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QUEST MEANS BUSINESS
Irish Stocks Plummet; Cyber Monday Gives Online Shopping a Boost
Aired November 29, 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, GUEST HOST, QUEST MEANS BUSINESS: Backfiring bailout as stocks plummet. We ask was helping Ireland the right thing to do?
Surfing for sales, as Cyber Monday gives online shopping a boost.
And too cool for school, what some of the biggest names in business have in common.
I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS.
Hello to you.
Fear and uncertainty is written all over the markets in Europe, this in bright red ink. Ireland has its bailout, more than $100 billion worth and may see very little to show for it. Actions designed to calm the markets seem to have had little impact. Investors believe the euro is still in danger. And whether it is stocks, bonds or the single currency, traders are getting out fast it seems. Borrowing costs are going up in a big way. The difference between what Spain pays to borrow and what Germany pays has risen to a record now. Irish bonds yields remain suddenly high as well, despite ready access to cash from the EU at a lower rate. Portugal is under pressure. Everyone thinks it is going to be next, and even though it doesn't need anymore cash until April.
Olli Rehn is the EU, economy-commissioner. He's criticized market herd mentality. Christine Lagarde, the French finance minister says markets are irrational and they are sheep like. So it is politicians versus the markets here. Now the Euro is also down, around 1 percent this session. More than 6 percent in the past month, currently $1.31. Now, Germany's Finance Minister Wolfgang Schauble says the Irish bailout should bring calm and reality to the markets. It doesn't seemed to have happened entirely, though. Stocks have been tumbling around the region. Banks have been hit very hard in France, Credit Agrico and Sofgen (ph) both down, 3.5 percent.
In the so-called periphery markets banks have been tumbling. In Madrid, many banks have been gaining ground though. In Ireland, the only gainers it seems from this bailout is, it was a bailout, essentially of the banks, you could argue.
Now, you are looking here at a chart of the FTSE Euro First 100. That is an index of the top stocks across Europe. And the debt crisis in Europe has made for a very wild November, as you can see. The Irish government was strongly denying it needed a bailout, almost, right up until it got one. And there is some criticism around that. November the 15 was the first time we got any hint from the government that it was ready to ask for some cash. And that is when it admitted it was in touch with international colleagues. Now, the next day, European finance ministers said they stood to help. Two days after that officials from the EU and the IMF arrived in Dublin and took over-and took a good look over all those books.
By November 21, that is here, a week since Ireland denied needing any help, a massive bailout was indeed agreed upon. It took a week more to hammer out the terms, which it learned about just yesterday, as you can see. Things going down rather than up.
It is worth remembering Ireland didn't need this bailout as a matter of urgency. It already had enough cash to last until June, without going to the markets it said. But officials in Europe felt that something had to be done, or the euro itself could fail.
Now, with borrowing costs still on the rise, you have to ask if all of this has been handled particularly well. I'm joined now, from the United States, by Ken Rogoff, former chief economists at the IMF, currently a Harvard University professor.
And soothsayer, Ken, because you predicted bailouts before anyone else was talking about them. What were you saying back in April?
KENNETH ROGOFF, PROF. OF ECONOMICS, HARVARD UNIVERSITY: Well, the leverage in the Euro Zone, the borrowing levels. The external borrowing levels are just off the charts by historical standards. And one had to be concerned. I mean, I think the European officials have just been in denial saying no restructuring. It is unthinkable to have happen. And we are going to see restructuring and I think that is why the market is still a concern, because they are just not sure quite how this is going to resolve itself yet.
FOSTER: And that is the fault of the authorities, isn't it? Because we've got this tension between what the politicians are saying and the markets are saying. But is that the politicians fault, or the markets fault?
ROGOFF: You know it is hard to blame the politicians at this stage. We can blame them that it got so far, but they are not faced with easy options. I'm sure there was no stomach to talk about a bank debt restructuring so that the senior creditors would actually loose some money and the Irish banks, even though I think that may be inevitable. So for the moment they have converted a bank problem into a sovereign debt problem. But it is clearly not the end here. And, you know, they are groping towards a solution.
Angela Merkel is being criticized for being for talking about eventually restructuring the debts. I think that is the only common sense endgame here.
FOSTER: OK, ahead of the Irish bailout, you were predicting a bailout. Are you predicting another bailout then and if you are, are you looking to Portugal?
ROGOFF: Yes, I think Portugal is certainly at risk and potentially Spain. Bailout is not the end of the world. That is really not the problem. I mean, the bailout can help. Portugal has one in '77 and '83, from the International Monetary Fund. It worked out well. The question is whether they will ultimately be partially defaulting, restructuring on these debts. The Europeans, with this $67 billion euro bailout in Ireland, have rented a solution, but they have not bought one. We still need to see what happens down the road.
FOSTER: OK, if we are looking ahead to a Portuguese bailout, how can the authorities handle this one better, so the markets improve after it is announced, rather than get worse?
ROGOFF: Well, I mean, it is difficult because everyone is expecting a bailout out of Ireland. So you can only sort of make them happy by coming in with a bigger one and at some level you don't want to. At some level we do have to go through some trauma.
I want to emphasize I think this is a manageable problem. Certainly there do need to be some restructurings in Europe, across all Portugal, Ireland, Spain, Greece, of public and or private debt. But it is the level that is manageable, because governments when they default, don't default 100 percent. It is less. But denial is not a policy and they need to move forward from that. And get to something where we can really see an end to this. And as I say, they are groping their way towards it. These are not easy decisions.
FOSTER: OK, Ken Rogoff, thank you very much indeed for joining us, from the U.S. Speak to you again, during this bailout season, as it feels right now.
Now, Europe's effort to get debt under control are actually going to make things harder in the short term. The European Commission says growth could falter next year, as austerity bites. The Commission has cut its forecast for growth in the 16-nation Euro Zone, to 1.5 percent. Slightly, down on what they forecast earlier this year.
Despite the gloom, Europe's commissioner for the economy, Olli Rehn, says there are plenty of reasons to feel confident in the region.
(BEGIN VIDEO CLIP)
OLLI REHN, EUROPEAN ECONOMY COMMISSIONER: Economic recovery has taken hold in Europe this year. I'm particularly encouraged by the prospect that employment is finally set to improve next year in the Union. Another important feature in the economic outlook is that public deficits are beginning to decline. Thanks to the consolidation measures taken and thanks to the resumption of economic growth.
(END VIDEO CLIP)
FOSTER: Now, Christoph Mueller is the CEO of Aer Lingus, a major Irish airline. He is in London for the future of air transport conference. He told me the decline in the euro is already making things difficult and I asked him what else he is worried about in terms of doing business.
CHRISTOPH MUELLER, CEO, AER LINGUS: Our business travel is very strong and remains very strong, and remains very strong. Fourth-fifths of the Irish economy is the private sector and the export surplus is very, very strong. On the private side I believe people wait until the uncertainty is over. We see some weakness but that seems to be of temporary nature.
FOSTER: So in terms of Irish passengers flying with you, you think those numbers will dip, for now?
MUELLER: They have dipped 35 percent so we believe that we have reached the sea bed. The travel intensity in Ireland is particularly strong and we transport a lot of Irish people living abroad, to and from Ireland, so that is recuperating relatively fast.
FOSTER: I presume for you, as for other business leaders, that bailout is good news, because it means that at least there is a solution to economy. And it is not going to get much worse, and at least there is some money going into the system now.
MUELLER: Private spending is largely affected by uncertainty. And that uncertainty seems to be over now, so we are looking forward. Particularly, now, Christmas coming up and we hope that the private consumer takes its confidence and takes a purchase decision accordingly.
FOSTER: And you are taking pressure from all sides, really, because the airline industry globally is under pressure as well. So, how are you finding your position within the global airline industry? I know you have changed strategy somewhat, haven't you, in the last couple of years?
MUELLER: We have changed strategy, quite (ph) often coming from a legacy environment and then becoming a low-cost carrier, and since the beginning of the year we position ourselves right in the middle. We have a modular product built up so the passenger can decide whether he wants to travel on just a low fare, purchasing the transportation from A to B, or whether he wants to purchase a little bit more lounge access, food on board, and so on and so forth. That positioning has been quite successful and we are announcing a profit this year.
FOSTER: You have got the basic flight, obviously (ph), everyone pays for. What are you finding people are paying for on top of that?
MUELLER: It starts with the seat selection. Particularly if families travel together, they want to sit in one row. They don't want to be divided and they don't want to sprint to the aircraft in order to occupy a good seat. Number two, the business traveler enjoys a fast-track security in the morning, then access to the lounge. Whereas the tourist, for example, enjoys a hot meal on board, on a three and a half hour flight.
FOSTER: Are you finding that in the end they actually end up paying as much as they under the old ticketing system, because they are buying the add ons once they are there?
MUELLER: No, it is still a better deal than in the old legacy times, because the traditional carriers they have to offer it no matter whether you want it or not. So even if you are not a member of a frequent flyer program, you have to take the miles if you buy a business ticket. We are more modular, and some of the things should be even less than in the good old times.
FOSTER: You're not going to the extent that some other airlines were have reported to have going, as in charging for the loo, for example?
MUELLER: Under no circumstances and what we want to avoid is to surprise the passenger badly in arriving on the airport. So every Aer Lingus customer knows exactly what the final bill will look like.
FOSTER: There you are, some reassuring words there from the head of Aer Lingus.
Now, this week, France takes over the presidency of the G20 and we will bring you an interview with the French Finance Minister Christine Lagarde about the upcoming presidency and concerns about Ireland and possible contagion. That is tomorrow on QUEST MEANS BUSINESS.
Now, the great holiday season shopping splurge has hit cyber space. We have lost that Black Friday feeling, now it is all about Cyber Monday madness. We'll delve into the online deals in just a moment.
FOSTER: Black Friday has come and gone in the U.S. but a shopping frenzy continues online. Today is the day when online retailers tempt people returning to work after the Thanksgiving weekend in the U.S. with fresh deals. Both sides of the Atlantic are getting involved, though. In the U.S. it is known as Cyber Monday. Here in the U.K., they are calling Manic Monday. Whatever you call it, there are some big deals to be found out there. British shoppers are expected to spend around $834 million online today. In the U.S. shoppers spent $887 million in 2009, with more activity expected this year.
It is expected to be the biggest online shopping day of the year. And CNNMoney's Poppy Harlow has been hitting the refresh button in New York, to track the story about Monday Madness, as we are calling it, Poppy.
POPPY HARLOW, CNNMONEY.COM: Max, I think, Manic Monday is a much more sound explanation of what this day is. You know, I experienced my first Black Friday, in the middle of New York, at one of the biggest department stores in the country and that was manic enough. But apparently, even more Americans are shopping today, but from the comfort of their homes or their office.
Look at these numbers. What the National Retail Federation is telling us is that 106 million Americans are shopping on line today alone. That would be a record, if that is indeed what we do hit. Also in terms of why they're doing that? Well, it looks like that nine out of 10, or just about 88 percent of retailers are offering special deals today, alone. Now, to give you a sense of what people are buying we got some numbers from Wal- Mart, and also Target.
Wal-Mart is saying the iPod Touch, the 40 inch LCD and the Kinect for Xbox, those video games, those are selling the best today. As for Target, sort of a similar story. LCD televisions, also digital cameras, and actually books. Books are selling very well on sale today, at Target. But this has been growing every year. I want to show you a chart of what Cyber Monday sales have been since 2005. They were $484 million, a steady climb since then, last year, $887 million. And as you said, they are supposed to top that this year.
And the word Cyber Monday, here in the U.S., was actually coined just five years ago, in 2005, when retailers noticed more and more people shopping on line the Monday after Thanksgiving. And a lot of them were doing it from their office, because five years ago our Internet connection at work was a lot stronger than it was at home, Max. But this is an interesting point that I didn't know until this morning, Cyber Monday in the U.S. actually is not the biggest sales day of the year on line. That comes in the second week of December. Last year it was December 15 when online retailers raked in $913 million. So Cyber Monday is a big one, but not always the biggest for sales here in the U.S., Max.
FOSTER: Give us some practical advice running up to Christmas then, Poppy.
FOSTER: What should we be looking for? How do we get the deals?
HARLOW: One thing we noticed is that if you go on say, Amazon.com, they are offering these lightening deals, say, 30 items left, and it takes it down to 29, 28. So you have to go very quickly to get those. Also you should search online for coupons. Other than what the retailer is offering. There are a lot of those online. In addition to that, almost every retailer here is offering free shipping. Trying to get your business instead of you going to the competitors. But there are a lot of risks out there.
Some of the things you want to look for. If a deal sounds too good to be true, it probably is not true. If you get some unsolicited e-mails, if you don't know the address, you want to check out where those are from. Make sure it is all legitimate. Also, if you get an e-mail after you have placed and order, and it says, well it looks like there is a problem with your order. That could likely be fraud. They'll ask you for your financial information. Don't give that to them. Call the retailer.
And finally, always pay with a credit card online. We usually do this, but no money orders, because if you pay with a credit card, if there is sort of anything mischarged to your account you can always call the credit card company and check and they will, obviously, refund you for that. But I am a bigger fan, Max, of Cyber Monday than I am of Black Friday, because the stores on Friday were absolutely manic.
FOSTER: Yes, that is absolutely true. OK, thank you very much, Poppy, for that.
Now, when it comes to making a splurge in sales is it all about online then? Ellen Davis is the vice president of the National Retail Federation and she joins us from CNN Washington.
Thank you very much indeed.
Have you got any figures for how much people spent over the weekend?
ELLEN DAVIS, VICE PRESIDENT, NATIONAL RETAIL FEDERATION: Yes, over the weekend the average person spent about $370. And that is up about $20 from a year ago. Thursday through Sunday were very popular days in the U.S. with actually the biggest increase in sales and traffic coming on Thanksgiving Day. When a lot of people went to stores, who were open, but also shopped online.
FOSTER: So good news, but not as good as it could have been, I guess?
DAVIS: Well, of course, the news could always be better, but we were encouraged by the Black Friday weekend traffic and sales. Of course, this could mean that it is simply because the deals were very good and the consumer hasn't recovered. But what we're hoping is that this is a sign of good economic news to come, as throughout the holiday season.
FOSTER: And in terms of what people are spending their money on? And also the whole Cyber Monday thing? Because it is all merging a bit, isn't it?
FOSTER: Are people using their computers to buy particular products? I understand they're using their phones, in shops, to work out the best deals?
DAVIS: Yes, many people are using their phones this holiday season to shop. In fact, one in five people with a smart phone, like an iPhone or a Droid, are using their phones during the holiday season for shopping. A lot of retailers have mobile applications and mobile web sites.
In terms of what people are buying, the good news is that this year the gifts are more discretionary. Last year people were buying very basic items, like small appliances and blue jeans. This year there is more of an emphasis on jewelry, toys, gift cards, and a lot of electronic gadgets, which is great news for retailers in a lot of different categories.
FOSTER: OK, Ellen Davis, thank you very much indeed. It is early in the shopping season, so we'll see how it looks at the end of the month.
Now, we have taken you online, and we are getting you next, on the road.
(BEGIN VIDEO CLIP)
RICHARD QUEST, CNN ANCHOR, QUEST MEANS BUSINESS (on camera): After the break "Future Cities" in Brazil. And Curitiba's unusual bus system.
(END VIDEO CLIP)
FOSTER: We'll be taking you inside one of our "Future Cities" in just a moment.
FOSTER: Now for our "Future Cities" segment, we are taking you to some of the world's most sustainable cities. And few places do it as well as Curitiba, in Brazil. When it was planning its transport network the city couldn't afford an underground subway, so everyday millions of workers get from A to B on a bus system instead. This system is so slick it is the envy of the world. And Richard Quest jumped on board to see why Curitiba's cars are staying in the garage.
RICHARD QUEST, CNN ANCHOR, QUEST MEANS BUSINESS (voice over): The unmistakable colors of the bus system in Curitiba, Brazil. Moving more than 2 million passengers around each work day, it is a network that has been admired worldwide, as a triumph of urban planning. The system was built in the 1970s. It has become a dominant feature of the city's design.
The main arteries are lanes, dedicated only to buses. No cars allowed. The buses move quickly without worrying about traffic. In other words, the bus is behaving like a subway.
JAIME LERNER, ARCHITECT: We knew that we didn't have the money for metro, or for a tube. And we realized why not on surface?
QUEST: The architect Jaime Lerner helped develop Curitiba's rapid bus transit system.
LERNER: It has to be fast, it has to have comfort, or-and most of all, reliability.
QUEST: High rises can only be built along the exclusive bus lanes. So the city is spread out, away from the center. It results in less concentrated areas, and less traffic.
MARCOS ISFER, DIRECTOR, CURITIBA TRANSPORTATION (through translator): This system was created to help the urban growth, and allow it to be done proper planning. Allowing more people to live in a smaller area, living, studying and working, around this transportation system.
QUEST (on camera): Just one, please.
(Voice over): After hearing so much about this bus system, I needed to try it myself. Passengers pay at these tube stations to speed up the process of boarding the bus.
(On camera): Here comes the bus.
It is certainly popular.
(Voice over): Easy to use, it gets pretty crowded with Curitiba's growing population, the buses are starting to reach capacity. The city's growth has brought wealth. In 2009, Curitiba had a per capita income of $12,000. More money, more people; so now, more cars.
LUCIANO DUCCI, MAYOR OF CURITIBA: Curitiba has the biggest number of cars per capita in Brazil, therefore we have these challenges; challenges that all big cities of the modern world have to face. It is difficult today, because the use of individual transportation is very personal.
QUEST: To address this growing car problem Curitiba is sticking with what it knows best.
ISFER (through translator): We average over 2 million passengers in our system daily. This forces us to work hard to make sure our transportation system works well, with quality and affordable prices, as well as being efficient, moving people fast from one point to another.
QUEST: One of the first steps is to expand the system, adding the Green Line. It started in 2008. It will add nine kilometers to the existing 72 kilometers of exclusive bus lanes. It will transport 32,000 people a day.
ISFER: The Green Line used to be just a highway that connected the south of the country to the north of the country; a link to important cities like Sao Paolo and Porta Legra (ph). We used to have a very heavy flow of cars, trucks, buses.
QUEST: Now, this former federal highway has Curitiba's sixth exclusive bus lane. And it is testing out the new bio-diesel buses, that one day could be used for the whole city.
ELICIO LUIZ KARAS, GREEN LINE PROJECT (through translator): We have committed to operating 10 percent of buses in bio-fuels, using either ethanol, or vegetable oils. We are looking at adding about another 150 buses using bio-fuels to the fleet.
QUEST: The city knows expanding the buses isn't the only answer. It must also improve existing infrastructure.
ISFER (through translator): We are working on a new passing system now, to allow passing on the regular lanes so we can have everything flowing faster. More buses in use in the lane, and subsequently more people moved.
QUEST: The number of cars may be growing, but Curitiba has no plans to adapt the system to accommodate this growth. For this city the key is sustainability.
ISFER (through translator): If you always choose the foolish (ph) transportation of driving, you will be automatically making people see that car with only one person on it makes no sense. This isn't sustainable. This isn't viable for the future.
QUEST: The buses have worked well, and yet, the future of Curitiba's transportation could ultimately lead back to a plan that was once thought was too expensive.
DUCCI (through translator): We can't leave aside the idea of a metro in the future. We are already discussing the financing with the federal government, since it is a very expensive investment.
ISFER (through translator): We are complementing the bus system with a subway system, ultimately all the public transportation systems that will be used by most people, moving people within the city on a sustainable manner.
QUEST (On camera): With its tubes, its platforms, and its buses, Curitiba has been a dissenter of mass transit thinking for a quarter of a century. Now with the refinements being planned, and the intention to build underground, Curitiba is determined to remain a future city. Richard Quest, CNN, Curitiba, Brazil.
FOSTER: Well next, into Africa. As Walmart takes its first steps into the continent, an expert tells us why Africa is rapidly becoming an investment destination and attracting interest with growth potential.
FOSTER: Welcome back.
I'm Max Foster.
More QUEST MEANS BUSINESS in just a moment.
First, we're going to check the news headlines.
A day after WikiLeaks began publishing secret U.S. documents, America's top diplomat is firing back. Hillary Clinton called the release of classified cables an attack on the international community and said there is nothing laudable about endangering lives. The U.S. secretary of State also defended the actions of American diplomats, saying their work benefits billions of people around the globe.
South Korean President Lee Myung-bak has a warning for Pyongyang. He says if North Korea launches another attack it will pay a, quote, "dear price." The strong words came as U.S. and South Korean forces engage in joint military exercises. The naval drills are being held about 100 kilometers from North and South Korea's disputed maritime border in the Yellow Sea.
The U.N. mission in Haiti is expressing, quote, "deep concern" about allegations of fraud in Sunday's elections. Haitian election authorities have up failed -- upheld the validity of the poll and they're currently counting votes. But many of the presidential candidates are alleging widespread irregularities and ballot stuffing. And they want the poll annulled.
Mexican officials say an alleged drug gang leader has confessed to ordering more than a dozen killings. They say Arturo Gallegos Castrellon was arrested over the weekend. He's believed to be the leader of the Aztecas gang and police claim -- or blame him for 80 percent of the killings in the notoriously violent city, Ciudad Juarez.
Now, Walmart is taking its first dip into Africa. The world's largest retailer is paying $2.3 billion for a 51 percent stake in South Africa's Massmart. Arkansas-based Walmart, which is looking to expand internationally to make up for slowing sales at home, first bid for all of Massmart back in September, but it's scaled back those plans to win support from shareholder unions and the South African government.
Now, Massmart's board unanimously supports the bid. It's hoping to benefit from Walmart's expertise. It has operations in 14 African countries through its 288 stores.
But it's not just about private companies boosting Africa's private sector. The International Finance Corporation is an arm of the World Bank and it's dedicated to providing loans to the developing world.
To tell us more, I'm joined by Thierry Tanoh.
He is vice president for Africa, Latin America and Western Europe.
Thank you so much for joining us.
First of all, what do you make of the Walmart deal?
It's -- it's an interesting one, isn't it?
This is a joint venture.
THIERRY TANOH, VP, INTERNATIONAL FINANCE CORPORATION: Yes, and it's an important one. And I think it shows the interest that countries start to have in sub-Saharan Africa and the potential of investment there. So it's a -- it's a great news. And hopefully, it would be triggered by others in the years to come -- in the months to come.
FOSTER: What do you say to Western, for example, business leaders when they're considering investing in Africa and are apprehensive about it?
TANOH: Well, if -- in today's world, I mean if you look at the crisis -- and we've discussed this -- I think the crisis has shown that sub- Saharan Africa is not such an -- an unsafe place to invest. On the contrary, actually, is the resilience of the continents toward the crisis over the -- you know, the past two years has shown that this is an country -- a continent in which a lot of profit in the private sector would be more than welcome.
And so -- and, today, the risk appetite for Africa should grow. I think the main issue that we're facing is the continent is not that well known and this is part of the role of ISC is to bring foreign investment on the continent.
FOSTER: And infrastructure is a problem, but that's actually the opportunity, as well, isn't it?
TANOH: Exactly. I think, you know, it is, today, an impediment for the growth on the continent. But there is a huge volume of investment needed in order to bring the infrastructure in sub-Saharan Africa to a level which would bring Africa as a market, actually, for developed countries.
So, there's, again, another potential benefit here.
FOSTER: And it's a sad thing to say, but people often talk about corruption when dealing with Africa and they're concerned that it's not as transparent as it should be, all these business deals.
I guess that's where you come in, isn't it?
You advise, you help finance deals and therefore make it easy for Western companies to sell to their shareholders.
TANOH: Yes. And I think the importance, also, for us, is to -- to demonstrate that, you know, Africa is a good place to do business. The IFC has grown over the past five years from $140 million of investment to $2.4 billion last year. And we added $1.1 billion in mobilizations. So pumping into sub-Saharan Africa $3.5 billion.
We've been able to do this because with our local presence and good selection of sponsors and countries in which we're investing, we've -- we've made, you know, a good -- a good return.
The notions of corruption on the continent, while here, is a reality. I think you're -- you're seeing a lot of good examples where it is possible to do good business in sub-Saharan Africa.
Therefore, I think I'm encouraging not only the private sectors, but also, you know, leaders in sub-Saharan Africa to get their countries and the continent better known, because that's what is going to make a difference.
FOSTER: OK. Thierry Tanoh, thank you very much, indeed, for joining us on the program.
TANOH: Thank you very much.
FOSTER: Let's head to Wall Street now, where stocks are sinking, sadly.
Alison Kosik is at the New York Stock Exchange -- Alison, there's quite a lot of selling going on.
What's the main driver, would you say?
ALISON KOSIK, CNN CORRESPONDENT: Well, Max, you know what, there was a lot of selling. But in the blink of an eye, we are off our session lows, right now, the Dow down about 63. We were as low as 163 points in the red.
But the main focus today, Max, seems to be Europe. It still is the number one concern here on Wall Street, despite the fact that Ireland, for all intents and purposes, is going to be getting its bailout, because the market is thinking, which country is going to be coming next?
Will it be Spain?
Will it be Portugal?
You know, there's just too much uncertainty with U.S. banks having exposure to big European banks.
Now, here's what analysts are saying is happening here. Investors are looking at bailouts very differently these days than they used to see bailouts, because they used to see them as a good thing. Now, there's a new reality among investors, that borrowing more money to solve a debt problem isn't necessarily the answer, because the thinking is that Europe may bailout one country after another after another, but the underlying problem remains, that there's still too much debt. And the uncertainty over whether the debt crisis can be contained is really the reason we are seeing stocks in the red today -- Max.
FOSTER: Alison, thank you very much, indeed.
Euro concerns out worrying -- outweighing all the positives over that shopping spirit over the weekend, it seems.
Now, move over Antwerp, a new diamond bourse has just opened in Mumbai and it wants to be the next diamond hub of the world.
FOSTER: Diamonds may be a girl's best friend, but they're also proving to be the latest hot investment. That's after a rare pink diamond was sold for $23.2 million at an auction in hostage earlier today. It was a record price for a gem sold in Asia. The 14.2 carat jewel, called the Perfect Pink because of its clarity and color, was bought by an anonymous bidder.
But if you think that's expensive, less than two weeks ago, another pink diamond was sold for almost double that amount in Geneva. The 24.8 carat stone went under the hammer in Geneva. The jewel was not seen on the open market for 60 years and it was bought by the London jewelry dealer, Laurence Graff. It fetched $45.6 million, smashing the record for a single gem at auction, not surprisingly.
Now, pink diamonds are only found in -- in a few mines throughout the world. And one of those places is in India. Given that nine out of every 10 rough diamonds processed in the world are routed through India, industry leaders believe Mumbai could be the next diamond hub.
Mallika Kapur sent us this report.
MALLIKA KAPUR, CNN INTERNATIONAL CORRESPONDENT (voice-over): This building is called Panchratna (ph), Hindi for five jewels. Inside, traders deal predominantly with this one. Most of Mumbai's diamond trade takes place in tiny, cramped units like this one in the city's south. That's about to change. Thousands of diamond traders are moving out of here and into this -- a state-of-the-art Bharat Diamond Bourse.
"It will be very good for us," says trader Velez Hada (ph). "We won't waste time going from our office to the customs department or to a bank. Everything will be under one roof."
A bank, customs, plus 2,400 offices and trading halls, safe deposit boxes and walk-in vaults -- everything within its highly secure eight towers.
(on camera): Parts of this complex are still under construction. Once it's done, 25,000 people will use it on a daily basis. Officials here say it's the largest diamond bourse in the world.
(voice-over): Thirteen out of every 14 diamonds manufactured in the world are cut in India, mostly in the nearby city of Surat, says the bourse's president. This exchange will help connect Indian manufacturers with international buyers, so India can also become a global diamond trading hub.
ANOOP MEHTA, PRESIDENT, BHARAT DIAMOND BOURSE: If we have this infrastructure in place already right in the center of Bombay, then the trading volumes of Antwerp, as well as Israel, could slowly move away. Why are the diamonds that are cut and polished in India being traded in Antwerp or in Israel?
Why don't they just do it over here?
KAPUR: As India's diamond industry gets more organized, it will help everyone involved with it, says this jeweler, not just exporters, retailers and consumers will benefit, too.
PARAG JHAVERI, JEWELER: For the jeweler, basically, the first thing is the procurement of available raw materials. So when you can procure the raw materials from an organized sector in an organized manner, it is much beneficial.
KAPUR: The bourse was launched on the Sarat, a Hindu festival, an auspicious day, say bourse officials, who hope it will mean a profitable future.
Mallika Kapur, CNN, Mumbai.
(END VIDEO TAPE)
FOSTER: Good weather there, but record cold temperatures apparently here in the U.K.
Guillermo has been monitoring the European weather for us.
GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes.
FOSTER: And the snow swirling around out there.
ARDUINO: And in so many -- so many places, Max. It's unbelievable. Even in Portugal, Castillo Blanco is where we are expecting some snow. But concerning Britain, I have to warn you that the warm water here, with the winds coming from the coldest sections, it's providing perfect opportunities to have a lot of snow. And we will continue to see heavy snow.
When you see the satellite pictures, there are no place, I think, with nice weather. Italy this year has been hammered so badly -- so intensely with -- with bad weather.
And we see, also, cold conditions and snow in Poland, in Germany, in the Netherlands, in Belgium. I said Portugal, Spain, Britain, Ireland, France, Italy, Slovakia, Belarus, the Baltics. I mean I can mention everybody, because that's what's going on.
And I have a couple of pictures to show you. New Castle, here in the U.K., well, they are in the U.K., I must say. Scotland -- and Scotland has seen more. And the complications that this all brings about, we all know. This is a beautiful picture, but a very dangerous area to navigate with your car. So Scotland is where -- bye -- where we get most of the pictures.
You see this coast, because of the humidity available here in the North Sea and also the winds that are coming from the north, from that direction, here the coastal parts is where we see most of the precipitation. And when you see blues, don't think it's only rain, because in the previous map, it's also snow. And we are going to see some more snow.
I think that concerning London, we are going to see snow tomorrow and then on Wednesday. And then temperatures are going to be extremely cold. So this week is going to be terrible. So get ready.
The only -- you know what?
Information is power and you're -- you've got it. So you prepare yourself, because there's nothing you can do about it.
It's going to be extremely cold.
Have you seen that Stockholm has had minus five as the high for so many days?
So it continues to be extremely cold.
Well, this band of snow extends all the way over into Belarus and Northern Ukraine there. Poland with some more snow. Of course, at the airports we will see complications.
Look at this, weather-induced delays possibly -- this is a calculation that we make. And Amsterdam, Brussels may seem some delays because of the snow and the wind; Munich; Frankfurt, Zurich; Vienna; Copenhagen; Rome.
So you have to actually prepare for that moment, you know, go away ahead or check your BlackBerry or your Internet device constantly to see what's going on with your flight -- Max.
FOSTER: OK, Guillermo.
Thank you very much, indeed.
ARDUINO: Thank you.
FOSTER: And more flight trouble for different reasons. There's trouble ahead for British Airways. It's facing the threat of more cabin crew strikes after Unite, Britain's largest union, announced a fresh ballot for industrial action. Unite says the ballot is aimed at ending the victimization and punishment of cabin crews. This is expected to begin next week, paving the way for the possible walkout to begin in January.
CNN's Ayesha Durgahee spoke to the head of Unite earlier today.
TONY WOODLEY, JOINT GENERAL SECRETARY, UNITE: The moment has been missed. The moment has been missed. And, therefore, we're back to the negotiating tables, hopefully. Failing that, we're back on strike.
AYESHA DURGAHEE, CNN CORRESPONDENT: So in your eyes, the promise hasn't been broken?
WOODLEY: It's not a question of promises. You go into negotiations in good faith and with good intent, all of you, all of you, the same as our shop stewards say they would. We looked and we recommended the last deal. But when you have 5,000 or 6,000 people, 60 or 70 who have been disciplined, five or six who have been sacked, all of whom say, well, that sounds very nice from your point of view, Mr. Woodley, or from your point of view, Mr. Shop Steward, but we don't think it's good enough. And I believe we've got an obligation to listen to them.
(END VIDEO TAPE)
FOSTER: Well, Woodley appeared to be at the point of agreeing to a deal to settle the long-running dispute in October. But B.A. says Unite has broken this promise and instead has now chosen to create fresh uncertainty for customers and damage the interests of thousands of its own members within British Airways.
The news comes on the same day shareholders approved B.A.'s merger with Spain's Iberia.
Now, put down those books, leave those lectures and dump all that student debt -- you don't have to graduate to make a million. We'll introduce you to some famous folk who have struck it rich while skipping school, next.
FOSTER: Now, if you want to make your millions, you've got to study hard, go to a good college and come out with a degree -- or at least that's what many people say. But the reality is a little different. In fact, plenty of billionaires have bucked the trend and found fortune without ever finishing university.
In fact, Bill Gates was once the world's richest man and he doesn't have a university degree to his name, you might like to hear. He dropped out of school to concentrate on Microsoft after two years at Harvard. Ten years later, he released Windows. The rest, of course, is history.
Steve Jobs didn't last as long as two years in university. The Apple CEO managed just one semester, in fact, at Reed College in Portland, Oregon before dropping out in 1972. He took a job developing video games two years later, but quit that to go traveling around India instead.
They're great stories, aren't they?
Virgin boss Richard Branson never even went to university. He wasn't a great student and preferred to sell records from the boot of his car instead. That was the start of Virgin Records. Flash forward now to today and the company is planning to send people into space.
Now, Simon Dolan left school when he was 16. Now he's worth over $100 million.
He's written a book titled, "How To Make Millions Without A Degree."
And he joins us now.
This is inspri -- inspiring stuff, isn't it?
I don't know why we bother going to college.
SIMON DOLAN, AUTHOR, "HOW TO MAKE MILLIONS WITHOUT A DEGREE": No, and that's the whole point of the book. "How To Make Millions Without A Degree" describes and shows to people that they can go on if they haven't got a degree, they can start their own business and they can start and earn some good money.
FOSTER: So degrees are good for certain professions, aren't they, obviously, law, medicine and things like that?
But what you're saying, in terms of business, you don't need to go to university?
DOLAN: Yes. And I think a lot of the times, you know, as you say, if you're a surgeon or if you're a lawyer, you want those people to go to university. But setting up in business, you don't need an MBA. What you need is a decent idea and some dedication and hard work and the ability to actually go out and sell.
And that's why those three people that you've got there are -- are so good.
FOSTER: But surely you learn some tips at business school which would take you years to work out in the real world?
DOLAN: No, I don't think you do. I think you learn a lot of theory at business school. We're taught by people who, on the whole, have never done anything in terms of business. What they're doing is giving you the theory. But it's a bit like when you learn to drive a car and you do your -- all of your theory.
How many times do you ever refer back to that when you actually start driving a car?
You learn pretty quick automatically.
FOSTER: Do you think it can work against you, going to university and making it all academic, when actually, there's just a practical process?
DOLAN: Yes, I think you can. I think what happens is, is that you get caught up in producing long business plans, because you think that that's the way to do it. And in the end, you get stifled. And that great idea that you had gets stifled under a whole weight of paperwork because you think that's what you need to do and that's what you've been taught.
FOSTER: You're one of those Richard Branson stories, aren't you?
And you started at the age of 13 or something.
DOLAN: Yes, I...
FOSTER: Tell us when you started.
DOLAN: Yes, I started selling scratch cards to my friends at school. And then I went on and worked in a garage. I worked on a cheese making stool at the market. I've done all sorts of things. I've sold time share. I've sold faxes and photocopiers, a lot of different things.
But all of these things, especially when I was younger, give you great experience, and especially working on the market, you know, great numeracy skills, great customer relations skills and that all helps.
FOSTER: But we're intimidated, aren't we?
The whole idea of setting up a business is intimidating. We do hear about all of the red tape and the bureaucracy involved in the process.
But are you saying it's actually easier than it seems?
DOLAN: It's a lot easier than it's portrayed on television, certainly, and a lot easier than a lot of people would think. Take, for example, if you've ever sold anything on eBay, you're a businessperson.
FOSTER: But we don't think of it as business.
DOLAN: But you don't think of it. You don't think of yourself as an entrepreneur, because everybody does that. And that's what I'd really like to encourage, is to get people thinking of themselves, you know, actually, I can go out, I can start my own business, I can make some money and, hopefully, then employ people. And that's what we need.
FOSTER: Is there one thing that you would say that you've learned, which would be useful to someone young thinking of doing the same thing?
FOSTER: Or old, in fact?
DOLAN: Yes, anybody. You've got to learn how to sell. And that is the key. If you can't sell anything, you're never going to get a business. And regardless of how (INAUDIBLE)...
FOSTER: But that's a natural skill, though, isn't it?
DOLAN: No, that's a learned skill. I was...
FOSTER: Is it?
DOLAN: -- I was terribly shy as a child and really had no -- no idea at all how to sell. But I had to get out there and learn how to do it. Once you've done it a few times in practice, like anything in life, you can do it.
FOSTER: And what is the skill?
DOLAN: The skill is having empathy with people.
FOSTER: So working...
DOLAN: And (INAUDIBLE) to them.
FOSTER: -- out what they want?
DOLAN: Working out what they want and then giving it to them.
FOSTER: Selling it to them?
FOSTER: OK. Thank you very much, indeed, for joining us on the show.
DOLAN: A pleasure.
FOSTER: Now, this Thursday, QUEST MEANS BUSINESS is back with a special segment of Q&A, Quest and Ali. In Q&A, you can choose the topics and we give the answers. Watch Ali Velshi and Richard battle it out. See who's explanation you like the best as we unravel your subject in one minute flat. There will even be a little quiz for them.
Just go to CNN.com/qmb and send your talking points in. It's a great watch.
We're going to check on the markets in just a moment to see if things are improving a bit more on Wall Street.
FOSTER: Let's check on the markets now in the U.S., because it's the first day after the Thanksgiving weekend and the Dow plunged earlier, hovering under 11000 points at some point. The Dow, the NASDAQ, the S&P 500, they're all down around 1 percent right now. The big concern here is euro concerns. It's getting a lot better, actually. It was done a lot further, obviously, late -- earlier on, but now down .5 percent.
And those euro concerns outweighing the positivity following the spending spree over the Thanks hol -- the Thanksgiving weekend.
Now, it's a picture of deep distress in Europe, as you can imagine. All the main markets took a sharp tumble this session. The Irish bailout was meant to provide some reassurance that the debt crisis would stop here. But traders are having none of that. The big banks of the Eurozone bore the brunt of the sell-off. Societe Generale, Credit Agricole and Deutsche Bank all lost ground. It seems everyone is waiting for the next country to ask for help. Only the Irish banks doing well today, effectively being bailed out.
In Asia, Japanese's Nikkei closed at a five month high, as the yen fell back against the dollar. Hong Kong's Hang Seng posted its biggest gain in more than a week after Europe agreed to bailout Ireland, offsetting concerns over North Korea. Chinese stocks fell back on concern the management policy will be tightened. And we saw a slight gain in Australia.
that is QUEST MEANS BUSINESS for today.
Thank you for watching.
I'm Max Foster in London.
"WORLD ONE" starts right now.