains to be had.
And our Poppy Harlow has been watching the crowds at Macy's flagship store in New York, along with the CEO of the company. Terry Lundgren told Poppy the day is shaping up well.
TERRY LUNDGREN, CEO, MACY'S: So far, so good. We had 5,000 outside out doors last year, and it was an hour later. So, I think they were here, ready to shop, ready to go, and the traffic is building, at least in this store. So I feel very good about the start to the day.
POPPY HARLOW, CORRESPONDENT, CNNMONEY.COM: You have 850 stores across the country. Here in New York, this is one of them, some of the shoppers I spoke to said they were here for the novelty, to see what it is like. You need people buying things in a major way, leaving the store with their bags full. Any predictions on what you'll see between now and the few days past Christmas.
LUNDGREN: Well, the good news for us, Macy's and Bloomingdale's, is that in our case we have great momentum going into the fourth quarter. So we're up close to 5 percent on same store sales for the year, which is a very big number on our size of company. So, we're saying 3 to 4 percent for the fourth quarter. And I feel really comfortable with that predictions. And if we can have this day, like, in all of my stores, as we are starting out here today, I'm going to be very happy.
HARLOW: In terms of price cutting, I mean, we have seen some deals where prices are cut by more than just in half. How much are you willing to cut prices? How much have you reduced them just to get people in here, buying those things, maybe not making a lot on those, but buying up other things?
LUNDGREN: Well, we've had a full year to really think about what we wanted to do for this important period. And as you point out this is, you know, the finish line. Between now and about December 27th, that is when we need to do a substantial amount of business, and when we'll make a substantial amount of our earnings, all of us, all retailers are in the same boat. So we have had a full year to focus on this period. And we have great values at every price point throughout the store.
And I think that is the difference between this year and last year. Is that last year was very focused on opening price points. And this year it is focused on great value at all price points.
FOSTER: Poppy, there, speaking to the head of Macy's.
Now, if shopping doesn't appeal to you at the best of time, well, Black Friday is probably a good day to sit home. Another increasingly popular option is to go online for your holiday goodies. Cyber Monday is when people are being encouraged to do it. According to Accenture's recent survey 69 percent of consumers said they'll be buying presents online. That is 5 percent more than last year. And quite a chunk of consumer spending, actually, but it is not just online spending that is going up.
As we mentioned before seasonal spending is increasing on the whole. With fewer people in States saying the economy will affect how much they buy in the U.K., on the other hand, shoppers are coming back this Christmas, spending 10 percent less than last year, according to surveys.
Now, if you think standing in line for hours requires patience, pity fans of Mark Twain. He banned publication of his last book for 100 years. Still, it was all worth it to the publisher.
FOSTER: A century after his death the legendary American writer and humorist Mark Twain is once again on the best-seller list, would you believe? The new book, in his autobiography, which he decreed should not be published until he had been dead for 100 years. Twain, his real name was Samuel Clements, struggled to get his life's story into words before hitting on a novel solution.
"Start at no particular time of your life," he wrote, "and wander at your free will all over your life. Talk only about the things that interest you; Drop it at the moment its interest starts to pale," he said.
Now for the publishers the end of that 100 year embargo came along at just the right time. But no one at the University of California Press expected the book to be quite such a hit, as Rod Meloni reports.
ROD MELONI, CNN CORRESPONDENT (on camera): This is the Thomson Shore Book Printing Company in Dexter, Michigan. And while they are printing the autobiography of Mark Twain, for them this is more like Harry Potter.
KEVIN SPALL, CEO, THOMSON SHORE: We really had no idea that it was going to have the kind of demand that obviously it has become, as of late.
MELONI (voice over): It is a century-old, 735 page tiger by the tail. Twain, uncharacteristically, concerned about offending a lot of people, did not want his book published, until 100 years after his death.
So, President Kevin Spall had not idea when the first 2,000 book order came in that it would explode into a 310,000 order smash hit.
SPALL: It has been a gradual building of joy, certainly as we are heading into the holiday season.
MELONI: The autobiography of Mark Twain, published by the University of California, got the job by the Mark Twain Family Trust and sent the printing job here to Michigan, through Thomson Shores sales guy Dave Raymond. He, too, had no idea he held the company's biggest-ever printing job in his hands.
DAVE RAYMOND, THOMSON SHORE SALES: They originally started with asking for pricing on 2,000 and 5,000, and eventually ended up a couple of days later, to 40,000. And that is when knew this was going to be really big.
MELONI: This 40-year-old printing plant is like any other Michigan manufacturer, laid off workers last year. These are very happy holidays this year indeed.
They are thrilled to work the extra hours. They are thrilled to be working overtime and working weekends. It is just-it's very exciting.
MELONI (on camera): Fortunately, for Twain and book lovers alike there are two more volumes of this work to go. Thomson Shore intends to bid on it. They don't have the contract yet. But they sure hope they can keep this good run going.
FOSTER: That is the arts for now, but we're going to get back to Europe's debt problems in just a moment. We'll take a closer look at what makes the crisis a crisis. And ask if Portugal and Spain really are on the brink?
FOSTER: Welcome back. I'm Max Foster. More QUEST MEANS BUSINESS in just a moment, but first a check of the headlines this hour.
FOSTER: Now every day this week Europe's debt crisis has led the financial headlines. The amount of debt a government has is a key indicator of how much it is at risk of needing a bailout. Look at these figures, from Nomura International, of debt as a percentage of GDP. Now Spain, Ireland, and Portugal look positively healthy compared to Japan. Its government debt is almost four times Spain's, approaching 200 percent.
Nomura International says this isn't a complete barometer for fiscal health, though. After all, we are not seeing anything about Japan needing a bailout. Nomura says that a percentage of that debt held by foreign investors is also key. If we look at these figures you can see that for peripheral European economies, that percentage is very high, indeed. For Japan, it's just 5 percent. Lamore (ph) says this is important for two key reasons.
First, domestically held debt will be reabsorbed into the economy. Debt held by foreign investors will leak out to the rest of the world.
Second, foreign investors are more likely to de-risk in the event of a debt crisis and make a run on the debt.
Now, Spain's foreign held debt is just 50 percent.
And I asked Javier Diaz Gimenez, professor of economics at Madrid's IESE Business School, if that puts it in a better position than Portugal or Ireland.
JAVIER DIAZ GIMENEZ, IESE BUSINESS SCHOOL: In general, it's better if -- if you are -- if the national debt of a country is held domestically. A large chunk of Spanish debt is held by Spanish banks and they can keep it and they can be forced or encouraged to keep it on their balance sheets.
So -- so, yes, I think, in general, that's a -- that's a good idea.
FOSTER: So why isn't that being taken into account when you look at debt yields, for example, for Spain as a -- compared with Portugal and Ireland even?
It's still high, isn't it?
DIAZ : Well, yes, that -- that's -- that's correct. And I mean it probably is being taken into account. If it was not -- if that was not the case, probably we'd be seeing spreads even higher than what we are seeing then currently.
FOSTER: Do you think Spain is vulnerable?
DIAZ : In some sense it is and in some -- and in other senses, it -- it isn't. In fact, for -- for the year 2011, the -- the amount of Spanish 5 and 10 Year bonds outstanding is -- is fairly small. And -- and this -- and this -- and the due dates come right after tax collection debt -- dates. So -- so I think the Spanish Treasury has pretty much got it under control.
But, of course, when -- you know, when the markets start betting that -- that there's going to be trouble with some asset or with some currency or with some country, it's -- it's a hard bet to fight. You -- you -- you need -- you need to, you know, show extra determination and maybe take a more radical stand on -- on your reforms than you would have to do otherwise.
FOSTER: Spain seems to be benefiting right now by the simple fact that Portugal is almost acting like a buffer for investors against Spain, because everyone is looking to Portugal to be the next country to get a bailout before Spain. So the focus is on Portugal.
And we understand that officials are putting pressure on Portugal to take a bailout, in part, to stop contagion spreading to Spain.
Do you think Portugal should take a bailout to protect Spain?
DIAZ : Again -- again, that one -- and that one is hard to answer. It's true that -- that Spanish banks and Spanish corporations are very heavily invested in Portugal. And the fallout from a Portugal default would be -- would -- would be pretty rough on -- on the Spanish economy.
So, yes, bailing Portugal out is -- is much cheaper than -- than bailing Spain out. And that would certain -- that would certainly act as an initial buffer. But then again, once Portugal is gone, the next -- the next one on the line is -- is Spain. So -- so there are -- there are reasons to -- for -- for both sides on the argument here.
FOSTER: And also, we were expecting a bailout of Ireland to reinstill faith in the whole Eurozone, but it just didn't happen, did it?
So bailing out Portugal might not have the desired effect either?
DIAZ : Well, it -- it's true that we know that if the Eurozone is going to survive, you know, on the long-term, we need a stronger form of political union. We need some kind of mechanism to -- to -- to do fiscal transfers between different countries in the -- in the monetary union. And -- and then unless we see that, we are going to see recurrent bouts of speculation against national debt or against national -- the nationally denominated assets within -- within the union.
(END VIDEO TAPE)
FOSTER: Well, let's have a look at the markets, because everyone's got their eye on them at the moment.
A reminder of how they ended the day. After tipping to losses of around 1.5 percent earlier in the session, the major European indices pulled back a little later on. Banking and mining shares, which were some of Thursday's top gainers, were the biggest losers today.
All of these indices are down for the week as a whole, as well.
The euro sell-off is continuing. It's dipped further -- a further cent against the U.S. dollar, now trading at a two month low of around 1.324.
Now, the business trends of 2011 are the next big thing for the global economy. They're all in "The Economist's" annual magazine. Editor Daniel Franklin will be with after the break and he'll tell us about the new BRIC on the block.
FOSTER: Well, the "Economist's" annual magazine looks ahead to the biggest economic developments of the year and it's out this week.
Earlier I spoke to the editor, Daniel Franklin, and asked him about how important the BRIC countries are into next year and whether we're going to see more of them, actually.
DANIEL FRANKLIN, EDITOR, "THE ECONOMIST'S WORLD IN 2011": The BRICS are still very important, particular India and China. You might actually see India growing faster than China in 2011. That would be interesting.
But beyond that, there's -- there's -- there's other ones waiting in the wings and perhaps ones that will become increasingly important for businesses. So you can divide those, I think, very broadly into -- into two categories. There are the ones that have been more or less overlooked but are already very important, ones like Indonesia that perhaps should have been in the original four, perhaps. Some people think that it should have been there more than Russia; big emerging markets like South Africa. And then there are some of the more difficult frontier markets -- much riskier, have to be pretty, know what you're doing to go into them, but they have big opportunities, as well, perhaps places like Bangladesh, many countries in -- in Africa. And those, I think, for the adventurous businesses, that's where the new frontier lies.
FOSTER: And will investors be going into those markets as well as the bacalat (ph), do you think?
FRANKLIN: I think they will. I think there's a great interest in emerging -- if you take emerging markets generally, they're going to be outgrowing the rich world by perhaps four to one in the coming -- in the coming year. And that is the trend that's pretty much likely to be set in in the coming years.
So you follow the money. That's where the high returns are going to be. And the ones that -- the markets that are perhaps less obvious will offer even higher returns. So everybody has now piled into China. There are other places that offer very interesting returns. For example, one of the fastest growing markets in 2011 is going to be Ghana, probably the second largest economy in the world.
FRANKLIN: So not the one that you might first think of.
FOSTER: Yes. And as you watch these money flows around the world, the other thing that's going to affect them, of course, is currency fluctuations and what we're calling the currency wars.
Is that battle going to go into next year?
FRANKLIN: I -- I think it -- it is. And it's going to be a delicate one, because a lot of countries are hoping that their growth will come through exports, through selling to these emerging markets and elsewhere. And for that, they would quite like competitive currencies. So they're keen to see their currencies go down.
But not everybody can see their currency go down at the same time. The euro is particularly -- has been particularly strong. That's hurting the peripheral members of the euro area in particular. And then there's the big, big question of China's currency and China versus the dollar. And I think you're going to see a lot of pressure on China to see its currency or allow its currency to appreciate against the dollar in the coming year.
FOSTER: On the corporate level, we saw some classic P.R. disasters this year, didn't we, with BP and Toyota, where the P.R. departments were really, really pushed.
Do you think P.R. -- dealing with the press, dealing with messages, is going to change going into next year?
Are we going to learn lessons from them?
FRANKLIN: Well, we have a nice piece by Lucy Kellaway in -- in "The World in 2011" arguing that, actually, words are of -- have served corporations particularly badly. They're -- they've mangled their message very often. And increasingly, anyway, video is the medium of -- of -- of a -- of power. And companies have got to get better at doing it. The chief executives will have to...
FOSTER: Producing in their own videos or performing on video?
FRANKLIN: Well, I think a bit of both. They'll have to perform and they'll have to develop those film star qualities. And I -- I think you can probably expect, if this is true, some pretty cringe worthy performances.
The one -- the companies that get it right will be onto something pretty powerful. And you can already see that the -- the power of our video, for example, for companies can be -- can be very great.
FOSTER: And what are your thoughts on where we're going to be watching those videos?
Is it on mobile phones or on laptops?
FRANKLIN: Well, increasingly we'll be watching them all over the place. There's a bit of a battle -- an interesting battle going to be on next year for the tablet computer. Apple had this huge success with the iPad. BlackBerry is going to be coming in with its Play Book early next year. So the battle is on. And then there's also the mobile phone, which is spreading madly all over the world. Smartphones are going to be out selling traditional mobile phones in America next year.
(END VIDEO TAPE)
FOSTER: There are predictions for the future of technology. We're going to get the predictions for weather now. And Europe is going to be very, very cold, as I understand it, Guillermo, this weekend.
GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes, you're not wrong. You're right. Yes, it is. There are a couple of systems that are bringing cold weather and snow. Also, we see evidence of it right now here in the North Sea and here the Atlantic Ocean, with the cold air coming down.
So let's take it one by one.
First, temps. These are the highs. This is a -- as good as it gets on Saturday, minus five and still cold. Two in Glasgow.
This is the high temperature of the day, OK?
While 22 is the forecast for Athens, 10 in Madrid. We really have snow in Navarre and those sections of Spain.
Now, let's see what's going on in the U.K. All right, so five centimeters, 20 centimeters here to the north in Scotland. I would mean, actually, Max's head for the pronunciation of these words. And eight centimeters in England. Yes, that's Bridlington.
Bridlington, is that right?
And then we see more snow, of course, in the Alpine Region. I think skiers are very happy about this. I'm going to break it up so you understand why it's going on. We don't see significant snow in Northern Spain. Again, we have the warnings for today for the Navarra section, Gipuzkoa, also, the Netherlands with snow. As you see, this -- this has already happened. It's a wintry scene that we got from there.
Well, this snow here in the south is bringing the humidity that is going to bring some snow into the Alpine Region, then moving on into the Balkan Peninsula. But possibly, we will see heavy snow again next week into Northern France, into Britain. Also, I was reading that many are happy that they are seeing a lot of snow in the French alps and also in the Pyrenees. So skiers are excited about that. We, too.
Snow for London probably for Saturday. Dublin with the same toward evening hours. There are problems at airports in Germany and in Switzerland, you know, because of the combination of winds, snow. I remember last year, they had to de-ice my plane. It was a hassle, like a one hour thing, in Paris.
Well, if you are coming to the States, again, Sunday is going to be a very busy day. But the weather is clearing now in the Northeast. You see Canada is in bad shape here. But the -- on the other side of the country, in Oregon and also in Washington State, in B.C. and Canada, bad weather. Cold conditions. We have, you know, this is going to dissipate. This is going to move away very soon. But look what's going on on the other side. If you're coming to Washington State, to British Columbia, Oregon, even into California, Idaho, Montana, you will have problems there at airports because these systems are unrelenting and these are the temps forecast for Saturday -- Max.
FOSTER: OK. A cold weekend for many.
Thank you very much, Guillermo.
ARDUINO: Thank you.
FOSTER: Now, this just in to CNN.
US President Barack Obama was accidentally hit on the lip and he required stitches today, while playing basketball with friends at the White House in Washington. His press secretary says the president received 12 stitches administered by the White House medical unit. They were on hand, luckily.
On a lighter not, Mrs. Obama received the official White House Christmas tree today. We are certainly into the season. It's a Pennsul -- a Pennsylvania Douglas fir, apparently. She seems very pleased with it, as do the girls.
That's QUEST MEANS BUSINESS for this week.
I'm Max Foster in London.
Thank you for watching.
"MARKETPLACE AFRICA" is next for you.
ROBYN CURNOW, CNN CORRESPONDENT: Hello and welcome to MARKETPLACE AFRICA.
I'm Robyn Curnow here in Johannesburg.
Now, did you know that Lagos is the fourth most populated city in the world?
So it's no surprise that they've run out of space. It's also, though, a problem for one of Africa's fastest growing economies. There is a solution. It's expensive and ambitious. Which is why we're going to have an in focused look at the land reclamation project called Eko Atlantic.
NIMA ELBAGIR, CNN CORRESPONDENT (voice-over): Makoko slum in Lagos Lagoon. At the heart of Nigeria's financial hub, houses on stilts and wooden canoes are a floating home to the thousands who flock here every year to make their fortune.
(on camera): The Lagos metropolitan area is spread across a series of islands which altogether make up around 300 kilometers square. Lagos's population is around 15 million. And by 2015, it's estimated to hit 25 million.
And the obvious question is, where are all these people going to go?
(voice-over): Latoya Island (ph) -- along its bar beach coastline is some of Lagos's prime real estate. And it's about to get even more up market.
DAVID FRAME, MANAGING DIRECTOR, EKO ATLANTIC: It's reclaimed land.
ELBAGIR: It's here that David Frame, the managing director of Eko Atlantic, thinks he's found the answer to Lagos's land woes -- at least for those who can afford it.
FRAME: So, unfortunately, there's just not enough land available for development in Lagos. Eko Atlantic, in essence, is a reclamation project. It evolved from a -- a desire to find a permanent solution to the erosion of Bar Beach and the threatened flooding of Victoria Island.
And during the course of the engineering studies, it was discovered that the original coastline of Bar Beach was, 105 years ago, along the line of the revetment that we are constructing today.
ELBAGIR: Nigeria, with its population of 150 million, is Africa's largest market -- a consumer powerhouse that will expect to overtake South Africa as the continent's fastest growing economy. All that growth is currently being squeezed by the legendary traffic jam and overburdened infrastructure of the country's financial center.
Eko Atlantic is envisioned as a fresh start for Lagos and for Nigeria.
FRAME: The project is being driven by, in particular, the financial institutions here in Lagos, because the -- the concept is that we could create a very modern city that would establish Eko Atlantic and Lagos as the financial hub of Africa.
ELBAGIR: But, of course, Eko Atlantic, ambitious as it is, is only a start.
FRAME: So this land that we're reclaiming today will be meeting the demands. So, in reality, we need more projects like this, because the population of Lagos is expanding rapidly.
ELBAGIR: And here in Lakoko, the slum dwellers are continuing their own land reclamation.
Nima Elbagir, CNN, Lagos.
(END VIDEO TAPE)
CURNOW: OK, let's take a look at Eko Atlantic by the numbers. Now the project is estimated to be costing about $3.5 billion U.S. About a quarter of a million people will be housed there in skyscrapers. And hopefully, that will help alleviate the crushing population density problem in Lagos.
It's estimated that about 20,000 people live in each square kilometer of space.
Now, from big to small, after the break, we go to the tiny island nation of Mauritius and find out why it's the most prosperous and stable economy on the continent.
Don't go away.
(BEGIN VIDEO CLIP)
SUNIL BENIMADHU, CEO, MAURITIUS STOCK EXCHANGE: A small country like Mauritius is not competitive relative to those countries so we've had to reinvent ourselves.
(END VIDEO CLIP)
CURNOW: Hello and welcome back to MARKETPLACE AFRICA.
Now, Mauritius is a small island off the coast of Africa. It's tiny, in fact, only a million people live there. But it's big on ambition.
The World Bank recently ranked Mauritius as the easiest place to do business in Africa and the government there wants to go one step further and make it one of the most business friendly locations in the world.
So the secret behind their success?
Well, Maggie Lake recently sat down with Sunil Benimadhu.
He's the CEO of the Mauritian Stock Exchange.
MAGGIE LAKE, CNN CORRESPONDENT: Tell me about Mauritius' efforts to expand the financial sector.
What, in particular, has changed in recent years?
BENIMADHU: I think, first of all, there's been a lot of change on the macroeconomic front in Mauritius. We have really modernized the economic infrastructure. We've also come up with major economic reforms so as to set Mauritius on the high growth path. And within that environment, of course, the financial sector has grown quite substantially.
It's a sector that is growing on an annual basis about 11 percent. And this growth is driven by the growth of the global business sector. In Mauritius, you know, Mauritius is growingly being used as a platform for service Asia. There's a lot of money that is being raised in -- in Europe, in the U.S. and invested in India. And because Mauritius has a double taxation treaty with India, therefore, it makes Mauritius an ideal platform for people to set up companies to invest in India and in the Asian markets.
LAKE: What's been the chall -- when you grow rapidly, there are always growing pains and challenges.
LAKE: What has been the greatest challenge of managing that so it's sustainable?
BENIMADHU: I think it's -- the main challenge has -- has been to maintain, as you say, the growth temp at the macroeconomic level at 5 percent.
Because year in and year out, at 5 percent -- why?
Because Mauritius faced what we call the triple shock in 2004-2005. First, with a huge increase in the -- in the price of oil. And because we are a major importer of oil, so this had a big impact on -- on our current account balance in Mauritius.
Secondly, Mauritius had relied for a long time on what we call the preferential sugar protocol with Europe. And this has ended since 2007 -- 2006, which means that today, we are selling our sugar on the world markets and, therefore, the price that we are getting right now is 30 percent less than what we used to get.
Thirdly, Mauritius' growth has relied, for a long time, on the manufacturing sector. And today with the emergence of China, Bangladesh and so on, and with the huge economies of scale that we can derive, you know, a small country like Mauritius is not competitive relative to those countries. So we've had to reinvent ourselves.
LAKE: And explain to me -- you -- you seem to be setting yourself up as the bridge...
LAKE: -- as you said earlier...
LAKE: -- to India, to China...
LAKE: -- two of the biggest markets.
LAKE: How exactly is -- does that work?
I mean what's the pitch you give to investors?
BENIMADHU: We tell investors investing into India and China that we've got a big competit -- competitive edge in terms of locating their -- their businesses in Mauritius and use Mauritius as a springboard jump to invest in those countries.
Because with the double taxation treaties, which is very beneficial, we've got a very flexible and open economy. There is no exchange control at all. We've got a regulatory framework which is English based. So anybody who is an international investor feels really at ease whenever he is doing something in Mauritius, because it's easy to understand what the regulatory framework is all about.
LAKE: What do you think you've learned from the global financial crisis, that as -- as you expand and as you diversify in this area, amid -- you know, you, perhaps, have the benefit of -- of seeing what happened and what to avoid.
BENIMADHU: Yes. I think we -- we see the -- the global financial crisis as showing a lot challenges, but also a lot of opportunities for us -- I mean for us and for Africa.
In terms of the challenges, I think we've had to, you know, face the dwindling investments. People have become very worried. But we also see a lot of opportunities.
Because what is going -- what is happening right now is that the Western world is hardly growing in terms of GDP growth. I mean everybody expects Europe and the U.S. to grow between 0 and 1 or 2 percent, which is fantastic, whereas the growth is shifting toward the Africa and toward the Far East. And this is where we are going to get more eyeballs on our exchange, on our countries, and, therefore, we think that there will be more and more money flowing into this region of the world, which will end - - then, you know, help us grow on a faster basis.
(END VIDEO TAPE)
LAKE: There you go, the success of Mauritius.
Now, here's what's trending this week.
Ethiopian Airlines has taken delivery of Africa's first Boeing 777 200 Long Range Aircraft. It's the first of 27 long range jets it's ordered from Boeing and rival Airbus. Both companies are eyeing Africa as a key growth area. Boeing, for one, expects to deliver more than 700 planes to the continent wroth $80 billion over the next 20 years.
And Africa's largest sugar producer may not be producing much this year. The South African Sugar Association is forecasting the country's smallest crop in 15 years due to severe drought. Adding to the industry's woes are volatile global sugar prices. Elovo (ph), the country's biggest sugar producer, reports earnings are down 53 percent this growing season.
(END VIDEO TAPE)
CURNOW: That's this week's show.
I'm Robyn Curnow here in Johannesburg.
Thanks so much for watching.
If you want to hear about contact details, please do go to our Web site, which is CNN.com/marketplaceafrica.
But until next week, goodbye.