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QUEST MEANS BUSINESS
Berlusconi Survives No-Confidence Vote; Russian Justice?
Aired December 14, 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: Victorious but under siege: Berlusconi's political survival sparks mass protests.
Steady as they go, stocks edge up ahead of the Fed's latest statement. We'll have that live.
And economies emerging, will this man ever emerge himself, though, from prison. Russia's Khodorkovsky is about to hear his verdict.
I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS.
Well, the Berlusconi show goes on but not without a Roman chorus of opposition. Some of the worst violence in years has hit the streets of the Italian capital. Tonight we'll look at the battles still to come for the Italian prime minister and the economic impact.
Also tonight, we are just minutes away from the U.S. Fed's latest policy statement. The question: How they'll follow last month's $600 billion cash injection.
First, Silvio Berlusconi survived a major challenge to his government today by just three votes. Deputies in the Italian parliament voted 314 to 311 against, a no confidence vote in their prime minister. Mr. Berlusconi had insisted the country needed stability to get through its economic troubles. But the prime minister may need more than just stability to solve Italy's problems.
The bank of Italy says public debt is at 120 percent-120 percent of Italian GDP. An extraordinary figure, one of the highest levels of debt, in fact, by percentage in the world. Unemployment is 85. percent as well. But Standard & Poor's, interestingly, has a long term rating for Italy of A plus. So that is less risk then Ireland, Spain, or Portugal. So it is not in their category, despite that debt.
Pressure is still weighing on Italian bond markets however from peripheral countries, Spain, Portugal, Greece; 10-year government bond yields rise for the third straight day. That was the news that we heard today. Now, S&P (ph) said in November that political instability could put extra pressure on the Italian economy. Berlusconi's approval ratings have plummeted this year, unsurprisingly. Now, current approval rating is around 30 percent. And riots in the streets of Rome follow today after that vote decision. And it shows the extent of Berlusconi unpopularity, actually. Our Senior International Correspondent Dan Rivers has been watching all these events unfold, outside the parliament. He joins us now from Rome.
Dan, how would you measure the protests on the streets today?
DAN RIVERS, CNN SENIOR CORRESPONDENT: Well, were right in the thick of it for a time there, Max. There was lots of tear gas and lots of missiles being thrown by the protestors. For a while it felt like the Italian police had slightly lost control of the situation, to be honest. There were some instances of them running backwards away from the protestors. Now I understand that may have been some sort of tactic to draw the protestors in before they arrested then. But on the streets where we were it didn't feel like a situation that was under control. It felt like the city was a little bit under siege at one point. And this is all happening on Via Del Crossa (ph), one of the main shopping streets through Rome. The equivalent of Oxford Street, really. And as you can see from those scenes there, it was pretty ugly at times.
This was all about half a hour, an hour after the vote in the Chamber of Deputies, the vote that Silvio Berlusconi won, narrowly. It would only have taken two of the people that voted for him to switch sides and vote the other way, and he would have lost. There were two extensions as well. So, it really came down to the wire, but certainly things got very ugly on the streets.
In terms of who they were, it was a pretty broad coalition, or you know, scattering of protestors. There were students, there were anarchist groups, there were even, you know, survivors of the Laquila (ph) earthquake, as well, who thought that, you know, not enough had been done, or they were unhappy with the level of rebuilding in that town hit by the earthquake. So there were lots of different people there, but certainly some very ugly scenes. Lots of cars burnt, shop windows smashed, lots of damage to street furniture and so on. So, terrible scenes, but for Silvio Berlusconi, a sigh of relief. He lives to fight another day as prime minister, or albeit with the most wafer thing of margins, in the lower house.
FOSTER: So, he becomes much weaker, I guess?
RIVERS: Yes, I mean, I think that is the big question now is, how can he move forward with any sort of legislative program given just how much- how many people have defected from his coalition lead by Gianfranco Fini, who failed to get this vote of confidence against him. But clearly there is going to have to be some horse trading and some backroom deals and some arm twisting now, by Mr. Berlusconi, over the Christmas break in order to shore up his position.
He's gone on TV here reassuring the public that he feels he can carry on governing. That they are plenty of other slim majority governments in Europe and that he feels that he can get his program through. It includes a lot of austerity measures that are deeply unpopular here but as you mentioned, Italy's debt is colossal. You know, it is one of the highest in the Euro Zone; about 120 percent of GDP. Now the rating for Italy hasn't fallen dramatically because a lot of that debt is not held by foreign investors. But I think the feeling is that if interest rates rise in the Euro Zone they are going to have real trouble servicing that debt, which is about $2.3 trillion.
FOSTER: Dan in Rome. Thank you very much indeed.
Well, Italian stock markets were relatively unfazed by the day's drama. Which really follows what Dan was saying there. The MIB index is saw a fourth straight day of gains in fact, up around a third of 1 percent. And who was the best performer of the day? Well, look no further than Silvio Berlusconi's own Mediaset company, would you believe? They saw the index's best gains, by far more than 3 percent. The country's biggest commercial broadcaster is owned by the prime minister. It's been facing tax fraud investigations that Mr. Berlusconi say are politically motivated. It is powerful as long as Berlusconi is powerful, I guess.
We'll have more on events in Italy in just a moment, but first, in just a few moments the Federal Reserve will release its most recent policy statement. The U.S. central bank is expected to hold its key interest rate close to zero. But the key thing we are looking at, is QE, as it is called. Last month the Fed took a big step by introducing a second round of quantitative easing. Let's take a look at what has changed since then. The dollar has appreciated, the value jumping 6 percent against the euro. Yields on 10-year U.S. bonds have risen from around 2.5 percent to 3.3 percent. And both retail sales and business confidence have increased. Consumer spending rose 0.8 percent in November. More than half a percent of that-half a percent more than was expected. And confidence among U.S. small businesses rose to the highest level since the financial crisis actually began.
Felicia Taylor joins us now live from New York.
Felicia, tell us what to look for when the statement comes out.
FELICIA TAYLOR, CNN FINANCIAL CORRESPONDENT: Well, basically, Max, in a word it is supposed to be wholly-uneventful.
But this is the first time that Fed policymakers have met since the contentious vote on the new stimulus, or quantitative easing, that you were talking about last month. And Fed Chairman Ben Bernanke has said that the Fed's decision to purchase literally hundreds of billions, $600, to be exact, in Treasuries will continue to be reevaluated. That so that he can continue to look at the economic numbers that are coming in.
And in frank (ph) news, we have seen some pretty good stuff coming in. Let alone, today, we saw retail sails quite strong. But all expectations are that things will remain status quo at this meeting. There will be no change in interest rates, no change in the outlook. And those economic numbers that you mentioned are under scrutiny. In all fairness, like I said, there have been some signs of life in the economy since QE2 began.
Except, when it comes to the jobs picture. This is crucial. It is the most central point of concern. And after last month's incredibly disappointing number only 39,000 jobs were created against what was an expectation of 150,000. It does remain the single biggest problem for the U.S. economy. So until there is significant job creation and inflation remains tame, analysts expect that the Federal Reserve will keep the stimulus program in place until all of it is spent by June. That means they are going to spend about $75 billion every month until that $600 number is reached.
But even so, less than two months into this program that debate continues over whether QE2 is actually working. There is an article in last week's "Journal" that said, quote, "The bond program looks more like a water pistol than a cannon." And yet today, there is an article in today's "Journal" that says, you know, frankly, even though we've seen yields rise on Treasuries, that actually is showing that the economy is more resilient than one would have expected. And perhaps, QE2 will end earlier than we expected. So, you know, it is always a question of who you ask, Max.
FOSTER: OK, Felicia, thank you very much indeed. We'll be back with you later in the show when we get the statement and your take on that.
Now we are going back to Italy now. Because Silvio Berlusconi has survived a no-confidence vote in Italy. We're talking about that with Dan. Mr. Berlusconi's term ends in 2013, so he presumably will have time to get Italy's economy back on track. Fabrizio Mattesini joins us from Rome, now, to talk more about this. He is professor of economics and institutions and Rome (ph) University.
Thank you so much for joining us, Professor.
How much difference does Silvio Berlusconi staying in power make to the economy?
FABRIZIO MATTESINI, DEPT. OF ECONOMICS, UNIV. OF ROME: Well, I think Berlusconi, now today, he got this vote of confidence for a very, very narrow majority, and therefore his majority now is very fragile. His government is extremely fragile. He's going to try to form, maybe widen his coalition but I don't think that is very likely. And so the situation for the Italian economy is going to be of some kind of instability, or at least not very political-the political decisiveness that will be necessary at the moment.
On the other side, I think that there is widespread consensus in the country and therefore in the opposition that fiscal responsibility is extremely necessary given the situation of the Italian finances. And therefore I don't think there is going to be a lot of repercussions in the markets.
FOSTER: When you say there is this general need for some fiscal responsibility how much real reform can there be from here? Can all those disparate parties actually come together and push through reform or we are just stuck with where we are right now?
MATTESINI: I think that in the following months we are going to be pretty much stuck with where we are right now, because the government is going to be extremely weak and therefore no major reform is really possible at the moment.
FOSTER: But that is a very bad situation for a country with such a huge amount of debt, isn't it? It has to deal with that debt.
MATTESINI: Yes, I think that is the big problem. On the other side, I think, you know, you know, you have to see that this vote has been done right after the approval of the budget law, the financial stability law, and this signals the idea that although there is going to be like a lot of- some kind of weakness in the government, that fiscal responsibility is keeping the deficit down. It is extremely necessary. As a matter of fact Italy has kept the deficit pretty much down in the past few years, with respect to other countries that have been a little more loose on this sense.
FOSTER: OK, Professor Mattesini, thank you very much indeed for joining us with your analysis from Rome, for us tonight.
Well, of course, we will be bringing you much more coverage from the United States as we await that Fed statement. But we are also going to Russia this hour, where the man who once was the country's richest man is now the country's most infamous prisoner. We'll be tracking the latest challenge for a once-high flying Russian oil tycoon.
FOSTER: We literally, just this moment, had the Fed statement through. And interest rates are unchanged in the United States. And we are trawling the commentary now to see if there is any indication that there will be more quantitative easing and whether there are any changes in that. We have Felicia working on that right now. So we are going to get back to her as soon as we can, once we have had a chance to look through the commentary, which is all-important on these things.
Now we'll expect to start hearing the verdict in the trial of the former Russian oil tycoon, Mikhail Khodorkovsky as well. On Wednesday, it is just another phase in a spectacular rise and fall of the former Yukos boss. And it can tell us a lot about the Russian economy itself.
Now he bought Yukos for $300 million in 1995. Can you believe that? And it became Russia's biggest oil producer. Khodorkovsky was arrested in 2003, though, on fraud and tax evasion charges and he's sentenced to nine years in prison. And Yukos went bankrupt in 2006, with over $27.5 billion in taxes owing. A new embezzlement and money laundering charges were actually put against him just last year.
Khodorkovsky believes charges are politically motivated, though. He believes the Kremlin is trying to destroy him. He was once Russia's richest man. He was also No. 16 on the "Forbes" billionaire's list in 2004, worth $15 billion.
Now back when Khodorkovsky actually bought Yukos, Russia was heading for an economic crisis. Last month President Medvedev spoke of the need to modernize the Russian economy in the state of the nation address, there in Russia. But Khodorkovsky has dismissed those ideas and warns that Russia could face a new crisis in 2015.
The Khodorkovsky case has come to represent so many things about Russia's economic and political situation. As Matthew Chance now reports, whatever the verdict, this case will have a huge affect on the entire nation.
MATTHEW CHANCE, CNN INTERNATIONAL CORRESPONDENT (voice over): As he awaits the verdict, Mikhail Khodorkovsky has already told the Moscow court its decision will have an impact far beyond his own future and that of his business partner, Platon Lebedev, his co-accused.
MIKHAIL KHODORKOVSKY (through translator): There is much more than just the fates of two people in your hands. Right here and right now, the fate of every citizen of our country is being decided.
CHANCE: Few doubt the prosecution of Russia's former richest man on embezzlement charges, critics describe as absurd, has taken on a symbolism far beyond his own innocence or guilt. Analysts say Russia, itself, and its commitment to the rule of law is on trial.
MARIA LIPMAN, MOSCOW CARNEGIE CENTER: This verdict will be a verdict on whether Russia is a law-governed state, or whether it ever aspires to become one, because currently it is not a law-governed state. And the trial of Khodorkovsky and his partner, Lebedev, is the most striking example of it.
CHANCE: The former head of the Yukos oil company was arrested back in 2003, and later sentenced for eight years for fraud and embezzlement. He was found to have underpaid taxes on the oil his company produced. Yukos was later broken up and absorbed by the state.
The reason he was targeted is widely believed to be political. He backed opposition parties, called for reform and publicly fell out with Vladimir Putin, then Russia's powerful president.
Bizarrely, in his second trial, which could see him behind bars for many more years, Khodorkovsky is accused of stealing all the oil on which he is already been convicted of underpaying tax. Many analyst believe Putin (UNINTELLIGIBLE) will steer the outcome of this trial as well.
(On camera): Of course, the problem with all of this, beyond the fate of the individuals in the dock, is that it adds to an already pervasive atmosphere of lawlessness in Russia. A sense that the law can be used in this country against any one who falls foul of those in power.
(Voice over): In his final address to the court, Khodorkovsky made a last impassioned appeal.
KHODORKOVSKY (through translator): For me, as for anybody, it is hard to live in jail. And I do not want to die there. But if I have to, I will not hesitate. The things I believe in are worth dying for.
CHANCE: Words clearly intended to sound like those not of a fallen oligarch, but of a political martyr. Matthew Chance, CNN, Moscow.
FOSTER: (UNINTELLIGIBLE) I've had a chance to read through the Federal Reserve statement. This is what has stood out to me. The committee decided today to continue expanding its holdings of securities as announced in November. That means that the quantitative easing announced in November continues. And it won't be changed at this point. Although, the committee will regularly review the pace of its securities purchases and the overall size of the asset purchase program in light of incoming information. And will adjust the program as needed to best foster maximum employment and price stability.
So it is open to more QE if required. Basically throwing it support behind QE, saying this is the right way ahead. On interest rates they are going to maintain the target range for the Federal funds rate at zero to a 0.25 of 1 percent. Basically interest rates are unchanged and QE is unchanged. More on that with Felicia and the market reaction after this break.
FOSTER: The Federal Reserve's latest statement is out. Stephanie Elam is at the New York Stock Exchange gauging the reaction there, but first let's go to Felicia Taylor who is at CNN's New York studios.
You expected no change, Felicia. Is that what we got?
TAYLOR: We got pretty much nothing. That is exactly the language that we expected to hear. Wholly uneventful, they didn't change anything. Interest rates are exactly where they have been. Some of the highlights that they did say is that the information that has been received since the initiation of QE2 is that the economy is recovering, but not enough once again, to bring down those unemployment numbers.
And that, again, is the central part of this story that needs to be resolved before we are actually going to see a recovery in place. It continues in other words to be a jobless recovery.
The housing sector is under pressure as well. So that is another thing that the Federal Reserve is going to continue to watch. However, inflation remains pretty stable. We are not too concerned about that yet. As of yet, we have seen some prices in commodities rise a little bit higher we have seen retail sales do well. The consumer is feeling a little bit better as we move into the holidays.
So that is all good news. I mean those are things that the Federal Reserve wanted to see happen. Progress has been made, but as the Federal Reserve said, it has been disappointingly slow. And that is why there will be no change in rates at this point.
There are still some critics of QE2. There is one Federal Reserve member who says that high level of monetary policy could increase inflation at an unexpected rate. So there is some concern within, or dissention, I should say, within the Federal Reserve that remains to this day. The money, though, will continue to be spent in terms of easing; $75 billion a month through the end of June of next year, that stays the same.
And the market reaction was pretty much as expected. As one trader said, it is pretty much baked in. It went up about 6 or 7 points, a few ticks higher on the 10-year yield. And that is the one surprising thing that we've seen, is that yields on bonds have risen. That wasn't the purpose of this yet, but yet again, not so significantly to be of any concern. So, OK, status quo, move on as we had expected. No big deal. And that is OK for right now. Change is not what we need. It would be good if we could see a change in the unemployment numbers but that is all right for the moment.
FOSTER: The news is no news. Felicia, thanks for bringing us no news.
FOSTER: Anyway, markets are irrational, though. It does matter how the markets react.
So, Stephanie take us through how the markets are taking this.
STEPHANIE ELAM, CNN FINANCIAL CORRESPONDENT: They are taking it pretty much as Felicia said. A slight movement to the upside, but barely anything that you would shake a stick at, for sure, Max. Overall, here, this is pretty much what was expected. Anything different than this would have been something that would have been noteworthy to investors. But overall, it was what was expected.
What is interesting though, in the accompanying statement to the decision coming out from the Federal Reserve, is that they did mention that spending, businesses spending-that they are actually spending less towards the end of the year than they were earlier in the year. And that is something worth noting as well. And they are, of course, that people-these businesses, still reluctant to go ahead and hire.
The other thing that is noteworthy about critics of what is going on, as far as the QE2 movement, and the whole idea of stimulus here, is the idea that once you start buying back these bonds like this it is very hard to stop doing that. You do hear critics saying that as well, just adding on to what Felicia was saying there.
But overall, when you look at the markets here, pretty much as expected for this last meeting of the year.
FOSTER: OK, Stephanie, Felicia, thank you both for joining us from New York with that. And we'll have more on the Fed statement next, as we are going assess, really, where we are with the Fed at the end of the year. Their last statement to the year, that was, we are going to an economist after that.
And we have got an update on our CEOs, is-in this-across this week, in the global recognition as Sarah's company is nominated for an award.
FOSTER: Welcome back. I'm Max Foster in London. More QUEST MEANS BUSINESS in a moment. But first a check of the headlines.
FOSTER: The RHDP wants Ivorians to help take control of government buildings in an effort to force Outarra's opponents from power. Much of the world recognizes Outarra as the winner of last month's presidential election. But incumbent, Laurent Gbagbo, has declared himself president.
Gay rights groups are outraged over some advice from FIFA president, Sepp Blatter. Blatter says gays and lesbians who hope to go to the 2022 World Cup in Qatar should refrain from sex. He also went on to say that football has no boundaries.
Gay basketball star John Amaechi says Blatter's comments are more damaging than they appear.
Just minutes ago, the U.S. Federal Reserve released its latest statement. It will hold its key interest rates close to zero and says that it will probably be necessary for an extended period. The quantitative easing announced last month will also continue. The statement says that the U.S. economic recovery is continuing, but at too slow a rate to bring down unemployment. It also said the housing sector continues to be depressed and that measures of underlying inflation have continued to trend downwards
Diane Swonk is chief economist at Mesirow Financial.
She joins us live from Chicago.
Thank you so much for joining us.
On the face of it, this statement is very much like last month's statement.
But was there anything of interest in there for you at the end of a -- a year for the Fed?
DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: Well, you know, there -- I think there was no news is good news. I don't think the Fed wanted to make a lot of news. It was interesting, the only acknowledgement that some of the incoming data has been stronger more recently was, of course, in Tom Hoenig, the president of the Kansas City Fed's dissent. He actually dissented on grounds, on what he had already dissented on since January, since he's been a voting member of -- in 2010. He'll be going off that committee in January of next year.
But I think it's interesting that he noted that the -- the economy looks like it's re-accelerating a little faster.
So that is the only thing we saw in this statement to sort of acknowledge things like today's retail sales, which were actually quite robust for the month of November and upward revised for the month of October. What the Fed stuck -- stood on message on was inflation is too low, unemployment is too high. It's just not enough.
FOSTER: They kept the option open for more QE
Is the Fed as much on a P.R. drive for QE as anything else, to -- to keep the faith in QE as a solution to America's economic problems?
SWONK: Well, it's certainly only one of two solutions now. We do have a bit little extra stimulus from the payroll tax cut. And the fact that tax cut -- the tax cuts are being extended means at least a few less headwinds going into 2011. And that's something that the Federal Reserve is welcoming at this stage of the game.
I think the Federal Reserve would love to, particularly Ben Bernanke, would love for the economy to surprise him on the upside and be able to stop the quantitative easing program much sooner, stop buying purchases of Treasury bonds much sooner than they expect.
I don't think there's going to be likely in the first six months of the year, because the inflation situation, although producer prices are going up, commodity prices are going up, it's just not going through to the U.S. consumer. In fact, much of the reason we do have strong retail sales is because of really heavy discounts. During the month of November, they had what we call Black Friday here in -- in the States. Those sales went on the entire month, and actually even started in October this year, much earlier than usual.
FOSTER: Diane Swonk, thank you very much, indeed, for analysis on that story.
Now, whilst the U.S. reacts to the news from the Fed, Europe has its own issues to deal with. As we heard earlier, Silvio Berlusconi has clung to power in Italy. But the threats to stability remain. And that fiscal uncertainty could spell economic disaster.
In Spain, a government bond sale saw yields rise sharply. The government also missed its target of $4 billion in the sale by more than $0.5 billion.
But we saw brighter news from Germany, where investor confidence rose for the second straight month in December. The ZEW Index rose to 4.3 points, showing there is some positivity in the Eurozone.
Italy was one of the countries mentioned this year as being at risk of needing a bailout.
I asked Francois Bourguignon, former World Bank chief economist, if he thinks Mr. Berlusconi holding onto power will affect the country's economic situation.
FRANCOIS BOURGUIGNON, FORMER WORLD BANK CHIEF ECONOMIST: No. I think the economic implication is the fact that the budget will go through, meaning that the Italian economy is not under very strong pressure for the coming months. And from that point of view, markets should be reassured that nothing will come from that side of the European economy.
FOSTER: OK, Italy is just one concern across the Eurozone. We've been hearing today from the European Central Bank president, Jean-Claude Trichet; actually, late last night he said: "We're looking for maximum flexibility and maximum capacity in this bailout fund," as it's been dubbed, "quantitatively and qualitatively."
Do you think that sounds as though he wants money to go -- go into that bailout fund?
BOURGUIGNON: I don't think there is a need right now for this fund to be expanded. The other day, Miss. Merkel say that for highland (ph), there will be a meeting on the 10 percent of the funds. If tomorrow there is a problem with Portugal or even with Spain, the fund should be enough.
So I believe that this is not, for the moment, a real big issue. When Jean-Claude Trichet refers to the quality of the fund, nimbleness (ph) is more important in the sense that what matters is really to make sure that Europeans learn to manage this fund, because, of course, we are not used to this kind of bailout situation.
FOSTER: But we are reaching a bit of a -- a crisis point, aren't we, in the relationship between the central bank and politicians, because the central bank is getting frustrated with having to support the bond markets and politicians aren't going to do much more, it sounds like, because they don't want to put money into the bailout fund.
But the -- the central bank can't keep supporting the bond markets by buying up bonds.
BOURGUIGNON: No, I think this is the role of the central bank to do that. On the other side of the Atlantic, the central bank is having another kind of a crisis. I don't think there is any big issue behind that.
It is true that the central bank has to support those bond markets. But at the same time, it might be the case that the pressure in these bond markets will calm down in the coming days and weeks so that I do think there will be any -- any further problem from that point of view.
FOSTER: OK. When E.U. leaders meet later this week, do you think they'll be able to come up with some sort of plan to respond to a crisis, if it does draw in Portugal and possibly Spain?
BOURGUIGNON: I don't think that the problem (INAUDIBLE). I mean this is -- these problems are -- are inside. Spain is trying to find a -- a new growth path. They have decided about this strategy to push out the manufacturing sector, to get away from construction. So this is rather encouraging. And, again, I don't think that there is any urgency, at this stage, in the case of Spain.
So I would not be really to worry for what will happen in the Eurozone. There is no real risk for the Eurozone to break up. And for the moment, I don't see any big risk for the euro to lose a lot of value, with respect to other currencies and particularly to the dollar.
(END VIDEO TAPE)
FOSTER: Now, Sarah Curran travels to New York in this week's episode of The Boss. Her company has been nominated as best global e-tailer at the Global Fashion Awards.
But will she walk away with the main prize?
Find out after the break.
FOSTER: It's Tuesday, which means it's time for The Boss.
Today it's all about quality for two of our leaders, as our fond little narrative takes us to New York.
Sarah Curran is the founder and the CEO of My-wardrobe.com.
She's Attending an awards ceremony where her company is up for best global e-tailer.
And Richard Braddock, well, he's about to chair a crucial staff meeting as head of online grocer, FreshDirect.
(BEGIN VIDEO TAPE)
UNIDENTIFIED MALE: Previously on The Boss, Richard Braddock took time out from his busy schedule to focus on charitable giving.
RICHARD BRADDOCK, CEO & CHAIRMAN, FRESHDIRECT: We're actually going to, I think, donate about 1,000 turkeys.
UNIDENTIFIED MALE: And in London, Sarah Curran acknowledged her growth as chief executive.
SARAH CURRAN, FOUNDER & CEO, MY-WARDROBE.COM: If you see the person - - even a person that's got (INAUDIBLE) I think I have (INAUDIBLE).
OK. The stock is out. I've got the BlackBerry. I've got my BlackBerry. We have to call when we win.
UNIDENTIFIED MALE: Sarah Curran has crossed the Atlantic Ocean. She's in Manhattan at the Global Fashion Awards.
UNIDENTIFIED FEMALE: (INAUDIBLE).
UNIDENTIFIED FEMALE: (INAUDIBLE).
UNIDENTIFIED MALE: Her company, My-wardrobe.com, has been nominated for outstanding e-tailer of the year. For Sarah and her team, there's no more rewarding recognition.
CURRAN: This is such an exciting event. I mean, to be short-listed as global e-tailer alongside such established brands, who have been going for 10 years and we're for-and-a-half years old, it's phenomenal.
Did you check on Thurston (ph)?
UNIDENTIFIED MALE: Yes.
UNIDENTIFIED MALE: (INAUDIBLE).
UNIDENTIFIED MALE: As the chief executive of a growing company, Sarah knows the nomination could catapult her company further, bringing in new brands and new customers. For Sarah and her executive chairman, it's a major achievement. Understandably, their nerves are kicking in.
CURRAN: You know, naturally, I'm feeling quite anxious.
UNIDENTIFIED MALE: It's really exciting, huh?
UNIDENTIFIED MALE: No?
CURRAN: Yes, no. Absolutely.
UNIDENTIFIED MALE: There's no down side.
CURRAN: We'll get a nice meal.
UNIDENTIFIED MALE: Because we got nominated.
CURRAN: Yes. Thanks.
UNIDENTIFIED MALE: We'll have to put a lot of our (INAUDIBLE) away.
CURRAN: Thank you.
UNIDENTIFIED MALE: As Sarah arrives, she's faced with stiff competition from well-established brands. But she doesn't seem fazed.
CURRAN: It's not about how old you are or in terms of an e-tail business or how -- when you launch your -- your company. It's about the dream that you have and the creative ideas that are born within that -- within that -- within that dream and within the business.
UNIDENTIFIED MALE: As the chief executive, Sarah knows she has a chance of walking away with the prize.
CURRAN: Do I want to win?
Yes. It's -- it would be -- it's not in my nature to not want to win.
UNIDENTIFIED FEMALE: Here are tonight's nominees, who are battling out for (INAUDIBLE). OK. ASOS.com. Gilt Groupe. My-wardrobe.com.
And the winner is ASOS.com.
UNIDENTIFIED MALE: Despite missing out, Sarah is confident she has a winning strategy and, above all, a winning team.
CURRAN: I'm phenomenally proud of the team. The team worked so hard. And I've got such a passionate team and actually the -- the team has often been -- the executive team has stayed the same. We haven't lost anyone. I think that's a true testament to everyone's passion.
UNIDENTIFIED MALE: She's the boss and she's not defeated. With her head held high, her eyes affixed firmly on next year's prize.
CURRAN: Now we go to the office party (ph) and we unwind. We'll get the global e-tailer award next year.
BRADDOCK: Hello, everyone.
UNIDENTIFIED MALE: Meanwhile, in another part of New York City, in Queens, to be precise...
BRADDOCK: Well, next starting, I'm going to begin to snack.
UNIDENTIFIED MALE: Richard Braddock is about to meet with the managers in charge of FreshDirect's daily operations. Keeping the product fresh and the customers happy is their top priority.
BRADDOCK: As we get, you know, up in volume and we expect to continue growing like we are now...
UNIDENTIFIED MALE: For Richard, there's no more important meeting than this one. It's here that he hears what's going wrong and, more importantly, what's being done to get it right. His team works tirelessly to make sure problems with the orders are kept to a minimum.
UNIDENTIFIED MALE: We had only three short. That was about 360,000 packs. That's only one short for every 110,000 products that we handle.
UNIDENTIFIED MALE: Managers are discussing the quality of the food they sell to customers and the quality of FreshDirect's delivery operations. For Richard, this is what his business is all about -- getting it right time and time again.
BRADDOCK: We have a -- we have a business which is largely based on perishable product, where we have 30 metrics that we look at every single week. And we can screw up on any one of those and a customer can hold us fundamentally accountable for it.
UNIDENTIFIED MALE: Are you using the -- going to the North Shore at all?
UNIDENTIFIED MALE: Yes. Yes. Yes.
UNIDENTIFIED MALE: Richard likes what he hears from his team. For him, it's crucial that FreshDirect maintains its high standards.
BRADDOCK: Everyone around that table could talk about their unit in terms of what happened yesterday and what they're doing about it tomorrow. And once you get that rhythm in place, you build the confidence of the company, you build their willingness to take risks, to change.
UNIDENTIFIED MALE: Richard's attention to the product is not limited to the boardroom.
BRADDOCK: All right. There's nothing great here I'm covering up.
UNIDENTIFIED MALE: He dons his protective gear and joins his managers for a taste test inside the heart of FreshDirect's operations.
UNIDENTIFIED MALE: Do you want to take a bite?
UNIDENTIFIED MALE: Sure.
UNIDENTIFIED MALE: Beautiful.
UNIDENTIFIED MALE: Sure.
UNIDENTIFIED MALE: Be it a meeting or a taste test, Richard is fully involved in his company's daily operations. As the boss, only he knows what's needed to achieve success.
BRADDOCK: Our future is going to be that we've cracked the code on loyalty. Every day, I appreciate what you're doing. And, you know, it's - - it's impressive that you're all able to talk about what happened yesterday and what we're doing to make it better tomorrow.
UNIDENTIFIED MALE: Next week on The Boss, Sarah and the team relocate as my wardrobe expands. And we catch up with Michael Wu (ph), as he plays business guru to university students.
(END VIDEO TAPE)
FOSTER: Well, the nominations, meanwhile, for this year's Golden Globes Awards have been announced, kicking off the start to the awards season. But it's not just good news for the nominees. After the break, we'll find out that it could mean big bucks for TV, as well.
FOSTER: Now the stage is set for the Golden Globe Awards. The leading contender, with seven nominations, is "The King's Speech." And there are six nominations each for "The Social Network" and "The Fighter." But the show is also TV gold. NBC now pays $13 million a year for the right to broadcast the ceremony. so is it worth the money?
Tom O'Neil has the inside track on this.
He is entertainment writer for the "L.A. Times" and editor of the awards site, GoldDerby.com.
He joins me live from Los Angeles.
Thank you so much for joining us.
Just give us a sense of the money behind these awards, because we just see them as glamorous events.
TOM O'NEIL, EDITOR, GOLDDERBY.COM: Sure. Well, let's put it this way, all of the Oscar winners last year were on the stage at the Golden Globes, accepting awards before they won the Oscars. The impact is enormous. In recent years, they've been out of sync in terms of what they choose for best picture.
But in general, the O -- the Golden Globe is an Oscar crystal ball. And more than 20 million people tune in. And it's the best party in town.
Warren Beatty once said the Oscars are business but the Globes are fun.
FOSTER: OK, it makes sense how the -- how -- how the movie industry makes money from this, because it raises the profile of yet more of those movies. But in terms of the TV industry, you're saying basically it's from advertising, from the show, that is, the awards ceremony.
O'NEIL: It is. You could go back to shows like "Ally McBeal" 15 years ago. It was put on the map by the Golden Globes. You could argue that "Madmen," which is now, of course, the toast of -- of basic cable in America, was put on the map by the Golden Globes. It's won best drama series there for the past three years.
And when you've got 20 million people tuning in to NBC for this awards show, quite a few of them are going to go out and check these shows winning. And when they're little shows on little networks like AMC, it matters a lot.
FOSTER: OK, and there are other awards ceremonies ahead of the Oscars, aren't there?
But this one has the credibility because, as you say, it's a crystal ball, right, it generally gets it right?
O'NEIL: Yes, and it's also the best party of the year, because they don't have all those little categories like best film editing and cinematography and art direction. It's all star power and it's all the top stars of TV, with film in one room. And drinking, by the way, 1,600 bottles of champagne in one sitting. And it is a party that goes on all night and they're having a blast.
FOSTER: It seems like a conspiracy to some people, though.
Don't people who are giving out the Oscars sometimes get a bit over the fact that they -- they effectively come up with the same decisions as the Golden Globes. Maybe one year they'll decide to go against the grain just to assert themselves.
O'NEIL: Yes. Everybody feels that the Globes upstage them. And there's a very popular view in Hollywood that these are 88 people who are undeserving of the success they have.
I take the other point of view. I say good for them. I think there's an arrogance in America of treating foreign journalists with contempt when, if you were to draw parallel, let's say, to the Los Angeles Film Critics Association, there are a lot of dubious members there. They give out awards. They did it on Sunday. Nobody cares.
But the Globes are so successful and have such a high profile that you'll hear a lot of griping today about their integrity. And I'm not sure that's fair.
FOSTER: OK. And what did you learn, then, about the rest of the awards season, from what you saw at the Golden Globes?
O'NEIL: Well, you mean in terms of today's nominations?
FOSTER: Yes, what can you predict for the rest of the season?
O'NEIL: Well, I think the big story is how strong "The Fighter" came out swinging today. We knew that this was a race at -- an awards race, Globes and Oscars, between "The Social Network" and "The King's Speech," but suddenly "The Fighter" came out with nominations for best picture, for best director and Mark Wahlberg got nominated for best actress. He bumped out of contention Jeff Bridges, who was the awards darling last year, of course.
Where was "True Grit" today?
Everyone thought that would be up for best picture. It's a Coen Brothers' movie. They weren't nominated for director either. That was a big surprise.
FOSTER: OK, Tom O'Neil, thank you very much, indeed, for that.
We look forward to the rest of the season and the Oscars, eventually, as well, of course.
Over to the Weather Center now.
It's very cold in the United States, even colder here in Europe -- Jenny, toward the end of the week, I gather, you're warning?
JENNY HARRISON, CNN METEOROLOGIST: Yes, that is what I'm warning, actually, myself. (INAUDIBLE) in the U.S., as you say. But let me start out by showing you what's been going on in the last few hours. Another storm, a winter storm pushing into the Pacific Northwest. Some very heavy rain, again, some ice and some snow.
And then we've seen more of this lake effect snow around, obviously, the Great Lakes in the Midwest. This shows you, in the past 24 hours, how this snow has been fairly unrelenting. And, of course, there have been some problems there, not just in the United States, but also across the border into Canada.
Have a look at some of this. You can barely see. Whiteout conditions that we have seen, huge amounts of snow. This, as you can see, is Sarnia in Canada. And there have been hundreds of motorists stranded for about the last 24 hours. They have now been able to reach these stranded motorists and get many of them out and obviously to a warm, dry, safe place.
But you can just see what it has been like, the amount of snow, and, obviously, the problems it has caused.
Let's come back to the weather map. I'll just show that where that actually is. It's on a particularly busy interstate. And this is, as I say, to the east. This is where the motorists have been stranded and all because of the less.
Now, what exactly happens in lake effect snow?
Well, I'll come onto that. But here's just another couple of iReport images which I have to show you. Again, cars stranded, but at least, perhaps, in front of their own homes. This coming into us from Rita out there in St. Paul, which is Minneapolis, which is where the huge snowfall came down over the weekend.
But, of course, what happens with a lake effect snow, you have the bitterly cold air coming over this warmer water. This picks up all the moisture and the friction, then, actually slows the air down and, of course, it comes down as snow. So that is what has been happening both to Canada and the U.S.
Warnings in place across the Midwest of the U.S. And more lake effect snow in the next 48 hours. And then you'll notice another system coming in from the west, which really sweeps across the region. Rain in the south. And, as I say, all the while that snow continuing out in the west. But the temperature is still well below average and it will continue to be like that as we go through much of this week.
So Wednesday, again, temperatures not even making it above freezing around the Midwest.
And there are some travel delays across in Asia to just be aware about on Wednesday. Nothing to tell you about across in the U.S. We're not really experiencing anything which should produce long delays. But a similar story in Europe when it comes to the snow and the problems there. These are the current temperatures with the wind factored in. So bitterly cold across the southern and southeastern areas.
And then, indeed, as Max was saying, new blasts of snow and ice as we head, really, Thursday into Friday. And this is going to be absolutely vile conditions -- really intense, strong winds bringing in that cold Arctic air. It will extend across much of Western Europe and the snow will be coming down as well -- Max.
FOSTER: OK, I look forward to the traffic chaos later on in the week.
Thank you very much, Jenny.
We'll check on the markets and see if there's any chaos there after this short break.
FOSTER: Let's go straight to the U.S. markets.
The Dow is at its highest level since before Lehman Brothers filed for bankruptcy in September, 2008. The Fed's decision to keep interest rates near 0 and to forge ahead with the QE2 seems to have had little effect on the market, because they all expected that.
The Dow was advancing before and after the announcement, currently up .5 percent.
Stocks in Europe closed mostly in positive territory, too, listed by the upbeat real -- retail sales figure that we reported on earlier from the U.S. Most investors kept to the sidelines, though, ahead of the Fed's report, which was released after the European close.
BP helped the FTSE higher after agreeing to sell assets in Pakistan and the DAX closed barely changed, pausing for breath on hitting a 31-month high yesterday.
Caution was the watchword in Asia, as of the Federal Reserve policy meeting. The major stock markets ended higher, but not much. The exception was the KOSPI. Shares in exports rose. That helped push the market to a three year high.
Japan announced plans to cut the corporate tax rate by 5 percent, but investor reaction was muted. Shanghai pulled back from their Monday surge, ending the session pretty much as it began.
That is QUEST MEANS BUSINESS.
I'm Max Foster.
Thank you so much for watching the program from here in London.
"WORLD ONE" starts for you right now.