Return to Transcripts main page
QUEST MEANS BUSINESS
President Saleh Injured; Ratko Mladic Appears in Court; John Edwards Insists He Is Innocent; Portuguese Election; Holiday Hell; Drought In China; Cassettes Popular in Zimbabwe; Mobile Technology Popular Zimbabwean Industry; Greece's Age Of Austerity Cuts Even Deeper; U.S. Jobs Data Cause For Concern
Aired June 03, 2011 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, CNN ANCHOR, QUEST MEANS BUSINESS: Tonight John Lipsky, the IMF's acting managing director tells-joins me as he embarks on a tour of big economies.
The biggest of them is looking increasingly fragile. U.S. hiring falls sharply.
And back in the race, Bahrain returns to the Formula One circuit.
I'm Max Foster in for Richard. This is QUEST MEANS BUSINESS.
Hello to you.
Tonight job creation stalls in America and the Greek government prepares to make deeper cuts in return for cash. They might call it the road to recovery, but for people living and working in those economies it might feel like hitting a brick wall. The U.S. economy added 54,000 jobs in May. It is a big number, but well down on the average gains for the previous three months.
Public sector workers, there, they continue to shed jobs. The private sector, well, it's hiring is slowing down dramatically. The unemployment rate has crept up to 9.1 percent.
Now, there are more public sector jobs to go in Greece. It is about to make deeper spending cuts. It is going to race taxes. It is going to speed up the sale of state assets. The "troika", that is the IMF, the EU, and the ECB, has given a thumbs up to the plan. And that means Greece will get its next installment of the $161 billion bailout agreed last May; $17.5 billion was available in early July. It is still not going to be enough, though, to stave off the default.
Now there is likely to be even more cash from the EU and the IMF to fill in extra hole caused by poor growth and tax evasion in Greece. This time European taxpayers may not be the only ones to fit the bill, though. Some of the money could come from private bond holders. You may be asked to volunteer to rollover Greek debt. Perhaps what the Greek Prime Minister George Papandreou was discussing with Jean-Claude Juncker, the head of the Euro group finance ministers when they met in Luxemburg earlier today. Well, the International Monetary Fund is looking at how neighborly countries impact one another. For the first time it is examining how national policies can affect a country's trading partners. (UNINTELLIGIBLE) to the next round of annual economic assessments by the IMF and John Lipsky is the acting managing director of the fund. He joins me now from the World Bank (sic) headquarters in Washington, D.C.
Thank you so much for joining us.
Just explain to us, if you can, the idea of this tour and what you are going to be taking in?
JOHN LIPSKY, ACTING MANAGING DIRECTOR, IMF: Yes, indeed. Actually, I am in IMF headquarters, in Washington.
We have as a regular matter of our annual business conduct consultation mission with all of our 187 member countries. This year there is a special character for five of the systemic-systemically important economies, U.K., Japan, China, the U.S., and the Euro area. The idea here is that we have gone and consulted with the partners of the systemically important economies about how their economies and policies are affecting their partners.
So when we visit, now, the U.K., Japan, China, U.S., and the Euro area, we'll be able to discuss with their authorities, how their partners view their own policies. This will add real depth and a multilateral aspect to these discussions that should be new and very important and interesting, just at this juncture.
FOSTER: Why are these countries particularly important? Is it because they are big economies, or because they are particularly interconnected, economically speaking, with their neighbors?
LIPSKY: Exactly, both. These are big economies that are very substantially integrated. For example, the U.K. is particularly important as a financial center for global interchange of funds. Perhaps a bit less so on the trade side, but very key. All the others are large economies in and of themselves.
FOSTER: This is interesting, isn't it? Because some people may see it as a slight shift in function of the IMF, because it has been criticized perhaps on focusing too much on the Euro Zone, for example, in recent months. Are you saying actually, there is a world economy we need to be looking at? We need to be looking at crucial countries, you changing the outlook of the IMF?
LIPSKY: No, no. We have always paid attention to all of our members. The-obviously the demands right now in the Euro area are particularly acute. But it is obvious in the wake of the recent crisis how important trade and financial inter-linkages are, how inter-linked policies are and how it is necessary to take account in setting policies of the global affects. And this is what we are going to be able to do in a more nuanced way, shall we say, than has been the possibilities in the past.
FOSTER: In the meantime, there is some firefighting to do, isn't there, when we talk about Greece? We were talking about that at the top of the program. What do you make of today's developments with Greece? As I was outlining earlier, are you happy with the policies that they announced today?
LIPSKY: There is some very important policy advances that have been announced by the Greek authorities and they'll be adding details in the days to come. They have to consult their own council of ministers, etc cetera. But the important thing is to remain focused on the elemental challenge to the Greek economy, is to restore competitiveness within the Euro area. And that is going to require some important structural reforms to the Greek economy. There are problems of debt and deficit and the public attention seems to be focused on those. But the policy measures that the Greek authorities are announcing are focused on the really base problems of the Greek economy. And in that way offer a real way forward, in addition to dealing with the issues of debts and deficits.
FOSTER: They are going to need more money, aren't they, coming up? Are you happy to hand it over? Under what conditions will you hand that over?
LIPSKY: Well, first and foremost, primarily, the Greek authorities are adopting a set of policies that have a real chance of success, if fully implemented in restoring a prospect of sustained growth within the Euro Zone for the Greek economy. Under those conditions when we are assured of the financing we'll take this to our executive board for approval that will involve then dispersements of funds from the IMF and as well, from the European partners.
FOSTER: And just a word on the process involved in filling your position permanently. When will we hear about a new long-term head of the IMF and do you have any preferences?
LIPSKY: Well, this-the choice of a new managing director is the responsibility of our membership acting through our 24-chair executive board. They have set a very clear set of policies intended to produce a process that is open, transparent, and merit-based, by June 10, the nomination period will close. Then there will be a process of short- listing, interviewing the candidates on the short list, with the goal of making a selection by June 30th. I'm very confident that our membership will ensure that the new managing director will be someone of real talent and effectiveness for this important role.
FOSTER: Mr. Lipsky, if the IMF, thank you very much indeed for joining us on the program today. Appreciate your time.
Now even if the IMF can solve the debt crisis in Europe, some say this won't go far enough. Jeffrey Sachs is considered one of the leading economic thinkers of his generation. He writes in "The Financial Times" he argues the next head of the IMF needs to change the entire monetary framework. He told me that change should begin with the selection of the new managing director.
JEFFREY SACHS, COLUMBIA UNIVERSITY: It is amazing to me that in the international scene we don't take as much care as we do for a research post at a university. And this, I think, is the big mistake. It is not whether it is European or not European. It is that a name was put forward and then everybody falls into line and this is going to help Europe hold this position so the U.S. can hold the World Bank position. And on and on we go and we don't solve major problems that affect the whole world.
FOSTER: Do you think there is a sense in Europe that by getting a European head there will be more money coming from the international community to Europe, and perhaps a smaller proportion, therefore, coming from Europe itself?
SACHS: I think that is a very good summary of the hopes that if Europe holds the position in the IMF then the IMF can be used, in part, to solve this problem within Europe. And, indeed, the IMF does play some role, but we shouldn't see the IMF as really being there to bailout Europe from its own internal responsibilities. One of the things that I have been arguing, in general, is that regions need to take more responsibility within their own regions.
FOSTER: If you were running the IMF, how would you see the priorities changing in terms of where they should be focusing? I mean, would it be, looking at the dollar, say let's sort this out and then we can move onto the other problems, for example, Europe.
SACHS: Well, not exactly, because problems and crisis don't come in a line, but the U.S. has been the world's reserve currency since the IMF was established at the end of World War II. But it can't play that role anymore. One of the points of the upheaval in the past decade, including until now, is that the Fed is really not pursuing a monetary policy that makes sense for the world. I don't think that it makes sense for the United States either, by the way. But the world can't live on a U.S. dollar standard the way that was traditionally was the case. The U.S., it just doesn't have the economic strength or size in the world economy. So we need to move to a system where the dollar, the euro, the Renminbi, China's currency, and a few others play an important regional role and we have a multi-currency world.
It is a tricky set of issues. Especially how Asia will be part of this. And this is going to be sorted out not in a week, or a month, or a conference, or a nice academic paper. It is going to be the life of monetary change over the coming decade. The IMF, I believe, should play a central role in allowing for the rise of the Renminbi, for example, as an international key currency. And as a international store value for central banks and reserve currency. But there is a lot to do to make that happen. And if we get bogged down in just the crisis of countries that have fiscal problems, we are going to miss the big picture.
FOSTER: Jeffrey Sachs, there.
Now, head scratching, meanwhile, on Wall Street; finger pointing in Washington. New U.S. jobs numbers are nowhere near good enough. Are we looking at an economy stuck in reverse?
FOSTER: Jobless, job numbers from the United States make for grim reading for President Obama. The U.S. economy added just 54,000 jobs last month. That was far, far worse than expected. It needs to add almost three times that number just to keep up with population growth. Also, the unemployment rate has risen from 9 percent to 9.1 percent. In the previous three months we saw gains of around 200,000 jobs.
Now we are back to the levels-the stagnant levels of job creation we saw back in January, as you can see from that chart. And the White House chief economist says this is just a bump in the road.
FOSTER: But Mitt Romney, the Republican, who hopes to run against Mr. Obama in 2012, says they are a sign the U.S. is going backwards.
Investors are finding it hard to find a silver lining in these figures. We saw a sharp drop at the open of trade in New York. Alison Kosik is at the New York Stock Exchange to tell us what has happened since- Alison.
ALISON KOSIK, CNN FINANCIAL CORRESPONDENT: Hi, Max.
Actually, stocks have actually recovered since the open. We saw stocks drop as far as 140 points, the Dow now down only about 66. But you know this report, overall, came as a big shock to Wall Street. You know, if you look at what you were just talking about, you know, the past year, the past several months have been pretty good, with job gains averaging up almost 250,000. But it is really disconcerting to see what is going on in this report, if you look deeper. You know, the government is shedding jobs at a faster pace than any other area of the economy. Manufacturing as well, and that was thought to really power this recovery. I talked with a few traders and they are just expecting more weakness to come, through the summer.
KEN POLCARI, ICAP EQUITIES: It is further confirmation that the economy is struggling. And I think people are just really starting to reassess and the market is certainly reassessing and has reassessed, and then we'll see going forward. Don't forget QE2 ends in another couple of weeks. And so therefore that is going to be the real test of if the market is going to be able to hold itself.
KOSIK: Hey, Jason, what is your take away from the report? Are we just in a soft patch as everybody is saying?
JASON WEISBERG, SEAPORT SECURITIES: Well, I agree with some of the things that Ken said, but quite frankly, a lot of this is baked into the cake. I mean, the volume is anemic. Not a lot of people put a lot of faith in this number. They don't put a lot of faith in a lot of the key data points, the economic data points. And it shows in the volume. The long-term players have really stepped away from the table. They have been away from the table for quite some time.
KOSIK: And as far as those questions as to whether we are headed for a double-dip, Max, you know what? They are talking about it on the floor here at the New York Stock Exchange, but many say it is unlikely, Max.
FOSTER: OK, Alison, thank you very much, indeed for that.
Now the U.S. president has spent the day trying to draw attention to one of his success stories. And that is rescuing the country's auto industry. In the past hour Mr. Obama has been speaking at a Chrysler factory in Ohio. The government is selling off the last of its stake in the company after rescuing it in 2009. The taxpayer is still more than $1 billion short. Mr. Obama insisted it was a sound investment.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We've got a lot of work to do, but we are going to get there. And if anybody tells you otherwise I want you to remember the improbable turn around that has taken place here at Chrysler.
I want you to remember all those folks who were-all those voices who were saying, no; saying, no, we can't. Because Toledo, you showed-you showed that this was a good investment, betting on America's workers.
(END VIDEO CLIP)
FOSTER: Now Fiat bought the remaining stake in Chrysler. CNNMoney's Poppy Harlow asked the Chrysler CEO if the deal really worked out for the American people?
(BEGIN VIDEO CLIP)
SERGIO MARCHIONNE, CEO, CHRYSLER: I think was a phenomenal deal for U.S. taxpayers. I mean, when you look at this from the potential disastrous consequences of a failure of Chrysler as an entity, just to pick up the pieces of what would have been left over, the impact on the supplier base, employment levels here in Michigan, and in other states of the U.S., it would have been a real mess.
Look, the easiest way to look at this is to look at the competitor field, go ask the people of Ford what they thought of the bailout. It would have cost them incredible pain and grief, because of the inability to get a supplier base to respond to their requirements. It is an industry that is now both global and requires mass in order to function. And the destruction or the disappearance of one of the Detroit Three, would have been a real mess.
POPPY HARLOW, CNNMONEY.COM: You know it is interesting I just this morning reread and op-ed by Mitt Romney back in 2008, in "The New York Times". And he said, look don't bailout Detroit. Don't bailout Chrysler and General Motors. So, looking back do you think that Chrysler could have stood on its own two feet and come back without this government money?
MARCHIONNE: Whoever told you that is smoking illegal material. That market had become absolutely dysfunctional. It had become absolutely dysfunctional in 2008, 2009. I-there were attempts made by a variety of people to find strategic alliances with other carmakers on a global scale. Chrysler shopped a variety of other sources before it came to this conclusion. And the government stepped in as the actor of last resort. It had to do it because the consequences would have been just too large to deal with.
HARLOW: Looking at your numbers, $160 million profit Q1. The big question, are we going to see an IPO this year?
MARCHIONNE: We are going to see an IPO whenever we think that we have the means to monetize the (UNINTELLIGIBLE). This is really the objective of this exercise. Fiat obviously is not a seller of its interest in Chrysler. The objective here is to make one reliable (ph) automaker. How that happens has a variety of alternatives. We need to work through them all and then make the best choice.
So, timing is not up in the air, it is indefinite because I think we need to wait for the resolution of the ultimate capital structure of Chrysler on the one hand. And we need receptive capital markets to do the operation.
FOSTER: Well, after today's jobs numbers and the downgrade warning that Moody's issued yesterday, these are troubled times for the U.S. economy. PriceWaterhouseCoopers has just published a report that predicts exactly when the world's largest economy could be overtaken by emerging rivals, at least the banking sectors there. Earlier I asked its chief economist John Hawksworth if today's jobs data took him by surprise.
JOHN HAWKSWORTH, CHIEF ECONOMIST, PRICEWATERHOUSECOOPERS: Well, I think there were slightly disappointing figures and obviously they are consistent with some other evidence that the U.S. economic recovery is slowing down a bit this year. In fact affected by high oil prices and just general uncertainty about the budget deficit and things like that.
Having said that, it is only one month's data. This data does jump around and so I do tend to say we need quite a lot more month's data before we can talk seriously about the double-dip recession.
FOSTER: So you are not too concerned right now?
HAWKSWORTH: I mean, it is a slight sort of, you know, amber light, but it is not something that one should get too concerned about until there is a lot more sort of data going the same way.
FOSTER: I know that you have been looking in your latest research a very a-taking a very long term view, particularly about the financial sector around the world. How are you assessing U.S. versus more developed economy banking sectors right now?
HAWKSWORTH: Well, I think that what we are saying is that the sort of supremacy of the U.S. and the European banking sectors is really going to come with a challenge over the next two or three decades. I think we see China potentially overtaking the U.S. as the biggest banking market (ph) in the world by 2025.
HAWKSWORTH: India potentially overtaking Japan, about five or 10 years later, having already overtaken the U.K. And Brazil will start moving up fast and eventually overtaking the U.K. as well, later in the-in later decades. So, really I think we see the sort of balance of power that has been with the U.S. and Europe for the last sort of 200 odd years, you know, really shifting very much to the East.
FOSTER: Presumably exacerbated by the financial crisis?
HAWKSWORTH: Absolutely. I mean, we originally did this analysis four years or so ago. And this is now happening much faster. I mean China's economy has grown by a third over the last three years. The U.S. has stood still, the U.K. has gone down. So they are catching up at a very rapid rate. And I think the banking sector obviously, you know, Western banks hindered by the overhang of the crisis and the need to deleverage, regulatory changes, while Chinese, Indian, and Brazilian banks are already powering ahead.
FOSTER: And the banking sector, of course, controlling, holding, the world's money. So, what does it-what is the impact of that power shift moving from West to East?
HAWKSWORTH: Well, firstly, if Western banks need more capital to meet new regulatory requirements they may need to get it from places like China's sovereign wealth funds and other places like that. So, they will be the people holding the capital, because they are the economies that are doing the savings at the moment and generating the excess capital. So that sort of gives them a certain amount of financial power.
Secondly, I think that trade flows will increasingly between these emerging economies. They will be between China and India and Africa and South America. Almost bypassing, you know, to a certain extent U.S. and Europe. And finance will to some extent follow trade, particularly in areas like natural resources, where China is selling money, factory goods, to get natural resources back. And so to a certain extent the Western banks want to get into this growth. You know, they can't just focus on their domestic markets. They have to look at ways, through joint ventures, and other sort of initiatives to actually get into these markets. Because they are going to be growing very fast in terms of consumer finance, mortgages, things like that.
FOSTER: The great global power shift.
Well, the Bahrain Grand Prix has been given the green light. Next, we'll look at why it could prove to be an unpopular move.
FOSTER: Well, the Bahrain Grand Prix will take place this season, after all. It was meant to open this year's Formula One season, but was canceled in February due to violent anti-government protests. Bahrain's state of emergency has been lifted, but there is still civil unrest in the kingdom. I asked our Don Riddell how the race organizers are justifying the reinstating it.
DON RIDDELL, CNN SPORTS CORRESPONDENT: Well, it is going to go ahead on October 30th and the Bahraini authorities and the Bahraini International Circuit where the race will take place are absolutely delighted.
But there is a lot more to it than that. The teams didn't want to go. They had a meeting in Monte Carlo last week, just ahead of the Monaco Grand Prix, and word from that meeting was that the teams didn't want to go. And I suspect there are several reasons for this way beyond the moral implications it will extend the season up until the second weekend in December. It has already been a very long season for the teams and I don't think they are keen to have it extended by another couple of weeks.
And there are also insurance concerns because while the Bahraini ruling party may say at the moment that it is safe and there are no problems and marshal law has been lifted there are still a lot of disaffected people in Bahrain. A lot of these people have been running to the teams saying please don't come. We don't want you to come. So there could well be concerns and protests and violent outbreaks when the teams arrive. And who is going to insure that? Who is going to cover it? So I that the teams are concerned. And Red Bull, who are the top team in the sport at the moment, have released a statement today saying that words to the effect of we are considering our options, we will be discussing this with the other teams.
FOSTER: They haven't really got an option though, have they, if the race is on they have to take part, wherever it is.
RIDDELL: Well, yes, they are legally bound to go. The penalties for anybody who chooses not to go are pretty crippling. And it is the sort of sport and the sort of community where if you step out of line things can be made rather uncomfortable for you. So I think the only hope for the teams is that they can come to some kind of agreement and all 12 of them can speak as one. But we'll have to get to that point to find out what their options really are.
FOSTER: So the broader pitch of perhaps an interesting crunch point for the power play in this sport, which we have seen playing out in the last couple of years.
RIDDELL: Well, that is right. I mean, you know, we can look beyond this to what is going to happen at the end of next season when the Concord Agreement, which is the deal that binds the 12 teams to CBC, which owns the commercial rights of the sport, that contract is going to expire and preliminary negotiations are already taking place to see what happens at that point. And only last month we had the chairman of Ferrari hinting that perhaps the teams could come together and break away. Now, Bernie Ecclestone, the sports premier (ph), has said, that couldn't happen. It never will happen. But it will be interesting to see if the 12 teams can strike a deal on this and agree on this, as to where that leaves the sport going forward.
FOSTER: We'll see.
Portugal is heading to the polls this weekend. Two candidates are battling it out to be the one to fix the country's crippled economy. We'll look at the men who say they'll be up to the challenge, next.
FOSTER: Welcome back. I'm Max Foster. You're watching QUEST MEANS BUSINESS, and these are the headlines.
A Yemeni government spokesman says President Ali Abdullah Saleh, will postpone a news conference he was expected to hold today due to "scrapes" he suffered during an attack on the presidential palace. Earlier Authorities said he's doing fine. The state news agency says the shelling of the palace's masque shelled several of the president's bodyguards.
An un-repented Ratko Mladic made his first appearance on Friday before a war crimes tribunal in The Hague. The former Bosnian serve commander faces charges linked to the siege of Sarajevo and the massacre of some 8,000 Muslim men and boys in Srebrenica. Mladic calls the charges obnoxious and monstrous.
Former US senator and presidential candidate John Edwards is due in court in North Carolina this hour, after a grand jury indicted him on six counts related to campaign finances. Prosecutors allege the two time presidential candidate improperly used $900,000 to cover up an affair with his mistress. His attorney says Edwards will plead not guilty and insists the disputed money was not tied to Edward's campaign.
After more than two months of caretaker leadership, Portugal will make its new prime minister -- or pick its new prime minister this Sunday. Caretaker Prime Minister Jose Socrates is currently trailing Pedro Passos Coelho's, social democrats in poles.
As Ines Ferre reports, the country's economy is in for a rough ride, whichever candidate wins.
INES FERRE, CNN INTERNATIONAL CORRESPONDENT (voice-over): The closing date of campaigning for Portugal's general election are under way. And across the country smiles and promises. This is a campaign like no other. Portugal is facing its worst economic crisis since the early 1980s, and these two men are vowing to fix things.
JOSE SOCRATES, PORTUGAL PRIME MINISTER (through translator): The Portuguese people know that I've always assumed my responsibilities and they also know that I've never turned my back during the difficult moments.
FERRE: In the running is socialist Jose Socrates, Portugal's caretaker prime minister, whose minority government collapsed in March when it failed to push through posterity measures in parliament. Challenging him is Pedro Passo Coelho, the leader of the social democrats.
PEDRO PASSO COELHO, PORTUGUESE OPPOSITION LEADER (through translator): I may not have the governmental experience, but I won't carry in my conscience the 700,000 people unemployed.
FERRE: For the past two months they've been engaging in tit for tat attack. At the heart of the debate, the $112,000,000 European Union bailout, a harsh recession, and record unemployment.
COELHO: What would happen in Portugal if the next government fails? It would take less than six months and we would be asking yet again for help, and, perhaps, in that occasion there wouldn't be any.
FERRE: In a televised debate, both candidates blamed each other for the debt crisis. Passo Coelho, who is slightly ahead in the latest poles, said the prime minister had delayed requesting a loan he described as inevitable.
COELHO: Many companies in Portugal closed their door, throwing many people into unemployment because they could not get credit from their bank.
FERRE: Socrates, with a graph in hand, replied the crisis could have been avoided, if the opposition had accepted his austerity program.
SOCRATES: Since you failed the round of austerity measures, interest rates haven't stopped rising.
FERRE: If the election brings political deadlock, a coalition may be needed. And analysts say that could delay the much needed economic reform. For those voting on Sunday, the economic picture is clear. The reality will be rough, no matter who wins. Ines Ferre (?), CNN London.
FOSTER: Sun, sand and screaming kids. Next, we'll tell you about the survey that prompted holiday company Thompson to start doing adults only holidays.
FOSTER: (INAUDIBLE) company TUI has spotted a gap in the market. Holidays for people who don't want a lot of screaming kids running around. Thompson found more than three quarters of its surveyed customers said their holidays were affected by other people's children.
Fifty-five percent said their main complaint was the kids' behavior in restaurants. Forty-eight percent said the little ones' general noise and whining was irritating.
And, it's not just other people's kids that can be like nails on a black board, 14 percent of surveyed parents said their own children have affected the enjoyment of their holiday.
All right Christian Cull is Communications Director for TUI, Thompson's parent company. He told our John Defterios that it's new; couple's only plan was driven by a lot of customer feedback.
CHRISTIAN CULL, COMMUNICATIONS DIRECTOR, TUI: Thompson, we take three and a half, four million people on holiday every year. And up to about a million of those every year give us feedback. And they were saying, a lot of them, that, whilst they may even have kids of their own and families of their own, sometimes they just want to go away, the two of them, with their partner, and remind themselves of just what it's like to spend time without the kids. Spoil them crazy when they get home maybe, but spend time as a couple.
JOHN DEFTERIOS, CNN INTERNATIONAL CORRESPONDENT: It's kind of risky as a company is it not, to say you could be venturing into that space of being anti-child, or anti-children. How did you weigh that internally before moving like this?
CULL: Well we put this into context. What I'm talking about here is a new range of hotels, and there are 19 of them across the world. Where every year we send people to 1,761 hotels. So that leaves 1,742 to choose from if you want to bring children, or if you don't mind other people's kids on holiday too.
DEFTERIOS: Well that's an interesting point though because that came out in your survey. It's not necessarily just their children traveling, but other people's children, which is really causing the problem. This isolates that problem.
CULL: Yes. Well there are plenty of people out there who have a partner that may not have children. And they like to go on holiday. Sometimes don't mind having kids around, but I'm sure that some people out there will know what it's like, they're lying quietly by a pool, they've just put their suntan lotion on, and someone comes screaming past, maybe splashes them with their feet, gets some of the water up on their backs.
And, that can irritate some of our customers. So, if there's a chance or an option that if they're in the mood to be alone together, then we can give them that holiday, that sounds like a good idea to me.
DEFTERIOS: How about singles in this equation? Do they get to participate in these couple's hotels, or are they isolated as well?
CULL: No. I think hopefully Thompson couples would welcome single people as well. The main thing is there aren't noisy kids there. I've got kids myself. I love my kids; go on holiday with my kids. Sometimes it's just nice to kick back with your partner and enjoy it that way instead.
DEFTERIOS: This is targeted to the platinum card holders of the world? What sort of edge of the market are you looking at?
CULL: I think we're looking at a broad range of people. It's a mainstream holiday option. We're looking, age wise, from about a 25 through to anything up from that. Sixty, sixty-five they're welcome as well. Some of the hotels have -- used to be Thompson gold hotels, which were a -- aimed at a slightly older market. They've moved into the Thompson couples offer now and become adults only.
But, it's anybody really, who want to go away -- it's not a sort of lovey-dovey, smooching, holding hands all the time type holiday. If you want to do that great, you can do that anywhere. But, it's more a chance to enjoy some relaxation, maybe take a spa or something on the beach. You don't necessarily want to have a spa or well-being session on the beach with kids around.
If there aren't any kids around it just it a different -- a different perspective really, and a different variety to it.
FOSTER: Wonder what his kids think of all that. Anyway, millions of people in China are affected by the country's worst drought in 50 years.
Meteorologist Pedram Javaheri is at the CNN News national weather center for us.
How serious is this Pedram?
PEDRAM JAVAHERI, CNN METEOROLOGIST: Yes. You know, it's as serious as it comes for them Max. And it's in -- a lot of folks, you know you think it -- perhaps it's in an isolated are. It's not an area where it's habited, but it certainly is one of the most populous regions in the world.
And right along the areas within the Yangtze, within the Yellow River, that area has some of the highest population density in the world. And, it's really the life blood of the nation here. And you go towards the Three Gorges Dam. Was built here, could certainly help out when you don't have much rainfall in the way of drought concerns, and also could help out when you have flood concerns, but barely any water to work with.
Downstream, work your way towards Yueyang only 49 percent of the average rainfall so far in 2011. You think that's bad, well, how about out towards Shanghai. Higher population, even less rainfall, 42 percent of the average rainfall so far in 2011.
And again not just the Yangtze, but also the Yellow River, and this map here shows you the population density. The dark brown colors, that's the highest, most populous region and that's right along the eastern coast there of China, where they've been very, very hard pressed to get, not only very little rainfall, but also very little in the way of tropical storms and cyclones that help them out during this time of the season.
But, some good news in the forecast. Some showers, moderate at times in the next 24 to 48 hours. Again, right along the area they need it, so that's the good news, at least for the fore seeable future, but again the drought concerns have been long going.
We know a lot of industry in this region. A lot of the water has already been polluted from the industry so, you can't use if for drinking, you can't use it for the farm land.
And, the concern going to continue here, but, of course, the first -- the first signs of relief here as we are beginning month of June, Max, as some rain falls. So, at least better news in the next few days. Max.
FOSTER: Good to hear. Thank you very much Pedram. Now do join us all of next week on CNN as we go inside the cloud. Not the sort that Pedram would talk about. This one is heralded as the next evolution in computing.
What is the cloud? Well we are already in it. And there are different types of clouds too. What happens if it fails then? What are the security issues? CNN will use its global business resources to answer those questions and more for you.
We'll also examine the opportunities for business and investors. All next week, here on CNN.
That is QUEST MEANS BUSINESS. I'm Max Foster in London. Have a great weekend "MARKETPLACE AFRICA" is up next CNN.
ROBYN CURNOW, HOST: I'm Robin Curnow. This week we're in Harare, Zimbabwe. Now once this was one of the world's largest tobacco auction floors. It used to be full. Its crop used to provide Zimbabwe with its biggest foreign currency earnings.
But, that was more than 10 years ago. Before the farm seizures, before the political and economic upheaval. But, Zimbabwe's dying tobacco industry is showing signs of life, of recovery. The prospects for this year much, better than last.
Now another dying industry. A technology receiving a new lease of life here in Zimbabwe is the cassette tape. Long ejected by the rest of the world for digital music. But here nothing quite beats good old fashioned durability.
TEXT: IN FOCUS
CURNOW (voice over): Rewind back a few decades. Before the CD, after vinyl, there was the cassette tape. A music format now outdated almost everywhere else. But here in Zimbabwe, the cassette is still top of the pops (ph).
Sold in music stores and manufactured by local record companies for the past three years. Diamond studios saw a business opportunity out of old technology and started what they say is one of the few tape factories left in the world.
From this small garage in Harare, they produce more than 10,000 cassettes a month, trucking their music to listeners in rural Zimbabwe. As well as Mozambique and Botswana, earning more money than if they produced only CDs.
PHATHISANI SIBANDA, DIAMOND STUDIOS: When we started with CD stuff the CD was pirated a lot. At the end of the day the artist got nothing from sales, from royalties, and there was nothing for the artists, nothing for the studios. So we decided to opt for the cassette.
CURNOW (voice over): These are two of Diamond Studios best-selling artists, editing their latest release. They say they're surprised at how many tapes they've sold.
SOMANDLA NDEBELE, SUNGURA ARTIST: So far I've just released my latest album. (INAUDIBLE) .some three weeks ago. So it seems (INAUDIBLE) out, on CDs. With CDs they bought some few copies. The cassette (INAUDIBLE) a big surprise to me. They have sold more than 10,000 copies. (INAUDIBLE). There is a very big difference, a huge one. Most cities are (INAUDIBLE).
CURNOW (voice over): With little disposable income, people say it's a matter of value for money.
CURNOW: Here on the streets of Harare, Zimbabweans can pick up a brand new cassette tape with the latest releases for about $2.00 or $. $3.00. For the same price they can buy a pirated CD. The difference though, is the quality.
SIBANDA: The cassettes are very, very durable. I'm going to have this for the next ten, fifteen years.
CURNOW (voice over): The record label executive says his customers want tapes because they last longer than badly produced pirated CDs. Which is all most people can afford?
SIBANDA: You buy a CD it's scratched, it's no longer going to play. You find a (INAUDIBLE). a tape deck. They've been having for the past I don't know how many years and the electricity -- they don't have electricity, but (INAUDIBLE). So for them to buy this CD stuff, it needs a lot of voltage. It needs -- so they go for the radio cassettes where they buy batteries and just pop inside.
CURNOW (voice over): From the towns to the countryside, most Zimbabweans are too poor to upgrade to CDs or IPods.
JOYCE SIMETI, GOSPEL ARTIST: Listeners they prefer cassette, because most of the -- most of our listeners they stay in rural areas and they don't use those radios which play CDs.
CURNOW (voice over): In the past decade Zimbabwe's economy seems all but collapsed. Inflation hit record highs. Political uncertainty still frightens away foreign investors. So, there's been little investment in infrastructure. A de-industrialization, as some analysts describe it.
The survival of the old cassette tape is just another reminder of how broken Zimbabwe's economy still is. Stuck with the soundtrack from a time of prosperity, now long gone. Robin Curnow, CNN, Harare, Zimbabwe.
CURNOW: Up next, he has an eye for a good deal. What inspires one of Zimbabwe's most successful men?
CURNOW: We're in Harare on a tobacco auction floor. Of course tobacco used to be one of Zimbabwe's biggest industries. These days though, in Africa, the big money is made in mobile technology. Our guest on FACE TIME this week is Strive Masiyiwa, the founder of Econet Wireless. He's a Zimbabwean businessman, but many describe him as truly African Renaissance man.
(TEXT: FACE TIME)
STRIVE MASIYIWA, FOUNDER, ECONET WIRELESS: I feel like a pioneer, because I'm here to provide solutions. When I wake up in the morning, I've always been motivated by providing solutions.
CURNOW: Not money.
MASIYIWA: No, no. The money is a consequence of what you do. But you don't -- I didn't wake up and say I want to make a lot of money. No. I began my career as a telephone engineer. And, I knew we could provide services to more people than that.
And you know, I was like a single voice shouting to say we -- we can do more than we do. Today, 500,000,000 African people have telephone service. And, I was part of that. So, for me it's not -- it's -- that's what I'm about. Providing solutions. But we go beyond that, you know. We provide communications for banks.
We provide the services for a lot of the banks, to provide things like point of sale terminals. Credit card. When you swipe a credit card, you're probably running a network we provide in Africa. We do that in 18 African countries.
So, we -- we do a lot of things but it's all -- it's not about the technology. It's about responding to the needs of our customers. So that's really our --
CURNOW: How do you respond to the need of a customer in Nigeria, a customer in Haiti and a customer in New Zealand? Are they all the same when it boils down to it?
MASIYIWA: No, no they're not the same. It's about the skills that we mobilize. You know, for me, my main job here is to manage a global talent pool. It's about how many -- if you walk down our corridors here, you're going to find Americans, Chinese. We have Christians, Muslims. We have women; we have Ghanaians and all sorts of people who I cross.
CURNOW: You're a committed Christian. How much does that play into your business ethic?
MASIYIWA: It certainly drives my values. But, I see that as -- as manifest in things like my approach to things like corruption. You know, I will not allow it within the organization. And I will not -- you know we've had many issues as you know where I have responded very aggressively over prohaption (ph) in different countries.
CURNOW: Do you read the Bible for an hour a day? Is that correct? I read that.
MASIYIWA: That's when I'm busy. I can read it for four or five hours. Like on a weekend I spend a lot of time studying the Bible and looking at various passages.
CURNOW: And is the Bible a good business management tool?
MASIYIWA: The very best. Nothing better than it.
CURNOW: Give me a good example.
MASIYIWA: Well, let me see. Do you know that delegation -- God first told Moses to delegate? He said Moses you can't do this all by yourself. And he told him pick 70 people and he delegated to them. And that's what I do every day. I'm always looking for an opportunity to delegate responsibility and empower people.
CURNOW: You're very philanthropic, aren't you?
MASIYIWA: You know I've been in business now nearly 30 years and -- but, we had the problem of HIV and AIDS in Africa. And I run a construction company. And I realized that a lot of my workers were dying and leaving very young children.
And, so, I began to adopt the children and send them to school. And that program I expanded beyond my own group.
Today we provide support for -- education support for about 30,000 orphans at any given time. We pay school fees. We buy their uniforms. We provide counseling support. And we do that wherever we have an operation.
MASIYIWA: Because it is right. You have to have a purpose in life. And, so, I guess in my case I'm driven by a deep spiritual need, but I see that as something everybody should do. Whether you do it as an enlightened self interest -- you see if we don't send these kids to school, don't be surprised if somebody attacks you with a gun on the street. Because that's the consequence of it.
CURNOW: Are you an idealist?
MASIYIWA: No. I'm not an idealist. In fact, if it's an ideal that I cannot implement, I leave it to the philosophers. I'm about execution. I get things done. That's what I'm about. So if I can't go out and do it, then I move on.
CURNOW: Strive Masiyiwa of Econet Wireless. Please do go to our Facebook page and tell us who are your inspirational business leaders. Now here's what's trending this week.
TEXT: Wal-Mart/Massmart Merger. Wal-Mart expects to finalize its acquisition of South African retailer Massmart in the next few weeks, after earning final approval from South African regulators.
The $2.4 billion deal gives the world's top retailer its first foothold in Africa.
CURNOW: That's it for our show from Zimbabwe, I'm Robyn Curnow. Thanks so much for watching. Please do go online to our website. All of our stories and interviews are there. But, until next week, goodbye.