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QUEST MEANS BUSINESS
IMF Says Europe Should Shore Up The Banks; Eve Ensler, Others, Lend Their Celebrity To Bolster Occupy Wall Street Protest; Interview with Martin Wolf; Qantas Dispute; Interview with Tim Zagat; Interview with Meredith Whitney
Aired October 5, 2011 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN ANCHOR, QUEST MEANS BUSINESS: Ah, a capital idea. Well, the IMF says Europe should shore up the banks.
Wall Street is wall to wall with protestors. The unions are joining in.
And it is a nasty business at Qantas. The chief exec says he's received death threats.
I'm Richard Quest. We have an hour together, because I mean business.
Europe's banks once again seemingly in dire need of a rescue and the fears are growing over the strength of the continent's lenders. Now Germany says it will defend them, should the debt debacle drag everyone back to the abyss. German's Chancellor Angela Merkel says recapitalizing Europe's struggling banks would be justified. And that sent shares in the continent's biggest lenders absolutely rocketing up.
Mrs. Merkel says she could get the ball rolling on a plan as soon as next month's G20 in France. The chancellor says Germany's ready to act and that is providing the situation that maybe this is the sort-this is the Catch 22-maybe she will provide that if the situation is right.
(BEGIN VIDEO CLIP)
ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): Germany is prepared to move to recapitalization we need criteria. We are under the pressure of time and I think we need to take a decision quickly. If we need to discuss this at the summit, we are certainly prepared to do that.
(END VIDEO CLIP)
QUEST: We need to do this quickly. Other people, like Ollie Rehn today described the current situation, he is the economics commissioner, as urgent.
And if you join me over in the library you will see exactly what they are talking about. Three snapshots of the current crisis, from today, and give you an idea. Let's start with the IMF. It says Europe must get the money to the bank and give it a much needed jolt into action. Recapitalization sorely needed, and particularly, if we take, for example, Dexia, the French-Belgium bank. They must do whatever they can to avoid fresh credit crunch which would have an enduring recession as the financial markets once again seized up.
The IMF's European director, for Europe, says the problems need a European solution.
(BEGIN VIDEO CLIP)
ANTONIO BORGES, EUROPEAN DIRECTOR, IMF: The lack of confidence, and to a certain extent the vulnerability of the banking sector in Europe is fairly widespread. No banking sector in the world can sustain a generalized loss of confidence. And therefore we need to restore that confidence all over Europe. And we certainly prefer a European approach.
(END VIDEO CLIP)
QUEST: And this number shows you exactly the situation and why it is so critical. Britain had GDP numbers that showed the economy is just about stagnant. Revised downwards to .01 of 1 percentage point for the U.K. economy in Q2; it comes on a poor Q1 and, of course, a negative late last year. Overall, as the recession is getting closer the situation is worse than first thought. The British prime minister speaking to his conservative party conference basically said we are in this together keep the faith.
(BEGIN VIDEO CLIP)
DAVID CAMERON, BRITISH PRIME MINISTER: Our plan is right. Our plan will work. I know that you can't see it or feel it right now. But think of it like this. The new economy we are building it is like building a house. The most important part, is the part you can't see, the foundations. Slowly but surely we are laying a solid foundation for a solid future. And the vital point is this: If you don't stick with it, it won't work.
(END VIDEO CLIP)
QUEST: Let's pull the strands together and you can see how this picture becomes so murky. You have the IMF with the banks. You have slower and sluggish growth. And now, we have a warning of Italy downgraded there notches. And although the risk of default is remote. They do still say, the credit agencies, that Italy's totality of debt is so huge that there is a serious worry. All this factored together, not surprisingly, a report that came out this morning from HSBC global economics. Says it is the big chill. It warns about the developed economies being frozen stiff.
It says the banks expects the Eurozone, the Eurozone to grow by 2.5 percent this year, down from 3 in the last report. The developed world on a whole is turning blue. Growth of less than 1.5 percent, this year and next. The phrase that the HSBC Senior Global Economist Karen Ward is using is, permafrost. So, I asked Karen, when she joined me earlier, it is a strong phrase, and why the numbers were turning her cold.
KAREN WARD, SENIOR GLOBAL ECONOMIST, HSBC: I think what is most worrying about where we are now is that we have thrown an awful lot at these economies. Whether we are talking about the U.S., the U.K., or indeed the Eurozone, we have thrown zero interest rates at these economies. We have thrown enormous amounts of fiscal stimulus. And it is the fact that even after all that, we are still not seeing a decent recovery, which makes us really nervous.
QUEST: Do you think that this latest banking sector crisis, has the potential to spiral or to explode all of a sudden?
WARD: Well, the latest strains in the financial sector have really come about because of the Eurozone sovereign crisis. We just don't know if certain governments within the periphery of Europe can afford these debts. We don't know what the solution will be if they can't. And therefore we are really looking for a solution from the Eurozone in order to get the financial markets and, indeed, the banking sector, to ease this caution. So certainly if that doesn't happen, then obviously we are in an environment of heightened uncertainty, heightened fear. And that is an environment where you can see the financial sector strains affecting the real economy.
QUEST: If you look at the latest, and I don't want to take into too deep of political waters, but if you look at the latest proposals from the Eurozone, the ECOFIN, the IMF, are you confident that they are getting ahead of the curve?
WARD: I think ahead of the curve, no. But they are clearly talking. They clearly know what the issue is, and then moving in the right direction. But certainly, no, I think we are still very much waiting to understand whether they have got a sufficient firewall to protect some of the larger economies within the Eurozone. And also what their long-term strategy is for the future of the monetary union.
QUEST: Final question, though, let's just assume for the purposes of humoring me. The ECB, and the Fed and the BOJ and the BOE, did decide-and everybody decided-to put a couple of trillion euros, dollars, pounds, against this crisis. Is that really what is needed? And is that the will that we're not seeing?
WARD: I think certainly, what we are seeing in the Eurozone is a market failure. It is the fact that no one has any idea what is going to happen. Therefore nobody wants to participate in the market. They need to know that there is a buyer of last resort. A big force out there with a lot of money that is going to step in and provide a floor, it if is needed. So, certainly, I think if you saw that kind of announcement from all of those individuals it would bring everyone back to the table and put a stop to this issue we have at the moment, which is a market failure.
QUEST: Permafrost and the big chill from HSBC.
(DESK BELL CHIMES)
Well, today it was a case of doom, gloom, but zoom. For now, European stock markets are heading back upwards. And if you join me at the super screen-all this running around today, better keep me on a diet. Join me at the super screen and you will see, because this is well worth spending a minute or two, just to look at what happened today.
We have very, very strong gains in the FTSE. The Paris CAC currant up 4 percent. The DAX is up the best part of 5 percent. And the banking stocks really did show the best. Agricole was up almost 10 percent. Deutsche Bank was up 7.5 percent.
But I really want to focus. This is the way the day went today. But if we just go back over a month and look at the last month. And I think what you see, more than anything else is this phenomenal amount of volatility; absolutely, the markets just rocketing up and down. And over a three month period, again, once we end up, once you get this fall that we had in August.
This line of volatility, which frankly is what has been moving people and making everybody so concerned at the moment. Similar moves for the FTSE over the last three months. Frankly, it looks more like the Swiss Alps, than the markets. I could you the other day, they would be exactly the same. We are still basically, after that short fall in the summer, bouncing along the bottom there. Those are the markets. They zoomed up today, the roller coaster.
When we come back, in just a moment, they say they'll no longer tolerate the greed and corruption of Wall Street. And today their voice is getting louder. We'll be occupying Wall Street, after the break.
QUEST: Frustrated by what they are calling the greed and corruption of America's richest 1 percent, unions across America are joining the Occupy Wall Street Movement. And it is not just Wall Street anymore. Three weeks after protestors started camping out in New York's financial district, it is spreading. This is a protest in Boston. Protests are also taking place in Chicago, Los Angeles, and Seattle.
Maggie Lake is joining me now from New York with the protest. Maggie, I need, all right, Occupy Wall Street and all that sort of stuff. But I need to understand how-is this just an inch deep and a mile wide, or is this serious long-term protesting?
MAGGIE LAKE, CNN BUSINESS CORRESPONDENT: I think that is still an open debate, Richard. But I do think that you can't write it off. How is that for a little bit of foot-in-both-camps answer. Listen, if it is going to gain critical mass this is going to be a very important day. I want you to take a look behind me; is where, as we have been reporting from the last few days, it is sort of the headquarters for Occupy Wall Street, although as you mentioned now, it is in more cities and spreading.
There is definitely more people here today. We have got celebrities and artists stopping by to help. As you know, later today, union members, they are starting to show up a little bit. They are going to be showing up in force. You have students coming from a lot of the local universities, as well. In terms of how big the numbers are going to be, we don't-we're not sure. I mean, one organizer said to me it could be 5,000, it could be 25,000. We are not just sure yet.
But they hoping that this is going to be a little bit of a game changer. Certainly judging from the media here, we are all expecting a bit of a turn out. Whenever that happens, of course, you wonder what the relationship with the New York City Police Department is going to be. That is something we are going to watch closely. It is likely that we may see some arrests. Certainly the organizers are expecting that, although, they are not looking for that. I'd like to emphasize.
But I mentioned the fact that artists and celebrities are coming down here to show their support. We are going to talk to one of them right now.
Eve Ensler, who is the writer of the "Vagina Monologues", the founder of V-Day.
Thanks very much for joining us today. Talk to me about why you felt you wanted to come down.
EVE ENSLER, FEMINIST PLAYWRIGHT: Well, I'm here-I've been coming down over the last two weeks. And I'm here to show support and solidarity for the wonderful people who are here Occupying Wall Street. And I'm here because I work, 12 hours a day to stop violence against women, here, and around the world. And these issues are all interconnected.
LAKE: You know, Eve, a lot of people wonder when they see this, especially, you know, when a lot of what the media will pick up on is the drumming and the dancing. And some people say, OK, these are sort of political activists or students. I'm not sure I'm going to take it seriously. Should we be taking it seriously? This is a question Richard just asked me, is this just sort of a passing fad, and sort of people coming, curiosity seekers, or is there something more serious happening here?
ENSLER: First of all I think there is a cross section of people here. There are teachers here, there are students here, there's nurses here, they are workers here. I think it is very serious and I think it is part of a global movement that began in Spain, and in Tahir Square, and the Arab Spring, and is now spreading all over the world. We are a very, very, very crucial point in humanity, and in the planet. We are in an economic crisis. We were are in a global warming crisis. We are in a crisis where we are looking at violence against women in proportions around the world that we have never seen; 1 billion women across the planet will be violated.
And all of these issues are interconnected. We keep sidling things, you know, putting saving the earth over here, and stopping violence over here, and ending racism over here, and stopping-but it is one story. And corporate greed and economic injustice is at the core of that story. So, I think the people here are brave and brilliant. And I'm so happy to see so many young people, so many students. But also to see this wide, vast net, of people from unions, coming together in one-
LAKE: Yes, you know, this is, a lot of what we are used to seeing sort of protests, rallies, strikes, this type of thing in other countries, not so common here in the U.S. Do you get a sense that people are so fed up that that might be changing?
ENSLER: I do. Having now traveled a lot, around the world, but particularly in the U.S., the economic situations for so many people here is so terrible. People are out of work. People don't have health care. Single moms are trying to figure out how to pay their bills and keep their- pay their mortgage payments. I mean, we are talking about many, many, many unemployed people in this country.
And I think we need a new progressive movement. We need a real progressive movement. We see how Congress is failing us. We see a president, who we invested in a lot, and failing us. And I'm so happy to see the youth who put Obama in power are not giving up, but instead are organizing to keep it alive and keep a progressive movement going.
And I think, really, in all honesty. I think everybody should be down here. And it is fantastic to see Occupy Wall Street spreading throughout America. I think people shouldn't be afraid. These are regular people who are looking for work or looking for health care or-
LAKE: Or looking for answers, that they are not getting.
ENSLER: And looking for answers. And we may not have the plan yet. But plans take time. First you have to speak out and have your voice. And this is democracy in action. This is what it looks like.
LAKE: Eve, thanks so much for joining us. I know you want to on- people are anxious to talk to you. Thank you so much. And it is interesting Richard, because even an investment banker stopped before and was sort of watching. And I was talking to him, and he said, this is the sort of-they is-they are sympathetic. They understand that people are fed up with the economy. And that-even though there seems like there is a lot of diverse messages, that is one thing that keeps coming up again, is the frustration with the politics and frustration over the economic situation.
QUEST: All right. So, Maggie, you and I have covered demonstrations enough times. And you know with a demonstration there comes a point when you feel the thing has reached its climax, when you feel that it has run out of steam, or whatever. Do you feel this one is on the top, the top, or heading down?
LAKE: I think it is on the up right now. But this is going to be a critical juncture for them, Richard. I mean, they are young, they are a bit disorganized. At the root it, although, they get these sort of people coming in.
Can they take today, and do something with it. You know, they do have the benefit of social media helping them, in a way that generations past didn't. But can they take this momentum and solidify their message a little bit. And start to sort of head somewhere with it. I think that remains an open question. Today is going to be critical.
QUEST: Maggie Lake, who is in New York at the protestors for us tonight.
Some of the most influential people on Twitter have been talking about the Occupy Wall Street. Let's start with Nouriel Roubini.
Roubini says: "Obama told bankers in '09, I'm the only one standing between you and the pitchforks. Bankers got a bailout and didn't change the habits. Now pitchforks on Wall Street.
The hip-hop business magnate Russell Simmons is Tweeting: "I want to pay more taxes if it will help give health care and education to my brothers and sisters."
And the economist and special advisor to the U.N., Jeffrey Sachs; Professor Sachs says: "The top 1 percent of American income earners receives more pretax income than the bottom 50 percent."
Those are the views from "Tweets At The Top", on the Occupy Wall Street. What do you think about Occupy Wall Street and the protests? You can send it to the Twitter address, as always, @RichardQuest. It is Twitter.com @RichardQuest.
In a moment, on the streets of Athens, the message is clear. We can't take the cuts. We look at the austerity measures that have brought more than 10,000 to protest.
QUEST: So now let's go to the country where most people believe the problems reside. At least the immediate problems in Europe. As Greece pushes through new spending cuts. Its public workers are pushing back. The airport, ministries, and schools that keep Athens ticking are empty today. Staff on the state payroll walked off the job.
(BEGIN VIDEO CLIP)
QUEST: On the streets of the capital there clashes as more than 10,000 protestors marched against the latest wave of measures. From Athens, Elinda Labropoulou has more on the cuts that are for many, a cut too far, and too much to bear.
(PROTESTOR SHOUTING THROUGH LOUDSPEAKER, DRUMMING)
ELINDA LABROPOULOU, CNN INTERNATIONAL CORRESPONDENT: Thousands of demonstrators are gathered in the streets of Athens today protesting against austerity measures. There have been dozens of demonstration over the last year and a half, since Greece undertook an EU/IMF bailout plan to prevent the country from defaulting on its debt.
But what is different now is the degree of anger that the people are expressing about measures that are just too severe for them to bear. And a sense of despair that no matter what the sacrifices, they are just not adding up.
Greece, on Sunday, announced that it will not be able to meet its deficit target for the year 2012, which means the country will go into a fourth consecutive year of recession. The protestors are saying that in the time since the crisis hit, they have taken a massive drop in their living standards, of up to 50 percent. What they are saying is that the recession is suffocating the economy.
They are asking the government for development. They are asking for plans that would get Greece out of the crisis. And so far, they are feeling that neither the government, nor Greece's lenders have done enough to reassure them that this is possible. Elinda Labropoulou, Athens, Greece, for CNN.
QUEST: In these very difficult times you want to hear the views opinions and assessment from the world's top commentators. Martin Wolf, the chief economics commentator at "The Financial Times" is certainly in that league. He joined me earlier to talk about the crisis and why things seem to be getting worse. And I put it to him that the situation in Greece is now very serious indeed.
MARTIN WOLF, "FINANCIAL TIMES": Well, this is a correct description. But it has taken them a very long time. In fact, one could question whether they even now have gotten to the point where they understand how big the crisis is.
They have taken a large number of measures. Each of which they thought were extraordinarily dramatic and none of which was big enough, actually, to deal with the crisis. Which was meanwhile getting bigger as they tried to deal with it and it clearly now has morphed into something much more fundamental than the one they recognized when Greece first burst onto their consciousness. So, we are getting into something where they are always behind the event. And that continues to be the case.
QUEST: So in that scenario we now have got the EFSF and they are talking about leveraging that up, but they have only just voted on the July 21 restructuring of it. What do you favor should be done now to try and for once and for all get their hands around the neck of this thing?
WOLF: It is not actually clear that they can. That is to say they could reach an agreement on measure which are large enough to really stop it. But if they were going to try what they would need to do, I think, is- it's not in any particular order. First, they have to put Greece on a path which looks credible. And at the moment it doesn't.
It is not that Greece is anymore the crisis. It has gone beyond that. But as long as they can't even deal with Greece, that looks ludicrous. They have to come up with a package that makes sense. Greek debt is unmanageable. They have to restructure this. They have to say how Greece is going get back to being a credible economy. Then they have to be able to say that they are able to handle the other countries in difficulty. Portugal looks much more problematic. Ireland, I think, it looking a bit better.
But the really big issue is do they have the means to support the debt market if they get into difficulty of Italy and Spain. And do they have the means to ensure that the banking system will be adequately capitalized and adequately funded. And those are the things they needed. And for that they need trillions of euros, not a few a 100 billion.
QUEST: Noting what you have been writing, and others, there is a new pessimism in what you are writing now, isn't there? You are not-you are far more pessimistic about how this plays out.
WOLF: This is correct. And the reason is for that is reasonably specific, up to the early summer, I thought there was a chance that they- not certain, but there was a reasonable chance that this will be a crisis of a few small peripheral countries. While that was difficult they could manage it. But in the early summer the crisis got to Spain and Italy and spreads for these countries' bond markets, government bond markets, started ballooning out and then it started becoming a really big banking crisis.
So when you have got a sovereign debt crisis in two really big countries, Italy has the fourth largest public debt in the world, and it has got into the banking sector. Then it is a completely different order of magnitude. And they simply don't have the resources at present. Or even, I think, the will to deliver the resources to deal with it. And that is why I have become so much more concerned than I was a few months ago.
QUEST: The British chancellor, the finance minister, today hinted that, you know, the U.K. treasury was extremely worried at the prospect of a Euroland break up. Is that as unthinkable, or thinkable, as it once was?
WOLF: Oh, I honestly don't think it is as unthinkable as it once was. I mean, one of the most striking things, which I pointed out, is that some very senior government officials, in this case, the Dutch prime minister no less, actually hinted that some people should be encouraged to leave.
Now as soon as you start hinting that it is not irrevocable, that actually it is possible to imagine people leaving. Then the whole notion of this as an irrevocable currency union, with all the implications that has for where you put your money, what-in which way you can lend and borrow. All that goes. So I think the question of the irreversibility of the Eurozone is no longer something that can be removed from discussion. It is in the discussion. And that makes the prices much, much more difficult to handle.
QUEST: Martin Wolf of "The Financial Times".
Now, who could possibly be making death threats against the chief executive of Qantas?
The airline says unions are responsible. Accusations are flying from both sides of the picket line. It's a nasty business.
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And on this network, the news always comes first.
Protesters and police have clashed in the Greek capital. Agency public workers are holding a one day nationwide strike. It's polarized parts of the country. At least 10,000 marchers have been rallying against further planned budget cuts. The latest belt-tightening is Greece's attempt to qualify for the latest installment of bailout money worth more than $10 billion.
Turkey's prime minister, Recep Erdogan, has called for the defeat of a U.N. solution on -- resolution on Syria unfortunate and says Turkey still plans to impose its own sanctions. The resolution would have called for an immediate halt to the Syrian government's crackdown on dissenters. China and Russia vetoed it on Tuesday.
Somalia's president has declared three days of mourning after Tuesday's deadly truck bombing in the capital, Mogadishu. Dozens of people were killed in the attack at a government complex. More than 100 more were hurt. The Islamic al-Shabab militant group has claimed responsibility.
India has launched the world's cheapest computer. It's a tablet and it costs $50. With its 18 centimeter touch screen, wi-fi Internet, multi- media player and 180 minutes of battery power. The tablet is designed for students and will be distributed first to universities and not should -- not sold at shops.
It's a nasty business, bullying, death threats and racism -- those are the allegations flying between Qantas, the airline, and its unions. Relations between the two now hit an all time low this year, when Qantas announced a restructuring plan that could cost 1,000 Australian jobs. And now, reports of death threats have started pouring in, as 7 Network's Paul Kadak reports.
(BEGIN VIDEO TAPE)
PAUL KADAK, SEVEN NEWS CORRESPONDENT (voice-over): The bitter dispute between Qantas and the unions over pay and jobs today became a battle for the truth over death threats. The airline says a letter mailed to Alan Joyce's home calls the Irish born airline boss, "foreign filth" and says, "It's coming soon, Paddy. Your evil plans will come back to you very swiftly."
Qantas says he wasn't the only one threatened.
Spokeswoman Olivia Worth also targeted.
OLIVIA WIRTH, QANTAS SPOKESWOMAN: Why is why Alan took the step yesterday to say this just wasn't on. Bullying wasn't going to be accept. It is a form of intimidation and we're not going to stand for it.
KADAK: The unions weren't going to stand for that.
TONY SHELDON, TRANSPORT WORKERS' UNION: Why did 35,000 Australian employees of Qantas have this allegation leveled at them?
KADAK: They've denied any involvement and question whether the threats were even real.
STEVE PURVINAS, AIRCRAFT ENGINEERS ASSOCIATION: It could be a concocted situation created by management to draw on public sympathy.
SHELDON: If the allegations aren't true, then they should be looking at the hard drives of the media team of Qantas to find out whether they produced this document.
KADAK: The unions produced their own examples of abusive e-mails they've kept. Qantas insists the threats to management are genuine.
(BEGIN AUDIO CLIP, COURTESY ABC RADIO)
ALAN JOYCE, QANTAS CHAIRMAN: This has nothing to do with PR. There will be consequences for anybody caught being involved in this activity.
(END AUDIO CLIP)
KADAK: Police are investigating.
(END VIDEO TAPE)
QUEST: And that Qantas says it will push on with its expansion plans into Asia and its various low cost subsidies despite its internal issues.
Now, as we move on, I have the menus here from three of the world's top restaurants.
How do you fancy some grilled Roman artichokes, Maryland blue crab or a bit of black bass?
Well, apparently, the menus are going up in price and we're still eating at them.
Tim Zagat after the break.
QUEST: Now, in these troubled economic times, with talk of failing banks and you and I were talking earlier in the program about the perma frost, you might think it's a little bizarre when I tell you whether restaurants are suffering in the midst of this crisis.
Well, apparently, when it comes to fine dining, prices are holding up and it can be pretty difficult to get a table in some of the world's top restaurants.
"The Zagat Guide" says the average cost of a meal in New York is up 4 percent -- average cost now, 43 percent.
In London, it is up 6 percent.
So, if you join me over at the el -- the library. We -- we moved the furniture around and I suddenly forgot what we were calling them.
OK. What does it cost to eat at today's top restaurants?
According to the Zagat, the best in New York, according to their people, is Le Bernardin. I have the menu here from Le Bernardin. A fixed course, four course meal at $120. $135 extra for an ounce of caviar. You'll be very pleased to know that when I called, there was still a table for two available tonight. I'll see you there.
In London, on Piccadilly, it's the Wolseley. It threw Gordon Ramsay's restaurant off the top spot. Forget the Wolseley, although we could have had some nice chopped chicken salad or maybe steak frites. I couldn't get a table tonight. But there are some available tomorrow, so we might manage it over there.
And finally, Spago's is the most popular restaurant in Los Angeles. The 10 course tasting menu, matching wines, $250. We can get a table there tonight. It's only the Wolseley, apparently, that can't manage to see us.
Well, joining me from CNN New York, Tim Zagat, co-founder and chief exec.
Hey, Tim, look, I'm afraid we can't go to The Wolseley tonight, but we could go to Spago's or we could go to Le Bernardin.
And what does that tell us?
Tim Zagat, CEO, Zagat survey:
Don't wait very long because you want be able to get into either one if you wait.
ZAGAT: It's true across the board now, that the most expensive and the best restaurants -- and we cover 90 cities around the world -- are pretty much full most of the time. You may be able to get in at the last minute if somebody cancels. But generally it's, they're full.
QUEST: OK, are you surprised that in this environment, with -- with recession on the cards, unemployment so high, a credit crunch around the corner, that top restaurants have pricing power to put the prices up?
ZAGAT: The very best restaurants still have a limited number of seats and there are enough well-off people to keep them full. However, when you look at overall, the restaurants, for example, we cover over 3,500 restaurants in New York City, those restaurants are more affordable than they ever have been. They are giving good value. And value and casualness have been the trends, really, ever since the crash of 2008.
QUEST: So people -- people want value, but they want quality and they don't want to have to dress up in some -- some suit or -- or whatever.
But I do wonder, are the restaurateurs living in this make believe paradise that this cannot continue, because everything I see, Tim, suggests harder times ahead. People will be cutting back.
ZAGAT: Well, maybe that will happen, but it hasn't happened yet. And we are surveying up to the beginning of September. So in the last month, of course, the stock market hasn't been very good. But our figures from hundreds of thousands of people show that people are eating out as much as ever.
You've got to understand that the day to day meal out is almost a necessity. Most families, the wife is working. There's nobody around from Monday to Friday to shop, cook and clean. And given the fact you make more staying at your job for an extra hour, you're better off letting you do what you do well and let the restaurant do what they do well. And there are lots of very inexpensive restaurants.
There are also lots of ways to save money when you go to a restaurant...
QUEST: Oh, come on.
ZAGAT: Skip the first course.
QUEST: Right. Now, let's talk about that. Let's -- let's not be cheapskates about this. I'm buying you lunch or I'm buying you dinner, but I really don't want to have to have a nasty explanation with the accounting department at CNN.
So what should I do?
ZAGAT: Number one, just have a main course. That's usually plenty to eat. You might skip hard liquor, which is probably a good idea if you're going to lunch, because you don't want to come back and -- and fall asleep. You are generally there -- skip desert. There are lots of ways to cut back.
Read the menu from right to left rather than left to right. So pay attention to the prices on the menu. You don't have to eat the most expensive items.
Lots and lots of restaurants, more than ever today, have prix fixed menus, so you know what it's going to cost you to have lunch beforehand and you can make your selection of restaurants based on something you know will not cost you more than a fixed amount. For example...
QUEST: All right...
ZAGAT: -- some of the best restaurants in New York have a $24 prix fixed lunch for three courses. For example, Jean Georges...
QUEST: All right...
ZAGAT: -- Gotham Bar and Grill.
QUEST: When I'm in New York, you choose the restaurant for lunch. When you're we need your in London, I'll choose the restaurant.
Tim, good to see you.
ZAGAT: Love to.
QUEST: It's good to see you, as always.
ZAGAT: Love to.
QUEST: Now, all good things must come to an end -- Guillermo, how could you?
How could -- I'm not -- you know, the awful thing about this -- and I'm aware that large parts of Europe have been having terrible weather, but that's not where I am.
But the awful thing is we knew it was going to come to an end, despite our best hopes.
QUEST: But the awful thing is we knew it was going to come to an end despite our best hopes.
GUILLERMO ARDUINO, ATS METEOROLOGIST: Of course. But you enjoyed a long ride. I hope you were there. I mean, the conversation was so nice with these restaurants. And, of course, you know, we have to come to this moment when the rain is bad.
I was checking out London. So far, so good. There is no rain. But the pattern that we're going to see now is this. We are seeing the storms again, because the jet descends. And along with the jet comes the cooler conditions, the wind and also the rain showers. So the only area where now you could go to enjoy the -- the last days of warm conditions is in the Mediterranean Sea and in Spain. Madrid was reporting 30 degrees two hours ago. Fantastic. Unbelievable.
QUEST: It is.
ARDUINO: And we...
QUEST: It is...
ARDUINO: -- we are going now to 15 or so in London. So it's not that bad, but the high temperature of the day -- and also notice this. You see in the higher elevations, we start to see snow. And I know there's talk that some time in October we'll see snow in London. Honestly, I read it in several -- several areas, but I wonder if it's going to be London proper. Probably not. Maybe outside.
So look at the temps right now for Thursday, 30 for Madrid, 17 Paris, 15, London. Of course, you know, if you're watching from any of these areas you say, come on, it's not that bad.
Yes, it's not bad. But in the morning it's cool. At night, it's also cool.
Then in the evening -- at the -- the best time of the day we'll get 27 in Rome. That's pretty good. Twenty-six in Istanbul. Actually, Turkey is having nice conditions.
Now, an update on what's going on in Asia, because we had two systems, one after the other, going through the same areas in Vietnam and especially -- and especially -- I mean exactly the same, the exact same area in the Philippines. But this, the remnants of the cyclone that we had now in Southeast Asia, it's not bringing much precipitation, fortunately, because if you compare what we have had so far since January 1st and the average year to date, it is actually 58 and 31 above average in these two locales.
So the situation is not good at all. What's good is that Thailand is not going to get as much rain associated with remnants of the cyclone, the last one, Nalgae, that we have here in Southeast Asia.
The winds are going to die down, because this system is going to be over there, over these sections.
So we have floods in Thailand. We have had floods in Cambodia. Look at the numbers here on the screen. They are quite staggering. The situation is very complicated. It would be very unlikely to have a third cyclone over the same area, so -- and, also, as you see in October is when we see the tropical cyclone activity decreasing and also we see a decrease in precipitation.
So things should be much better soon -- Richard.
QUEST: We thank you for that, Guillermo.
ARDUINO: Thank you.
QUEST: Just (INAUDIBLE).
Now, let's stay in with a little bit of sun in sunny Seville. The lady I am about to tell you about is in the "Guinness Book of World Records" as having the most titles, the marquesses of this, the countess of that, the duchess of at least 15 or 14 different places. She's the Spanish Duchess of Alba. And she picked a nice day for her wedding. The dear duchess is aged 85 and she has a bank balance in the billions. She is a billionaire aristocrat and today she tied the knot with Alfonso Diez, a civil servant who is 25 years her junior. I don't know why I feel it relevant to tell you that, but everybody is quoting that fact.
As for the duchess, she wore pink. She celebrated with a flamenco dance, as the happy couple left the chapel.
And when told that her children didn't approve of this marriage, she basically says her children change partners more often than she does.
We'll be back after the break.
QUEST: The markets in New York are open. They are doing business. And this is how they are trading, up 91 points, 10900 -- a nice round number, 10900, a gain of just about 1 percentage point at the moment.
Now, in the last hour, the finance minister from Ireland, Michael Noonan, has been speaking to the Irish Doyle, the parliament, about the current banking crisis. Reporting by Reuters says that Mr. Noonan says he believed 100 billion euros -- 100 billion euros would be needed to recapitalize the banks in Europe. He said he didn't expect Greece to default and that Greece would be protected by other members of the union.
But 100 billion euros is a great deal of money and that has to be put into the banks. At the start of this crisis, Meredith Whitney was one of the first analysts to sound the alarm on U.S. banks. Now she says European political leaders are set to fail, as she spoke to CNNMoney's Poppy Harlow.
She tells her why she's so concerned.
(BEGIN VIDEO TAPE)
MEREDITH WHITNEY, CEO, MEREDITH WHITNEY ADVISORY GROUP: European stocks are in serious decline. They're trading at less than 50 percent on tangible. U.S. banks are now nearing 50 percent of tangible book value.
It is a sell everything and -- you know, now and ask later type of environment. And certainly through U.S. banks, that are so much better capitalized than the European banks, that have sound balance sheets, that are -- don't have great businesses (INAUDIBLE) the business environment is terrible, I don't see them impaling capital this quarter, which would be supportive of the fact that they're trading at discounts to their core capital ratios. It's just I think it's more of a global phenomenon than an individual short phenomenon.
And, look, European banks, many of those banks are not going just to Europe for now, two years, three years from now. These European banks, many of them...
POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: Many of them...
WHITNEY: -- will be...
HARLOW: They're going to -- they're going to be allowed to fail?
WHITNEY: I think what you're going to see...
HARLOW: Do you think?
WHITNEY: -- you're going to see the government has -- the governments will have to pick winners. And there are a number of banks that just are not going to -- they're not going to make it. So the governments can't save all of the banks. And if you look at what -- if you look at the composition of the balance sheets for the European banks, you know, what is most important is securing the European payment system.
So if you have a shoe company or you have a coffee shop or you have, you know, another type of manufacturer, then you could have liquidity, you can have, you know, fund your lines of business and actually even get advances. You can clear payments. And that's basically the cash register portion of the economy that is so critical. The economy cannot function without a payments system. And a surety in the fact that your banks -- your -- your deposits are going to be secured.
So what the governments will likely do is guarantee deposits, but force -- what you're seeing now is force the banks to sell off the valuable assets. You sell what you can, not what you said. And -- and slowly wear down or -- or -- or wear off their government securities portfolios.
I mean, effectively, so many of these banks have been shills for sovereign debt consumption. And the sovereigns can't issue as much debt and the, you know, the -- the portfolios will just have to -- to run off.
HARLOW: Treasury Secretary Geithner recently, at a conference that you also spoke at in -- in the past few weeks, said that there would not be another Lehman moment for European banks, that a Eurozone bank is not going to be allowed to fail.
You clearly think otherwise.
Are there -- are there certain banks that you're looking at that you think are most at risk?
WHITNEY: Well, let's -- let's draw some clear delineations. There have been hundreds of banks within the U.S. that have, in fact, failed. Lehman was a large, interconnected financial services enterprise that had a tremendous amount of contracts around the world, you know, around the world.
Individual banks that have, you know, single country exposure, certainly will fail. And you've already seen some of these in Europe. So it's not beyond comprehension to imagine that many banks within Europe, as many banks within the U.S., will fail. They will be smaller, systemically less important banks. I certainly don't think you're going to see a, you know, some of the banks that have huge derivative contracts to all of European countries, European banks, counter party exposures, that doesn't work. And so they will be deemed systemically important banks and not systematically important banks.
And that delineation will determine who survives, who doesn't survive.
What comes out of this and which banks are, you know, the -- the dominate players within 10, 15 years, are likely going to be decided within the next, you know, year or 18 months.
(END VIDEO TAPE)
QUEST: Meredith Whitney talking to Poppy Harlow earlier today.
One note to point out to you. Resignations at UBS as the global, the co-global head of equities have now resigned. Of course, it follows the scandal at the bank with the unauthorized trading. We'll have more details of that in the hours ahead.
And in just a moment or so, well, as the banking crisis gets worse and the European Union continues to talk, we need to have a chat -- A Profitable Moment.
QUEST: Now, more news on that -- that story I was just reporting to you from UBS. Here is the official statement. It says that "the resignations of Francoise Gouws and Yassine Bouhara, the co-heads of global equities, have been accepted. It comes as they assume overall responsibility for the effective management of equities. It also says there will be appropriate disciplinary action against other individuals in the equities business.
UBS, it says, expects to take disciplinary action against responsible staff in other functions.
In other words, the hot potato of the blame game is now moving fast. Under the circumstances, we are not providing further details, as they say. It doesn't matter. The heads are starting to roll at UBS. The chief executive went and now the others are starting to go.
And that's QUEST MEANS BUSINESS for tonight.
What a busy evening.
Thank you for making time to join us.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I hope it's profitable.
This is CNN.
The news continues.