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QUEST MEANS BUSINESS
Interview With Jose Manuel Barroso; Google Rushes to Plug Holes in Android
Aired May 18, 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, CNN ANCHOR, QUEST MEANS BUSINESS: You better act now if you want to keep it in Europe. Tonight the European Commission president gives us his view on the future of the IMF.
(BEGIN VIDEO CLIP)
JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: We don't like a vacuum. So, I think it will be important as soon as possible to have this matter resolved.
(END VIDEO CLIP)
QUEST: Outsmarted, Google rushes to plug the holes in Android. We speak to one of the researchers who discovered the breech.
And flying, Formula One, and now football, we talk to Air Asia's chief Tony Fernandez.
I'm Richard Quest. We've an hour together and I mean business.
The battle for the control of the IMF is intensifying. And it is managing director is not officially gone. Whether innocent or guilty, Dominique Strauss-Kahn is already viewed as the ex-head of the fund in all but name. Tonight the president of the European Commission tells us the next person in the job had better be European. Our Correspondent John Defterios has been talking to Jose Manuel Barroso. John is with me now from Brussels where he is attending a forum.
John, they are not wasting time because they know they have to get momentum if they want to keep it European.
JOHN DEFTERIOS, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, it is an extremely good point, Richard. The European finance ministers meeting where we were, the Eco Fin, as it is being called. They are very guarded. They were saying we'd like a European but we're not going to mention any names and due process has to move forward.
We have moved to the European Business Summit here in Brussels. And at the plenary session, which I was chairing, I had a chance a to have some question and answers with Jose Manuel Barroso. And something has changed dramatically here, Richard. He is saying that a delay could damage the process. Let's take a listen.
(BEGIN VIDEO CLIP)
BARROSO: I have full confidence in the IMF. It is a very strong international institution. They have already stated that the recent events will not undermine their operational capacity, but of course, in terms of leadership we don't like a vacuum. So, I think it will be important as soon as possible to have this matter resolved.
DEFTERIOS: There has been a clear desire by Chancellor Merkel and others to retain a European as managing director of the International Monetary Fund. Is it time to get some clarity, though? Since there is so much global attention on what is transpiring on Dominique Strauss-Kahn?
BARROSO: Look, first of all, I think the executive director has to be chosen on merit. We want a strong, respected, competent executive director for the IMF, but I think it is only natural that the European Union countries-together they are by far the biggest stakeholder, the biggest contributor to the IMF-feel the responsibility to present a good candidate. So, yes, I hope there will be a good candidate for the European Union, from the European Union, that will be able to give the IMF the credible and strong leadership.
DEFTERIOS: Should we break the mold of a European at the IMF, and an American running the World Bank, should we get out of that practice?
BARROSO: Look, once again, if they are doing a good jobs, why should we replace. Zoellick is doing a great job in the World Bank, so I think he should go on. Now, we have the problem now in the leadership in the IMF, so let's find another one, another leader for that.
DEFTERIOS: It should be a European, is what you are suggesting?
BARROS: Yes, I think it should be a European because, once again, Europeans, together are, by far-even only the Euro Area countries, alone, they are the biggest stakeholder in the IMF. And there are a lot of Europeans that can do that job. So, why now choose someone because he is not European? That makes no sense. So, I think there will be a good candidate from Europe. Let's not make now an issue of flag, about this. What is important is to have a strong credible candidate and I think that we can present that candidate.
(END VIDEO CLIP)
DEFTERIOS: It is quite fascinating. "We have a number of strong candidates," so he didn't want to take a political position there. I suggested that he didn't want the job because he is the president of the European Commission. Did he want to put forward names? He said, let's get away from the idea of the flag. Now this is some subtlety here, but worth debating with you, of course, let's not talk about a French or a German, but we know Dominique Strauss-Kahn was a Frenchman, of course, and one of the leading candidates is Christine Lagarde, a French woman. And perhaps he was making a subtle comment here. Let's not get overly obsessed whether it needs to remain in French hands or not.
QUEST: But, John, the fact is he is going to have to, and Europe is going to have to coalesce around a central candidate, because candidates will be coming from elsewhere. So they are going to have to come up with a candidate, aren't they?
DEFTERIOS: Absolutely. So, beyond Christine Lagarde, we had today Angel Gurria, the secretary-general of the OECD, speaking at the Brussels Economic Forum, which is on the other side of town. Now, metaphorically, he actually took the spoke of Dominique Strauss-Kahn at that particular event. Already, though, we have three German names which are being floated, I think if not by accident, Angela Merkel at the beginning of the week was saying we would like to keep a European candidate in the role. The best known is Axel Weber, he is the former head of the Bundesbank, as you know, Richard. He just finished his position, ironically, at the end of April. So he is available for the job, if you want to put it that way.
QUEST: John Defterios, who is in Brussels for us, and following things.
Now, President Barroso is the latest in a chorus of voices trying to influence the IMF decision. The governments of German and Ireland are openly pushing Europeans to take charge. South Africa's finance minister says it is time for a candidate from the developing world to lead the IMF. Chairman Manuel (ph) must be high on his mind, as he put that one forward. And an official in Brazil said emerging markets should have more influence over the fund, but haven't come up with a name. And if you think all this squabbling is a little premature, even the U.S. Treasury Secretary Tim Geithner is one of several senior figures who have already called time on DSK's career.
(BEGIN VIDEO CLIP)
TIMOTHY GEITHNER, U.S. TREASURY SECRETARY: He is obviously not in a position to run the IMF. And I think it is important that the board of the IMF formally put in place, for an interim period, somebody to act as managing director. And they have in John Lipsky the-it is not the constitutional order of succession, but legal order of succession. And he is a very capable person, with a lot of experience. So, I think that is the appropriate step to take.
(END VIDEO CLIP)
QUEST: Why is everybody getting so excited, so quickly about who might take over the role as head of the IMF. And institution that frankly, until 10 years ago, was so boring most people didn't even turn up to their meetings, or at least not unless you had to. This is the reason why. It is the To Do List, largely built and promulgated responsibilities that would were dragged into the IMF's view and possibly by Dominique Strauss- Kahn.
The biggest, of course, at the moment, the European Sovereign debt crisis: Greece, Portugal, Ireland, the restructuring, potentially, of Greece's debt, the new interest rate that may or may not be given to Ireland. How much to Portugal? Can they restructure and refinance? That is the big one. That is the number one reason why Europe says it should go to them.
But then you have Middle East unrest and the whole question of Egypt seeking up to $4 billion from the fund to plug a deficit.
And then also way from the day-to-day crisis, the longer aspects of rebalancing the global economy. The IMF has been given huge responsibilities by the G20 to coordinate exit strategies for monetary stimulus and quantitative easing, and also, to sort out which countries are running imbalances, for the future. The subject of that will be on the table at next week's G8.
The Deputy Director John Lipsky will deputize for DSK. With all on the mind, I turn to Martin Wolf, the chief economic commentator for the "Financial Times". And quite clearly the issue had to be whether the new leader, at the IMF, should be a European.
MARTIN WOLF, CHIEF ECON. COMMENTATOR, FINANCIAL TIMES: I think that it will be a European, whether it should be or not. The-I think it will be because of the sensitivities of its roles at the moment, within the Eurozone. Whether it should be, I think, I have always been one of those who feels it should go to the best person for the job. Wherever that person is, we shouldn't be tied up with questions of nationality.
But we have to define what the best person for the job is, properly and correctly. And there is not reason, in principle, why that need be a European. In the present situation, however, there is an argument to be made that the extraordinary political sensitivity of the IMF's role within the currency union, which is a very special structure, requiring someone with extremely good connections to other European policy makers. That doesn't have to be a European but it has to be someone that they really can trust. And really can have a good relationship with.
QUEST: It is a fascinating situation because it may be that the circumstances of fact, of the fund's mission at the moment, dictates the answer rather than the principle, which I think most people would accept that it should now be open to anybody, from anywhere.
WOLF: I mean, obviously, one can reasonably answer that. Or respond to that by saying well, we didn't bother to have an Asian when they were dealing with the Asian crisis, or a Latin American, when dealing with a Latin American crisis, which is clearly correct. And so formally this doesn't follow, but one has to accept that the Europeans are enormous creditors at this institution and above all that the currency union is of the nature that what happens to any one of these countries affects them all in the most intimate way. So it is what we are dealing with here is an incredibly complicated, intra-European, intra-Eurozone, negotiation. That is what the fund is involved in. And that is rather different than what the fund has had to do in Asia, or in Latin America.
For these reasons there is an argument that it has to be somebody whom the Europeans will really trust. Now that doesn't have to European. I can think of people who could do this job, who they might well trust, at least to a reasonable degree. But clearly in this context that has become a rather important criteria for making a success of this job.
QUEST: Martin Wolf of the "Financial Times", whose article in this morning's paper is pretty much required reading on the subject.
Watch out! You may have a hole in your pocket. We look at the latest digital security leak. How your Android phone might be broadcasting your personal details to anyone who is, basically, listening.
QUEST: Google says it is rolling out a security fix for Android phones. Over the next few days it will patch a hole that allows potential hackers to see your personal information when connected to an unsecured wi- fi. Flora Graham is mobile phones editor at tech new site, CNET UK. And she showed Phil Black how this works.
FLORA GRAHAM, MOBILE PHONES EDITOR, CNET UK: Well, one of the best things about an Android phone, and all smart phones, really is the fact that they keep all of your information up to date with the cloud. That is the Internet. So, it downloads things like your e-mail, your contacts, you calendar, right to the phone. So you are always in sync. But what that means is your data is always going back and forth over the Internet, between your phone and the Internet. And, Android, because it is Google's mobile phone operating system, is even more well integrated with Google services. Its online e-mail, g-mail, it is calendar services, all the rest of it.
PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: So that means information is constantly going back and forth between the phone, online. And in this case, these German academics believe they have found a potential vulnerability in that system. What is it?
GRAHAM: Well, let me show you how it works. We are sitting in a cafe with open wi-fi, so on this Android phone, I can connect up to that wireless network without entering any password or user name. Once I'm connected, if there was someone on the same open wi-fi network there certain bits of data going back and for, between my phone and the Internet, that they could possibly intercept. And those would allow them to pretend to be me and connect with certain services on the Internet.
BLACK: And essentially access your calendar, your contacts, as if it were you?
GRAHAM: Exactly. So, although this might not be your banking data, or something really crucial, the fact is you don't want people to see your private contacts. You don't want people to see your appointments.
BLACK: And that key is vulnerable because we are on an open wi-fi system. So, no passwords. And that key isn't encrypted.
GRAHAM: That's right. So most services, that are on the phone, all the data that goes back and forth over the wi-fi, whether it is open or not, is encrypted. So even if someone did intercept it, they couldn't do anything with it. They couldn't read it. But in this case, for some reason these keys are not encrypted. So that is when someone could actually take advantage of them and use them.
BLACK: Androids say they have largely fixed the latest version of their operating system. They say they have come up with a short-term fix to now cover everyone else who is evidently affected. How big of a security problem is this for Android users?
GRAHAM: Well, open wi-fi networks are popular. And Android is usually set up by default to sync automatically. So this is a potential problem. But let's remember there is no proof that this has ever actually happened and the person who wanted to steal your data would have to be on the same wi-fi network, so virtually sitting at the table next to you. So it is not something that you worry about really, just walking around the street everyday.
QUEST: Florian Schaub is a privacy researcher at the University of Ulm. And it was Florian and his colleagues who found the Android security hole. And he joins me now via Skype.
Florian, did you-I mean, were you looking for this? Or did you discover it by accident?
FLORIAN SCHAUB, PRIVACY RESEARCHER, UNIVERSITY OF ULM: Well, we were as part of our research we were conducting a security and privacy analysis of the Android operating system, and happened to come upon this. One of the typical things you want to check is what kind of information is flowing from the phone, to the cloud. And yes, well, we found this unencrypted communication going from the Google-
SCHAUB: Calendar, contacts, and other apps, to (UNINTELLIGIBLE)
QUEST: So, did you think this was just-to put it crudely-do you think this is just a caught up by Android, in that they just basically never realized this had happened, or do you think they were just lazy and slovenly in the way they have created it?
SCHAUB: Well, I don't like to speculate here. And I can only imagine it is an error they made and probably didn't realize it at first. But, yes, it is a big error. And we were really surprised finding it, because we didn't expect that in the Google applications.
QUEST: You see, that is really the core to this, isn't it? Because if we take those legitimate areas where we know that privacy is under question, like the Google with the maps, and the information being received by Android.
Florian, you are obviously and expert in this area. How much of our privacy is at risk?
SCHAUB: Well, with the data, obviously, and a hacker can reach a calendar, and not only the ones you are currently syncing but also calendar events from the last years. And the same for contact information, all your contact information is exposed, including other people's addresses and phone numbers.
QUEST: Finally, Florian, you are a-I'm guessing a few years younger than myself. Do you think that your generation is as concerned about everyday data, like calendar entries, Tweets, e-mails and things, than maybe older people are?
SCHAUB: Well, I don't know, I think everyone is concerned about their privacy at some point. But it is often a lack of awareness what the actual issues are. A lot of people don't know that these services sync the data all the time. Or how vulnerable they can be by these kind of security flaws. I think that is a major problem that the awareness of how your data is at risk and what can happen with the data. That is not (UNINTELLIGIBLE). Everybody says I don't really care if my data is shared, or this is public anyways, let people read it. But it boils down to their awareness of what happens to the data once it leaks and what can be done with it is missing.
QUEST: Excellent point, Florian, many thanks indeed.
It is one of those classic questions that everybody says that they don't care about their data, until it is their data, or your data, or indeed my data that is stolen and misused.
It is the latest in a spate of technology security scandals. Mobile phone locations, of course, the big one, hacking exposing information from Sony, with the PlayStation network. Now that PlayStation is finally back online. It was shut down for four weeks. And the hacking raises the question, can anything online be safe? Just have been talking about that system.
Howard Stringer, the chief exec of Sony says, "We have made big strides in bolstering our security."
(DESK BELL CHIMES)
And then comes the quote, "but whether anyone is 100 percent secure, I don't know."
What do you think? Can our information ever be secure? One place that is secure, well it is not, because everybody reads it, is of course, at the Twitter.com/RichardQuest, @RichardQuest, is where you can actually get in touch with me. And I promise you, I do actually read the @RichardQuest. It is not some PR guru, or some underling reading it. I promise you it is there. It is right on my phone actually.
Talking of phones, there is now a very much a new way you can reach us if you have a Nokia smart phone. CNN, we have launched the new Nokia app. We obviously have the iPad and the Android, and now Nokia has joined the family. It will keep you updated on the latest news, articles, photos and videos. And you can contribute your iReports. It is free.
(DESK BELL CHIMES)
Yes, we like that. It is available now for the Nokia E7. It will be rolling out on some other Nokia smart phones, like this one, in the next few weeks. CNN apps are available for Android and Apple phones. Putting it bluntly and crudely, if you can't get hold of CNN on your phone, or your telly, or your computer, then you are not looking.
When he invests people take notice. If George Soros is selling gold, does that mean you should, too? Asset allocation, after the break.
QUEST: Well, you pays your money you takes your choice. It is live television. Good evening to you.
Gold prices are under new pressure. George Soros cleared almost every last bit of the precious metal from his multi-billion dollar portfolio. Records show that Soros dumped nearly $800 million worth of gold during the last quarter. It implies he doesn't expect prices to much higher. But probably implies he expects them to go down.
Several other hedge funds also sold gold. John Borsen (ph), who is famous for his bullishness on the gold metal, is staying put. Prices fell to their lowest point in almost two weeks on Tuesday. They have recovered in today's trade, up more 0.75 of a percent. The price of gold has risen more than 20 percent over the past year.
And many of you will probably not forgive me or forget me for calling it the useless metal. Well, you know what I meant when I said that.
Clearly, now is the time for portfolio reshuffling, if gold is getting old, where are people moving their money. I put that to HSBC's global head of asset allocation, a little earlier.
(BEGIN VIDEO CLIP)
FREDRIK NERBRAND, GLOBAL HEAD OF ASSET ALLOCATION, HSBC: Well, they are moving it into cash. They are also still a lot of assets been flowing into carry trade. You know, more and more people are buying emerging market assets, debt/equity, etc cetera. And we are seeing flows into emerging markets that are still relatively high. And that is because people want carry. They ask themselves where can I get a yield on my cash? And the answer to that question, is often, I can get there in emerging markets.
QUEST: But all emerging markets are not equal are they?
QUEST: Are we seeing a divergence over the last quarter between, China, if you like and ex-China, elsewhere.
NERBRAND: I think you are, to some extent. I mean, the Chinese have been much more aggressive in terms of actually implementing quantitative tightening to offset that of the quantitative easing in the U.S., than for example, what has happened elsewhere in emerging markets. So, yes we are starting to see some discrepancy there. And we are starting to see, again, some moderation of Chinese data, whereas some other economies are still booming ahead. The big discrepancies as far as we're concerned are still those countries that are indeed implementing some type of quantitative tightening.
NERBRAND: How successful that is ultimately going to be.
QUEST: Let's talk about the gold play. When Soros sells a billion of gold, $800 million, a billion between friends.
What does it tell us? Is the gold play over for the time being?
NERBRAND: Listen, I mean, gold is a good diversifier for those long- term investors. And actually, in our calculations, you know, there is only about, of all the invested assets in the world, there are only about 14 basis points of that is in gold. Gold is a tiny asset class that only a few people have moved into.
NERBRAND: So from that perspective there is still an upside to gold. The one thing that concerns me more than anything else, for those of your viewers who have a bit more of a shorter time horizon, is the fact that gold has become correlated to equities. And if I'm buying risk, that is something very different from buying gold, which ultimately should be the hedge for all the ills in the world, that we all know still exist.
QUEST: Good point. Gold has now become a play of risk in its own right.
Finally, if we look, then-tell me, because I know viewers are really wanting us-the core question to ask you, how should I balance my portfolio for the next quarter?
NERBRAND: Well, I mean, we have been reducing risks quite dramatically and dramatically over the last few months. And actually, we have come to the conclusion that actually a fair amount of your capital should sit in cash. And today is a question about capital preservation rather than that of capital growth. We have only about 20, 25 percent or so, in equities. And the rest is sitting in cash. Of course, still about 10 percent actually in gold, which is relatively high to that of the street, an the rest is sitting in short-term bonds.
QUEST: Fascinating that. We'll talk more about that in the days ahead; 20 to25 percent in equities, 10 percent in gold, and a short amount in bonds. But also a large proportion in cash. We'll talk more. We both need to discuss that.
LinkedIn, it is the social network where you would be more likely to slip your friends a business card then poke them. Now, LinkedIn is making its own network, in that it is floating itself on the New York Stock Exchange and connecting with investors the world over. Maggie Lake is in New York.
And, Maggie, we are going to have-find out the IPO price and find out some more about LinkedIn.
MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: Yes, that is right. We should know the price later on this afternoon for sure, Richard. You know, bankers certainly hoping that investors get excited enough about this IPO to put some of that cash to work.
You know, one of the interesting by-products of the financial crisis is that the IPO market has pretty much been closed, especially to technology companies. But that is all going to change this week.
LAKE (voice over): Before there was Facebook and Twitter there was LinkedIn, established in 2002, LinkedIn is one of the pioneers of social networking. Based on a simple premise, to connect business professionals via the Internet, and help advance their careers.
We tracked down Ron Bates, the man widely believed to be the most plugged in person in the LinkedIn world, with more than 43,000 connections. This LinkedIn super user caught up with us via Skype at his offices in Portland, Oregon.
RON BATES, EXECUTIVE ADVANTAGE GROUP: Everybody utilizes a networking platform for different reasons. I am a retained executive recruiter, so, the concept of connecting with more people makes sense for me, given what I do for a day job.
LAKE: Thousands of connections may seem like small change in this time when celebrities have millions of Twitter and Facebook followers. But Bates says the quality of connections on LinkedIn can be more valuable.
BATES: On LinkedIn, the connections are much more direct. And they are typically there for a reason, in terms of the benefit that people get from a networking relationship. So LinkedIn really is a networking platform, where Facebook is less so a networking platform and more so a social media platform.
UNIDENTIFIED MALE: It's the world's largest professional network, helping people find and share opportunities every day.
LAKE: Users like Bates may gush over LinkedIn, but in the investment world, there is concern about whether the company can live up to the hype and can generate robust revenues and profits.
JULIANNE PEPITONE, CNNMONEY.COM: I don't think that we're seeing the same kind of daily, that rabid user base that we see in a Facebook, for example, that you do everything on Facebook, they're logging in everyday. And while there are different companies, LinkedIn is positioning itself as that business networking site. To be logging in just once a week or whenever you get a message, that would be -- certainly be a concern for anyone who is investing.
LAKE: We'll see how LinkedIn ultimately connects with the investment world as it makes its Wall Street debut.
(END VIDEO TAPE)
LAKE: And, of course, Richard, this isn't just about LinkedIn. It's also considered an important test. Remember, we believe Facebook is going to try to come public some time within the next year.
QUEST: Maggie Lake in New York.
We'll have the price when it is announced.
When we come back after the break, the head of AirAsia and why he might also want a football team, in a moment.
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And on this network, the news always comes first.
Lawyers say the woman accusing the head of the IMF of sexual assault is to testify against him. She's scheduled to go before a New York grand jury any time now. Dominique-Strauss Kahn is being held without bail at the Rikers Island Prison complex. He will appear in court again on Friday.
The White House has imposed tough new sanctions against Syria's president and six other members of his regime. The U.S. Treasury Department says it's an effort to end the fierce military crackdown on Syrian protesters. Also targeted are two top Iranian officials suspected of providing material support to Syrian intelligence.
Afghanistan's president is condemning a suicide attack that left a hun -- left 14 people dead on Wednesday. Ten of the dead were police. The suicide bomber targeted a bus that was coming from the police training academy. Hamid Karzai says terrorists are intimidated by the growing strength of the Afghan security forces.
Russia's president has dodged questions about whether he'll run for reelection next year. At Dmitry Medvedev's first big news conference in Moscow, he refused to offer even a hint, but he said the decision would come soon and many wonder if he and Russia's former president -- prime minister, Vladimir Putin, will end up competing for the same job.
The price of oil is climbing back up again from the sell-off that we saw at the start of the month.
If you join me over here, you'll see exactly what I mean. Brent crude now at $1.86. It's trading at around $112 on mark. And light sweet crude is back above the important level of $100 a barrel, up by more than $3 on the NYMEX exchange.
Every airline chief exec we've spoken to this year has the issue of oil prices front and center in their business plans. Right now, the AirAsia chief executive is also thinking about expanding not only his empire with more international flights, but also his sporting group, perhaps making a bid for a football club, too.
West Ham is in his sights.
Tony Fernandes, good evening to you, joining us from New York tonight.
Firstly, let's just get oil out of the way.
I know you say you're only hedged by about 10 percent and I know you say you've got to live with currency indy (ph). But it is a concern for you.
TONY FERNANDES, CEO, AIRASIA: Well, I think the -- the unknown of oil is always a concern, the volatility is a concern. But we've built a business model that we think is very robust at whatever oil price it is. And the good thing about oil is it affects everybody. And in some ways, we've be -- you know, we are much more efficient than other airlines. So our price differential grows.
Well, we've had a very good first quarter. We announce our results next week. And we're in a nice part of the world where lots of people want to travel. So the price of oil, in some ways, is compensated by our ancillary income and also by very strong load factors, better than we had forecasted due to the demand in travel in...
FERNANDES: -- in Asia-Pacific.
QUEST: And you're also managing to keep your -- your yields and your prices firm in that -- in your region of the world, aren't you?
FERNANDES: Yes, very much. I mean I think there's a huge pent up demand for people who want to travel. And AirAsia has come at the right time and unleashed that...
FERNANDES: -- that huge pent up demand.
QUEST: Now, on the question of West Ham, I've got to ask you, you are -- you are a fan. West Ham has been relegated. It's hardly an attractive business proposition.
Tony, hard-nosed businessman that you are, hard-headed, are you letting emotion get in the way?
FERNANDES: No. I mean I think, you know, this is something I'm not going to make too much of a comment on. Obviously, there's been a lot of speculation after they got relegated and many fans have been sending stuff on my Twitter.
You know, it's a fantastic -- London clubs are fantastic clubs. But this is something I don't really want to talk much about. You know, our focus is on AirAsia. And -- but any business that I go into, it has to be a business. Emotion can't rule anything.
QUEST: What about your other business, Formula 1?
I mean you've -- we know that News Corp and others are looking.
Where -- where do you stand on a breakaway league or a breakaway race grouping or -- or selling off?
FERNANDES: Well, I mean I think I'm a -- a small member of that. I'm new to it. But what I can see is, is the fantastic opportunities for Formula 1, you know, media, television has exploded. And I think Formula 1 is in a -- in a fantastic position to really maximize that. It's a fantastic brand builder. There's so much more that can be done now with digital.
So I think the team owners are in a -- in a great position...
FERNANDES: -- to capitalize on this. So we'll have to wait and see. But, you know, sport, in many, many other sports, television has made a huge impact to the earning potential. You're now talking the EPL or the NBA, etc.
So I think Formula 1 is playing a little bit of catch-up. But the opportunities are huge for the team owners. And for the owners of the business of Formula 1, I think it's an exciting time.
Tony, finally, just on -- back to AirAsia again, where do you expect most to expand in the next 12 months, domestically or within the AirAsia brand or the AirAsia X brand?
FERNANDES: I think both. I think AirAsia X is really benefiting from AirAsia. Today, AirAsia just signed a new air deal -- an engine deal with G.E. that enables them to use two engines to go into Europe. So that's a - - a big growth. They're looking at an IPO in the not too distant future.
So I think the growth of AirAsia X actually has been faster than AirAsia. And AirAsia has been one of the fastest growing airlines in history.
But I think both are going to grow at a good -- at a good pace.
FERNANDES: There's tremendous demand. I see AirAsia, actually, still being slightly ahead over the next year or two in terms of growth, because there are more planes coming into...
FERNANDES: -- and the short haul market is very, very robust.
QUEST: Thank you very much.
Tony Fernandes joining us from New York.
And good luck in Monaco at the Monte Carlos Grand Prix next week.
I appreciate it...
FERNANDES: Thank you.
QUEST: -- for that.
And just to point out that CNN is one of the sponsors of one of the cars, Tony's car, the Lotus car in the Monaco Grand Prix.
Now, let's stay in the aviation industry.
The Australian Transport Safety Bureau has released an interim report into last year's engine blowout on the Qantas A380 jet. You remember the one that nearly took the wing off caused an emergency landing with the superb skill by the five pilots on board.
It found that the British engine maker, Rolls-Royce, has since removed 53 of its Trent 900 engines from service because of a fault in the oil pipe, which can lead to an engine fire. You can read the full report. We've posted the ATSB's report. You can read it at Facebook.com/CNNquest.
She's a blogger, she's a businesswoman and she's breaking the mold -- one of China's most outspoken voices explains why she keeps poking fun at the regime.
QUEST: Ten years ago, the idea of a blogger being one of the world's most influential people, if you'd have said to me, I'm being ridiculous. In 2011, Hung Huang is on "Time" magazine's Top 100 list for ruffling the feathers of the world's most powerful economies.
For tonight's Breaking the Mold, we meet the woman hoping to change China one blog at a time.
HUNG HUANG, ENTREPRENEUR AND WRITER: I think breaking the mold in China is very difficult because the mold is very, very strong. When you break the mold, you're going to encounter all kinds of resistance. You're going to encounter all kinds of problems, questions. So, therefore, here, if you want to break the mold and be the alternative voice, it's much more difficult.
I actually, I'm terribly sarcastic. And, you know, there's so many things that in China you can be very, very sarcastic about. But you kind of have to be careful.
What I think actually frustrates me is not the fact that I am getting censored. If I want to say something, I've just got to be clever about the way that I say it. But what I'm really afraid of is that the majority of Chinese, a lot of them are so brainwashed in the sense that if you say something that is considered not patriotic, you get a whole bunch of hate mail. And you kind of realize the intolerance that exists in the society.
I think the importance of different viewpoints is building a tolerant society. And only a tolerant society can be a harmonious society. You know, you've got to be able to understand other people's point of view, put yourself and other people's shoes. I think in China, it's also important to break the mold because this mold is very old. It's 5,000 years old. But, on the other hand, I think it's also by trying to break it, you realize there are actually things that are very, very valuable in classical traditional Chinese thinking, which actually is very relevant for the 21st century.
(END VIDEO TAPE)
QUEST: Breaking the Mold.
And let's say stay on the idea of break the mold. Look at these pictures that we've got now coming into CNN.
Here we have Queen Elizabeth, President McAleese and the Duke of Edinburgh arriving for the state banquet at Dublin Castle. It's part of the four day visit by the queen to the Republic of Ireland. It's the first visit by a reigning British monarch for 100 or so years. And what I think we're looking at there is the receiving line as the people go in for dinner.
Yes, we just heard Mary Robinson, the former president of Ireland, being introduced or being called -- announced. And she will -- is now at the United Nations.
Now, receiving right there is former President Marty Robinson.
Well, we could look at these pictures all evening, but we can't, unfortunately. We need to move on.
The weather in Dublin for the queen's visit, there were some -- some spots of rain at one point, spots of rain in London, too.
I'm not doing his job for him, I'm just pointing out a fact -- Pedram.
PEDRAM JAVAHERI, CNN METEOROLOGIST: Well, let's just watch the footage. Let's just watch the live video, Richard. We were both having fun.
QUEST: Tell me -- hey, listen, we could all live comfortably on the jewels that the queen is wearing tonight.
JAVAHERI: Oh, absolutely. No, she looks beautiful, as always. And you know the condition that's out there, as well, looking fine and dandy, as well. Some showers in the area but certainly going to improve over the next couple of days. The nicest day for them in Ireland looks to be there tomorrow, some sunny skies in the afternoon hours. And temperatures about seasonal, 15 or so degrees.
But we want to share with you what's been happening across Asia because heavy, heavy rain showers across portions of, let's say, Thailand, Laos, on into Vietnam. And that stationary front typically this time of the year, the Mayu Bayu front (ph), as the locals began to call it there, well, by direct translation, meaning the flood rains. It develops typically around May, June, on into July, where a semi-permanent front develops and rain showers become scattered in nature for several months. They certainly need that out there.
And we're getting too much out across portions of Thailand. But in China, they certainly need that rainfall, as they are dealing with some drought issues, as well.
And I just want to show you the drought monitor coming out of areas of Northeast China, right around Beijing, some of the highest population density right there, south of Beijing. And, again, extreme drought in the forecast. And fortunately, the rainy season on the way. But I'll share with you some photographs out of Huday Province (ph). This showing you the officials. They've spent a lot of them, a lot of money in China getting the -- modifying the weather. And a really extreme drought out there causing them to actually try to sow some silver iodide into the atmosphere, Richard, and help create some clouds and send some showers their way. So hopefully this comes out to help them here over the next couple of months, because they need it -- Richard.
QUEST: Pedram, we thank you for that.
While you were telling us about the weather, back in Dublin, she's 85 and she's still standing and greeting guests arriving. Queen Elizabeth is preparing for the state banquet in Dublin. There will be no expense spared. The same cannot be -- the same said for the Irish economy -- the boom, the bust, we will look at that after the break.
QUEST: The U.K. economy got a rare piece of good news from its latest employment numbers. The unemployment rate fell slightly, to 7.7 percent. The un -- the overall number of unemployed people fell by 36,000. However, problems remain, mainly with the unemployment among young adults. The number of young unemployed, 16 to 24 year olds, it's a youth underclass that approaches one million. The Prince's Trust is warning of this and calling it and giving it a phrase, the youth underclass on the employment front.
The streets of another troubled economy have been slightly more tranquil, as Queen Elizabeth continues here her historic state visit to the Republic of Ireland. And she's still standing in that receiving line. It's amazing, just on it goes. It's a dinner.
She's just arrived at Dublin Castle a few moments ago. During the dinner, the queen will make her only public speech of the trip at this official state banquet.
Now, the pomp and circumstance taking place that you're seeing is set against a backdrop of harsh economic realities for the Irish. New figures this week show that house prices have fallen almost 40 percent since the peak. That was only four years ago. And some analysts say the market could take years to recover.
Our correspondent, Diana Magnay, has been to Ireland to look at the sorry state of boom and bust.
DIANA MAGNAY, CNN CORRESPONDENT (voice-over): Foundations laid and then left -- building materials abandoned beside derelict homes. No one has visited these show homes in years, not since Ireland's property bubble burst three years ago. Homeowners found themselves with houses worth half as much as they paid for them and the dream of the Celtic Tiger suddenly turned into a nightmare.
(on camera): There are 620 of these ghost estates across Ireland -- the scars of the property boom -- visual reminders of everything that went wrong -- easy credit, lax planning regulations and just nowhere near the demand to meet the number of houses actually being built.
(voice-over): Over the next door estate, things are going better -- for now. But tour this site and you find out just how the property market is working three years after a period of unprecedented prosperity in Ireland came to a crashing halt.
The banks are still lending, if you have a large enough deposit. So buyers like Therese Heneghan, who manage to get mortgages, can snap up bargains.
THERESE HENEGHAN, HOMEOWNER: First of all, the original price was close on $300,000. But let's just say that we got it for close to half price.
MAGNAY: It means developer Johnny Owens is scarping through for now, but only just and with money he knows he can never pay back.
JOHNNY OWENS, PROPERTY DEVELOPER: When you come into the estate and you see this great big sign, Developer X, Y or Z, he's the name of -- on the top of the board. But the developer here is really the bank. What the development -- what's going to (INAUDIBLE) is managing bank -- the bank's money and turning it into -- into those houses.
MAGNAY: Turning it into houses, but at such a slow rate now demand has fallen away that the builders and plasterers and electricians who depend on the developers have been laid off one by one. The young leaving for overseas, the old with nowhere to go.
WILLIAM MURTAGH, BUILDER: All the young chaps that served their apprenticeship here now within the last six years with Johnny Owens, every one of them -- every one of them have gone to Australia or the United States or Canada. There's none of them knocking around at all.
So where we -- what do we do?
Like we're just left on the scrap heap, really.
MAGNAY: Didn't you think about demand as a developer?
Is there demand for these houses that I'm building, when everybody is building right, left and center, who's going to buy?
OWENS: Yes, well, I had no reason to think otherwise. When I started developing this site, I had absolutely no reason but to think that there was portions of demand because the previous site we built, we couldn't build the houses quick enough.
MAGNAY: Johnny Owens wasn't the only one. And like the country he calls his home, all he can do now is try to stay afloat whilst he tries to service his debt.
Diana Magnay, CNN, Mullingar, Ireland.
(END VIDEO TAPE)
QUEST: The different sights from the turmoil of the economy to the state banquet for Queen Elizabeth tonight.
And we'll have live coverage of the speech on this historic visit. The queen speaks in Dublin Castle in a special edition of "WORLD ONE." It's coming up very shortly, about six minutes from now, after QUEST MEANS BUSINESS.
One piece of news I must bring to your attention. Sony has taken down again part of its Sony PlayStation network after two tech blogs revealed that a security hole existed. The site only came online again after this week, after the four week hiatus. Seventy-seven million PlayStation network accounts were hacked. We'll have more details on this latest hacking scandal or story or whatever you want to call it in just a moment.
A Profitable Moment is after the break.
QUEST: Tonight's Profitable Moment.
"United States victory in landmark WTO dispute," trumpets this e-mail from the U.S. trade representative. Five minutes later, WTO final ruling, "decisive victory for Europe" shouts this e-mail from Airbus and the Europeans.
Two e-mails, both claiming victory. And the case is the Boeing Airbus subsidies row before the WTO. The appeals panel has issued its report and both sides, Boeing and Airbus, claim they won.
The fact is the battle over aircraft subsidies has been going on for years and far too much time and money has been spent on lawyers and lobbyists to fight the case and get the message across. And we seem to be no further in getting a resolution. As these e-mails make clear, both sides say they won and they both can't be right.
So tonight, don't bother asking me who actually won this round. I have absolutely no idea.
And that's QUEST MEANS BUSINESS for tonight.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I do hope it's profitable.
I'm going to leave you with some pictures of Dublin Castle and the queen's historic visit.
"WORLD ONE" comes up after this.