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QUEST MEANS BUSINESS
Amazon Debuts An Affordable Tablet, The Kindle Fire; Interview with Andre Esteves; Interview with Andrey Kostin; Trading Sensation; Interview with Alessio Rastani; Made in Africa
Aired September 28, 2011 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
NINA DOS SANTOS, CNN ANCHOR, QUEST MEANS BUSINESS: Playing with fire. Amazon ignites the tablet market.
The Eurozone's greatest challenge yet. Jose Manuel Barroso calls for greater economic union.
(BEGIN VIDEO CLIP)
JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: We have to clear about this. This is not a spring, but a miracle.
(END VIDEO CLIP)
DOS SANTOS: The amateur trader who went viral tells this program who he really is.
Hello, I'm Nina Dos Santos in for Richard Quest. This is QUEST MEANS BUSINESS.
After 18 months of iPad domination Amazon is starting its tablet price war. Just hours ago the company unveiled its new Kindle Fire. The seven-inch tablet goes on sale on November 15 at less than half the price of the cheapest iPad. CNN's Maggie Lake joins us now, live, from New York, where Amazon CEO Jeff Bezos showed off the tablet a little earlier on.
Maggie, is this just a spruced up e-reader? And what kind of reaction did the crowd have when they unveiled it, when you were there?
MAGGIE LAKE, CNN BUSINESS CORRESPONDENT: It certainly seems a bit more than that, Nina, I can tell you. Even in a room full of sort of skeptical, hardened tech journalists, jaws dropped when we saw the price tag on that. You are right, less than half the lowest and of the iPad.
Jeff Bezos addressing the crowd, said this is going to be a game changer for consumers. Have a listen.
(BEGIN VIDEO CLIP)
JEFF BEZOS, CEO, AMAZON: All content, 100,000 movies and TV shows; 17 million songs; apps from our Android apps store, millions of books, beautiful full color magazines, here is just a small subset of the selection you'll find in our magazine store.
And all of the content on this device is backed up in the cloud, so that you can delete things whenever you want.
(END VIDEO CLIP)
LAKE: That was Bezos addressing the Kindle Fire. I also want to mention, though, at the same time, he unveiled a new line up of Kindle's better, smaller and cheaper. So again, the price target is very attractive on these. They are going to start shipping November, here in the U.S., internationally I'm afraid you are going to have to stay tuned. We didn't get a date on that.
But, you know, of course, the question the business community is asking, again, is this finally the iPad rival. And analysts I talked to said, not exactly.
(BEGIN VIDEO CLIP)
MICHAEL GARTENBERG, RESEARCH DIRECTOR, GARTNER: I don't think this is going to affect the iPad. The iPad is a $499 device. It is designed for content creation, content consumption, it has a 10-inch screen, a lot more memory, Bluetooth, 3G. It is designed for communication. This is going to appeal to a different audience. Someone that has said, maybe I don't need all the features of the iPad. It is attractive, but I don't need everything. Or, maybe, I can't afford it. It is $499. And this is $199. And that becomes much more affordable.
The key is that Amazon has built out of the services required to make this device successful before launching the device.
(END VIDEO CLIP)
LAKE: And that is very key. And, of course, Nina, the bar for success for Amazon isn't really taking out Apple and the iPad, it is selling its stuff. This is all about pushing content, not about the tablet itself. Most of the people in there thinking they have got a winner on their hands, Nina.
DOS SANTOS: Maggie, Apple not withstanding, why do they think that they are going to be able to succeed where so many other people have failed in the tablet space?
LAKE: Yes, this is a really good question, because remember almost every big tech name out there has a tablet; a lot of them concentrating on the smaller 7-inch tablets. It goes back to that content. Amazon has such a strong consumer brand. They have so many customers already. And they have a full array of content ready to push out. The other thing is that these things come ready to use. Amazon, clearly, you can tell this from Jeff Bezos on the stage today, spent a lot of time thinking about the consumer experience. Very much like Apple in this respect. It works right out of the box. Easy to use. It has touch capabilities. Both the tablet and some of the other Kindles now, as well. So that is why people think that they are going to be able to dominate in a way that the other competitors haven't. Those are the people that really have to worry. The other mobile devices out there need to watch out.
DOS SANTOS: OK, Maggie Lake, there, joining us live from New York, where that particular piece of kit was just launched a few hours.
Now, let's take a look at how this compares with some of the other competitive products that are out there on the market. Starting out with, of course, the new Kindle Fire, which was the one that was launched today. It retails, as Maggie was saying, at a relatively reasonable $199 each. It has a 7-inch screen. It weighs 414 grams, which means it is one of the lighter touch screen tablets out there on the market. And when it comes to its operating system, it runs a customized version of Google's Android operating system.
This, of course, is the big competition, though, it is the Apple iPad 2, the latest tablet computer that was launched by Apple just a couple of months ago. It retails at $499 a piece. So it is far more expensive than the Kindle Fire that was launched today. It has a bigger screen, though, 9.7 inches, is how much that measures. It weighs in around 600 grams, so much heavier, than for instance, the Kindle Fire. And it also runs on Apple's iOS software.
And we should also look at Research In Motion's Blackberry Playbook here. Officially priced at $499, though you can get these, at some retailers, about half of that price. It has a seven-inch screen so it is similar to the Kindle Fire. Slightly heavier than the Kindle Fire, though, 425 grams is what it weighs in at. Kindle Fire, 414. It runs on Blackberry's tablet operating system. But this is the crucial bit. It can also run on Android applications as well. So that is one of the interesting thing for publishers that are making applications to run on some of these tablets.
Let's get a little bit of insight into the new shake up in the tablet wars. Joining me now is technology writer Sarah Shearman. And she is here in out London studio.
Sarah, it is all about price, but it is also all about content and operating systems. Because the publishers who are going to be creating applications, they are investing a lot of money in fact. Are they going to be creating a lot of applications for the Kindle Fire, do you think?
SARAH SHEARMAN, TECHNOLOGY WRITER: Well, the Kindle Fire will give them a better deal, because for a business which sell digital content such as a newspaper, for example, which sell subscriptions, or a TV company which sells video, there actually Apple will take 30 percent of sales for an Apple app. So, I mean, if they were to develop on the Android, this would be a way of distributing their content without having to give a share of their sales to Apple.
DOS SANTOS: The other thing, that to a certain extent, has (INAUDIBLE) Apple, we have heard it time and time again, is their refusal to use Flash technology. Do you think that this is going to have to make Apple rethink its strategy to a certain extent?
SHEARMAN: I think it will be tricky to sort of talk about that in the sense that obviously the reason it doesn't hold Flash is it goes back to some sort of political spat between Adobe and Apple. But I do think that, yes, this product is going to reach a mass audience. And if half the Internet supports flash then that will certainly give it a great advantage over Apple. And yes, you are right, they might have to rethink their strategy.
DOS SANTOS: Now we have looked at some of the statistics there, pricewise, there really is no competition to the Kindle e-readers, especially now that Hewlett-Packard has pulled its cheaper $99 tablet. Is this going to mean big demand for this product?
SHEARMAN: I think it will, I mean, Kindle sales, although Amazon hasn't released them, you know, analysts are saying they are going to wrack up $6 billion in the next year. And they have been doing very well so far. You see a lot of people reading their Kindle, as opposed to reading their tablet because it is the higher end piece of technology. So it has the opportunity to reach the masses and I think it will shake up the market.
DOS SANTOS: Now one of the interesting things that some analysts have been telling us is -- OK, perhaps it may not take over the top slot from Apple, because of course Apple's marketing has been particularly successful. But then again, even if it gets the second place that could mean a lot for Apple here, couldn't it? Excuse me, Amazon, here?
SHEARMAN: Definitely, remember Apple is a huge brand, as is Amazon. You know, it has got a huge amount of reach. And the fact that it has a Web site with a mass audience, it has great marketing capabilities and it has its own app store in the same way the Apple has iTunes. So, it could mean a huge amount for the brand over here.
DOS SANTOS: OK, we'll look forward to when they launch it here in Europe. Obviously, so far, we haven't seen it yet. But Sarah Shearman many thanks for that.
Sarah Shearman is a technology writer.
Now, Amazon's share price has been higher all throughout today's sessions. Of course, it did actually drop a little bit after the Kindle Fire was unveiled earlier on today. It is now higher than it was before the announcement. As you can see, it is trading up around 4 percent on the Nasdaq, at a price of $233.31.
Now, come together, right now. An appeal from the man who runs the European Commission; we'll bring you what Jose Manual Barroso thinks can solve the debt crisis, plus why Europe's biggest economy is feeling (INAUDIBLE).
DOS SANTOS: As you can see there, the Athens stock exchange ending the day up to the tune of 2 and 3 percent -- 2.37 percent, two and a third.
The troika is riding back into Greece. Inspectors from the International Monetary Fund, the European Central Bank, and also the European Union are on their way to Athens today. They are to check on the progress that Greece has been making towards closing its budget gap. The troika's report will determine whether the country gets its next installment of emergency funds. Lawmakers in Finland failed to discuss a second Greek bailout saying that they still want some kind of collateral in exchange for parting with the extra cash. The Finish parliament did however back a plan to enhance Europe's bailout fund that is the EFSF. Jim Boulden is in our London studio to run us through the day's events.
The Finnish vote, how important is that? (INAUDIBLE) didn't get too much on one side, but we did get the important passage --
JIM BOULDEN, CNN BUSINESS CORRESPONDENT: Yes, I mean, the vote all the time was about the EFSF. It is just that they mingled it in with this idea that we weren't going to give Greece anymore money, that the collateral -- they are talking about holding it hostage, some people. But as all 17 countries in the Eurozone vote on this expansion of the EFSF, that was agreed back in July. As we get that much closer to the second traunch -- I mean, sorry -- the second big bailout for Greece getting approved within this new expanded EFSF, so it is another tick, but then Germany votes for it tomorrow, expected to pass it. Then we move on to countries like Sloblakia -- Slovakia -- next month.
DOS SANTOS: You managed to get the EFSF right, though, Jim.
DOS SANTOS: I admire you for that.
We should also talk about Jose Manuel Barroso, here. A call for union? Is it being heeded?
BOULDEN: Well, he's been saying this for a while. I didn't hear anything new from him except this idea that we will have a transaction tax. A proposal that goes through the parliament, and that might become law in Europe. It is very controversial and very early days. But he has been setting out his stall for a very long time. He thinks the long-term solution is solving the problem with the euro is obviously going to be tighter fiscal union in many ways. Let's hear a little bit of what he had to say.
UNIDENTIFIED MALE: Jose Manuel Barroso.
BOULDEN (voice over): As a symbol of how EU President Jose Manuel Barroso envisions a more integrated European Union look no further than his annual State of the Union Speech to the European Parliament. It was his idea to copy what the U.S. president does and when he delivered his second one on Wednesday morning he got right down to the question of the day.
JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: Greece is, and will remain a member of the Euro area.
BARROSO (through translator): Today we are facing the biggest challenges that this union has ever had to face, throughout its history.
BOULDEN: Barroso spent much of the time on how the commission would try to prevent or at least soften the next crisis. Bluntly, the Barroso says the commission must have more say over what national governments spend.
BARROSO: We need to complete our monetary union with an economic union. We need to achieve the task of Maastricht. It was an illusion to think that we could have a common currency and a single market with national approaches to economic and budgetary policies.
BOULDEN: That won't happen unless national parliaments agree. And it won't be easy to pass his plan, now official to tax all kinds of financial transactions within Europe, stock trades, bond trades, and derivatives. Barroso says it could raise as much as much as 55 billion euros or some $75 billion a year.
BARROSO: Some people ask, why? Why? It is a question of fairness. If our farmers, if our workers, if all the sectors of the economy, from the industry to agriculture to the service pay a contribution to the society, the banking sector should also give a contribution to society.
BOULDEN: Already business groups have slammed this proposal saying Europe should focus instead on growth not increasing taxes. President Barroso speaks for the commission and certainly not Europe's national governments or their leaders. A real test of an integrated Europe, able to speak with one voice, will be if any of the commissions proposed reforms actually become EU law, one day.
BOULDEN: And, Nina, just another bit of news. There are reports out there that the euro finance ministers will have another special ECOFIN meeting to talk about the bailout for Greece, the next bailout for Greece. It is important to note that they are going hopefully meet and maybe talk about enhancing the second bailout.
DOS SANTOS: More talk, it is action that people wan to see. That is what they are telling us, isn't it, Jim? Jim Boulden, many thanks for that.
Well, tonight's attention is shifting to Germany, as Jim was saying a couple of minute ago. Lawmakers there are gearing up to have their say on whether to beef up the European Union's current rescue fund. Thursday's vote is a big deal for the Chancellor Angela Merkel. Many Germans say that they are now fed up with shouldering the burdens of weaker Eurozone countries. CNN's Frederik Pleitgen takes a closer look at the Eurozone's latest problems, bailout fatigue.
FREDERIK PLEITGEN, CNN INT'L. CORRESPONDENT: As sunbathers enjoy a lovely day in front of the German house of parliament, inside lawmaker Frank Scheffler is working hard trying to prevent fellow MPs from voting to give additional bailout money to Greece.
FRANK SCHEFFLER, LIBERAL DEMOCRATIC PARTY, GERMANY (through translator): The help we have given Greece, so far, has only inflamed the situation, he says. It has not made things better. It made matters worse. Greece is collecting less tax money and spending more. The aid has not helped.
Scheffler, a liberal Democrat, calls himself the taxpayers' Robin Hood. And he's seen as a threat to Chancellor Angela Merkel, because he is a member of her own governing center-right coalition, and because most Germans seem to agree with him.
A recent poll shows that 66 percent think it is a mistake to help out Greece and other Eurozone countries, even though many feel Europe's largest economy has no other choice.
UNIDENTIFIED MALE: We should put more money into Greece, because if Greece goes bankrupt, all the other countries, like Portugal, Spain, will go follow them.
UNIDENTIFIED MALE: It makes more sense to look at ourselves first. Because if we are not -- if we don't help the people here, how can we help the people of Greece?
PLEITGEN: Greece's prime minister was in Berlin this week for talks with Angela Merkel, trying to reassure the chancellor that Athens' austerity measures will be sufficient to fend off a looming default. But with Merkel barely able to persuade her own political allies of the need to help Greece bridge the next months with more cash, businesses are getting worried. Recent numbers show a drop in German business confidence due at least in part to the back and forth on the Greece bailout.
JIM HAGEMANN SNABE, CEO, SAP: The uncertainty for too long is a problem for business as well. So we need to make sure the necessary decisions are made.
PLEITGEN: And those actions need to be decisive experts say.
JOERG ROCHOLL, ESMT BERLIN: The biggest danger is that there is the risk of contagion, so that there would be a spread of risk to other countries in the Eurozone, in particular those in Southern Europe, including Italy, Spain, Portugal, Ireland.
PLEITGEN: And they say that would make for a crisis too large for even Germany to handle.
(On camera): In the end the vote here in parliament will be about more than just extra money for Greece. It will be about Angela Merkel's ability to govern this country and about Germany's commitment to the idea of a single European currency. Fred Pleitgen, CNN, Berlin.
DOS SANTOS: Germany benchmark the index, the DAX, finished the day in the red along side the rest of European major stock indices. Today's down session, in fact, snapped a three-day winning streak for the markets across the region. Here are the final numbers for Wednesday's session. Banking stocks, in France in particular, the star performers yesterday had a tougher time today. And as you can see that led the CAC 40 to sink to the tune of 0.9 percent. It was actually the FTSE 100 that fell the most, down about 1.5 on the day.
And going back to those French banks, Societe Generale was among some of the big losers, falling almost 3 percent. Financial shares have actually been the hardest hit amid recent worries over the exposure, particularly, of the French banks to the debt crisis in Greece.
Now, love may make the world go around, but what happens when it is your job to sell it across the globe? Meet a modern-day Cupid, next in tonight's edition of "The Boss".
DOS SANTOS: Now to the business of chemistry. Not the periodic tables, but helping people find their special someone. That is the mission of our new boss, Sean Cornwall, at online matchmaking service, eHarmony. He is helping us to feel the love in tonight's edition of "The Boss".
UNIDENTIFIED FEMALE (voice over): Honesty, not pretense. I love you, not I'll call.
UNIDENTIFIED MALE (voice over): A grand task, with an emotional twist, selling love to the world.
Meet Sean Cornwall, the international vice president of eHarmony, a modern-day Cupid, an our new "Boss".
Soho, Central London, teeming with shoppers, tourists, and couples, love is everywhere you look. No more so than on the fourth floor of this building.
It's here we find Sean Cornwall, whose mission is t spread love to far flung corners of the world.
SEAN CORNWALL, INTERNATIONAL VICE PRESIDENT, eHARMONY: What we do is we first get to know people through a quite an intensive questionnaire. And really get to understand people's personality and then match people with others, with whom they are compatible with, and have a good chance, if there is a chemistry between two individuals of having a long-term relationship.
UNIDENTIFIED MALE: At eHarmony we match singles based on 29 dimensions of compatibility.
UNIDENTIFIED MALE: On its home turf in the United States, eHarmony is long-established with 10 years matching up lonely lovebirds. eHarmony claims it is responsible for 5 percent of all marriages in the United States.
UNIDENTIFIED FEMALE: The most magical connection of all, it is called love.
UNIDENTIFIED MALE: Now Sean must take it global. A big challenge, but also a golden opportunity.
CORNWALL: It kind of had the best of both worlds. It was a start up, it was an entrepreneurial opportunity, which is always, in my view, the most fun. But it was also really well resourced and backed by a very successful American parent and you don't get that combination very often.
UNIDENTIFIED MALE: Sean has played a big part in the company's growing global success. Since launching its international operations three years ago he has opened eHarmony offices in the U.K., Australia, Japan, and Brazil, with 3.5 million international users registering for the service. It is one thing to open, quite another to be successful.
CORNWALL: I think the time has come now to become truly local in each market. To feel authentic and genuine and that really means making sure -- transforming the brand from an American brand, which has come into different markets, to a local brand which symbolizes -- which still has that common symbolism of long-term relationships.
UNIDENTIFIED MALE: So his strategy over the next six months is clear, to tailor the eHarmony brand to distinct international markets. Not an easy task as attitudes towards online dating vary from country to country.
CORNWALL: We got a very interesting challenge in Japan, because on the one hand, online dating has never really taken hold there. It is still regarded as a bit seedy. There are concerns over privacy. There is also this aspect that no Japanese will go on a date with anyone else, without knowing what their blood type is. So, for example, we have to adapt the product to ask people what is their blood type and then only match people according to certain blood types and so forth, because otherwise we would be just dead in the water in Japan.
UNIDENTIFIED MALE: To break through this social barrier, Sean must do his research. Focus on the detail and leave no room for error.
CORNWALL: I think the opportunity is huge and we can be very successful in Japan. But I think it is a market where we will need to tread carefully and we will need to learn at a rate very rapidly and really make sure that we get the customer proposition spot on.
UNIDENTIFIED MALE: With the local expertise in his international offices, Sean believes eHarmony will strike a chord with local singles. Giving control to his colleagues doesn't bother him. In fact, it is a quality he picked up from his previous job at Google.
CORNWALL: I think Google teaches you the importance of hiring and the importance of people. And how if you hire the best people, they will in turn hire the best people themselves. And you will create an A-class organization and you will create a top performing organization.
I think the other things that I've learned from Google, and I've taken, is focus on the end user, above all else.
Hey, Jason. It's Sean.
UNIDENTIFIED MALE: In business, as in love, faith is fundamental. And this boss not only has faith in his colleagues, but also in his product.
CORNWALL: If you don't believe in love it is very hard to work at eHarmony. Because its all around you the whole time. And we make sure it is all around you. Because, as I said, you know, I think it is what helps inspire people in this company.
UNIDENTIFIED MALE: Next week on "The Boss".
Sean Cornwall tells us how he aligns his goals in an international market. And in Brooklyn, Steve Hindy tells us how he is beating the rising price of barley and hops. That is next week on "The Boss".
DOS SANTOS: This is QUEST MEANS BUSINESS. Just ahead on the show, I asked a top Brazilian banker about the chance of a new recession hijacking the faltering recovery, in developed economies. An emerging markets view, next, on this very show.
DOS SANTOS: Hello. Welcome back. I'm Nina dos Santos.
You're watching CNN, the world's news leader.
Testimony continues at this hour in Los Angeles during day two of Dr. Conrad Murray's involuntary manslaughter trial. Right now on the stand, Michael Jackson's personal assistant. Earlier in the day, a lawyer hired by the concert promoter, AEG, testified that Dr. Murray, Jackson's personal physician, had asked for help in carrying for the pop icon.
The European members of the U.N. Security Council want to soften the resolution on Syria in the hopes of getting China and Russia on board. The new draft resolution simply threatens sanctions if Syria doesn't end its bloody crackdown on protesters.
Well, Russia has proposed its own resolution, calling for a Syrian-led political process to end the crisis there.
European Commission president, Jose Manuel Barroso, says that the debt crisis is the greatest challenge the bloc has faced in its entire history. He's speaking out in favor of a joint Eurozone bond and a financial transaction pact. And he said that Greece will remain in the eurozone, but it must meet its reform commitment.
Amazon has announced the newest version of its Kindle eReader, called the Kindle Fire. It has a color display and it's price at $199. That less than half of the cost of Apple's hugely successful iPad. The tablets start shipping as of November the 15th.
Well, a momentous week is unfolding right across Europe. Crucial votes on the region's bailout funds are still in the offing, and, at the same time, economists wonder about the possibility of a double dip for the world's developed economies.
The question is, what could that mean for the world's burgeoning emerging markets?
That's the topic I discussed with the head of one of Brazil's biggest financial institutions.
DOS SANTOS (voice-over): Forty-three -year-old Andre Esteves is chief executive of BTG Pactual, Brazil's largest independent investment bank.
ANDRE ESTEVES, CEO, BTG PACTUAL: So guys, where we are...
DOS SANTOS: Since reacquiring the firm from Switzerland's UBS in 2009, Esteves and his partners have quadrupled the company's value. The firm counts some $65 billion in assets under management. It's also now making a name for itself in mergers and acquisitions, fundraising from share sales.
Opening a new office in London, Esteves sat down with CNN and began by sharing his thoughts on the prospect of a new recession.
ESTEVES: I would say that at this stage, we have a reasonable chance of -- of having a recession, both in Europe and the US. I would say less than 50 percent, but I would say a meaningful chance.
DOS SANTOS (on camera): And how would a recession affect Brazil?
ESTEVES: The emerging markets will be affected and Brazil, naturally, will be affected. But it doesn't mean that most of the emerging markets you have the same kind of challenge than Europe or even the US. I think it's a different nature of challenge. And, in a certain way, could even bring a certain benefit to managing a certain over -- over hitting of -- of these economies.
DOS SANTOS: What would you say is the outlook like for the real, because, obviously, it's taken a complete about turn in terms of sort of the interest rate policy in Brazil.
What do you think is going to happen with this currency?
ESTEVES: The world is in a financial challenging moment. And -- and these will bring natural volatility, including to places that investors can see they are safe havens or good investment opportunities, like emerging markets.
The fundamentals didn't change. What we are seeing is just a little bit of a reversal of the last two to three year movements of -- of the strong investment in these -- in these currencies. It was just a small reversal.
DOS SANTOS: What would you be a buyer of at these levels?
And what would you sell?
ESTEVES: I -- I like the -- the -- the stock market, especially with -- with these -- the correction in the currency. I think it's an interesting alternative for investment, especially if you compare internationally about the alternatives and about the uncertainties. Brazilian banks, for example, are pretty cheap.
We continue to invest clients' money alongside with our money.
So we like to keep this alignment of interest. And the Brazilian economy continues to offer very interesting opportunities for -- for private investments if you are focused on the middle and lower end.
DOS SANTOS: So what would you be selling right now?
ESTEVES: I -- I think it's not necessarily the question of -- of selling, but it's time to -- to be more protective about your investments. So for -- for good performance on the long run, there are times that you should try to make money and times that you should try to protect your money. I think we are more on the protection moment at this stage.
(END VIDEO TAPE)
DOS SANTOS: So that's the view from Brazil.
Fellow BRIC member, Russia, will also be impacted by the slowdown in Europe and also in the United States.
On Tuesday, I spoke with Andrey Kostin, the president of Russia's VTB Bank.
He told me how his country will be indirectly affected by what's going on in the world's bigger economies.
ANDREY KOSTIN, PRESIDENT, VTB BANK: Well, I think there's the same concern all around the world. I spoke to leading American bankers here and I think they share the same view, I mean, as we in Russia. The Russian economy is doing pretty well. But, of course, it is a global recession caused by the crisis in Europe, particularly, in Greece and other countries, that will inevitably affect the Russian economy.
DOS SANTOS: And how much would it affect the Russian economy?
We already saw how much Russia was affected back in 2008,2009.
Will it be worse this time if we got a double dip?
KOSTIN: Well, I mean, on one hand, the Russian financial sector, for example, the banking sector, are not directly exposed to European debt. But on the other hand, of course, if this European crisis will result in a -- a recession into the -- a decrease of commodity prices on the basic Russian export commodities, that will be a very bad scenario for Russia.
I think Russia is better prepared from the point of your financial sector to face the situation but still, Russian leading industries, Russian leading enterprises will be badly affected.
And we have to spend again our special funds and reserves. And I think the scenario will be similar to what we had in 2008, though, again, the general opinion all across Atlantic that this scenario is probably not very probable, that we can avoid the situation. The situation will be better because the American economy, as well as the emerging market economies, are -- are doing pretty well.
DOS SANTOS: Now, Mr. Kostin, I'm glad you raised the issue of banks and financial institutions. Some people are saying that's at the heart of the kind of crisis we're seeing today. And Russia has seen plenty of reform and need for reform in its banking sector.
How worried are you, as the head of a Russian bank, about the banking industry in Russia?
KOSTIN: Well, Russia definitely does need reform, not only in the financial sector, but in the economy in general. You know, we are planning to modernize the Russian economy, to restructure it, to bring new technologies into the different industries.
As far as the banking sector is concerned, there's a progressive modernization of the Russian banking sector. I still think that there's too many banks in Russia, that many banks are not capitalized enough. But I think today, the Russian banking sector is much better prepared to stand problems which we face, for example, in 2008 -- and the government and central bank are quite ready, for example, to provide additional liquidity and so on and so forth.
But I agree with you, we do need a more changes in the banking sector and in the supervision, which is, in Russia, on the other hand is quite severe; on the other hand, is not endorsed properly.
DOS SANTOS: Now, we've talked about reforms for the country's economy. We've talked about reforms for the banking sector. And then in the midst of all of this, we've got Russia's finance minister's sudden departure, of Alexei Kudrin.
What does that say for investors in Russia?
It is being perceived as a negative sign.
How do you view this?
KOSTIN: Well, I think, of course, it's a pity that Mr. Kudrin left the government. He's a good friend of mine. And I know for some time that he had these plans, because he was the minister for more than 11 years. And he worked in the ministry for probably about 15 years. And he wanted some new challenges in his life. He wanted some new drive, you know, in some -- in some other -- area or in a different capacity.
So it was expected. But, of course, not -- not -- not today. Today I think it's -- well, it is, of course, will be not very easy to replace him because he is a very experienced person. And during the time of turmoil on the stock markets and in the financial sector, of course the -- that will be not easy.
But on the other hand, I think the government is working. The situation is under control. And I -- I think we will manage whatever problems we might expect now in the financial sector.
(END VIDEO TAPE)
DOS SANTOS: In a moment, the MSR trader who whips up a storm. But some people who heard Alessio Rastani's controversial TV interviews didn't buy him. Hear our very own interview with him when we come back.
DOS SANTOS: He is a self-proclaimed trader who caused an Internet sensation when he appeared to lift the lid on how the markets work. You probably hadn't heard of Alessio Rastani until he did an interview on Britain's BBC News.
On it, Rastani said, personally, quote: "I've been dreaming of this moment for three years. I have a confession. I go to bed every night," he said, "and I dream of another recession."
He also went on to say, quote: "The governments don't rule the world, Goldman Sachs rules the world. Goldman Sachs does not care about the rescue package and neither do the big funds."
Now, after a clip of his comments went on YouTube, people started sharing all of their views on Twitter. In fact, he became one of the most popular items on Twitter.
Then, what we saw was Alessio Rastani's name entering some of the top ten most discussed topics anywhere on Twitter, on the entire planet.
As you can see, Alessio here in Britain, Alessio in Portugal, Spain, also mentioned in France, as well.
Stay with Britain, though. We also saw some of his comments being searched among some of the top searched terms on Google. And then, as I was saying, in the U.K., he was grabbing all the headlines, as well. The British press picking up on his comments here. The "London Evening Standard" newspaper quoting him, saying, "I dream of a recession to make more money."
As we heard some of the international newspapers leading with this story, as well. Here you can see "LaVanguardia" in Spain saying, more or less, "The world is against the broker who says that the crisis is something that he dreams of so that he can make money."
Now, we should also clarify that Rastani does not work for Goldman Sachs, or, indeed, any other major trading firm, nor is he, in fact, a registered trader with the U.K. Financial Services Authority.
He does, however, write a blog at Leadingtrader.com.
Jim Boulden has been talking to him.
And Jim joins us once again in the studio -- enlighten us, Jim.
What did you make of Alessio Rastani?
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Well, I -- I enjoyed my conversation with him. He was very reluctant to come in. A great credit to the people on our booking desk who got him to come in. Then he decided to leave. He came back. He decide to leave. Then he came back and he reluctantly sat down with me.
And here's his explanation of what he said that he was saying and how this whole thing took off.
ALESSIO RASTANI, AMATEUR TRADER: The way you approach a recession is, as a human being, is different as you would as a trader, OK.
BOULDEN: So traders aren't human beings?
RASTANI: The jury is out on that one, right?
What I'm saying is, look, I published on my blog last night, on LeadingTrader.com. And I said exactly what I -- what I meant, which was, yes, you know, a recession can be horrible. It is, you know. It is a tough time.
My parents, when I was growing up, went through a -- I mean I remember the recession of 90 -- the early '90s. And it is -- it's a -- it -- it's a terrible specter.
As a human being, you don't want it.
As a trader, you think differently. As a trader, you think, OK, you're going to have one of the most volatile and possible trending conditions to make money in that market.
BOULDEN: So you're preparing for another recession and you said on the first interview that people better watch out, because they're going to be wiped out.
Now, the markets crash all the time. I mean we get it every 20 years or so. We had one in '87. We had one again in...
BOULDEN: -- in -- in 2008. It's October, so...
BOULDEN: -- you're warning that this is going to happen again?
RASTANI: I'm not an oracle here and this is the thing. And people think I'm -- I don't have a crystal ball that I look into and say, oh, wow, a recession is coming. I see what's in front of me, all right?
My job is to look in front of me and see what's -- what I see on my charts and what I see from other data that I'm getting and say, OK, this is what -- this is what I'm seeing and this is what I'm going to act upon.
BOULDEN: The reason this whole thing, your interview, went viral was because you said some things that were considered to be shocking.
BOULDEN: But you don't because you're trying to sell yourself. You're trying to sell the book. You're trying to get people to sign up for your trading desk...
RASTANI: Oh, I see what you're saying.
RASTANI: No. I -- I would not -- with all respect, I would not say that. No, I had absolutely -- I had -- I can tell you, I'm -- I believe -- I believe there is a God and I could not possibly sit in front of you or a television station and with all good conscience say something that I don't believe, all right?
So my conscience wouldn't allow it. No, I was not doing that as a self-publicity for a book. I -- I really truly meant what I said. I do believe that if you sit and wait for the governments to sort things out, be prepared to wait a long time.
The governments, even if they do sort things out, how long are they going to take?
Economists -- some economists in America say it will be eight years before the economy goes to pre-recession periods. If that's true, let's say it was four years.
You know, are you going to wait four years?
I'm not. So my -- my advice is, look, folks, act now. Do something about it. Don't just wait for these governments to sort things out. They're not going to sort things out.
Are you going to wait for them?
No. The big boys control what's going on here. And what I was really trying to say is, look, get out there, you know, just people -- I'm just talking about ordinary folks here. Just -- if you're watching this, get out there and go and learn how you can make money from this recession, not me, not just me.
BOULDEN: But a lot of people can't short futures of the Dow. I mean it's not something that the average person can do at home.
RASTANI: Fine. Do other strategies, you know?
Do other hedging strategies. People can buy options, you know, play options. People can find other ways of making money in a -- in a recession market. You know, the fact is, you know, what I'm saying is go and educate yourself. There is no excuse for you not to learn. You've got to go out there and learn how to do it.
I'm not trying to sell myself about anything. I'm honestly being honest here.
BOULDEN: Finally, let me ask you this. There were a lot of rumors after the interview that you were a member of this group called The Yes Men, which are people who go around saying things but they're not who they say they are.
Now, you say you are a day trader.
BOULDEN: You are Alessio Rastani, Italian-Iranian. And you're not a member of Yes Men?
RASTANI: Yes. You know what, maybe I'll just leave that open. You know, people want to -- if people -- if people want to believe that I'm part of The Yes Men, let them believe it.
BOULDEN: So he said to me that human beings don't want to see recessions. He understands that. But traders, some do, because you can make a lot of money on the volatility.
He's not the only one who thinks that, of course.
DOS SANTOS: He has divided opinion in equal measure here over the last couple of days, Jim. Some people are horrified at his comments. Others appreciating his candor.
Where do you stand, having met him?
BOULDEN: Well, when I met him, I realized he -- he -- I think he's an honest guy. What he is saying is what he's saying. But, you know, he would like to write a book one day about traders. He does have a Web site. He does like to train people for trading.
So I -- but I think to -- to his defense, he was asked to come onto a TV show and talk about the markets. And that's what he did. And in that sense, what blew up was because what he said was such a surprising thing, because they thought maybe he was just like any other trader coming from another bank who wouldn't say those kind of things if he worked for one of the major banks.
DOS SANTOS: It seems in his interview that he's had a little bit of a rethink about his delivery method. He was quite sort of placid, let's say, in comparison to his fiery appearance.
BOULDEN: He was very nervous. And like I said earlier, he was very reluctant to do this. But I think he might have realized at the end he needed to say again some of the things and maybe say it in a slightly different tone.
DOS SANTOS: Jim Boulden, who is not an amateur trader, and, thankfully, not an amateur reporter either.
Many thanks for that interesting interview with Alessio Rastani.
Next, a truly homegrown initiative -- we'll look at why this new aircraft is a first for Africa.
DOS SANTOS: Welcome back.
The defense group, Paramount, has unveiled what it says is a first for African aviation -- a plane entirely designed and built on the continent.
This is Paramount's Advanced High Performance Reconnaissance Light Aircraft, or, for short, AHRLAC. It was developed in partnership with South Africa's Aerosud and it's expected to add half a billion dollars to the South African economy.
From Pretoria, Paramount's founder, Ivor Ichikowitz, told Richard Quest how this aircraft really is one of a kind.
IVOR ICHIKOWITZ, FOUNDER, THE PARAMOUNT GROUP: This aircraft is really completely unique in the world. There is nothing in current production that does what this does. It is -- it's a reconnaissance aircraft that has multi-applications. It has -- it has an application in the military role as an attack aircraft. It also has an application in the civilian role as a -- as a reconnaissance aircraft. There really is nothing or has been nothing since the Bronco, which is a very, very old design of aircraft, that does what this does.
And it was designed specifically to meet current requirements, both in the battlefield as well as in civilian applications.
If you have a look at the aircraft, it's basically got the -- the nose of a helicopter. And you've got -- you've got two wings with two hard points on them and then a pusher propeller at the back.
Underneath the aircraft is -- is a flur ball (ph), is an observation system. It's a multi- -- it -- it's -- it's a multi-payload observation system. So it will take a thermal camera. It will take night vision equipment. It will take all kinds of -- of observation payload.
RICHARD QUEST, HOST, "QUEST MEANS BUSINESS": This, of course, has been designed and built in Africa. And it's very much Africa's first aircraft, at least as long as I can remember.
Why do you think the continent has not managed to play a bigger role in aerospace?
ICHIKOWITZ: South Africa was a very, very proud aerospace and defense country many years ago. And a lot of that capability has been lost. And this aircraft is a celebration of the competence that still exists on this continent, of the competence that still exists on the African continent is immense. We are able to do amazing things here.
ICHIKOWITZ: And the only reason that we have not developed an aircraft to date is because, frankly, nobody set their mind to it and nobody set their mind to putting all these amazing people together to go out and do it. And we decided to do that now.
QUEST: Who's paying for it?
Who is actually funding you to do this?
Because one thing I do know from years of covering aviation -- and we've only got to look at the Dreamliner, which, of course, is first delivered today or the 380 or whatever, you don't do it in a dime. So this is an expensive project.
ICHIKOWITZ: Absolutely. And it's 100 percent private sector funded project. My organization, the Paramount Group, in partnership with -- with Aerosud, which is a defense and aerospace contractor that we are shareholders in here in South Africa, have funded this with our own funds. And we are sufficiently confident about the market. And we are sufficiently confident about the demand to have been able to -- to take the risk and to -- to go out and do it.
QUEST: And how many, well, do you hope to sell?
Because, obviously, and -- and it's no use saying to me, well, Richard, we don't know, we're talking to this. When you put your hard earned cash into this and got everybody involved, you had forecasts for exactly how many you intend or would like or you believe you can sell.
ICHIKOWITZ: Well, Richard, we're really designing a factory right now that is going to produce between two and three aircraft a month. So we are anticipating filling at least that.
But we've also designed this aircraft in such a way that it can be produced anywhere in the world. So its portable prediction is part of our -- our business plan. So over and above what we produce in South Africa, we're going to be able to -- to produce this aircraft elsewhere in the world, as well.
QUEST: If I wanted to buy one at list price, although you and I will have a -- we will have a bargaining session later -- how much is it going to cost me to buy one?
ICHIKOWITZ: In fact, we're intending to be in the market at sub-$10 million for a basic aircraft. But variants can -- can extend to multiples of that depending on what the aircraft is designed to do.
(END VIDEO TAPE)
DOS SANTOS: Ivor Ichikowitz there speaking to Richard Quest.
Ivor Ichikowitz is the founder of Paramount.
And don't forget, if you want to comment on that or any of the other stories that you've seen on tonight's show, get in touch with the whole of the QUEST MEANS BUSINESS team. And you can do so via Facebook.com/cnn/quest.
Now, stay with CNN and QUEST MEANS BUSINESS because we're going to be right back with a full recap of the stock market action, next.
DOS SANTOS: Now, we're about an hour away from the close of today on Wall Street. All of the major indices are current trading lower. And that threatening a three session winning streak for these markets.
Now, at one point, the Dow actually crawled back into positive territory, before slipping back into the red. As you can see, this is where it's trading, down at the moment, down about .5 of 1 percent, 60 points at the moment, at a level of 11129.
And homing in on some of the stocks in particular, it was U.S. banking stocks that were really feeling depressed right throughout today's session, mirroring the kind of picture that we saw in Europe, as well. Citigroup, Bank of America, also JPMorgan, all down by more than 1 percent at the moment.
Market experts have been telling us that the volatility is going to be around for quite some time now on both sides of the Atlantic.
One of today's winners has been Amazon. We've been telling you about this company and its latest addition, its latest launch of the tablet, the new eKindle Fire. We've been telling you about that throughout the course of the day. And that is why this company is very much in focus. As you can see, it is up 34 percent.
And in Europe, the major benchmark indices ended their day down, as well, after a huge rally on Tuesday. Let's look at the final numbers. As you can see, all of those markets down. We had the banks dragging them down, in particular. But it was the FTSE 100 that lost the most, down about 1.5 percent.
And that's it for this edition of QUEST MEANS BUSINESS.
I'm Nina dos Santos in London.
But the news continues on CNN.