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QUEST MEANS BUSINESS

Interview With Valentijn Van Nieuwenhuijzen; Alistair Darling: Inaction By Eurozone Leaders in Dealing With Greece Has Dragged on Too Long; Ringfencing Detail?; Spain's Wealth Tax; Agriculture in Africa; Forwarding Fashion

Aired September 16, 2011 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


RICHARD QUEST, HOST: Stop your bickering. The U.S. says Europe must work together. The president of the ECB called on governments to show the same purpose of unity as central banks.

And charged with fraud, the trader is told he was there to safeguard not act against the interests of UBS.

I'm Richard Quest. I mean business.

Good evening to you.

The U.S. Treasury secretary has told European leaders to remove a catastrophic risk facing the financial markets. Timothy Geithner, who made the unusual move of attending the ECOFIN, European finance ministers meeting in Poland, urged Europe to take swift action and work in unison with its central bank. Euro Group President Jean-Claude Juncker has ruled out a stimulus package for Europe, saying there is not room, not enough room to maneuver to make it possible.

And the Swedish Finance Minister Anders Borg told our Jim Boulden that although stimulus is something Geithner has been pushing it might not be in Europe's best interests.

(BEGIN VIDEO CLIP)

ANDERS BORG, FINANCE MINISTER, SWEDEN: We are in a very difficult situation. There is a debt storm riding over Europe and we need to see some progress, because this is a major issue for the whole world economy. And I think he argue very strongly on that case.

JIM BOULDEN, CNN BUSINESS CORRESPONDENT: Does that mean stimulus in Europe? Because that is not what you are doing?

BORG: Well, I mean, basically it means solving the debt crisis. That has to some extent actually to deal with full implementation of-100 percent implementation of the fiscal program that has been put forward. But also solving the long-term debt sustainability for countries such as Greece.

(END VIDEO CLIP)

QUEST: Anders Borg.

Now, with stimulus off the cards, seemingly, the ECB President Jean- Claude Trichet says Europe should do what it can to bolster confidence

(BEGIN VIDEO CLIP)

JEAN CLAUDE TRICHET, PRESIDENT, ECB: To remain very alert, very, very attentive at what all could improve confidence. I already said, and I have to say that the European ministers and governors know that we pride ourselves as a central bank to be as a solid anchor of confidence and stability.

(END VIDEO CLIP)

QUEST: Jean-Claude Trichet.

CNN's Jim Boulden is at the summit in Wroclaw, in Poland.

Jim is with me now.

We have-we have much room or ground to cover, so let's take it at a fair ole' clip. Tim Geithner, first of all. He was there. Juncker said, basically, we don't need any lessons from the Americans. So there was some resentment, was there not, that he had come to lecture?

BOULDEN: Well, you know, he was invited by the Polish finance minister, who was very pleased, as we heard yesterday, that Timothy Geithner was at these meetings. But Timothy Geithner, himself, stayed away from the media, made his point to the finance ministers, and then you hear the finance ministers talk about what they think Timothy Geithner was talking about.

And we didn't hear any kind of unity or agreement about what the U.S. would like to see. But, of course, as Europe continues to point out, every time I ask somebody about banking reform, I ask them about stimulus, Richard. They always want to answer the question with Greece. Greece has to do this. Greece has to do that. That is what the finance ministers are doing at this meeting. They are reminding the Greeks that they have got to stick to the plan that they have agreed to. If not, disaster is around the corner.

QUEST: (AUDIO GAP) one section of the problem. They have the ESFS, restructuring, they have the parliamentary votes that have to take place. They have to agree to a second bailout. And they have to start the process of further fiscal integration. Everything else is window dressing

BOULDEN: Yes, you know, that is of course what is really tough, difficult to discuss and get an agreement on, which is closer fiscal union. It is not easy. If you saw the class photo today, what I was really struck about, when you saw all the finance ministers and central bank governors, sitting and standing near here, Richard, was there are so many of them; dozens and dozens and dozens of people. Then you have the ECB president. Then you had junior people from the IMF as well. And you know, earlier I spoke to the Slovakian finance minister, Ivan Miklos. And he has some very interesting things to say about unity, about Greece, and about what they will do if there is a default.

(BEGIN VIDEOTAPE)

IVAN MIKLOS, FINANCE MINISTER, SLOVAKIA: It was mostly about a necessity to have bigger capacity, to increase capacity and flexibility of the ESFS. I mean, to have more powerful institutions and institutional capacity for dealing with this process. This is something what is in the process. As you know, it was agreed on the political level, that we will increase, capacity and flexibility. And now we are doing through the process of the improvement in the parliaments.

BOULDEN: Mr. Geithner was quoted as saying that there was too many disagreements between the European governments and the European Central Bank. What do you say about that?

MIKLOS: This is, I think, on one side natural, because we have the European Union is not one state, it is a union of the 27 states, and the Euro Group is the union of currency union, of the monetary union of the 17 states, which means it is-I mean, a special situation. And in this regard it is natural. On the other side, of course, it is a necessity to have-I mean, more flexible, and more unified approach. That is true.

BOULDEN: Do you agree with some who say there is only a matter of months left to sort out, make sure Greece doesn't default or the euro is in danger?

MIKLOS: I agree it will be-it will have to be decided in the next weeks and months.

BOULDEN: Are you worried at all about the future of the euro? Should Greece maybe just default and get that out of the way and then move on?

MIKLOS: We will know more after conclusion of the Troy Commission, which is now in Athens. Which means it will be until the end of this month, because it is the matter of the professional experts guys (ph). If the measures are enough, and if the debt sustainability will be achieved; if, of course, Greece will approve another measure. Because it is clear that measures which have been approved until now are not sufficient.

BOULDEN: But what if it isn't enough? What next?

MIKLOS: Then, uh, then, uh, it will be no six traunch, and then of course, only results can be default.

BOULDEN: Are you all talking about that? Are you getting ready for that? Are you putting in theoretical parameters for a default?

MIKLOS: Of course, it is very important if it is a managed default, or unmanaged. But at present we have been assured by the finance minister of Greece that Greece ready to implement any necessary additional measures to be able to convince the markets, and of course, experts, and then also, politicians, that they are able to manage.

BOULDEN: Any regrets of Slovakia joining the euro?

MIKLOS: Uh, I think, you know, it was a decision-it was a correct decision. I was one of the proponents and supporters of the Eurozone. Of course, we knew also at that time that one of the potential risks of the Eurozone is sustainability of the whole project. What we have been, maybe, surprised that it came so quickly.

BOULDEN: Yes.

(LAUGHTER)

(END VIDEOTAPE)

BOULDEN: So, Slovakia feeling the pain that everybody else in the Eurozone is feeling, Richard. If you are looking for a silver lining, Juncker said that Ireland and Portugal are on track with their austerity measures. So, a bit of a road map for Greece, perhaps, Richard.

QUEST: Jim Boulden, who is in Poland for us tonight. Jim, we thank you.

So at the very center of Europe's crisis is a nation on the periphery.

(DESK BELL CHIMES)

It is, of course, Greece. There is only one way to say it and Greece is the bloc's problem child at the moment. The Greek finance ministry expects GDP to contract somewhere between 4.5 and 5.3. In fact, probably at the higher level this year. It is the third year of recession. Employment is also a major problem. It hit 16.3 percent in the second quarter. The highest rate since quarterly records began. And the numbers themselves are questionable. Last year the International Monetary Fund, the European Commission, the ECB, the troika, agreed to give Greece $146- billion bailout. So it could meet its obligations; $146 billion.

In July of this year the second bailout, $150 billion, agreed upon in exchange for those deeper austerity cuts. That is the situation of where we stand with Greece at the moment. And the ability, or otherwise, of the Euro bloc to deal with that crisis; seemingly, they are unable to do so.

Britain's former finance minister, Alistair Darling, says something has got to give in Europe, or the whole experiment could be ruined. As Britain's chancellor between 2007 and '10, he had a front row seat when this crisis began. And he told me that despite this weekend's meetings they were no closer to a solution.

(BEGIN VIDEO CLIP)

ALISTAIR DARLING, FORMER BRITISH FINANCE MINISTER: I'm rather pessimistic. I hope something positive comes out of this weekend. But it doesn't look like it. As far as I can see, Greece has got real problems. The austerity program being imposed on that country looks like it is going to cripple the economy. And I don't actually see how they are going to make the repayments they have to. Never mind the political difficulties in Greece. But unless they sort out the Greek problem then it will spread. And that is something we must avoid.

QUEST: You see, unless they sort it out, but one is not clear what sorting it out means. We had Sarkozy, Merkel and Papandreou having a conversation and the same platitudes get spoken.

DARLING: Well, I think the conversations are all very well, but it doesn't actually affect the problem. It is not rocket science. What you need is a program that will restructure the Greek economy; that you can get their borrowing down, but you have to do it in a way that is realistic. That it doesn't actually damage their income so much that they will never have the money in the first place.

QUEST: We are talking about a structured, an orderly-note, I say orderly-default?

DARLING: Well, it hasn't come to that yet, but you know, obviously, the longer this goes on, the more that is going to be a strong possibility. What the root problem is, if you have a single currency, and if you have economies as diverse as Greece and Germany, then something has got to give. I think Germany has got to recognize that it is in its interest that the Greek problem is sorted out. It will need some degree of transfer payment one way or another. But unless they do that the whole project is going to be endangered.

QUEST: So when they meet, when they meet, what do they have to do?

DARLING: I think they have to say, very clearly, that they will do whatever it takes to help Greece restructure, make the changes it needs with a program that is actually deliverable an workable. Greece has got to sign up to every single last word of that. They have also got to make it clear that if any other country gets into trouble, they have sufficient funds available to do something. Now they half fixed it in July, but very little of this has been ratified yet. They have got to go the whole hog now, do it properly. Otherwise the risk is we are going to have another crisis in a few weeks.

QUEST: How significant is it that Tim Geithner is not only making some very important comments saying Europe has to sort it out, but is actually traveling over to attend part of the meeting?

DARLING: I think Tim Geithner's attendance demonstrates the urgency and the seriousness of it. When I remember talking to Tim, in the early part of 2009, and he said, are you Europeans not going to sort out these problems? Now that was, you know, 18 months ago. America is concerned, and rightly concerned that if you get instability in Europe that will feed back into further problems for the U.S. economy. So it is very, very serious. And all the experience of the last three years tells you, if you have a problem, it won't go away. You need to deal with it and deal with it decisively. And I'm afraid that is not happening at the moment.

QUEST: That is a very sobering thought, from a man like yourself, who was the chancellor. That it is not happening. That these senior serious people, in Euroland, don't-they get it, they are just not doing anything about it.

DARLING: You see all of this reminds me of an evening dinner I attended in Washington, in the middle of the general election campaign, when all these financial-the big euro finance ministers were there. Tim Geithner was there as well. We all acknowledged, we all knew it was serious. But even at that stage, Germany, for example, was saying, look, we don't think we can do anything. Now, this is a serious problem. And the longer you leave it, the greater the risk is that it blows up very, very quickly, and once that starts it is very, very difficult to control.

QUEST: Are we at that stage yet?

DARLING: We're not there yet. That is why this weekend is an opportunity. But it is an opportunity you have to seize, if you don't seize it, then the risks mount, and they mount day by day.

(END VIDEOTAPE)

QUEST: Very sobering thought from a former senior finance minister in Europe. The risks mount day by day, we are not there yet, says Alistair Darling. But the window is closing.

Angela Merkel's mind is made up on the euro. The chancellor's desperate to protect Europe's single currency, in a moment.

(DESK BELL CHIMES)

(COMMERCIAL BREAK)

QUEST: Angela Merkel says it is her country's duty to secure the euro. In the chancellor's words, "the single currency is good for us, as an exporting nation". She was speaking to the German Trade Association and added that Germany must take an active role in stemming the crisis. But at what cost?

Join me over in the library and you'll see what I mean. First of all, Germany's share of the loan guarantees, so far, $291 billion. Now, you have to remember it doesn't mean they've paid all that money out from the start. But that is what they are on the hook for. That is how much they can be called upon to provide. A lot of it is guarantees, it is not straightforward loans. It is still a very sizable amount of money.

And as the economies of Europe have slowed down-and remember Germany was the export powerhouse-unemployment has dramatically fallen. A variety of economic indicators all showed strong growth, except for this one! The Deutsche bourses, which is now showing the DAX index down 23.5 percent since the beginning of the year. The DAX is the lowest-the worst performing of the four majors in Europe at the moment, because of worries about industrials, and crucially, German banks.

And as for Angela Merkel's own popularity, 65 percent, according to an ARD poll, find that 65 percent say that her government has made the wrong decisions in dealing with the crisis. It is a sobering thought, from a woman who is always thought to be so-well, frankly, so much in touch, and so hands on. Diana Magnay, is our correspondent, and is in Berlin tonight.

Look, what is it? Is it that they believe Merkel is stubborn? She's wrong? Or she simply sees things from a different point of view?

DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT: Well, I think they just haven't seen results yet. And she kept promising from the day one of the Greek first bailout, back in May 2010, that that would be the last. And now we're trying to hammer out the terms of a second bailout and the situation still doesn't seem to have improved. Greece is still in a huge amount of trouble.

And the Germans just aren't seeing the kind of effects that she keeps promising. It is already-it is all well and good, Richard, saying we must do everything that we can to save the euro. But if you don't really have an action plan on how to do it, and also if you are seeing sort of disagreements within the ruling coalition itself, on how to do it, then there is likely to be a huge loss of confidence in the chancellor and her government. And actually, if you look back that ARD poll in May 2010, when that first bailout was agreed; 56 percent of those polled, back then, thought that Angela Merkel was doing a good jobs. And now that has been reduced to 27 percent.

So, you know, it is pretty clear that the Germans are fed up. They don't want to pay for Greece and they want to see some results from this Greek austerity program. I went and talked to some people earlier today. I asked this women whether she thought it was time to leave the Eurozone- for Greece to leave the Eurozone? Here's what she said:

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Yes, I think it should stay. But it has to solve the problems there.

MAGNAY: Do you get the feeling that it is making enough effort to solve the problems that it has?

UNIDENTIFIED FEMALE: No, not yet.

UNIDENTIFIED FEMALE (through translator): We need to think very carefully about whether or not giving money to Greece. We read that Greeks retire early. That they get paid high salaries. They really need to start saving, like we do here. We're pensioners, and we have to save.

UNIDENTIFIED MALE: So they should start immediately making one authority that looks after the fiscal and the foreign trade affairs of every country so that they do not spend more money than they have revenues.

MAGNAY: The Federal States of Europe?

UNIDENTIFIED MALE: Yes? That's-yes, it should start now.

(END VIDEO CLIP)

MAGNAY: I think, Richard, when you speak to people on the streets. No one gives you one answer. No one really knows what the solution is. But they also don't think that their government does either, Richard.

QUEST: OK, but, in terms of the right decisions that have been made and the economic affect. The fact still remains Diana that Germany's unemployment is the lowest. It's bonds and bundes are at the lowest yield and therefore doing the best. And it is still the strongest in terms of industrial production as seen in Q1, although Q2 was bad. So, surely they must see that they have a responsibility in this regard?

MAGNAY: I think they do think that they have a responsibility; that they do have to help the weaker members of the Eurozone. But Angela Merkel, for instance, made it very clear that she doesn't think that the way to do that is to through a euro bond, precisely because a euro bond would mean that those other countries, those poorer countries could rely on Germany rather than actually try and improve their own fiscal affairs. They-I think most people do say we need to continue fighting for the euro. They understand that the euro has been very good for German exports. And it is important that that remains in place. But the matter of doing it is something they are unsure about how to achieve, Richard.

QUEST: Diana Magnay, who is in Berlin. Our correspondent in Berlin for us tonight.

Now, as we continue, in the nine years since the euro was launched, Eurozone has picked up a variety of extra states. Unfortunately, a lot of baggage, too, has come along with it. If you take a look at how the euro has been-the excitement about the currency's potential has been widely, to some extent, dissipated. Whether it is because of those countries who took the euro on board, or the countries that stayed outside, whichever way you look at it, project euro, project euro has not been a success. And it all looked so different when I started reporting on it.

(BEGIN VIDEOTAPE)

QUEST (on camera): Where the problems, of course, will really come is in every day buying. For example, every Frenchman knows the price of a baguette.

Un, baguette, si vous plait.

It is around 6.1 French francs. But what on earth is that?

(SPEAKING FRENCH)

(Voice over): It is nine years since I watched the launch of the euro notes and coins. January the 1st, 2002.

Back then it really was out with the old, in with the new.

For those in the Eurozone, it was a momentous occasion.

But three years prior to this, the euro had been an official currency for banks, businesses and the financial markets. Suddenly it belonged in 300 million people's pockets.

(MUSIC, SINGING ABOUT THE EURO)

QUEST: 12 countries agreed to make the euro their money, saying adios, au revoir, chow, to the liras, francs, deutsche marks, and pesetas. Just three countries, the U.K., Sweden, and Denmark decided to stay out of the single currency. Greece was initially excluded because of its weak economy. It was allowed to join the club, two years later.

UNIDENTIFIED FEMALE: The mortgage rates will be better, because of this euro. Our interest rate will go down, to get similar to the French and the German ones.

QUEST: The job of setting interest rates to maintain price stability. That was given to the European Central Bank, in Frankfurt, headed by Wim Duisenberg.

WIM DUISENBERG, FORMER ECB PRESIDENT: I'm sure Europeans, and not only the Europeans, will love the euro.

QUEST: The euro was sold as an exclusive club that promised economic growth and prosperity.

DUISENBERG: The euro is much more than just a currency. It is the symbol of European integration, in every sense of the word.

QUEST: Over the years that followed the Eurozone has continued to grow. And according to Jean-Claude Trichet, just last week, has delivered its' promise on prices.

JEAN CLAUDE TRICHET: We have delivered price stability over the first 12 years, and 13 years of the euro; impeccably, impeccably.

QUEST: But nothing can escape the fact the cracks are just about everywhere. The sovereign debt crisis, the failing banks, and the bailouts-and as for the rest, that they say, is history.

How many countries will be in the euro in 10 years?

(END VIDEOTAPE)

QUEST: When we come back we will look at the investment climate that you have to face. QUEST MEANS BUSINESS-(DESK BELL CHIMES)-good evening.

(COMMERCIAL BREAK)

QUEST: With the Europe's debt crisis and America's deficit in the spotlight it is no surprise that investor are shying away from the stock markets. Both the London FTSE and Dow are trading at least 10 percent below their year-to-date highs. Valentijn Van Nieuwenhuijzen is the chief economist for ING Investment Management. And he told me, since we had Lehman's collapse. Three years ago this very week. This is how the investment conditions have changed.

(BEGIN VIDEO CLIP)

VALENTIJN VAN NIEUWENHUIJZEN, CHIEF ECONOMIST, ING INVESTMENT MANAGEMENT: Well, in that year, in that moment, I think there was a lot of reason to be very pessimistic and negative. And were defensively positioned, in equities, in equity sectors, and we like Treasuries. At that point we also like credit but it took a while before we benefited from that, because initially it got worse.

Right, through 2009, things started to change. So in the middle of 2009 we started to become more positive and play the market from either neutral or an over ride position if you think about equities.

QUEST: Right and so you-as we came out of recession in 2010, you then obviously became more aggressive, to ride the industry upswing.

VAN NIEUWENHUIJZEN: Absolutely. I mean, if there was still, a clear, loan for longer environment. For central banks, a lot of liquidity in the system. And the cyclical dynamics were quite positive. So we went in a more positive stance toward equities, and also credit especially had a nice run then.

QUEST: When did you switch back to defensiveness?

VAN NIEUWENHUIJZEN: The defensive switch came basically in the beginning of the second quarter this year. We saw a cyclical peaking, and we had a combination, of course of the turmoil in the Middle East, and the shock in Japan. And then we switch back, first to neutral on equities and underweight during the summer.

QUEST: OK, so where do you go now, as you look forward, between now and the end of the year?

VAN NIEUWENHUIJZEN: Well, I would say, of course, if you look at various statistics, right now is the time to buy a lot of opportunities.

However, the market is pricing almost the recession, but is -- they're not pricing a system collapse in Europe. And we still take the risks are too high of that. So we are still defensively positioned.

Even if you move into the market now, we would be underwriting equities, underwriting commodities and real estate.

QUEST: OK. Explain what that means in real English to a viewer who says what did he mean talking about underweight equities and doing it for defensiveness.

Where do you put your money?

VAN NIEUWENHUIJZEN: So where do you put your money?

You hold it in cash. You prevent your losses and maybe buy a bit of Treasuries. And if you're really looking for opportunities, go to the emerging world. Buy emerging market debt or buy emerging market equities. Even consider Japanese equities for sort of the cyclical trade. But don't go into the European big equity markets or the general global equity markets just yet.

QUEST: The big question that people always ask me -- and I'm asking you because I don't know the answer -- if I were already nursing some losses...

VAN NIEUWENHUIJZEN: Yes.

QUEST: -- as a result of what's happened so far, do I just ride it out to the end of the year?

VAN NIEUWENHUIJZEN: Well, you know, that is always one of the most difficult behavioral elements to overcome. But forget about the losses.

Look into the future and just think, if I arrive on the earth right now, what would I do?

I would be defensive, even if you have losses, become more defensive.

(END VIDEO TAPE)

(COMMERCIAL BREAK)

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

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

In Libya, revolutionary fighters have pulled out of Sirte, the hometown of the ousted Libyan leader, Moammar Gadhafi.

Our correspondent, Phil Black, tells us they encountered fierce resistance from pro-Gadhafi forces. Phil says they've fallen back to an area just outside the city and they plan to go back in again tomorrow.

The president of -- Palestinian President Mahmoud Abbas has confirmed the Palestinian Authority will request full membership at the United Nations next week. And their request will go through the U.N. Security Council. The United States has vowed to veto the move.

The bodies of all four men who went missing in a Welch coal mine have now been recovered. A rescue officer told CNN that the shaft apparently filled with water after the miners broke through to a neighboring abandoned mine. Three miners did manage to escape to safety.

The UBS trader arrested by police in London on Thursday has now been charged with fraud and false accounting. This is into a trade that cost the bank $2 billion. UBS says that the trade was unauthorized.

Since that huge loss was announced, Moody's has put the bank on review for a downgrade. It's now former trader Kweku Adoboli, who was in court this afternoon. He will remain in police custody until his next hearing on Thursday. In the past hour, the U.K. financial regulator, the FSA, said it will launch a comprehensive independent investigation into the case, along with its Swiss counterpart. Regulators are also working with the British police investigation.

Whatever the merits of the case -- and that will be up to a jury in a court in London -- it's certainly raised the issue of supervision in investment banks.

I spoke to the head of Britain's Bankers' Association, Angela Knight, earlier.

And she explained to me what this serious incident told her.

(BEGIN VIDEO TAPE)

ANGELA KNIGHT, CHIEF EXECUTIVE, BRITISH BANKERS' ASSOCIATION: There's supposed to be here another big sum of money involved. So very serious.

How could it get to that point?

The second is, is that since the various, let's call them rogue trading that's happened in the past, where individuals have, for various reasons, been able to somehow obscure the position and thereby result in big losses.

How, after all that, and all the changes that have been taken in regulation and in requirements on all of our different types of financial firms, that somehow red flags or whatever did not get triggered much earlier on?

So there's something about this -- the sheer amount or there's something else about the controls which is supposed to be there in every firm which is very important.

QUEST: It does strengthen the call for those who say better regulation, not just more regulation.

KNIGHT: Yes.

QUEST: And also, as we've seen by whether it's the Volcker Rule in the United States or the Vickers Commission -- the Vickers' inquiry in the U.K., split the banks. Make sure retail and private banking does not get tainted by investment banking.

KNIGHT: I think the expression investment banking just said -- covers such a wide range of activities, that, again, we've got to be very careful how we use that. You know, the whole business of advice on mergers and acquisitions, the making markets for governments to sell their debt, that's all part of investment banking. I suspect that's not what -- what you mean. You're talking about the trading element of this particular type.

Does it play into the hands of those who say we need to do formalized splits?

Yes, of course it does, although I understand that the bank in question has actually made statements that it hasn't, you know, that it hasn't touched its retail customers.

So what I think it needs to do is not to say, oh, the answer is X or the answer is Y. The first thing, investigate. The second thing is look to see why existing systems and controls, for some reason, have not worked in this instance. But don't automatically go to a solution which may not be the right solution.

QUEST: Do you -- when you heard about this and you realized Vickers has just been announced and all that, did you think, I'm going to have an uphill task here now?

I'm going to have to, once again, be saying why we shouldn't necessarily have the heavy hand of Vickers on us?

KNIGHT: Absolutely right. I think it -- it's completely at the wrong time for rational arguments about universal banks. And the Vickers recommendations have talked about a ring fence of the retail and then there's a whole discussion about what retail is.

In the U.S., the -- there, the Vickers Rule is limiting the percentage of certain types of activities...

QUEST: Right.

KNIGHT: -- if you are a universal bank. So it looks different, two different directions.

And so people look at this and say that's it, that's posed and that's the right way to go.

What we don't ever know from either Volcker or Vickers is what the true costs are, those estimates about what the true costs are, number one. Number two, what are the true effects on the economy?

After all, in the end, if people say, oh, well, but I wanted this service and now I can't get it so I'm going to have to go to a bank that's outside this country, we haven't actually served any purpose well.

Take away the heat, take away the emotion. However much strongly this plays into it, let's be cold and calculating and logical.

(END VIDEO TAPE)

QUEST: Cold, calculating and logical, Volcker or Vickers.

Coming up next, the pain in Spain -- in the country that's too big to fail, it's the little guy who's feeling the pinch.

(COMMERCIAL BREAK)

QUEST: Welcome back.

Spain poses one of the greatest threats in the European financial crisis. It's a very simple problem -- it's too big to fail. And today we found out that Spain's debt burden is getting bigger.

If you join me at the super screen, you will see what I mean.

This is the ATM of Espana, the Bank of Spain. And the numbers don't make pretty reading, whatever the withdrawal.

Let's start, first of all, with the question of debt. The debt is 65 percent now of GDP and it is rising. Worse than that, unemployment, which is the biggest Achilles' heel of the Spanish economy, 21 percent -- 21 percent are out of work and 40 percent of that -- of those who are under 20.

The unemployment situation in Spain is the single biggest problem.

But the market, too, has also had its problems. This is the IBEX, the Spanish market. And, as you can see from its high point back in March, the market's fall. It's down some 25 percent.

Spain is one of the worst performing. It is a long way off its year- to-date high.

And finally, the plan put forward by Prime Minister Zapatero, who says he's not standing in the next elections, which are due, the austerity plan, $6.8 billion, nearly $7 billion in cuts, and a constitutional debt ceiling limit, the idea being that the debt ceiling could not be raised higher than otherwise acceptable within the European Union.

This is the scenario that Spain is facing.

In Venice, Rome, our correspondent, Al Goodman, caught up with one small business owner who is fighting a daily battle to stay afloat.

(BEGIN VIDEOTAPE)

AL GOODMAN, CNN CORRESPONDENT (voice-over): It's a 40 -year-old family business facing perhaps its toughest challenge.

JOSE CARRILLO, SMALL BUSINESS OWNER (through translator): I have never seen anything like this crisis. There's a lack of movement. It's absolutely vital to invent solutions day by day.

GOODMAN: And Jose Carrillo feels the pressure to do just that. His company supplies frozen vegetables, its premium product, but also distributes bulk canned vegetables, about 700 food items in all, to hotel kitchens, restaurants, government run hospitals and schools up and down the Mediterranean Coast, from its home base near the resort of Benidorm.

But it has been no fun laying off 11 workers, about 10 percent of his staff. He has outsourced much of his costly trucking operation.

CARRILLO: Fuel prices are up about 46 percent. Transportation is 30 to 40 percent of the costs of our products. So transportation is where we have cut costs the most.

GOODMAN (on camera): To keep the business going during the crisis, they have had to watch the costs very closely, pallet by pallet, kilo by kilo, pound by pound.

(voice-over): In the front office, the belt tightening means reduced margins and trying to collect from customers who are slow to pay.

CARRILLO: It's not just the customers who don't pay. It's the late payments from government agencies, which are a big client of ours.

GOODMAN: But no matter how carefully the company tries to wrap up all the challenging details, Jose Carrillo says he has no control over the underlying problem -- demand is weak.

CARRILLO: Consumption has to return somehow so the economy will work again. Here, we need a tourist from Southern England to earn a lot of money and come to Benidorm on vacation.

GOODMAN: The government says tourism is beginning to rebound. But for small businesses like Jose Carrillo's, it's a long road to a full recovery.

Al Goodman, CNN, Benidorm, Spain.

(END VIDEO TAPE)

QUEST: And that's the picture tonight.

That's QUEST MEANS BUSINESS for this week.

I'm Richard Quest in London.

Thank you for joining us this week.

Whatever you're up to, I hope it's profitable.

"MARKETPLACE AFRICA" is next.

(COMMERCIAL BREAK)

ROBYN CURNOW, HOST: Welcome to MARKETPLACE AFRICA.

I'm Robyn Curnow here in Johannesburg.

Now, there's a huge disparity between rich and poor in South Africa. Many people can afford to come to one of these restaurants for an expensive meal. But millions of other Africans are undernourished, hungry. Worries about food shortages and high food prices continue to be critical issues here on the continent.

So, for our FaceTime interview, we've invited Shachi Sharma from Syngenta, an agribusiness, to talk about the state of agriculture on the continent.

(BEGIN VIDEOTAPE)

SHACHI SHARMA, HEAD OF BUSINESS DEVELOPMENT, AFRICA, SYNGENTA: We believe that we have a significant role to play in African agriculture. We are quite innovative in terms of how we approach to -- in our -- in our approach to develop solutions for African farmers. So we've come up with ideas around products that are affordable, high quality products that are affordable, that can help to improve, maximize yield, in some cases, multiple times. Which means that in the -- in the life of a small holder farmer, it brings real impact and meaning which could be even as simple as increasing yield, which they can sell on the market, to be able to afford sending their children to school.

For smaller farmers, I mean we believe, generally, African agriculture is -- is on a -- on a good growth. And -- and we're certainly doing our best.

Where, you know, we believe we could play a significant part is around innovating with the products, but also training on how to use the products, education on what are the advantages and the benefits of using some of those products that we have in the marketplace, whether it's to control grasses, to control diseases and insects, and also around quality seeds.

So we are working on that and putting the -- the -- the products together as a solution that works best for the small holder farmer.

Technology, you know, does provide some mitigating solutions. We work on those. I believe, you know, everyone wants to improve the activity, whether it's to generate more income or to meet food security requirements. And this is probably why we see a lot of organizations now in Africa, including African governments, working toward food security, through technology used, through partnerships.

We are certainly seeing an increasing number of investments in African agriculture. We -- we -- we do look, you know, we do track investments. I mean we believe there are three things that are holding back development. That's -- the first thing is, obviously, around infrastructure. The second one is around the skill and the technology. And certainly, we can play a big part. And then the third one is around capital, you know.

Is there enough capital to make small holder farming or even commercial farming work?

And we -- you know, we're beginning to see a lot of changes in Africa on those three parameters that are being -- on those three drivers. They are having a positive impact on agriculture.

And one has to get good productivity, but at the same time, be sustainable. So we believe in sustainable, intensive farming. And, you know, we -- we -- we believe that we've got the right mind set and technology to do that.

We cannot just rely on oil and gas. It certainly plays a very big product. But agriculture plays a significant product. Most African GDPs and, you know, driving agricultural growth is key to generating employment and growth.

(END VIDEO TAPE)

CURNOW: Shachi Sharma there of Syngenta.

Now, let's take a closer look at some more numbers.

The World Bank estimates that agriculture employs 65 percent of Africa's workforce and that it accounts for 30 percent of sub-Saharan Africa's GDP.

Moving fashion forward -- next the growing industry pushing African fashion beyond African borders.

(COMMERCIAL BREAK)

CURNOW: Colorful dresses and bold designs -- African inspired fashion has been trending on international runways for some years now. While that might have helped the popularity of local designers or local boutiques like this one, there's been a problem getting many of these products to international customers.

Well, many retail stores have now found a solution online.

We're now going to take an In Focus look at a Web boutique who's digitally

Expanding the fashion market.

(BEGIN VIDEOTAPE)

SESAY (voice-over): Abundant on catwalks though rare in closets, African designer garments can be hard to obtain to consumers around the world, especially without access to local shops dedicated to the African brands.

Therein lies the beauty of online shopping. More and more African designers are taking their lines to the Web, looking to capitalize on the growing trend of Internet boutiques.

Dolapo Shobanjo launched the popular My Asho online shop in 2009, when she realized African designers were not being widely promoted.

DOLAPO SHOBANJO, FOUNDER, MY ASHO: I contacted the top designers and I spoke to them and I asked them about their struggles and, you know, how difficult it was for them. And that's really how they got started.

So I think to create that credible infrastructure in Africa is to show the demand from, you know, the global demand for the product and that will kick start production.

SESAY: Today, My Asho stocks a variety of clothes and accessories from over 30 carefully selected African designers.

SHOBANJO: We're very happy to add more designers to our portfolio. But we have to be sure that the designers that we add are like serious, because there are a lot of people out there who claim to be African designers but it's more like a, oh, I have a tailor who can survey well and copy out.

So we have to distinguish between the, you know, the real designers and the -- and the kind of copycat or people who are doing this as a hobbying.

SESAY: My Asho says it now has clients in more than 50 countries and since launching two years ago, their sales revenue has climbed over $100,000.

To keep up the momentum, in August, they opened a two day popup boutique in London.

SHOBANJO: This is a store. I mean we've had the idea to (INAUDIBLE) boutique because of the demand for people, like from people to try on our clothes, to see what the clothes look like, to see the quality of the clothes.

We don't have imminent plans to open a real store, but we do believe that a concession in a department store would be ideal for My Asho, just because we service so many people around the world. It's just the best growth method that I can think of.

SESAY: Having sold 75 percent of their stock, My Asho is now considering permanent retail space. But from the beginning, they're focused on creating demand for both up and coming and established African designers. And while more designers are setting up their own Web sites, many still rely on Web boutiques like My Asho, which have experience navigating the online market.

ERZUMAH ACKERSON, DESIGNER, BESTOW ELAN: I think there is an element of that an investment that still needs to be done so that we are recognized on an international as well as a mainstream platform. But, you know, I think My Asho is a perfect platform because, since I've been on there, I really -- I've got a lot of international buyers and have got into mainstream magazines.

SHOBANJO: These are quite cute.

SESAY: The platform has helped create demand and now designers are having to keep up in their supply.

TITI ADEMOLA, DESIGNER, KIKI CLOTHING: I think the biggest challenge for myself and possibly many other fashion designers is manufacturing. And, you know, you get a lot of excitement from -- from so many places.

But once you get an order, how do you, you know, manufacture in large quantities?

And that's the -- the issue that I'm facing, trying to focus on quality control and make sure that you can consistently provide, you know, quality in a few engage garments to, you know, upper companies in other markets.

SESAY: So while the goal is to create a sustainable business model, My Asho also claims to support local African communities where the clothes are manufactured. So working with ethical brands is a must.

SHOBANJO: I'm supporting Africa and helping it grow and creating jobs. But that's not to say that, oh, 7 percentage of X is going to here, because I don't think that's a sustainable business model.

I think it's better to kind of create it from the start with ethical principles and work with designers who pay their tailors well, who are invested in helping their communities grow and in creating jobs. And then, you know, when -- once you go to the business, you know that they will also go, as well.

SESAY: A business model that My Asho hopes never goes out of style.

Isha Sesay, CNN, Atlanta.

(END VIDEO TAPE)

CURNOW: From the fashion market to corporate trends, let's now take a look at the what's making business news headlines in Africa this week.

(BEGIN VIDEOTAPE)

CURNOW (voice-over): And here's what's trending this week.

Guinea is defending its new mining code, which will allow the government to increase its share in all mining projects to 35 percent. Several mining companies have expressed concern it will deter investment. But the Guinea government says it's necessary to combat corruption and free up more money for development. Guinea has the world's largest supply of aluminum ore.

And Tanzania and Uganda are joining forces to improve electricity along their shared border. The East African nations have signed an agreement to build a 16 megawatt hydropower plant on a river shared by the two countries. Collect power shortages and outages are threatening the economies in both nations.

(END VIDEO TAPE)

CURNOW: That's all from us here in Joburg.

But don't forget, you can find us online at CNN.com/marketplaceafrica. I'm also on Twitter at robyncurnowcnn

See you again next week.

END