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QUEST MEANS BUSINESS
New Greek PM Says Countrymen Must Accept Austerity; Irish Minister Says ECB Needs To Step Up, Pay Sovereign Debts; U.S. Stocks Update; Spanish Elections; CNN Freedom Project; Slim's Solution; Lost Generation
Aired November 14, 2011 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, CNN ANCHOR: The euro or nothing. Greece's prime minister says his country must accept austerity.
A lender of last resort, Ireland's European affairs minister tells me it is time for the ECB to step up.
And Boeing for gold, a record deal for the plane maker at the Dubai Air Show.
I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS.
Hello to you.
Governments are taking shape here in Europe and the onus is on Italy and Greece to prove this really is a fresh start. So far, frankly, hasn't worked. Stocks have fallen from Berlin to Wall Street. Bond yields are rising. And tonight, Ireland's European affairs minister tells me the only credible solution left is to call in the European Central Bank.
Well, first, Greece's new prime minister says the country's only choice is to stay in the euro. Speaking in the last hour, Lucas Papademos announced that the country is at a crossroads. And that swift reforms are needed to correct a worsening recession.
(BEGIN VIDEO CLIP)
LUCAS PAPADEMOS, PRIME MINISTER OF GREECE (through translator): Important sacrifices of the Greek people cannot, should not be, lost. Two basic prerequisites so that we win this battle is the truth, and the restoration of trust, confidence. The truth where we are, about where we are, and where we can go. And the trust in our strength and our powers to tackle the-
(END VIDEO CLIP)
FOSTER: Elinda Labropoulou joins us now from Athens, via Skype.
Elinda, any surprises there?
ELINDA LABROPOULOU, JOURNALIST: Not so much. But a very clear message from Lucas Papademos, in terms of what the priorities of his interim government will be. He did say that the first, the top, priority for his government will be to ensure that Greece is able to get the sixth traunch of a bailout plan.
He even gave a date for that. He said that the money must be released by December the 15th, in order to cover Greece's needs. The Greek government had already previous said that unless that money is in at that time, Greece could default on its debt.
Apart from that, another priority for the government that he did outline is that the final details must be worked out to ensure that Greece goes ahead with a second bailout plan agreed in the end of October. And so Mr. Papademos strongly urged all sides to ensure that by the end of the year these two things have been done.
His speech, which was in Greece seen as optimistic, focused a lot also on development. And he did outline a number of plans of how Greece can get out of recession. He did say that Greece will go into recession next year. But he did sort of say that there is a light at the end of the tunnel, by the end of the year, 2012.
So, a lot of plans for development that he outlined; how Greece will use its funds from the EU and its lenders, but also he did say that the government will push ahead with the necessary reforms. A number of structural reforms that include a number of austerity measures already decided that have been very unpopular until now, here. But he did say that that is the only way forward for Greece.
FOSTER: Elinda, thank you very much, indeed.
Well, though he is not officially in the job yet, the man nominated to be Italy's next prime minister has started work on selecting his government. A former European Commission member Mario Monti is speaking right now, in Rome. He is expected to conclude talks with political parties tomorrow before presenting his new government to the Italian president.
Well, even with an internationally respected economist taking charge, investors are still on edge about Italy's precarious debt situation, which we were hoping to show you here. But suddenly a blank screen.
Today Italy paid a high price for all of that uncertainty. At its five-year bond auction, here it is, it sold $4 billion worth of notes at round 6.3 percent. And that is the highest rate it has had to pay in more than 14 years. Right now, the yield on Italy's 10-year government bond is sitting at an uncomfortable 6.7 percent. While that is down from last week's record of nearly 7.5 percent; still dangerously high that figure.
And all of Europe's major indices fell on all of this news today. Milan's MIB index was one of the worst performers, with heavy losses in the banking sector. Banca Popolare di Milano had-and Unicredit actually-each lost around 6 percent. A downgrade by Moody's was the trigger for Banca Popolare's slide in the share price.
And for Unicredit it was a record $14.5 billion Q3 loss. Unicredit says it scrapped it's dividend for the year and plans to cut more than 5,000 jobs by 2015. The bank is planning a $10 billion share sale to boost its capital now.
CNN's Matthew Chance joins me now from Rome.
Matthew, where are we with Monti's appointment? This is a given, right?
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, he has formally accepted the offer, the nomination, by the Italian president to try and form a government.
The situation now, Max, is that Mario Monti, this distinguished economist, and former EU commissioner is in consultations with the various political parties to try and hammer out an agreement on the make up of his cabinet.
He is actually speaking right now to reporters outside the government offices, in the center of the Italian capital. He's been making the point that, first of all, the consultations are not yet over. He has been saying that, you know, he has spoken of the sacrifices that have to be made, in the country to the various political factions and that there are lots of things that the country has to do to get through this situation. He said that the leaders of the political parties with whom he spoke understood the gravity of the situation.
He said he also believed, and he is continuing these comments now, that the technocratic government that he is trying to form could go through until the spring of 2013, but he also made the point that it was clear that at any point the parliamentary majority, that it would need to stay in power, could be withdrawn and the government might fall earlier.
As I say, what has been spoken about throughout the course of the day is the make up of this cabinet that is going to steer Italy through these very difficult economic times. What Mr. Monti did say is that he does want politicians in his cabinet as well. Perhaps an attempt to give him the kind of political support he is going to need, if he is to get any meaningful reforms through in this country, Max.
FOSTER: And Matthew, he also needs to convince the public, doesn't he? Is there a sense that Europe is in effect installed a bureaucrat in charge of the government. Is that why politicians are also involved there? So at least there is some form of democracy within it?
CHANCE: That, perhaps, perhaps, it will give it some kind of democratic fig leaf. But who know? Because the point is, is that you know the measures that Italy needs to institute to get its economy back on track are going to be very painful, very deep, indeed. They are going to have a real impact on people's lives. We are talking about trying to bring down that massive public debt; $2.6 trillion.
It is going to mean huge public service cuts, public spending cuts, rather. It is going to mean huge tax rises. It is going to mean trying bring areas of the gray economy in this country, which is significant, back under government control. And so that is going to mean enormous changes and reforms in this country. And inevitably that is going to mean pain; inevitably in this country it will mean public disorder of some kind. And so those are the sort of public challenges that this government-if it manages to be formed by the end of the week, which is the plan-those are the kinds of challenges that is going to face in the months and possibly the year ahead, Max.
FOSTER: OK, thank you very much. Matthew reporting there, that Mario Monti has accepted that nomination as prime minister.
Now the ECB is still trying to do its bit to calm the bond markets. It brought up more than $6 billion of sovereign debt last week. Although that is less than half the amount it bought the week before. We have already heard that analysts have told this show that the ECB is the only institution which can save the day. But it might lack the ability to do so. There are some things it has to do right now. Obviously, it can set interest rates and it can lend money to help liquidity. In the past it has even done that on an unlimited basis. It could also buy bonds, both government bonds and covered bonds, which are a kind of corporate bond, with an extra layer for protection for investors.
There is one thing that the ECB can't do right now, though. Not at the moment at least. It can't print money to service public debt. At least that is what the president of Germany's central bank says. Jens Weidman also sits on the ECB council. That would apparently rule out something along the lines of quantitative easing, like we saw in the U.S., and here in the U.K.
Well, Angela Merkel is meeting with the Irish Taoiseach, Enda Kenny, on Wednesday. His cabinet is already telling Germany to face facts. Earlier Ireland's minister for European affairs told me it is time to accept the ECB is now Europe's only hope.
LUCINDA CREIGHTON, IRISH MINISTER FOR EUROPEAN AFFAIRS: I think it has become more and more apparent over recent months, but specifically since events have begun to unfold in Greece and Italy, in the last two weeks that, you know, unfortunately, it is an enormous challenge to try to beef up the EFSF in the way that was envisaged on the 26th of October. And it now looks like it will require a much more dramatic intervention and that means the ECB.
And we would be of the view that the ECB's role has to become more formalized and a much more substantial in all of this. And ultimately I think it is essential that the ECB would be become the lender of last resort, which I think is something that the majority of member states would agree with at this point.
FOSTER: So the European Central Bank effectively underwriting sovereign debt in Europe?
CREIGHTON: Which is the function of central banks in most modern economies and I think, you know, what we have seen over the last 18 months, or more, is the very clear manifestation of the reality that the European currency, the euro, has effectively a design flaw. In that it wasn't supported by the kind of architecture that it should have had. And we are now paying the price for that. So, I think it is essential that we get this right. The first priority is to save our currency. Then we need to talk about building an architecture to sustain it in the future.
But I thin the obvious step at this stage is that the ECB has to directly intervene. And that will require the support of the member states. Because it is effectively a shift in policy, even though these ECB has buying on the secondary market and has been very important in the role id has played over the last number of months. But that now needs to be formalized and it needs to be stepped up.
FOSTER: Finally, if Germany doesn't agree to allow the ECB to change its role to get more involved. What future for the euro?
CREIGHTON: There has to be a future for the euro. The obvious institution that can play a role is the IMF. But it goes back to the point which we have been hearing all along, which is why should members or countries who participate in the IMF support a currency if we are not prepared to do so ourselves. And I think there is a fair question in that. But, I mean, there are other avenues but I think that the only obvious one and the only credible one, really, is that of the ECB.
FOSTER: Well, still very much all eyes on Europe as far as Wall Street goes. Let's check on the number right now, on the Dow. And we are off slightly, at the moment, as you can see, down two-thirds of 1 percent. And it is banking stocks amongst the poorest performers there. They have been some of the most volatile shares lately. And we'll take a longer look at those numbers a little later on in the show.
But when we come back we'll hear from Boeing's CEO on striking the biggest deal in that company's history.
FOSTER: Boeing's having a pretty profitable time at the Dubai Air Show. Today it won another order for a batch of new Dreamliner aircraft, after clenching the biggest deal in its history on Sunday. Oman Air is to buy six Dreamliners at a cost of more than $1 billion. That deal is dwarfed by the one signed yesterday with Emirates Airlines. It is buying 50 777-300 extended range planes at a cost of $18 billion.
The Middle East is likely to be a massively important market for aircraft manufacturers. Boeing predicts the region will require 2,500 new planes in the next 20 years alone. CNN's John Defterios spoke with Boeing's CEO about its push to sell to that region.
(BEGIN VIDEO CLIP)
JIM ALBAUGH, CEO, BOEING: The traffic, if you go back to 2009 was up about 15 percent in this area. Last year it was up close to 18. This year, I think, because of the Arab Spring it is close to 9, 8.6. Those are very good numbers.
But I think this part of the world is very unique in that it can connect every city pair in the world from here. And that is why they are buying the long-haul airplanes, so they can go and be the-really the hub for the entire world. That is what they are trying to do.
JOHN DEFTERIOS, CNN BUSINESS CORRESPONDENT: Can you give us snap shot what it is like to negotiate a deal? How long does it take an Emirates deal of that sort of scale, $26 billion?
DEFTERIOS: From beginning to end, what are the driving forces here?
ALBAUGH: Well, these are very complex deals, as you can imagine. First of all there has to be a need. And certainly you have to have the financing. You have to have the right terms and conditions. I mean, it takes months to negotiate a deal like this. And the deals never get done until both sides want to get the deal done. And you know, quite frankly, leading up to this airshow, we weren't certain that it was going to get done. But I think both parties were very incentivized to have an announcement here. And we are happy and I know that Emirates is happy as well.
DEFTERIOS: International carriers, Middle East carriers, Asian carriers, are willing to make a bet into 2016 and 2017, in terms of growth. That doesn't surprise you. That they are willing to make such large bets?
ALBAUGH: No, it really doesn't. And I think that the airlines are seeing the same data that we've seen. And that is that the traffic goes up about one and a half times the world GDP. And there are spikes, and there are valleys. But over time, despite earthquakes, despite terrorism, despite you know, volcanoes and SARS, airlines traffic does go up over time.
And if you look at the last 30 or 40 years, I think that everybody agrees the direction is up. We think the future market is about 60 percent growth because of traffic and about 40 percent replacement of older airplanes.
DEFTERIOS: Can you give us a sense, even 10 years ago, did you ever think that the world would tilt so quickly to emerging markets and the growth. And did you find yourself prepared for that shift?
ALBAUGH: Well, it is incredible how quickly some of these emerging countries in China have started, you know, growing their economy. I guess my observation about China is they always do what they say they are going to do, but they always do it a little faster than we think they are capable of.
DEFTERIOS: Are you concerned, because China is such a big growth market, the political football that is being played with Renminbi, or the yuan, on both sides right now. Is there just a lot political noise, or is it going to actually trickle in and affect Boeing eventually?
ALBAUGH: You know what we have seen over time is that on occasion you see, you know, orders delayed, you see deliveries delayed. But over the long haul they have got a real need for airplanes, from us and from Airbus. And the politics really haven't gotten in the way.
FOSTER: Well, when we come back we'll be in the "Future City" of Tokyo, where tall can also mean tremor proof. We'll look at how developers are dealing with the threat of earthquakes there.
FOSTER: Japan is making a comeback. It's economy is growing again following a slump caused by the devastating earthquake and tsunami. Output grew by 1.5 percent in the quarter for July to September, following nine months of decline. Improving exports were the biggest driver of growth with a rise of 6.2 percent for the quarter. All this month we are looking at Tokyo as a "Future City". As Andrew Stephens reports now, the March disaster hasn't stopped developers in this "Future City" from thinking big.
ANDREW STEPHENS, CNN INTERNATIONAL CORRESPONDENT: Life in Japan, outside the tsunami zone is slowly returning to normal after the events of March 11. It was then that a magnitude 9.0 earthquake struck off the coast. The tsunami that followed caused widespread destruction, leveling some towns entirely.
But given the force of the earthquake overall Japan's infrastructure, its buildings, highways and coveted rail lines held up remarkably well. Today Tokyo is as vibrant as ever.
PAUL KATZ, KOHN PEDERSON FOX: The idea of Tokyo was to deal with, to overcome the difficulties of nature and develop a culture of urbanity and living together despite all their adversities that nature, and the forces of nature, and dealing with earthquakes and fire.
STEPHENS: Paul Katz is managing principle at Kohn Pederson Fox, the architecture firm behind this place, Roppongi Hills. It is essentially a town within a city. A place where people live, work and play. It features one of Tokyo's tallest office towers, as well as high-end shopping and plenty of open space. And that office tower is named after this man. The visionary property develop Minoru Mori, one of Japan's most successful businessmen.
MINORU MORI, PROPERTY TYCOON (through translator): Before the homes and the workplaces were very far apart. And you needed an hour, if not two, in Tokyo just to get from one to the other.
STEPHENS: Mori sees this as the way of the future. As people continue to flock to cities like Tokyo.
MORI (through translator): In the new world, the living space, the working space, and the entertainment space are not separated. And information is exchanged everywhere. That is why this all needs to be together.
STEPHENS: This near 7.8 million square foot complex is also equipped for disaster. Why did Japanese buildings hold up so well on March 11, against a magnitude 9.0 quake? We made it to the core of the building.
TORU TSUCHIHASHI, URBAN PLANNING & DEVELOPMENT (through translator): This is an anti-seismic installation, designed to absorb the power of the earthquake. As you can see, here, a brace comes down from the upper floor and it is connected to the lower floor.
STEPHENS: A quake produces a strain between floors, but with mechanisms like this, that strain is absorbed by the building itself.
TSUCHIHASHI (through translator): As you can see from this model I am holding, the dampener acts to absorb the energy. On March 11 this device acted very effectively. There are 356 of these mechanisms installed throughout the building. But they moved only a centimeter, at the most.
STEPHENS: When it comes to being self sustaining Roppongi Hills even has its own emergency food supply. Through a door in the car park, carton after carton of food stuffs and bottled water.
KATZ: In Japan and in the Japanese culture, and in Japanese urban planning, the idea of resisting or preparing for natural disasters is very prevalent. One of the advantages of a large project is that you can generate your power on site.
STEPHENS: This is a rare look at a power facility hidden beneath Roppongi Hills.
KENICH KIKUCHI, ROPPONGI ENERGY SERVICE: (through translator): What you see here is the power generator. We provide electricity to nine of the buildings of Roppongi Hills. We are capable of generating enough electricity for 10,000 individual homes.
STEPHENS: Head to the top of the Mori building at Roppongi Hills, and not only do you get a staggering view, but a new towering structure to the northeast also catches your eye. It is the Sky Tree, tallest radio tower in the world.
Ground was broken back in 2008 and since then Tokyo has seen the structure rise to a neck-bending height of 634 meters. That is 2,080 feet. Like any builder here, earthquakes were always on their mind.
HIROTAKE TAKANASHI, PUBLIC RELATIONS MANAGER, SKY TREE (through translator): This is Japan and we know there are earthquakes. So, since the project started we were working under the assumption that the worst could happen.
STEPHENS: So how do they ensure a safe structure that can adapt to these surroundings?
TAKANASHI (through translator): We have introduced the technique that is unique to this tower and inspired by traditional architecture, which is the core central pillar structure.
STEPHENS: But the tower itself is built with an iron frame. But at the core, the key to this building's safety, is a central pillar of reinforced concrete. A cylinder that is eight meters, about 26 feet in diameter.
TAKANASHI: By taking advantage of the difference of the swinging speed of the pillar, and the tower, the tower's amount of swinging then diminishes.
STEPHENS: Clever engineering, ensuring safe buildings on not-so- stable ground. Buildings that are meant to stand for generations to come. Andrew Stephens, CNN, Tokyo.
FOSTER: Well, up next Angela Merkel says Europe faces its toughest challenge since the Second World War. We'll find out if she is fighting a loosing battle, after the break.
FOSTER: Welcome back.
I'm Max Foster.
More QUEST MEANS BUSINESS in just a moment.
But first, the headlines.
The nominee to become the next Italian prime minister has been speaking to the country's Senate. Mario Monti says his consultations with political party leaders are not over, that the structural reforms need to be carried out quickly. Monti also said that the technocrat government he's trying to form could remain in power until the spring of 2013.
A new call for Syria's president to give up power. Jordan's King Abdullah says if he were in Bashar al-Assad's shoes, he would step down and make sure whoever follows can change the status quo. Saturday, the Arab League suspended Syria's membership because of the ongoing crackdown on protesters.
In Norway, a judge has ruled that mass murder suspect, Anders Bering Breivik, will remain in custody another 12 weeks and that his trial could start in April. Breivik has confessed to killing 77 people in bombing and shooting sprees in July. He -- it was his first public appearance since the attacks.
Hopes of seeing in an NBA basketball season have taken another turn for the worse. In the last few minutes, the players union has rejected the late stopper from owners in the ongoing dispute over pay. The union will now disband, paving the way for an anti-trust lawsuit. It now looks more likely that no basketball will be played this season.
Well, it's Europe's biggest crisis since World War II, that was Angela Merkel's call to action today. The German chancellor was rallying support at her party conference. Mrs. Merkel believes more political integration is the key to defending the union.
As she told her party colleagues, the entire continent's future was now at stake.
(BEGIN VIDEO CLIP)
ANGELA MERKEL, GERMAN CHANCELLOR (through translator): The euro is far more than just a currency. It is a symbol of European unification and it has become the symbol for half a century of peace, freedom and prosperity. It is everything but self-evident when we look at developments elsewhere. That's why I'm saying over and over again, if the euro fails, Europe will fail. We want and we will avoid that, dear friends. That's what we are working for, because it is a project of such historic proportions."
(END VIDEO CLIP)
FOSTER: Well, we've been watching bond yields tick upwards like a doomsday clock during this crisis. And on today's showing, the situation could be getting worse. Italian borrowing costs are on the rise on the 10- year-notes. We're seeing yields heading back toward the 7 percent mark. What could even be more worrying is that Spain is creeping behind. 10-year bond yields there have now pushed above 6 percent. French borrowing costs are heading higher, too. They're almost at 3.5 percent.
The spread between those bonds and the German Bund continues to increase. As the yields in Europe go up, stocks come down and these days, that's how it's going on Wall Street, as well, as in Europe.
Alison Kosik is at the New York Stock Exchange -- Alison, this link between Europe and Wall Street seems stronger than ever.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Oh, you said it. Yes, stocks, in fact, are all just -- just suddenly just started making a more decisive move to the down side after a jump in those Italian bond yields and a rise in those Spanish bonds, as well.
And the U.S. dollar extended gains against the euro, and that's helping to keep stocks in the red.
You know, Europe, Max, is really driving The trade today, especially because there aren't any major earnings or economic reports out today.
But investors are hopeful, with the nomination of Mario Monti to lead Italy, with his background in economics, Wall Street is cautiously optimistic that he could be the one to move the country forward after years of what many consider to have been completely inept leadership.
But analysts say this is unlikely to be a silver bullet and there are still a lot of questions that remain. So what investors are really looking for at this point is some action before they wind up throwing all their eggs into anyone's basket.
So in the meantime, what you're going to wind up seeing is a pullback in the marketplace, as were seeing today. Investors, Max, perhaps taking a breather after doing a -- a whole lot of buying late last week -- Max.
FOSTER: Yes, because there have been some profits for people, haven't there, as well?
And looking ahead to the week, what sort of U.S. news are we looking to?
KOSIK: We are getting some inflation reports, so maybe the focus will wind up turning a little bit more domestically. The -- of course, everybody is going to be looking to see if there's a contraction, because the worries about a possible recession, they're always on the back burner, especially with worries about Europe falling into recession, if it hasn't already.
So I think you're going to see the focus turn back domestically starting tomorrow, when the -- when we begin getting those inflation reports -- Max.
FOSTER: Alison, thank you.
Back with you as we get them.
Now, investors are trying to memorize the new names of European leaders. They could have a new one to remember by this time next week. Spain goes to the polls on Sunday. And voters look like turning on their current government in protest of the state of the economy.
There were large demonstrations at the capital over the weekend.
And Al Goodman spoke to some of those protesters.
(BEGIN VIDEO TAPE)
AL GOODMAN, CNN CORRESPONDENT: Good morning.
ESTEBAN GUERRERO, PROTESTER: Good morning to you.
GOODMAN: Good morning.
(voice-over): Esteban Guerrero has been to a dozen economic protests in Madrid since last May, but he doesn't see the one this day as just a repetition of the others.
GUERRERO (through translator): Each protest is not just one more. Many young people and workers take part. Some are bigger than others. But what's important is that thousands turn up each time.
GOODMAN: He agrees to take us along and we ride the metro from his neighborhood to downtown. Guerrero is in his last year of journalism at university. He's waited tables during the summer. But with unemployment among Spain's young people running at about 45 percent, twice the national average, he sees his prospects for finding a job bleak.
GUERRERO: It's a very precarious situation for young people in Spain and getting worse. Like it is for youth in Greece and Portugal.
GOODMAN: Which is one big reason why he's come to this protest. It starts out with a stand-off.
GOODMAN: "Less police, more education!" they chant, criticizing education cutbacks in Spain's deep economic crisis.
Spain's parliamentary elections are next Sunday. Polls say the opposition conservative will beat the incumbent socialists. More austerity is predicted.
GUERRERO: I think it's necessary to vote, but that's not enough. People think the elections won't change the situation. They won't stop the cutbacks.
GOODMAN (on camera): The demonstrators want deep changes in Spain's political and economic system. And they say they'll keep protesting until that happens.
(voice-over): A few thousand turn out this day, fewer than protest just a few weeks ago. Taking a turn in front of city hall, they head to the central Puerto los Sol Plaza, where Spain's economic protests began last May -- six months of demonstrations and no sign of them ending in Spain.
GUERRERO: I think there is a pent-up rage. The workers and young people of this country are fed up. It's been years of frustration over cutbacks and lower salaries.
GOODMAN: The march finally stops and a now familiar people's assembly begins. Guerrero says it's been hard to reach agreements at these debates, with so many opinions about exactly what needs changing and how. Yet they demand to be heard.
Al Goodman, CNN, Madrid.
(END VIDEO TAPE)
FOSTER: Next, getting smart in the fight against human trafficking -- we'll look at a -- a new tool to help those at risk in Russia and in Eastern Europe.
FOSTER: Tonight on QUEST MEANS BUSINESS, we're looking at how technology could be used to fight against human trafficking. It's part of CNN's Freedom Project, our commitment to shine a light on the horrors of modern-day slavery.
As more people begin to use smartphones, one scheme is to use them to educate and to protect potential trafficking victims.
CNN's Richard Quest shows us one contest that called on people to enter their best app ideas.
(BEGIN VIDEO TAPE)
RICHARD QUEST, HOST, "QUEST MEANS BUSINESS" (voice-over): This is just one of the videos submitted to the Stop Human Trafficking App Challenge. The online contest called on developers to create innovative mobile apps aimed at raising public awareness of human trafficking, educating people at risk or providing services for victims and survivors.
There was one twist -- the contest was aimed at a very specific target -- Russia and Eastern Europe. Only developers in these regions -- some 24 countries -- were eligible to participate.
Organizers of the App Challenge say the rise of the sex industry in this part of the world dates back to the fall of the Soviet Union.
SARAH MENDELSOHN, U.S. AID: Initially, there were a lot of people leaving Russia and going to work elsewhere. And they were persuaded by false advertisement and got essentially tricked into either forced labor or forced prostitution. There are a lot of laborers from Central Asia that are looking for work and end up being trafficked into Russia.
QUEST: The U.S. Agency for International Development, known as U.S. AID, helped organize and fund the contest, along with the Demi and Ashton Foundation and NetHope, an agency made up of 33 of the world's largest humanitarian groups.
And here's the design that won.
UNIDENTIFIED FEMALE: Our idea was to prepare a mobile app with advice on how to not become a victim of human trafficking.
QUEST: The goal now is to move it from concept to development, ultimately launching some time next year.
(END VIDEO TAPE)
FOSTER: Well, Bill Brindley is the CEO of NetHope, one of the groups behind that App Challenge project.
And he spoke to Richard about the winning entry.
BILL BRINDLEY, CEO, NETHOPE: It will be an information app about travel, about language translation, other relevant information. But beneath that surface view, it will provide people with it so they can verify potential employers that are appearing to offer them jobs elsewhere outside of Russia and Eastern Europe and then help them mitigate when they're subject to being preyed upon.
QUEST: Who's going to monitor this app to make sure what's on is correct?
BRINDLEY: Yes. Well, one of the key elements is the implementing NGOs on the ground in these countries that are very involved. So World Vision, for example, in Russia and Eastern Europe is one of the main NGOs that is working to make sure the data is valid. And they'll, in turn, work with the government and other civil society organizations such as the police.
QUEST: How do you hope that this is going to help the situation, because the people who were involved in trafficking -- and as we've seen through the Freedom Project over the course of this year, they are -- obviously, it's illegal. But they are extremely cunning. They out -- operate outside of the law.
QUEST: They entrap people.
QUEST: So how does an app help when you've got people who are prepared to go to such extreme lengths?
BRINDLEY: Well, it -- it, you know, there's no one solution. This is one among many solutions that are needed -- and interventions. But people are increasingly buying and using middle and low end smartphones. And this is a way that they'll have it in their hands. It's very tangible. It's accessible.
So we think this is a way to get it out more prevalent and ubiquitous so that there's more access.
QUEST: And as we look at the area where you're intending to start this, Russia, Eastern Europe, I can see why, at one level. But bearing in mind the European Union and the fact of freedom of movement from Eastern Europe and these places, are they the -- really the worst places to be looking at this?
Surely there are other places -- Southeast Asia and beyond?
BRINDLEY: Right. And this app is extensible and can be utilized around the world. But we felt this was the appropriate starting place for a number of reasons. And we ran this App Challenge to actually develop the app indigenously. The challenge was in Russia and Eastern Europe so that we'd have developers who could be, in the context, developing the app in partnership with our organization.
(END VIDEO TAPE)
FOSTER: The Freedom Project analysis there.
All right, as Europe is a -- a continent of extremes right now, Jenny is look at the weather situation for us from the Weather Center.
What's going on -- Jenny?
JENNY HARRISON, CNN METEOROLOGIST: Hey, Max, yes, as you say, real extreme to the east and the west. That's where we're seeing the really different types of weather.
Let's start out with, first of all, across the southeast of Europe, really, across into Turkey, the eastern end of the Mediterranean and in particular the area in and around Van, where, of course, still just last week we saw those two large aftershocks of earthquakes.
But there's been some really bitterly cold weather there since the start of the month. Minus three is the temperature right now. But the wind has been playing quite a part, too, in bringing that temperature low. So it feels like minus six.
We've had some light snow throughout Monday. There's a little bit more in the forecast.
The temperatures actually not quite as cold as they have been over the last few days, as the system is working its way eastward and actually bringing in the cold air. But it has been remarkably cold. Look at this - - the coldest start to the month since 1992. And so far, the 14 days of the month, 12 out of those 14, we have had overnight temperatures below freezing. The averages have been about minus three degrees Celsius. so this is why it's been so cold, all this cold air coming down from the far north throughout the central areas of Russia, but then really pushing across the east. It's beginning to pull away a little bit.
And then we've got this other system sitting of the southwest coast. Now, it's getting a bit closer. It's going to mean some very high waves and strong winds, but in particular, as well, some very heavy rain.
But, of course, once that moisture has come in contact with the colder air, we have seen quite a bit of snow. We'll see more of that over the next couple of days. And you'll see also, further to the east, we're going to see some more snow in the forecast in and around Van.
But as I say, some pretty strong winds, too, pushing through the eastern end of the Mediterranean.
So this is the forecast for the next three days. Those temperatures will be below freezing in the overnight hours. It will feel cold probably because of the wind. And then more snow in the forecast toward the end of the week.
But better than it was. And as much as the average overnight low is about freezing, and the forecast has it just below for the next few days.
Now, when it comes to the extremes, the central regions and the west of Europe very nice, nice and mild, certainly for the time of year. We've got high pressure in control. you can see, we have got high pressure in control here out across the west. In fact, what's happening is because of this high, it's forced all these systems coming in from the Atlantic to take this more northerly route. And then coming down the other side, too, where the colder air is. So quite a bit of snow across the eastern areas of Europe. But it has been mild and some nice sunshine, as well.
The winds are quite brisk out across the southwest in particular. As I say, pretty much following the same route as all those systems coming in. So it will stay blustery for the next couple of days. Nothing particularly strong, but very calm across central areas.
The winds, as I say, through the eastern end of the Med. Now, on Tuesday, that could cause some delays in Athens. And then the snow in some places, Moscow, particularly, as we continue through Monday on into Tuesday.
Blats in terms of temperatures. That's where that really cold air just plunging southward and then out toward the central and western regions, it is fine and dry. In fact, temperatures getting closer to the average. It's been well above average for the last few days. In fact, on Sunday, at Bangor in North Wales, 18.2 degrees Celsius. That was the daytime high. The average is only 10 for this time of year. And you can see London for the next few days, still a few degrees above average. Mild in the overnight hours.
Paris the same, as well. You can see where that snow is. You can see where the clear skies are. And those are the temperatures as we head into Tuesday, 12 in London, but just 3 to the east in Kiev -- Max.
FOSTER: OK. Jenny, thank you very much, indeed, for that.
Now, if you're wondering who to ask about the economic crisis, surely the world's richest man knows a thing or two.
Up next, Carlos Slim tells us how to fix the world's developed economies.
Stay with QUEST MEANS BUSINESS.
FOSTER: Well, with a net worth of around $63 billion, he could go some way to fix it -- fixing the problem himself. But the telecom tycoon, Carlos Slim, has other ideas of how to fix the troubled economies of the developed world.
Becky Anderson spoke to the world's richest man in Geneva.
He told her that structural change would be needed to solve the problem.
(BEGIN VIDEO TAPE)
CARLOS SLIM, CHAIRMAN & CEO, GRUPO CARSO: The developed countries have trying to give a state of welfare to the people, especially early retirement and other expenses. They put current expenses instead of public investments. And I think they need make structural changes. They think that they'll solve the problem with austerity and decreasing the economy and that get more employment -- one -- more unemployment. And they make -- these kinds of things make people, young people, lose the hopes because they don't have a -- they don't look where they -- if they can study or they can have a job.
BECKY ANDERSON, HOST, "CONNECT THE WORLD": Being the richest man on the planet, you are in a unique position to take a look at the the world and tell us what is going wrong and how we might fix it.
SLIM: I think it's that they should look for development. It's clear that they have big fiscal deficits. It's clear that they have a big debt. It's clear that that is unsustainable. But I think the way to do that is inviting the private sector to make the investments to maintain the economy activity.
(END VIDEO TAPE)
FOSTER: That's the Mexican tycoon, Carlos Slim, speaking with Becky there.
You can see that interview in full tonight on CONNECT THE WORLD about an hour from now.
Now other big investors are just as concerned.
Jim Rogers is never one to mince his words. He says never mind a lost decade, Europe could be in for 30 or even 40 years of economic failure.
On Friday, John Defterios asked him what needed to be done to get us out of this mess.
JIM ROGERS, INTERNATIONAL INVESTOR AND COMMENTATOR: I would say not another penny of bailout. I would say let's bring everybody into a room and I would say, OK, these institutions and these assets are going to survive and are -- are sound. These institutions are going to go bankrupt and close down. We're going to ring fence everybody. We will make sure all the checks clear. We will make sure the system survives. But in the meantime, we're going to wipe out decades of mistakes. It's going to be painful. It's going to hurt a lot. But after two or three years, we will start over from a very strong and renewed base.
No more gifts, no more free lunch. We have to start over.
JOHN DEFTERIOS, HOST, "MARKETPLACE MIDDLE EAST": Would you suggest that the European Central Bank should be buying Italian debt, though, to get through this crunch and the tests of the market, with the 10-year yield above 7 percent?
ROGERS: John, I wouldn't buy Italian debt.
I mean I'm not going to buy it with my money. I wouldn't even buy it with your money, John.
Are you kidding?
Maybe they're going to patch it over this time around. But the Italian debts keep going higher and higher. You look at Berlusconi's plan, until he was disposed, everything he said, they showed the debt going up, going up in a less rapid rate.
But, John, higher debt, more debt is not a solution to a problem of too much debt, John. The only solution to a problem of too much debt is less debt, not more debt.
DEFTERIOS: You're a currency investor. I want to talk to you about whether Italy and Greece, even Portugal, eventually Spain, do they stay within the euro?
Let's focus in on the near-term troubled countries, Italy and Greece.
Do they both stay in?
ROGERS: I would stay in if I were Italy and Greece. The euro is a good thing. It will make them more efficient, more competitive. They'll have to take some pain in the meantime.
But if they pull out, John, it's going to be the same old drachma, the same old lira, which which is always being debased, always inflation, always higher and higher costs. The Greeks are not going to be better -- nobody is going to be better off if you go back to a system of just printing money, more devaluations, more debasement. That's not going to help.
They can do it. They certainly -- they've been around for a long time. But most of the time, the Greek economy was in trouble because they kept debasing their currency. And, likewise, the Italian currency.
I would stay in. I would take the lumps. I would take pain. I would have huge write-offs. But I would stay in if I were those countries.
DEFTERIOS: We're at 2011, the end of 2011.
Could we really a lost decade in Europe because of the weight of the debt in Southern Europe?
ROGERS: John, we've had two lost decades in Japan. Japan, in 1990, was the richest country in the world measured by foreign currency reserves. They've had two lost decades. The Japanese stock market is down 80 percent. That's 8-0 percent, John, from 1990. Of course they can have lost decades in -- in poor countries that are already deep in debt.
Japan was not deep in debt when they started their lost decade.
No, Europe can have three or four lost decades and so can the US. The U.S. has already had one lost decade. We're probably going to have two or three or four ourselves.
(END VIDEO TAPE)
FOSTER: Now, you can see it being reflected or concerns that are being reflected in the markets at the moment.
After the break, we'll have a check of Wall Street and those European markets, too.
FOSTER: A pretty quiet day, actually, for the markets.
In America, the Dow is down currently, but at less than 1 percentage - - actually, it's just gone over that, exactly 1 percent, pretty much. The big winner of the day there so far is, unsurprisingly, Boeing, on the back of that multi-billion dollar deal signed at the Dubai Auto Show we told you about and reported on earlier in the program.
It's been an incredible show for them. There's billions of dollars worth of deals.
Now, the -- the nominee to become the next Italian prime minister says he's taking a long-term approach when picking his new government. Mario Monti says the team he's assembling could remain in power until 2013, when Italy is due to head to the polls.
He just said this.
(BEGIN VIDEO CLIP)
(BEGIN VIDEO CLIP COURTESY ITALIAN SENATE TV)
MARIO MONTI, ITALIAN PRIME MINISTER DESIGNATE: At a time in which the government, which I am trying to create, is that of the period between today and the end of the -- of the spring in 2013. It is clear that parliament can decide that a government is no longer a government, because of lack of trust. But I have met the political forces and I have -- I think it seems obvious to me and to almost everyone that the -- that commitment and the task that we face with this economic emergency.
(END VIDEO CLIP)
FOSTER: What a challenge.
Mario Monti speaking a short time ago.
That is QUEST MEANS BUSINESS.
Thank you for watching.
I'm Max Foster in London.
Stay with CNN.