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QUEST MEANS BUSINESS
U.S. Economy Starts Generating Jobs; NYSE Falters Due To Jobs Report; The Ties that Bind; Dior Runway Show; Creepy Crawly Car; The Business of Fresh Produce; Aid to Africa
Aired March 04, 2011 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: So, finally the U.S. economy starts generating jobs.
Something to shout about, WPP's chief exec says they've had a violent recovery.
And millionaires versus the billionaires, the NFL season is in doubt.
It may be Friday, but I'm still Richard Quest, and, yes, I still mean business.
U.S. unemployment is falling at its fastest rate in nearly 28 years and job creation actually spiked up in February. Despite the encouraging top line numbers there are still lingering doubts about whether the United States economic engine is really starting to rev up. Is it a blip or is there something really happening? These are the numbers. You make your own judgment.
Non-farm payrolls as they are known, non-farm jobs; this is the way it looked. It rose very sharply with 192,000 non-farm jobs added in February. It brings the unemployment rate, because of the way things are calculated down to 8.9 percent from 9 percent. Now that is the lowest figure since April 2009. If you look at the way jobs have been created. This of course was some very worrying times.
The job creation really began last October. We had this blip in January. And the question will be whether or not a trend has been established, or is it still too soon to say. Peter Morici is in Washington and joins me now.
We begin, obviously, with that pretty basic question. Is February, or the number we're talking about, is it a blip or is the tide turned?
PROF. PETER MORICI, UNIVERSITY OF MARYLAND: Well, certainly we're doing better than we were before. The economy growing at about 3 percent a year over the last six quarters, should be generating about 130,000 to 140,000 jobs a month. This month we got 190,000, but last month we did very poorly. I'd be happy to see 150,000 jobs a month on a sustained basis, as a beginning of doing better. Bottom line, we have to get about 350,000 to 400,000 jobs a month to get unemployment down to an acceptable level. But we're not there yet.
QUEST: Now, we have been inundated over the last couple of weeks with a wealth of economic numbers. All of which-frankly, Peter, you know, this late in the recovery they are still not giving us a clear signal on the U.S. economy, absence say, for example, stimulus.
MORICI: This economy still has fundamental structural problems. It doesn't produce enough of its own energy and it is too expensive to buy it abroad. If the trade deficit with China continues to grow, which means we are not selling enough stuff to pay for what we buy, you add the two together. And we have these chronic budget problems across big states, Illinois, Wisconsin, New York, New Jersey, California. Those labor relations problems and budget problems have to be solved if this economy is going to find a firm footing and go forward.
QUEST: OK, so you have a-this week there was a scintilla of good news on the U.S. economy though. Let's face it, Congress and the president have agreed on the two week temporary budget deal. I have-you, you-I've read your views on this. We will be back here within two weeks. But getting a full budget, that is not going to be easy.
MORICI: Well, no. Government spending in the United States has gone up almost 50 percent in the last four years. It has gone up, 1.-oh, about 40 percent. It has gone up about $1.1 trillion. And it has created a 1.6 trillion deficit, because they have also cut taxes some more, on top of George Bush. Now, you know, cutting $10, $20, $30, $40 billion out of that is chump change. These guys have got to get serious.
And I'm not going to be just critical of the president here. I mean, Boehner is not serious either. These guys have got to sit down and do something about health care for real.
QUEST: But obviously-
MORICI: And about Social Security for real.
QUEST: But obviously they are not going to get to grips with this with an election for the presidency, 18 months away, 20 months away.
MORICI: Absolutely not, because this president is so focused on getting re-elected it is not the statesmanlike thing to do; he's not doing right by the country doing that. The Republicans, for their part, want to do nothing but score points on this guy, so they can get their guy in, whoever that guy might be. So you are right. And that makes me less than optimistic that we are going to get the kind of jobs growth we need and this recovery is indeed sustainable.
QUEST: Finally, the market today, just looking at the numbers, we're off 166 points, but we were up about 200 points yesterday. And we'll be talking about the market in a second. What is the-in more detail-but what is the market telling you? What are investors into the market telling you?
MORICI: If the U.S. economy can grow at 3 percent a year, we may have high unemployment, but that is enough to generate a lot of domestic profits for companies. And most American companies, 80 percent of them earn 50 percent of their profits, or more, abroad. The S&P 500, 50 percent of its profits come from places like China. So if Asia is growing at 7, 8 10 percent a year, the U.S. economy is growing at 3. Wall Street can do very well, even if American workers have high unemployment.
QUEST: Peter Morici, lovely to see you, Professor. Thank you very much. See you again, very, very soon. Peter Morici is in Washington.
Now, as you have heard the jobs numbers are clear. So the reaction on Wall Street is really quite interesting. What did they make of it? Alison Kosik is at the New York Stock Exchange and joins me now.
Alison, I've already given the headline number. What, you are off down about 170 odd points, give or take.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: That's right.
QUEST: Why would the market not be encouraged by at least this rise in the job creation?
KOSIK: You know what, this is a classic buy on the rumors, sell on the news, effect. You know, you have to remember, Richard, what happened yesterday. We saw the markets rally. The Dow was up almost 200 points on the expectation that we were going to see a strong, you know, jobs report today. And this was based on, of course, that unemployment data. It was at one of its lowest points that we have seen in years. But what we got today was in line with expectations. So we really, yesterday, got all the gains we can get out of the report that we could. And then today when the number sort of didn't really wow Wall Street; it really wasn't a blockbuster number. That is when we saw from the moment the opening bell rang, you know, stocks started in the red.
Now, I did talk with one trader today, Richard, who put this into a little more perspective. Listen to what he had to say.
(BEGIN VIDEO CLIP)
JOE GRECO, MANAGING DIR., MERIDIAN EQUITY PARTNERS: It was a decent jobs report, but I don't think it was really a surprise there. You know, the market basically has factored in that we have already seen a bottom and we are starting to lift off it as far as unemployment is concerned. So, any incremental growth is not necessarily a real buoy to the market but rather just, you know, keeps it on the path.
If the number had been significantly larger I think we probably would have been able to sustain our gains from yesterday, or at least hold off on the selling that we're seeing today. And of course, if it were negative then I think we would have really seen some thrashing early on in the pre- market trading. But, you know, the focus is on oil. It is all about oil right now.
(END VIDEO CLIP)
KOSIK: And that is the second point I wanted to make, Richard. This really is all about oil and what you are really seeing is what is known as the weekend effect, where the geopolitical events are overshadowing the decent aspects of this jobs report. I mean, have you looked at oil today, Richard? It is up over $104 a barrel. It is getting pretty close to $105 a barrel, Richard.
QUEST: That, of course, is the West Texas, WTI blend, Brent, of course, at (CROSS TALK)
QUEST: But, Alison, hang on a second. Hang on. Look, we are now in a very dodgy, dangerous territory, when we are seeing triple digit moves on the main, on the 30, in each direction.
KOSIK: Oh, yes, I mean, volatility is back. I mean, but you know, besides the new of the day, I mean, you think about what this means for the future. I mean, just oil itself, talking about NYMEX crude, you know, for us looking at $104, $105 a barrel oil, it is a big deal. It is a huge headwind for both employment and for companies' bottom lines. I mean, think about it, for companies, the higher oil prices go, that cuts into their profits.
KOSIK: And puts pressure on pricing as well. So, not only it means they can't hire, but they are going to have to pass down those higher prices to consumers, Richard.
QUEST: Alison Kosik is in New York. Have a good weekend.
KOSIK: You, too.
QUEST: Although I was about to say, gas prices, gas prices in the U.S. are what, about $4, coming up on almost $4 a gallon.
KOSIK: We're getting close to it.
QUEST: Don't expect too much sympathy from our viewers, who are paying $9 and $10 a gallon.
KOSIK: OK, I won't ask.
QUEST: Many thanks, Alison. Have a good weekend.
Now, if there was much cause for optimism in Europe today, it wasn't certainly reflected in the markets. The major indices finished down, as in the U.S., it was those rising oil prices, a particular concern. Brent is up more than 10 percent, at $116 a barrel. The CAC 40, the Zurich SMI, saw the heaviest losses, both down some 1 percent.
Shares in Renault, the car company in France, fell nearly 2 percent in the Parisian market after the latest twist in the tale of corporate espionage. Now, if you join me over in the library, and while we go over there let me remind you, several executives were fired some months ago. And there were accusations that potentially China had been engaged in industrial espionage after Renault's electric vehicle technology. Well, now, Renault's chief operating officer, Patrick Pelata, has doubt about the spying allegations.
He was talking to "Le Figiro," the newspaper, and he said Renault possibly has been tricked. In other words, we may be talking not about industrial espionage, but good old-fashioned fraud. Now, related to the secrets about Renault's electric cars, there was talk about China receiving sensitive information. Three executives were fired in January. They are taking legal action against Renault. So, in this scenario, step in the Economics and Finance Minister Christine Lagarde, who wants answers. Renault is 50 percent state owned and she says that Renault must face all the consequences. Justice be done, confidence restored, compensation paid. Pelata says that he will take the consequences. What actually is happening at Renault, frankly no one really knows.
When we come back after the break, mature markets and traditional media. Going old school paid off for the world's biggest advertising agency. Sir Martin Sorrell, a good friend of this program, will be with me live after the break.
QUEST: A year of significant recovery. That is how the advertising giant WPP has described 2010. The annual pre-tax profit-wait for this-it soared 28 percent.
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A stronger than expected pick up in the U.S. and Germany boosted their results. WPP, the world's biggest advertising company, says business has bounced back from a brutal '09. The results were robust. The stock of WPP has had a hard time today. It was down. Looking at the numbers it looks like it closed off somewhere just over 2.5 percent.
What lies ahead? Joining me now, from New York, Sir Martin Sorrell, the head of WPP.
SIR MARTIN SORRELL, HEAD OF WPP: Good afternoon, Richard.
QUEST: Martin, you make a 28.5 percent jump in profits.
QUEST: And the market almost thumbs its nose at you.
SORRELL: No, I think that is a little bit unfair, Richard. You know, you are older and wiser than that. You know what happens. You know there is a little bit of loose money knocking around, certainly before results and after results. So, I think we have to look at it in a few days time. And we have had an-I think in all frankness, we've had a good run over the last year or so. And the results were good. They're record results. Maybe that is the problem, Richard. Maybe because their record results that causes an issue.
SORRELL: As you said in your intro, it was the mature markets, both geographic and functional. Well, it is the sort of thing that you're doing, that did well. Traditional television, free to air television. And in addition to that the United States. Those are the hot spots in 2010, 2011, probably the same rate of growth overall, but the BRICs in next '11, and digital will probably be a little bit more important. And there will probably be a bit more growth than in the U.S. and the U.K., for example.
QUEST: You see the one other concern, we saw it with broadcast to ITV, in the U.K. this week, with their results. There is a feeling or a fear that if there is a slow down about to take place, or some form, the froth comes off the top. We know for airlines, for example, they've had the best of it already.
QUEST: Do you fear that advertising might have had the best of it?
SORRELL: No, I agree with the professor, the prof just before that you interviewed. I think that the prospects for 2011 and 2012 look pretty good. In 2011 we are budgeting a 5 percent increase in life-for-like growth, similar to what we achieved last year, 5.3 percent. 2012 has that maxi-quadrannual that you and I talk about occasionally. The Olympics in London, the great event, the U.S. presidential election, U.S. Supreme Court decision that has allowed much more lobbying, political advertising behind that, and we'll have the European football championships. Those three events usually add about 1 or 2 percent to global advertising growth.
I think the issue is when the U.S. administration gets to grips with the deficit. And that might not come, as you said, until after the election. We live in political cycles, not economic cycles. So, I think it is set pretty fair for '11, pretty fair for '12. You have also got to get used to that slow growth you were talking about, in the mature economies.
SORRELL: And clients will have lots of cash; $2 trillion sitting on balance sheets from multinational companies in the West. They are not investing in capacity or jobs. They are investing brands and trying to build share or hold share.
QUEST: Right. Now, if we just look at these emerging markets and particularly, digital markets, digital economies and those.
QUEST: But how far do you think advertisers and companies are-have got-in actually maximizing the advertising benefits of it. It still seems to me it is banner advertising, although, still more sophisticated than that. But nobody has really unlocked the golden key on this yet.
SORRELL: Well, we're still in the very early stages of a revolution. And the valuations, the stock market valuations, you see, getting ahead of things, with Twitter, and Facebook, and Groupon, and Zinger (ph), and all that sort of thing. But having said that, you and I spend about 25, 30 percent of our time on line. Our clients are spending about 10 percent, 13 percent, 14 percent now, of their budgets, online.
There is clearly a long way to go. I mean, I was at a conference yesterday. A major package goods company, really only spending about 10 percent of its budget online. That has to change given consumer purchasing habit. Mobile habits, location marketing, all these things are going to become much more important, much more significant. At WPP 29 percent of our business comes from digital already, about $15 billion of revenue. And, and, we have just upped the target from a third, to 35 to 40 percent. Same for the BRICs in next '11, it is 27 percent; we have just upped it to 35 and 40 percent. That is where the growth is going to come.
SORRELL: Just one little statistic, one little statistic, between 2010 and 2015 the Chinese ad market, the Delta, in the market, will be greater than the total German and U.K. markets added together. That is where the growth is going to come from.
QUEST: Martin Sorrell, who is in New York for us tonight. Many thanks, indeed. Nice to see you, Martin, as always. Thank you for joining us.
SORRELL: Thank you, Richard. Thanks very much.
QUEST: Martin Sorrell, from New York.
Now, it is billionaires versus millionaires, both sides in the NFL's labor dispute want more of the league's $9 billion money pot. Will their fight mean no season for U.S. football fans? In a moment.
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QUEST: Now breaking news at this hour on the NFL contract dispute. According to the latest reports from NFL Network, talks will go on for another seven days. Both sides are trying to hammer out a new contract deal. Even though the NFL season is still six months away, that is a long way away, team owners and players have to get their act together now or there could be a lock out.
That is all because of the way you can only strike at certain points in a contract. It is all to do with the labor laws in the U.S. It is, a lock out, is a work stoppage to you and me. But money is at stake, $9 billion. The NFL Commissioner, Roger Goodell says, "We're going back to work hard again."
The head of the players association has also been commenting.
(BEGIN VIDEO CLIP)
DEMAURICE SMITH, EXEC. DIR., NFL PLAYERS ASSOCIATION: For all our players who dig our game, we appreciate your patience as we work through this. We're going to keep working. We want to play football.
(END VIDEO CLIP)
QUEST: They may want to play football, but they also want a larger slice of the pie for doing so, at least not a diminishing slice. But when Major League baseball players went on strike in 1994, it was known as the millionaires versus he billionaires. Something that President Obama alluded to yesterday, it is a similar story here.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I'm a big football fan. But I also think that for an industry that is making $9 billion a year in revenue, they can figure out how to divide it up in a sensible way and be true to their fans, who are the ones who obviously allow for all the money that they are making. So, my expectation and hope is that they will resolve it without me intervening because it turns out I've got a lot of other stuff to do.
(END VIDEO CLIP)
QUEST: And understatement if ever there was one. NFL revenues are roughly $9.3 billion. Last month's Super Bowl actually broke television ratings records. But this really pits the owners versus the players. Now the owners, they want a bigger slice of the revenue. They get about $1 billion and players get 60 percent of the rest. Owners want to increase that amount by another $1 billion. So, you don't have to be a rocket scientist or a genius to work out there would be a sizable loss to the players.
Now, the lockout, if it actually happens, that could be imposed by the owners, because the players would lose their pay. No football in 2011, it is not out of the question. The NFL would lose $400 million a week in revenues.
A short time ago, David Cornwell, a sports attorney, joined me. And, of course, the core question was, when you think about the NFL it is pretty hard to feel sympathy for rich men, squabbling over money.
DAVID CORNWELL, SPORTS ATTORNEY: It is hard to feel sympathetic, but at the same time, even though we have billionaires and millionaires fighting over this pot of money, they are still businessmen. And from the NFL owners' perspective, their focus in this labor dispute is to ensure that they can remain profitable. And from the players perspective, these are men who play football. They are businessmen, too. Their focus is to ensure that they are fairly compensated for their contribution to the game and all the growth that we have seen of the game over the last couple of decades.
QUEST: Well, as far as I-when I last looked, there wasn't too much poverty on either side.
CORNWELL: And you are right. This is an industry that generates over $9 billion a year in gross revenues. But the fact is that the players are paid a portion of those revenues based on a calculation called the salary cap. In order to get to the salary cap all league revenues are poured into a pot that is then divided among the number of teams, 32. And then the salary cap applies to each team. Some teams make more money than other teams. The Dallas Cowboys and the Washington Redskins are very profitable. The Buffalo Bills and the Cincinnati Bengals are not. So, when the Bengals pay the salary cap it has more of a financial burden on them than it has on teams like the Washington Redskins and the Dallas Cowboys.
QUEST: President Obama even referred to it at his press conference, saying that he didn't want to get involved. He had quite a lot of other things to do anyway. But it does show that the possibility of a lockout, the possibility of not having a football season, is it real?
CORNWELL: It is real. But the president's comments reflect how popular the National Football League is in the United States of America. It is not only our number one sport it is our number one entertainment vehicle. So, I think the president was speaking not only as the president of the United States, but also as a fan of the game. But I agree with him. He has plenty of things to do. And nobody understands how to solve this dispute, these problems, better than the owners that own the teams, and the players that play the game.
QUEST: Now, just help me understand, though. The deadline, of course, is eminent. If they miss the deadline, they can surely still come to an agreement and a season, or everything just starts a bit later. Or am I showing a fundamental lack of understanding about how the whole thing works?
CORNWELL: Well, actually, you are showing how sensible you are and the fact is that timing here operates a little different than what people would normally expect, because under the United States labor laws the collective bargaining agreement was scheduled to expire last night. Once the collective bargaining agreement expires then all sort of other legal, practical and business issues become prominent. So, timing might be the most critical leverage point for both sides in this case. And that is why they do not want the collective bargaining agreement to expire. Because if it does, then I do think we will lose games, just because of the tactical maneuvering that both sides will do for legal purposes, not for business purposes.
QUEST: And let me just remind you, since we spoke to Mr. Cornwell, it has now been announced that the NFL and the players union have agreed to extend the collective bargaining agreement, by seven days. In other words, the talks will continue for another week, as they try to reach an agreement.
In just 30 minutes from now, the actor Matt Damon and the cast of "The Adjustment Bureau" will be talking about the new film. They'll discuss politics and more; 30 minutes from now, Piers Morgan, tonight.
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QUEST: Thirty minutes from now, "PIERS MORGAN TONIGHT."
QUEST: Hello. I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And on this network, the news always comes first.
And Friday has been a day of violent battles in Libya. Security forces in Tripoli reportedly used tear gas and rubber bullets to shut down a new attempt at protest against Moammar Gadhafi. East of the capital, government troops fought militiamen for control of Ras Lanuf. And in Zawiya, would not have video to confirm what one witness is calling indescribable violence. The government says it has reclaimed the city.
The International Organization for Migration says some 200,000 people have fled the turmoil in Libya. The numbers are dropping since pro- government forces began manning the Libyan border with Tunisia. Tunisia's authorities say they're stepping up efforts to move out refugees as they come across.
New charges have been filed against the suspect in January's deadly shooting incident in Arizona.
Jared Lee Loughner now faces 49 federal counts, including the murder of a federal judge and a Congressional staff member. Eighteen people were shot during Loughner's attempted -- attempt to assassinate U.S. Representative Gabrielle Giffords. Six other people died.
By his own admission, Sir Howard Davies made a mistake. Sir Howard is the director of the prestigious London School of Economics and resigned after the university's reputation was damaged by its links to Libya.
An independent inquiry will now examine the relationship between the LSE and the Gadhafi regime and its dealings with a former student who's at the very heart of Libya's pro-Gadhafi movement.
CNN's Atika Shubert unravels the story.
ATIKA SHUBERT, CNN CORRESPONDENT (voice-over): Saif al-Islam Gadhafi was apparently so happy with his PhD, that he donated more than $2 million to his alma mater, the prestigious London School of Economics. But it's only after he appeared on Libyan state television threatening rivers of blood that questions are being asked -- allegations that his thesis on the, quote, "democratization of global governance" was plagiarized.
Now, there's scrutiny on Sir Howard Davies, director of the LSE and the man is instrumental in accepting Gadhafi's money. He also was an adviser to the Libyan Investment Authority.
He resigned on Thursday night, saying: I advised the council that it was reasonable to accept the money and that has turned out to be a mistake. There were risks involved in taking funding from sources associated with Libya and they should have been weighed more heavily in the balance."
The issue was hotly debated at the time, explains the head of LSE's Mideast department.
FAWAD GERGEZ, PROFESSOR, LSE MIDDLE EAST DEPARTMENT: My predecessor at London School of Economics, Professor Fred Halliday, spearheaded the opposition. He argued that taking money from Gadhafi would reflect badly on the school, that the money was tainted, that would have -- we should stay away from it.
He lost the battle. And he warned the school -- he warned the administration that the money basically would come to haunt us. And surely, it did.
I think the people who accepted the money believed that they could basically promote Libyan studies, democracy studies, civil society. I think it was partly ignorance and partly an inability to understand the nature of the Gadhafi regime.
SHUBERT: The decision was made when the international community, including then British Prime Minister Tony Blair, had openly embraced Gadhafi.
So did LSE and Davies do anything wrong?
LORD MARK MALLOCH-BROWN, FORMER BRITISH FOREIGN MINISTER: In the case of the LSE monies, a lot of it has more to do, probably, with the behaviors of the LSE, the -- the adulation given Gadhafi himself when he did a video in -- a video lecture to the university, the way that Saif, his son, was treated as a student, a lot of that is now a hostage to fortune.
The monies themselves, you know, probably -- they will be able to defend that.
SHUBERT: LSE has so far received only $500,000 of the money, now put aside for scholarships.
On campus, there are mixed views.
UNIDENTIFIED MALE: The links with Libyan investment and kind of with students coming over from Libya to be educated at the LSE. All these little ties is making LSE look like a university with quite ulterior motives.
SHUBERT: (on camera): Do you think it was the right decision for Howard Davies to resign?
UNIDENTIFIED FEMALE: I -- no, definitely not. We're really, really, really sad that he's leaving, because many students -- and most students think that it's a big, big loss to the school. But I mean I understand why he did it, but really, we are really upset but the fact that he's leaving this school.
UNIDENTIFIED MALE: We are campaigning that the money should -- should actually go back to the Libyan people in the form of scholarships and -- and the occupation and the demonstrations didn't last very long, because he actually did give in to demands. He actually recognized the fact that actually, you know, we did take that money.
But in hindsight, it wasn't the right decision -- it wasn't the right decision.
SHUBERT: LSE has accepted Davies' resignation with reluctance and regret. But they are opening an independent investigation into the school's ties with Saif al-Islam Gadhafi and how the school made the decision to accept millions of dollars of Gadhafi's money.
Atika Shubert, CNN, London.
(END VIDEO TAPE)
QUEST: In a moment from now, the show goes on, but without its creator. And the president of Dior tells of the terrible and wrenching ordeal and puts John Galliano behind him.
QUEST: The fashion house, Christiane Dior, unveiled its latest collection in Paris today. The elephant in the room was, of course, the anti-Semitic scandal surrounding its former designer, John Galliano. The Dior chief executive, Sidney Toledano, addressed the audience at the beginning. He was speaking from the catwalk and said: "What's happened over the last week has been a terrible and wrenching ordeal for us all." He continued: "It's been deeply painful to see the Dior name associated with the disgraceful statements attributed to its designer, however brilliant he may be."
Myleene Klass joins me from Paris to put this in perspective.
Let's begin, first of all, the -- the head of Dior, unusually, started the -- the event and came out and made some important comments.
MYLEENE KLASS, CNN CORRESPONDENT: Yes, and quite unusual -- an unusual break with tradition. The president of the House of Dior, himself Jewish, came forward and made a very moving, emotional speech, almost distancing himself from the remarks that Galliano has made.
Now, although the Galliano name was never mentioned, per se -- he was referred to just as the designer, it certainly was at the front of everybody's thoughts.
QUEST: It didn't stop people from turning up, though, did it?
There was a -- there was no shortage of the -- of -- of the fashion world to come and see what was going to happen.
KLASS: Absolutely not. In fact, 1,200 people turned up for the Autumn-Winter 2011 Election -- excuse me, 2011 Collection for the House of Dior. And there was quite a smattering of celebrities, not the usual turnout. But believe me, the fashionistas were out in full force. There was Anna Wintour, Anna Dello Russo and also photographer, Mario Testino.
Again, a lot of emotion that came forward from the seamstresses, who actually took the bow at the end rather than the designer. And you could actually see there were models who were seen crying. A lot of emotion and a lot of mixed feelings. The usual protests and the riots that were expected didn't necessarily turn out. But there was one man with a very poignant placard who was seen holding it aloft that cited, "The king is dead."
Not, not many people actually realize this, but Dior himself, Christiane Dior's sister was taken to a Nazi concentration camp, Buchenwald, and was held there.
So, again, this is something that has provoked a lot of thought and a lot -- a lot reaction.
QUEST: And if we -- we know that the Galliano event, the Galliano show -- designer show himself, that has now been canceled and there'll be a presentation instead.
Is there a feeling, Myleene, that this is over with, at least as far as Dior is concerned?
KLASS: Well, the House of Dior has very much made sure that they're distancing him -- themselves from the comments that he has made. And there are many people at the head of the game, the fashionistas, particularly, that do feel that it would be very hard for him to make a comeback.
In fact, when I spoke to Anna Dello Russo, who I spent the day with today, she's felt like, in her own words, it was attending his funeral.
QUEST: Myleene Klass, thank you.
Now, Mazda is recalling more than 50,000 cars and not because of faulty brakes or even sticky gas pedals. This is fascinating, because the engines are full of spiders' eggs. Apparently, one breed of spider has taken a shine to their sedan engines.
CNNMoney's Peter Valdes has the story.
PETER VALDES-DAPENA, CNNMONEY.COM CORRESPONDENT: I drove this Mazdas over here to the American Museum of Natural History to talk to one of the leading spider experts in the world because the Mazdas has kind of a spider problem.
Mazda had to recall more than 50,000 of these cars because a certain species, called the yellow sac spider, for some reason, likes to crawl inside of a gas tank ventilation tube and make a nest in there.
That causes air pressure problems in the gas tank that can actually lead to cracks in the gas tank and possibly a fire risk.
No fires, but there have been 20 reported cases of these spiders building nests inside that tiny hole.
NORMAN PLATNICK, AMERICAN MUSEUM OF NATURAL HISTORY: These are -- these are two specimens of what I think is the species, Cheiracanthium Inclusum. This is a female. It's -- as you can see, it's a fairly large spider. As -- as spiders go --
VALDES-DAPENA: This is it?
PLATNICK: -- that's actually quite large. It's certainly large enough to break your skin if it were to try to bite you.
VALDES-DAPENA: So any reason you can think of why this spider would prefer a Mazdas?
PLATNICK: No. They're not investigating cars as -- as cars. Most likely, these were adult females who were looking for a place to build a retreat.
VALDES-DAPENA: What's the nest like?
I mean it actually seems to be providing an obstruction to the air flowing into that tube?
PLATNICK: It's a -- it's a fairly solid piece of silk. Now, spider silk is a remarkable material. In many cases, the tensile strength of spider silk is greater than steel of the same diameter. And it can expand a great deal without breaking. So it's very tough, in that sense, and still very lightweight.
But if it's blocking -- if it's -- if -- if a sac or a retreat is built in a tube that's meant for air transfer, that could -- and the spider is about the same size as the tube, then between the spider and the silk, you're likely to get a significant blockage.
VALDES-DAPENA: And I suppose these things would be -- it would be relatively easy to keep these things out of a tube like this. I think Mazda said they were putting in a spring or something in there?
PLATNICK: Basically, yes, a fine mesh at the end of the tube would be sufficient to keep out the adults. Absolutely.
(END VIDEO TAPE)
QUEST: And that's QUEST MEANS BUSINESS for tonight.
I'm Richard Quest in London.
I thank you for your company this week.
Whatever you're up to in the hours ahead, I do hope it's profitable.
MARKETPLACE AFRICA is next.
ROBYN CURNOW, HOST: You're watching MARKETPLACE AFRICA.
And I'm Robyn Curnow here at the Johannesburg Market.
Now, they tell us that every day, they sell about $1.7 million worth of fresh produce here -- literally, a small part of South Africa's fruit industry. The real money earner is soft fruits, apples and pears.
So we're going to take an In Focus look at the business of fresh produce.
CURNOW (voice-over): For a few hours every morning, ton after ton of fresh fruit and vegetables are traded at the Johannesburg Market.
Thomas Mawasha, the marketing manager, says the volumes are staggering.
THOMAS MAWASHA, JOHANNESBURG MARKET: We are the biggest market in the world, selling in excess of over one million tons of fruit and vegetables per annum.
CURNOW: Those numbers are huge, but only a small part of South Africa's fruit industry, which exports about $1.7 billion of fruit each year to 70 countries around the world, says an industry spokesperson.
The fruit industry, though, has weathered some tough times. Last year, heavy rains wiped out about 25 percent of the country's export quality apples and the strong South African currency has also eaten into profits.
Here's Tru-Cape, which sells hundreds of thousands of apples and pears each year.
CHARLES HUGHES, CEO, TRU-CAPE: The principal business of -- of Tru- Cape, internationally, is to service the major supermarkets, wherever they might be. The United Kingdom, in particular is -- is our biggest trading partner in the world.
CURNOW: But in recent years, the company, like many other South African businesses, has started moving northwards into Africa's markets.
HUGHES: And certainly in the last six years, we've seen a massive growth in Africa and particularly on west -- on West Africa. So the business has just grown dramatic. But Africans like to trade with Africans.
CURNOW: African consumers, though, no matter how poor they are, don't want European supermarket leftovers.
HUGHES: They buy a box of fruit. They calculate how many pieces in the box. They know how much they're paying for it, how much they have to sell it for. They can't afford wastage.
CURNOW: Back in the Johannesburg market, fruit and vegetable agent, Mathews Kasote, knows all too well what African shoppers expect. He provides fruit to traders in three African countries.
MATHEWS KASOTE, FRUIT AND VEGETABLE AGENT: I am from Zambia in the (INAUDIBLE) state Lusaka, yes. I come here every week to buy fruit and vegetables. So after (INAUDIBLE), we send them to Zambia. In Zambia, we supply Congo and Tanzania.
CURNOW: These trucks are being loaded for Kasote with Tru-Cape produce. He says he and his colleagues send about 10 truckloads of fruit back to Zambia each week.
KASOTE: And the customers, they expect us to provide them with the nice, good apples, which can last, because when you come here, it takes us about four to five days to get to Zambia.
CURNOW: He say he makes, quote, "marvelous money" from selling South African fruit to African consumers.
CURNOW (on camera): How much -- how much do you sell --
KASOTE: Yes, this one like I said to you, one apple costs about 80 cents.
Eighty U.S. cents?
KASOTE: Yes, 80 U.S. cents.
CURNOW: In Zambia?
KASOTE: In Zambia. So --
CURNOW: That's expensive.
KASOTE: Yes, it's a bit expensive, but like I told you before, you have to look what the expense is. You know, we have to hire the truck, which is about $7,000 from here to Zambia. The duty -- customs duty -- you have to pay duty. Labor, we've got workers.
So when you put the costs of all those things, you will find that the margin is not too small.
CURNOW: So you sell an apple in Zambia for about 80 cents?
KASOTE: Eighty cents.
CURNOW: And when you sell it on to a place like Congo --
CURNOW: -- how much -- how much is an apple in Congo?
KASOTE: Yes, because they also have to -- to hire a truck. It's that expensive like them. They -- it costs (INAUDIBLE) $2 --
CURNOW: Two dollars for an --
KASOTE: Probably $2 --
CURNOW: -- apple in Congo?
KASOTE: -- for an apple, yes.
CURNOW (voice-over): Getting the fruit undamaged and on time to the supermarkets in Europe or street traders in Zambia has been a huge challenge for the South Africans. So Tru-Cape, along with other fruit companies, has set up a distribution network they could control.
HUGHES: The supply chain management business was really set up to assist us in -- in managing our own destiny. So we took a view of if we could manage it ourselves, we would have absolute control.
CURNOW: Just one way to ensure a constant supply. But getting the fruits from the tree to the table means much of the produce is refrigerated.
HUGHES: A couple of years ago, we did an interesting test on a variety. We kept for two-and-a-half years. And it was perfect.
CURNOW: All to give customers across the world a constant, year round supply of apples and pears, no matter what the season.
(END VIDEO TAPE)
CURNOW: OK, let's take a look at the business of soft fruits. Now, South Africa is the world's second largest explorer of citrus fruits, after Spain. The industry estimates that they hire about 460,000 full-time workers, which means that about two million people, all in all, are dependent on the business of apples and pears.
Now, coming up after the break, we're going to talk about the business of aid -- have all those billions of dollars helped to alleviate poverty?
Well, our next guest has the experience and the ideas to talk about just how that money should be channeled to the people who really need it.
CURNOW: You're watching MARKETPLACE AFRICA.
Now, aid to Africa has had its benefits and drawbacks.
Our next guest calls it a billion dollar business with questionable success.
Lai Yahaya is a Nigerian economist and lawyer. And he now campaigns for more transparent aid.
LAI YAHAYA, POLICY ENTREPRENEUR: One of the strange things about aid is that if you -- if you're an aid agency and you look to being extremely successful, what you're hoping to do is put yourself out of business.
I mean that's the point, OK?
So you have an industry that sort of fundamentally, you know, has a -- a bit of an issue there in trying to work out what it's -- what its purpose actually is.
CURNOW: You're quite cynical about it, aren't you?
YAHAYA: Well, it's a business and it's a huge business. It's certainly a billion dollar business with armies of consultants, every conceivable donor agency. That's a big organization, but a fragmented one.
CURNOW: But do you think it's helped?
Has it alleviated poverty?
That's the big question, isn't it?
All that money, all that assistance, all that focus.
Is that any good?
YAHAYA: It hasn't alleviated poverty.
Is there still poverty?
Then, clearly, you know, it hasn't.
CURNOW: Now, this is not a new debate, whether aid is dead.
When it comes down to it, what is the solution?
It's all very well saying, listen, it's not working, all this money being thrown to Africa, essentially.
What are the solutions, in your opinion?
YAHAYA: I think they're pretty simple. Firstly, we need to find out where the aid is going and then getting the views of those people who are supposed recipients and the beneficiaries of these projects.
At the moment, the -- the people who tell us how effective the aid is are the very people who are the donors of aid. And it's a -- it's not to assume that -- that they're lying to us. The key point is that -- that -- you know, there has to be some sort of independent assessment. Everybody now, I think, agrees that there needs to be a complete revision of the way aid works, particularly for Africa.
I just -- I -- I think that there will be a lot more talk, trying to change massive institutions with systems that have been operating for many years is very difficult.
CURNOW: We're talking about the IMF, the World Bank --
YAHAYA: They don't YAHAYA well.
CURNOW: -- the United Nations --
YAHAYA: -- we know they don't YAHAYA well. Innovation comes from -- from those people operating at the margins. It comes from those people operating and this is -- in the aid business, it will come from the -- the beneficiaries of aid. It will come from the people who are right at the front lines, who know, actually, that -- that a particular prescription and a way of spending money is inefficient, as opposed to another way.
But I guess one way to look at it is how do you create that sort of development venture capital?
How do you get innovation happening right there at the -- at the front lines over the next 50 years?
And this is the reason for great optimism, you know, is that the -- in Africa in particular, the size of government, you know, and the reach of government and the -- the -- the influence and control of government will shrink, will reduce, as the private sector gets stronger and starts to drive more in the economy.
So in that sense, the -- the solutions to poverty, you know, will come from the benefits that -- that come out of vibrant private sectors.
So that's where it will come. And I think that the -- the -- it won't -- it definitely will not come from a major international meeting with major donor agencies getting together and finding a solution and implementing a solution and suddenly poverty will be alleviated in five years.
(END VIDEO TAPE)
CURNOW: A frank assessment there by.
Now, here's what's trending this week.
CURNOW (voice-over): The world's largest palm oil producer is the latest company looking to Africa for more farm land. In the next month, Malaysia's Sime Darby is set to begin planting 220,000 hectares of land in Liberia which it acquired in 2009. And it's not stopping there. Darby says it's considering a $2.5 billion land investment in Cameron and may expand into Ghana, as well.
And Tanzania's president says processing of a $400 million loan to finance a coal-fired power plant is close to completion. The country is grappling with severe energy shortages and power rationing following a drought that depleted hydroelectric capacity.
Tanzania is also in talks with private investors for a new gas-fired power plant in this part of the country.
Together, the two projects could double the country's power production capacity.
(END VIDEO TAPE)
CURNOW: Well, that's it for this week's MARKETPLACE AFRICA.
I'm Robyn Curnow here at the Johannesburg Market.
Now, please do go our Web site, which is CNN.com/marketplaceafrica. My Twitter address, as well as our e-mail address, are there.
But until next week, goodbye.