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World's Central Banks Offer 3-Month Loans To Aid In The Europe's Debt Crisis; Interview With Finnish Finance Minister; Sending A Message; Ahead of the Game; Designer's New Digs; All Eyes on Poland

Aired September 15, 2011 - 14:00:00   ET


RICHARD QUEST, CNN ANCHOR, QUEST MEANS BUSINESS: Together they stand. Federal banks offer action. Christine Lagarde says it can't come a moment too soon.


CHRISTINE LAGARDE, MANAGING DIRECTOR, IMF: We have entered into a dangerous phase of the crisis.


QUEST: An arrest at UBS over suspected rogue trading. And hang onto your hats we'll be featuring milliner Stephen Jones as part of world at work.

I'm Richard Quest. We have an hour together. And, yes, I mean business.

Good evening.

From Tokyo to Frankfurt to Geneva, London and New York, the world's major central banks are today offering U.S. dollars. And they are doing so on an all-you-can-eat basis, full allotment, as they call it. A coordinated liquidity move for three-month loans will make sure non-U.S. banks have access to all the dollars they need, as American lenders back away because of Europe's debt crisis. The money will be made available through the ECB in three-month loans. The first tender starts on October the 12th.

Concerns over the ability of euro banks to borrow in dollars has been a major factor in the sliding share price, so far this year. We are seeing the affects of the liquidity move on the European markets.

Come over to the super screen and you will see what I mean. This is how things are looking. A dramatic rise in the London markets, we saw a strong performance. Look at the way things went as a result. It was up 2 percent. Lloyd's one of the best performers was up nearly 7 percent. In Germany we had Deutsche Bank at 5.8 percent. But it was CAC currant in Paris which saw a phenomenal 3 percent gain. And look at them! Look at that spike! That's the bit. That's the bit where we start to get an idea of this full allotment. BNP Paribas gets a gain of 13.4 percent. Even in Zurich, the SMI; not so-well, it was only up less than a 0.30 of 1 percent. Credit Suisse was up 5.8. Not surprisingly there was the unpleasantness at UBS. That took the market down and that is why Zurich did not respond as fast as the others.

The overarching view? You can see, one of positive reaction. Christine Lagarde praised the dollar liquidity move. The IMF managing director says that without bold coordinated action there was a real risk economies will slide backwards.


LAGARDE: Despite the very gloomy picture that we have at the moment, I believe there is a path to recovery. It is indeed a narrow one. And it is certainly narrower than it was three years ago. Because the volume and the amount of ammunition is different, lower. But there is a path and it will require strong political will across the world. Not just in one country, but in many countries. And it will require decisive action on the part of some central banks, which they seem to be showing to us, including this morning.


QUEST: In Brussels, the European Commission says Europe's growth prospects are deteriorating and has cut its growth forecast for the fourth quarter of this year. From 1.4 percent to just about stagnation.


OLLI REHN, EUROPEAN ECONOMIC AFFAIRS COMMISSIONER: The economic growth in the European Union is expected to become a virtual standstill towards the end of the year. Compared to our spring forecasts prospects are gloomier. And risks to the growth outlook are tilted to the downside.


QUEST: That is the scenario of the situation.

Sticking points over Greece's next bailout are another factor in the Europe debt crisis. Finland wants collateral for new Greek loans; a stand that has been criticized by the other Eurozone states.

Joining me now, Alexander Stubb, the Finish minister for European affairs and foreign trade, live with me.

Minister, we have much to talk about. We'll get to collateral in a moment. But if we look at the conversation yesterday, between Merkel, Sarkozy and Papandreou and you see the ECB's dollar liquidity move today. Do you-can you tell me tonight that you are more confident that the European community, and the euro institutions are ahead of the curve?

ALEXANDER STUBB, EUROPEAN AFFAIRS & FOREIGN TRADE MINISTER, FINLAND: Yes, definitely. I think the move yesterday was very political and the basic message was Greece will stay in the euro, from a political and economic perspective. And, of course, what the central banks did today was on the economic side. And clearly it calmed down the markets. But remember we are playing this day by day.

QUEST: Now see that not very encouraging. Because what everybody tells me they want from people like you is a clear road map and leadership about how this thing moves forward. And we're not getting it yet.

STUBB: We're not getting it yet. Basically we have been in this mess for the better part of three years. As a matter of fact, exactly three years today, because Lehman Brothers went down on the 15th of September. It has taken a while. And what we need now is basically three things. One, solve the crisis. Two, get tougher European rules. And then, three, get economic growth.

QUEST: Right, solving the crisis? How close to you think we are to actually getting that solved?

STUBB: I'm an eternal optimist and I think we are pretty close to it. We have had a few tough spots, with Ireland, with Portugal, the first Greek package. Now we are doing the second Greek package. Once we get that solved and ring-fenced to a certain extent, I hope that things will calm down. And other good news today, the European parliament will approve so-called six-pack of economic legislation. Pretty soon, in other words, in a couple of weeks, and I think that should calm things down.

QUEST: You are not being very helpful there, in Finland, by demanding this collateral. Sizable collateral, almost as much as the loan itself. If everybody wanted collateral, Minister, the loan wouldn't go ahead.

STUBB: No, we are a special case. And what we've done-

QUEST: Everyone says they're a special case.

STUBB: Of course, we are all very special. But basically what we did is after the elections we formed a government and one part of it was to get collateral for future packages. And the basic thinking is, listen, we've done our deal. We have stuck to the rules. And there are others who haven't and we need some safeguards on this.

What we are getting now-I hope, at least-is within the next few days or weeks, is a comfortable package of collateral, which is OK for us, OK for Greece. And of course, OK for all the other member states.

QUEST: The problem is if everybody demanded collateral.

STUBB: Well, I think this deal that we probably are in the process of forming would be rather be country specific and comfortable for all. I'm quite confident in the legal expertise of the people who are negotiating it.

QUEST: Isn't this the problem, though? Nobody really likes what is going on. Whether it is Chancellor Merkel, or your prime minister, or you, everybody is holding their nose at the stench of this crisis.

STUBB: Yes, I think you are absolutely right. And here is the fundamental problem. If you have a monetary union you need some kind of political union or at least economic policy coordination. In other words, you can't have your cake and eat it, too. And that is what is happening right now. We need tougher rules. That is what we need, so that this can never happen again.

QUEST: Do you support the-if I'm not saying it-it was the Netherlands' prime minister and finance minster in their recent suggestion: That those that break the Eurozone rules get a-there should be a euro czar to look at the budget. They should be able to be kicked out or penalized, and then kicked out.

STUBB: Well, Finland has some good experiences with czars, some bad ones.

I do like the idea that the Commission would get more power to say- have a say, some kind of a say on budgets so this doesn't happen again. The problem with the euro was you had a carrot to come, fulfill the three criteria, but you had no stick to force you to keep to those carrots. And the reason the Fins, for instance, are frustrated, we played by the rules, and some others haven't.

QUEST: All right. So, what is the next stage? Not in a crisis, that will take care of itself. But is there-what's the next stage for you, Minister, in terms of fiscal integration.

STUBB: Yes, I think there are two phases, one is to agree to this six-pack of legislation, which is on the table. That will happen in two weeks. Then, for the longer term, we really have to seriously think about two things. One, how to change the rules to make them tighter; and you can do that either through an intergovernmental conference. Or, two, the Eurozone itself going ahead and forming a hardcore. And having those rules in the package.

QUEST: Whoa! Whoa! A hardcore-you'd kick the rest out?!

STUBB: No, we don't kick. It can be open for all of those who want to be there. But we basically need more economic policy coordination. And that is what we need to focus on in the future. Otherwise we are going to get into this mess again. In other words, you need more integration, not less.

QUEST: Many thanks, indeed.

Now, ironing out Greece's bailout will be high on the agenda of the meeting of European finance ministers. It takes place in Poland tomorrow. CNN's Jim Boulden is already there and joins me now.

Jim, how likely are they to make significant progress. Both in determining what the next stage is and putting these things to rest.

JIM BOULDEN, CNN BUSINESS CORRESPONDENT: I asked that very question to the Polish finance minister a few hours ago, Mr. Ratowski (ph). And I said, has this meeting become ever more important? Especially, because U.S. Treasury Secretary Timothy Geithner will be here as well. And he made it very clear. These are informal meetings and he is going to keep it, as the host, as informal meetings.

And what he means by that is he wants everyone to sit around the table, on Friday and Saturday, and feel free to discuss everything that is going on. And he says he wants to take the politics out of it. He wants people to speak freely about what is going on and for Mr. Geithner to speak his mind and others to speak their minds. And that is what he says is key for this. Not to go every hour and release a really quick statement and not to have these grandiose press conferences. But to sit around the table for hours and hours and hours, and discuss this.

So, what could come out of this at the end on Saturday, Richard, is more (AUDIO GAP), as we have been hearing for the last 24 hours, to keep Greece in the euro, to keep Greece from having to default. And to say and do whatever they can to make sure that doesn't happen.

QUEST: Jim Boulden, who will have the-I beg your pardon. Jim Boulden, who will have the delight of listening to those hours and hours, perhaps, of discussions. Many thanks indeed, Jim Boulden joining us from Poland.

The city of London is alive rumor and scandal tonight. A $2-billion trade gone wrong for UBS. Is the rogue trader to blame? QUEST MEANS BUSINESS, next.



QUEST: Police in London have arrested a 31-year-old man on suspicion of fraud after UBS lost $2 billion in what it is calling unauthorized trading. It is a lot of money, $2 billion. Both the bank and the police are still investigating any possible wrongdoing. The losses are so great, UBS says it might wipe out the banks profits in the next quarter. The news sent UBS share tumbling in what was a good day for the rest of Europe's banks. UBS finished off by 10.8 percent. So that was the reason why, when we saw earlier in the program, the SMI had not been as buoyant as the rest of the market.

Atika Shubert, is with us, and has been following the story.

And we are in somewhat of a English legal minefield now. Bearing in mind someone has been arrested and the various reporting restrictions are in place.

ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT: Yes. But what we do know from police is that basically the acted on a tip off from UBS. Which is very interesting. That happened very early this morning. And it does appear that he may have been arrested, actually at his desk, at UBS. At least that is what police seem to indicate. Ian Dyson, who is the City of London police commander, did speak to the press very briefly. Here is what he said.

QUEST: Right, we don't have the inspector just at the moment.

When we look at the allegation, we don't know, and I apologize, because I'm going to talk more about what we don't know, rather than what we do.

We don't know what was supposed to have happened. We don't know how it was supposed to happen, whether it was an-we don't know anything really?

SHUBERT: No, we don't know. And UBS is keeping very quiet about this. They are just saying an estimated loss of $2 billion on unauthorized trades.

QUEST: So we don't know when those trades were made?

SHUBERT: No, we don't.

QUEST: Do we have an idea, because one of the rumors circulating around is that it was in relation to the SNB, Swiss National Bank, when it suddenly decided to intervene and put a floor under the Swiss franc against the euro?

SHUBERT: We don't know exactly. But that is what analysts have been speculating. All that we know is that he was basically dealing with exchange traded funds. But other than that we really don't know any other details. And we are waiting for UBS to come out with the details of their investigation and tell us a little bit more. After all, clients are probably asking a lot of questions at this point about why wasn't more put in place?

QUEST: Right. We do know, of course, UBS did say in their statement that client money wasn't affected. So it was obviously their own bank.

Atika, what happens next?

SHUBERT: Well, we wait to see what happens with the investigation. And we have to wait and see from the police what happens next. I don't believe he's been charged yet. He's only been arrested on suspicion of fraud, by abuse of position.

QUEST: That is what they call it? Fraud by abuse of position?

SHUBERT: Yes. And so we don't know exactly what that means. We are going to have to wait and see what the police say.


QUEST: Come back when there is more to tell me about that, please, Atika. Many thanks, indeed.

Now, despite the massive systems in place to prevent such things rogue traders still have the potential hurt banks or even bring them down. If you will join me in the-well, join me in the library-I think you'll see what I mean.

Nick Leeson, 1995, remember it well. Famously brought down Bearings bank from his desk in Singapore. He made unauthorized futures trades. He lost $1.3 billion. The whole bank collapsed and was bought by ING Bearings, as a result of that, for barely a dollar. The Bank of England, if I remember correctly, moved in and had to negotiate the sale. He disappeared off. He was brought back to Singapore, was imprisoned. Six and a half years in prison, in Singapore.

Then, a year later, Yasuo Hamanaka was found to have lost more than $2.6 billion over 10 years. He was a metals trader for Sumi Tumo (ph). He tried and failed to corner the copper market. Ended up forging his supervisor's signature. He went to prison for eight years.

And then Jerome Kerviel, in 2008, he lost Soc Gen, what for this number: $6 billion. He made the biggest unauthorized trades in history. He bet $61 billion behind his boss' back. He has been jailed for three years.

Having shown you all of this rogue's gallery, I really must remind you that so far, there are only allegations about the UBS trader in London.

When we come back in just a moment, it is a case of two crisis, it's two confidence, Europe and the United States have the sinking feeling. But when we talk in Q&A, which crisis do you think is the most important-well, which do we think? In a moment.


QUEST: QUEST MEANS BUSINESS and so does my good friend, Ali. We are here together in the CNN NEWSROOM, and around the world.

Good day to you, Ali.

ALI VELSHI, CNN ANCHOR: And to you, Richard. We're here to talk business, travel, innovation. Nothing is off limits. Today we're talking about the global economy. A question we've been getting from some of you on Twitter. Specifically, which poses a greater threat to the global economy? America or Europe?

QUEST: It is one of the best subjects that we have had so far. This week's question was inspired by many viewers who wanted you and me to talk about the threat of a Greek default. What is happening in the United States? We're going to start with you, Ali. You've got 60 seconds.


VELSHI: All right. Richard, as friendly as you look to our viewers, you folks across the pond pose a greater threat to the global economy than America does. Europe's problems are structural. Too much actually has to change on the ground. Not where you are, but in countries like Greece and Portugal and Ireland.

The U.S. Deficit is large but it is not even close to triggering a sovereign debt crisis. After the downgrade, global investors continued to think that loaning the U.S. government money is a good bet.

Secondly, Richard, this European mess is costing Americans, who I will remind you are still the world's best customers, real money in the stock market. Because American consumers have a greater proportion of our retirement savings directly invested in the market than do many of you, our global brethren. So when Americans feel poor, the whole world feels poor.

Finally, Richard, while the U.S. has serious political problems, they are all centered on a single federal legislative branch in Washington, which compared to your 17 member nations in Europe look like we're all holding hands and singing "Kum-Ba-Yah."


QUEST: Ah, Ali, Ali, once again, you have deceived yourself. This is the true answer to the question.


I don't know. Let's be honest. It is hard to pick a winner in this race to the bottom. Europe and the United States are like Laurel & Hardy. Perpetually stuck in another fine mess.

But if you ask me which is worse, I'll have to give you the same answer that countless analysts have given me. I just don't know.

Sometime it's Europe, with those different countries and characters. Contagion, widespread, who knows where the next skeleton is going to leap out of the closet? But who really knows if that trumps those headlines in the U.S.; drama, deadlines, last-minute deals. Yes, American crisis may be a little more sensational. They could also perhaps be a little more urgent in the long run.

Ali, I don't know. Neither continent is out of the woods-and even more importantly, neither continent has the leadership to do what is needed. Take it on face value. I have to give you the exact answer. Which crisis is worst? Europe or the United States?


At the moment, I just don't know.

VELSHI: While that was an excellent answer, you simply didn't answer the question which you cannot do in the next part of this.


Because we're going to bring The Voice in and he will give you multiple choice. He was built for a guy like you. Because you didn't answer the straight question. Let's see if you answer the multiple choice?


UNIDENTIFIED MALE: Yes, let's see if you guys can actually answer the questions. Today's quiz is all about money. Question No. 1: Countries that provide universal health coverage are trying to control costs. Of the 33 developed nations around the globe, only the United States does not currently provide some form of universal health care. According to the WHO, which of the following countries implemented their universal health plan first, is it A., France; B., Germany; C., Israel; or D., the United Kingdom?



VELSHI: I'm going to go with the U.K., D.



VELSHI: What do you mean incorrect? That was a bell. Isn't that correct?


UNIDENTIFIED MALE: According to my list, that's wrong.


VELSHI: Well then who rang the bell? Bells are supposed to be good.

QUEST: All right.


I am going to go with Germany.

UNIDENTIFIED MALE: Germany is correct.


Germany was the first in this group starting back in 1941. Norway was the first country ever to attempt universal health care back in 1912.

Question No. 2. We'll try to get our bells right this time. Ali, try not to make a face about this. We're about to talk sports.

According to "Forbes", the three most valuable sports teams in the world, in order, are Manchester United, the Dallas Cowboys, and the New York Yankees, with all of them being valued between $1.7 and $1.9 billion. Which of the following teams is also a member of the billion-dollar club? Is it A., Barcelona; B., Ferrari; C., the New York Knicks; or D., the Pittsburgh Steelers?



QUEST: I'm going with Barcelona.

VELSHI: I would take that, too.


QUEST: It's wrong.

VELSHI: I don't want Barcelona anymore. Barcelona is a ridiculous answer.

UNIDENTIFIED MALE: Then go for it, Ali. Let's hear it.

VELSHI: I feel, Richard, that it is question No. 2 so the trick is in now. This is where the trick question is. I'm going to say Ferrari.


UNIDENTIFIED MALE: That is correct. Ferrari is another member of the club with just over $1 billion in value.

QUEST: Good one!

UNIDENTIFIED MALE: And while the New York Knicks are the highest valued NBA franchise, they are only valued at $655 million.

QUEST: Come on! Come on! I'm only-


VELSHI: Do you know what, Richard? Depending on my intellect has not worked for me in this game for the past several months so I'm switching completely to strategy now.

UNIDENTIFIED MALE: Oh, that's what you call it? Strategy.

QUEST: It's working.

UNIDENTIFIED MALE: All right. Question No. 3: Let's talk about raising money for charity. In the 1980s, Band-Aid released, "Do They Know It's Christmas?" to raise money for famine relief in Ethiopia. USA For Africa released, "We Are The World," to raise money for relief for famine and disease in Africa. Artists United Against Apartheid released Sun City to protest apartheid in South Africa, and to support an economic boycott of the country.

QUEST: Is there a question here?

UNIDENTIFIED MALE: Which of the following bands did not have a member of their group perform on any of the aforementioned songs? Is it A., The Beach Boys; B., The Beatles, c, The Rolling Stones, or D., U2?

QUEST: Come on. We'll show ourselves to be completely -


VELSHI: I think the Beatles were involved. Paul McCartney was involved in all of them. U2 was definitely involved.



VELSHI: It was either the Beach Boys or the Rolling Stones?

QUEST: It's got to be the Beach Boys.

VELSHI: The Beach Boys.


UNIDENTIFIED MALE: The Beach Boys is correct. None of the Beach Boys participated in any of these songs. But as a group they performed at Farm Aid, a charity to raise money for American farm families.


UNIDENTIFIED MALE: Well, as they say, gentlemen, time is money. So I must move on to other endeavors. Congratulations, Richard. Good day, gentlemen. I'm out.

QUEST: Thank you very much.

VELSHI: All right, Voice, thank you very much.

QUEST: That will do it for this week. Remember, we are here each week. QUEST MEANS BUSINESS at 18:00 Greenwich Mean Time.

VELSHI: And in the CNN NEWSROOM, 2:00 p.m. Eastern. Keep the topics coming, by the way. We love them. Send them to our blogs at And at Tell us each week what you want to talk about and we'll see you next week. Have a good one, Richard.

QUEST: Have a good one, Ali.

Why do we put ourselves through that ritual humiliation every week and wondering if we are going to get any answers right? @RichardQuest, by the way, is my Twitter address. Give me your opinion on how badly we did.

When we come back, he's delivering a message about the U.S. consumer. We'll catch up with the head of the world's biggest package company and what he thinks about the prospects of the U.S. economy. QUEST MEANS BUSINESS, good evening.


QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.

This is CNN. And on this network, the news always comes first.

Libya's revolutionary forces are advancing on the last holdout towns where fighters remain loyal to Moammar Gadhafi. We're told they've made the biggest gains in Gadhafi's hometown of Sirte, pushing along the way to a main bridge in the city. They're facing stiff resistance around Bani Walid and Sabha.

French President Nikolas Sarkozy and the British Prime Minister David Cameron are in Tripoli. They're holding meetings with Libya's new leader. They're the first Western heads of state to visit Libya since the uprising began and they are pledging continued support for the NATO mission.

Other of the world's central banks are stepping in to help cash- strapped European banks. The plan involves the ECB, together with central banks of the U.S., the Fed, the Bank of England, the Bank of Japan and the Swiss National Bank. They'll start providing U.S. dollars next month to European banks that need currency to fund loans and repay debt.

An investigation into a very expensive unauthorized trade is underway at the Swiss banking giant, UBS. A man has been arrested on suspicion of fraud here in London. He's been identified in the British media as UBS employee Kweku Adoboli. The bank says the trade cost it some $2 billion. And that will affect its quarterly reporting.

Authorities in Pakistan now fear more than 240 people have died in the past month as a result of flooding caused by monsoon rains. Some villages that survived last year's devastating floods are facing disaster again. Villagers tell CNN they have lost their crops and fear they will starve to death.

There have been reassuring words for investors, possibly just the thing the market needed to hear.

And a warning from Washington, when the head of the biggest package company in the world, the delivery company, says consumer confidence is weak and that we need to listen.

Scott Davis doesn't think the U.S. is headed for a second recession, yet he believes a lack of decision-making on Capitol Hill is frightening people.

Poppy Harlow from joins me now.

The amazing thing about UPS is that it is a company that has its tentacles into every aspect of the economy. So when UPS speaks, I need to listen.

POPPY HARLOW, CNN BUSINESS CORRESPONDENT: Absolutely, Richard. If you just look at the United States alone, what UPS says is that they movie about 6 to 7 percent of this entire nation's GDP. They move billions and billions of dollars worth of goods into households and businesses across the country.

Scott Davis, the CEO, we had a chance to sit down with him this week.

What stood out to me is not only that he acknowledged what we know, which is that consumer confidence is weak, but that he says the indecision in Washington, especially the bickering in recent months, has not only stalled this recovery, he actually believes it has set the U.S. back a number of months in the recovery.

On top of that, he says what small businesses need -- because UPS deals with small businesses every day, what they are saying they need is not only a short-term plan from Washington, they need to know what the policies are going to be four to five years out. Until they have that, they will not be confident.

We talked a lot extensively about Washington, free trade.

Take a listen.

SCOTT DAVIS, UPS CHAIRMAN & CEO: I think that there -- consumer confidence is weak right now. I think that we, as a country, need to see some decision-making out of Washington. I think that the indecision we saw over the last few months, you know, frightens people.

HARLOW: Did it hurt us?

Did it set us back?

DAVIS: Yes, I think it set us back. It did. I hope that it's a short-term setback. I don't think we're going into a second recession. I just think we're going to have slow growth. You know, we -- we serve several million small businesses around the United States. They want policies that are four and five years out. They can see in four or five years what the policy is going to be, whether it's health care or energy, tax policy.

If they what the policies are in four or five years, then they'll make their decisions. They'll make capital investments. They'll hire people.

But if the policy changes every -- every year or every 18 months, it's hard to make those investments. And that -- that's really the problem, is certainty, at this point in time.

HARLOW: There's a few different camps as to why job growth isn't happening from big corporations like yours. Some say businesses are being greedy and they're not spending the money. The other camp says the demand is not there and when the demand is not there, you can't make businesses hire.

DAVIS: Well, it's -- certainly it all starts with demand. And then I think the reason demand is not there, part of the reason, certainly, is our -- our indecisiveness in Washington. As I said before, go back to the same issue on policy.

My perfect example and my hot button is trade. You know, we have three trade agreements that have been sitting out there for years in an important time, where South Korea has been, you know, has been sitting out there for four years. The South Korean Free Trade Agreement will add 70,000 jobs to the United States. Yet because of the divisiveness in Washington, nothing is being done.

It's -- it's silly at this point in time.

HARLOW: You sit on the president's Export Council. You advise him on these issues.

In the president's proposal for the American Jobs Act, he cut some free trade. The Chamber of Commerce says that if we see the free trade agreements with South Korea, Panama and Columbia pass, that we're going to see an addition of 380,000 new American jobs.

Is that optimistic or is that realistic?

DAVIS: I think it's realistic. I mean I think that we've got to do it, you know, as -- as a country. Again, 95 percent of the consumers are outside the United States. One percent or our small and medium size enterprises are export. That -- that's -- that's not going to work for the U.S. long-term.

We've got to get all business, particularly small and medium sized businesses, to export from the United States. The market is outside of the United States, yet right -- yet right now we make it difficult for them.

Trade seems to be a four letter word in the United States and in Congress. And -- and it's -- it's -- it's the best way for us to get out of this slow economy.


HARLOW: So he's saying trade, Richard, is the number one priority right now, getting the free trade agreements between the United States and South Korea, Panama and Columbia passed,

That that is going to create, in his vision and the U.S. Chamber of Commerce's vision, nearly 400,000 new American jobs. And this is an increasing drumbeat that we have to listen to from the people that are hiring, and that is the focus on free trade, also, the Chamber of Commerce there, chief economist last week, Richard, telling me...

DAVIS: Right.

HARLOW: -- we -- we also need a big focus here on jobs that can be created right now, such as in the oil and gas industry.

So they want to see more of a focus on this. The president touched on it. Yes, he did, in his jobs address. But he didn't focus on free trade. And what you're hearing from that executive is we need to focus on that, the number one priority.

QUEST: Poppy Harlow, who is in New York,

You can watch more of the interview, actually, at

In just a moment, there's fascinating fashion -- and I mean that quite literally. Stephen Jones teaches us the tricks of the hat trade, in a moment.


QUEST: The old saying is still true, if you want to get ahead, get a hat.

For, a hat is a work of art. He's one of the world's most famous milliners. Don't call them hat makers. They're milliners. And his latest exhibition opens today at the Bard Graduate Center in New York.

The aim is to celebrate the crowning achievements of milliners throughout the ages -- striking designs like these, that have made the waves at London's Victorian Albert Museum.

Proudly showed us his World At Work.


STEPHEN JONES, MILLINER: Millinery, for me, is like the most exciting thing. I mean sometimes people say to me, oh, why don't you make clothes, you can make clothes, too. But thank you, I've got the cherry on the cake already.

Anything which, sort of infringes on that space or sort of invades that space or changes your appearance which is so visible is the ultimate thing.

And this happened very quickly for me when I first started college. Within a year of leaving there, I have my own shop. Within a few years, I was making hats for the Princess of Wales.

When I saw Diana wearing the first of the hats that I made for her in the press, I couldn't quite believe it, just because you knew you'd had that thing in your hand and I'd been sort of sewing it and machining it and brewing it and trimming it. And then suddenly, it was on the cover of -- I think it was 230 newspapers around the world. It was amazing.

I mean they didn't all say "hat made by Stephen Jones," but I knew.

You know, this is a hat for a client who's maybe not conservative, in a way. It was more romantic.

This is for a client who wants, for her face, she wants to have some sort of softening effect.

And this is for a client who is really prepared to take risks. And it's quite a demanding hat.

Every season, I'm -- I try to find a theme. This is winter's collection. And it was called Topsy-Turvy. And that was all about making things just the wrong way around for no reason whatsoever.

I mean you have to have fun when you're making the hat, because somehow you'll pass that onto the hat and to the wearer itself. And that's what people love.

The business of making hats, I mean it's very different for every hat. But this particular one was made out of men's felt. We steamed the felt and we put that inside. And I'll just show you here, on my knee, we sort of stretch it and make it into that shape. And that's the hat. But, of course, it's worn upside down, because it's Topsy-Turvy. So I shall model it for you. And it goes on like this, you see?

The thing about hat is, yes, they're a lovely object by themselves. But they only really happen when the person puts it on and takes it over, because it is only a frame for the person. I mean, OK, it's got -- I give it tons of personality. It asserts its own individuality. But it must be subservient to the person who's wearing it.

There's been so many different times in my career that I'm really proud of. If I'm doing a hat for -- for designers, for example, for Marc Jenkins (ph), then when we're back stage and all the girls are lined up and they've all got their hats on and they look amazing, you do stand back for a microsecond and you think, wow, I did that.


QUEST: Oh, I do like that. You can't beat a good hat.

Let's say in the world of fashion and the Italian fashion house, Roberto Cavalli is letting its seams out, literally. The designer is to open a new store in London this weekend, which will coincide with London's Fashion Week, which starts tomorrow.

Cavalli's boutiques stands amongst other haute couture, like Versace, Yves Saint Laurent and swanky Sloan Street. How competitive, though.

The chief executive of Roberto Cavilli is with me.

He's Gianluca Brozzetti.

Good evening to you.

Why -- why would anyone want to open a flagship store or a large store in London, which is amongst the most competitive, with some of the most difficult trading environments?

GIANLUCA BROZZETTI, CEO, ROBERTO CAVALLI: I think that London is one of the most fascinating towns in the world. We are here since many, many years and so we are reopening in a large store. And it is the third one in town.

So I think that London is unique for a people which are here, for the social life, for the cultural life. It's just a great place to be there, to sell some dresses for women to feel sexy.

QUEST: Ah, well, there's nothing wrong with that. There's nothing wrong with that.

But can you make money?

Can you make money when -- when I look at all your other places where you are, in Europe or the Middle East, and where the margins are probably better than you're going to get -- or is it a case that you have to be somewhere like London?

BROZZETTI: No, no. We are here because we also make money. We have a very productive store in Harrods, in Saint Bridget's and in Sloan Street.

QUEST: So you're not a charity. You're not prepared to run this for -- you're looking at me as if I'm mad.


BROZZETTI: No, we are not.

QUEST: You're not prepared to run this as a loss.

BROZZETTI: We are not a charity. We are not a charity. It's serious business. And London, I think, is a great place to be in business.

QUEST: Where are you focusing your attentions?

Besides, obviously, London, where else are you focusing your attentions?

BROZZETTI: Our stronghold historical place is Europe, the Middle East and East Europe. But at the moment, like many others, are looking at Asia, China. We have just recently signed a joint venture to open 100 shops of Robert Cavilli and the second line, Just Cavilli and Class Cavilli in China. We are looking at India and we are expanding an effort in Brazil.

QUEST: I -- I was talking to the chief executive of Burberry and, as I'm sure you know, when I saw her in China. You're all going there, but it's not just enough to go there. You've got to have a strategy of what it is you aim to get out of it.

What do you aim to get out of it, besides just, obviously, selling more clothes, with that strategy?

BROZZETTI: First of all, we have a local partner that knows the market. So we bring the brand, he brings the knowledge of China. And we have a portfolio of lines with Robert Cavilli that will be present in Shanghai and Beijing. And then we have a more casual, younger line, Just Cavilli, that will be present in the other cities in China.

QUEST: OK. Let's talk about Italy, home market, home country, in terrible economic troubles, with a government that seemingly has only just got its austerity program through.

How worried are you about what's happening in Italy?

BROZZETTI: Of course, we are very concerned about what is happening in the country. We are holding the business there and our company, in one way, is lucky, because probably 70, 80 percent of our business is made with exports abroad.

Of course, the situation is concerning. But I think Italy is a great country with a lot of resources and I think we'll go through this tempest.

QUEST: And as a chief executive who does business in Europe and Eastern Europe, do you have a lack of confidence in the ability of the European politicians, whatever, to get this thing moving and to get things started again?

BROZZETTI: Probably I'm not the most expert person to give you this answer, but I...

QUEST: No, but you're...

BROZZETTI: -- think that...

QUEST: -- doing business and you're doing business there.

BROZZETTI: Sure. Sure. Sure. I'm not the most expert person, but I think that Europe will find the resources to get through this tempest. Of course, we are different. We have different languages, different cultures, different interests. So the difficult part is to put together all these different interests to come out as one strong continent.

QUEST: Right. Well, what -- finally, sir, I'm very relieved.

When I heard you on the program, I thought what on earth an I going to wear?

But I'm delighted to see we're both wearing -- well, you're wearing pinstripes and I'm -- we're both in dark suits this evening, so we have -- we've -- we've won tonight.


QUEST: Congratulations, sir, on the new store.

BROZZETTI: Thank you very much.

QUEST: Thank you for joining us.

BROZZETTI: Thank you.

QUEST: Come back again, please.

When we come back in just a moment, it's all eyes on Poland this weekend. Finance ministers get ready for their most important meeting in months.

How's Poland's economy?

QUEST MEANS BUSINESS after the break.


QUEST: Europe's finance ministers are gathering in Poland. Their meeting will take place on the continent's debt crisis. It's somewhat ironic. They'll be in one of the few countries that avoided, just about, the recession, although the rest of Europe's problems are starting to bite.

Our correspondent, Jim Boulden, is in Poland and looks at how long the country's prowess can last.


JIM BOULDEN, CNN CORRESPONDENT (voice-over): A modern auto parts plant in Southwest Poland. This firm has to supply parts just in time to many of the world's best known automakers, who set up shop in low cost Poland in the 1990s, while the economy went through massive economic reform.

That allowed to Poland to grow like an emerging market, so much so that companies like Kirchhoff Automotive kept on growing during the economic crisis, right along with the Polish economy.

JANUSZ SOBON, KIRCHHOFF AUTOMOTIVE POLSKA: The Polish economy used to be known, two years ago, as a green island in Europe. So the only one country with positive GDP growth. Of course, you know, we are very proud of that.

BOULDEN: Poland did slow down some, of course. But the gross domestic product is now growing above 4 percent this year, growth that the likes of Germany, the U.K. and the United States could only dream of.

SOBON: For the next few years, I'm -- I'm pretty sure nothing dramatic will happen to the Polish economy. That's what also makes us confident regarding our -- our future here.

BOULDEN: The architect of Poland's economic shock therapy of the 1990s says Poland does still need more fiscal reforms like its neighbors. But Poland has the luxury of doing so while not in crisis mode.

LESZEK BALCEROWICZ, WARSAW SCHOOL OF ECONOMICS: Our spending to -- to GDP is too high. It's 46 percent. It's as high as in Germany. It's mostly because of huge social spending. So we need reforms.

We don't need some more cars. For example, you have to raise the retirement age. '

BOULDEN: Wages are rising, which is good, of course, for the economy and employees, as long as productivity continues to rise, as well. And being outside the euro means the Polish Central Bank can cut interest rates if the world goes back into recession.

Poland is also still building or rebuilding its post-communist infrastructure.

So will the $12 billion worth of infrastructure projects underway to cohost next year's European football tournament help?

BALCEROWICZ: I'm rather a skeptic, because I don't believe that you can up the (INAUDIBLE) economic growth by one time events.

BOULDEN: With Germany's economy slowing to a crawl, there are growing worries that Eastern Europe's reliance on exports, especially commodities, could force the region back into recession.

Could Poland be a second time lucky?

Jim Boulden, CNN, Warsaw.


QUEST: And, of course, we'll see, in the next 48 hours, certainly tomorrow. And then, frankly, we'll have all the coverage from not only Poland, but also what happens with the ECOFIN summit and the Eurozone.

Guillermo is at the World Weather Center.


QUEST: Good evening to you.

ARDUINO: Good evening.

QUEST: I can't -- well, I can't decide what's happening out there.


QUEST: I mean, you know, it was a clear -- look, I'm -- I'm talking about London today. But I was in Moscow last weekend and it was absolutely bucketing it down and cold. And then it's sunny weather.


QUEST: I mean I'm -- I'm lost.

ARDUINO: Well, its changing. You know, it's not summer anymore, well, theoretically, it is. But for many people, it's not.

And we see the change. We see the situation already. You see it's cooling down big time here in Britain, also, along the way up in the north in Poland, Belarus, especially in Scandinavia.

Did you see that we had a lot of winds there with remnants of Katia, the hurricane?

I'll show you something in a minute, but not yet.

It's quite hot in Madrid, 34 degrees, 33 in Rome, 20 in London. We're not expecting big time problems anymore. The winds are shifting. They're moving a little bit to the east right now, but some foggy conditions in Zurich and Munich and that's about it.

But if you are traveling in the next two days, you're not going to encounter big problems.

Also, Britain not in bad shape at all, so we can't complain. Ireland, maybe. You see this is the pattern. We are going to see some storms moving into Britain and then high pressure in the area where we had most of the -- the winds before. And, of course, because of the combination of low and high, we're going to see some breezy conditions in the North Sea. So they are coming back, as you see.

Now, remember, Richard, Hurricane Katia?

We've got an iReporter from Scotland who showed how the winds were.

Let's take a look, five seconds or so.



The wind pushed it off.


ARDUINO: Wow! I mean thank you, Mark. Great job. We can barely make what he's saying, but it's because of the winds in excess of 100 kilometers per hour, all the way in Scotland, in Northern Ireland. Even in -- in the Midlands, we had that.

Well, you see now, let's come back. The winds are dying down. Things are much better.

So, but mark did a great job and we appreciate his input on the situation.

Part clear -- I mean Katia was quite strong. You see that, Richard, right?

QUEST: Well, it was strong enough. That poor chap nearly got blown away.

All right.

I want a weekend forecast from you tomorrow.


QUEST: There's (INAUDIBLE) starting.

Thank you, Guillermo.

ARDUINO: Thank you.

QUEST: But a Profitable Moment is next.



CHRISTINE LAGARDE, IMF MANAGING DIRECTOR: Collective, bold, decisive, courageous action is needed. And it will not only be in the interests of those that conduct such actions and for their countries, it will be for the good of the world.


QUEST: Tonight's Profitable Moment.

Words like those from Christine Lagarde have not been short in coming from the world's economic and political leaders.

Today, it was different. Today, they were backed up. After lunchtime, big hitters came in all at once. Central banks pledged to work together and pump U.S. dollars where necessary. That might be the most significant step they've taken to tackles this crisis recently.

Make no mistake, it's a collection of heavyweights -- the Bank of England, Japan, Switzerland, the Fed, ECB. This is the kind of response the markets have been crying out for.

Now, just now, maybe, perhaps, they will start getting a handle on this crisis.

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.

The news is next.