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QUEST MEANS BUSINESS

OECD: Out of Time; "Heineken's" New Marketing Strategy; Interview with Angel Gurria; Interview with Trevor Manuel; Interview with Alexis Nasard; How Eurobonds Work

Aired December 7, 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, HOST: There's a cry for credibility and trust. Merkel and Sarkozy call on Europe to have faith in their plans.

It's a warning from the OECD. The secretary general tells me "We're out of time. We need discipline on big guns."

And the toast of social media, a new marketing strategy. We hear tonight from Heineken.

I'm Richard Quest. I mean business.

Good evening.

It's a case of the gauntlet being thrown down for the first time in black and white and this is the actual letter from Angela Merkel and Nicholas Sarkozy to the EU president. It's a call to Europe on why their treaty changed plan is Europe's only hope.

In the open letter to Herman van Rompuy, the French and German leaders say their plan is necessary they say for the credibility and they say necessary for the credibility and the trust in the entire European project. It also restates their warning that if all 27 European countries won't get onboard, the 17 members of the Eurozone will go their own way and do their own deal.

As leaders prepare for tomorrow's big summit, the dirty laundry is being hung out across Europe and Germany (INAUDIBLE) and everything will be ironed out by Friday. Join me over in the library and you'll see exactly just how things are.

Germany is downbeat and is opposing at the moment, governing the bailout fund by connecting the EFSS the financial stability fund where the EFSS, the stability mechanism that is going to be introduced. Apparently, the ESM and the EFSF could have gone together, someone suggested. It's complicated but all you need to know is that government sources in Germany say that one must replace the other, they (INAUDIBLE) Germany will not let the two run in tandem.

The British prime minister is being quite blunt, saying the U.K. will use its veto and (INAUDIBLE) 27 involved unless, of course, U.K. interests particularly in the financial sector are preserved. David Cameron is also warning his own Tory-backed ventures not to use this treaty re-negotiation as a chance to stiff the European Union on its powers.

And finally, if you want to know where the money is being buried, look no further than the ECB. Tens of billions of Euros are being lent overnight on the marginal facility and also through the dollar swap schemes that have been launched at lower rates with the U.S. Fed. That central bank action that we talked about last week gave very much an indication.

You're getting a picture now as the scene comes together for this week's Euro summit. Don't expect fireworks, says Germany, and it's (INAUDIBLE) down expectations. So not surprisingly, the European markets are down. There is so much anticipated.

Gains fizzled out across Europe. The DAX performed worse of the big four, just down half of a percent but it is under 6,000 now. The Paris (INAUDIBLE) also if you get the impression small losses but bearing in mind the euphoria of last week, these small losses are particularly telling.

Over on Wall Street, the Dow Jones industrials, the big board at the moment that gained up 14 had been down marginally. The summit is a make-or-break event and it's watched by investors on both sides of the Atlantic, particularly on Wall Street so the make-or-break event to watch for and as seen, great expectations turn into hard times.

The Secretary of the OECD said it's time for Europe to bring out the big guns in all of this. Angel Gurria joining me from the U.N. climate conference in Durban. He said he's optimistic that the "Markozy" Merkel- Sarkozy plan will work but he says there needs to be tougher discipline.

ANGEL GURRIA, OECD SECRETARY-GENERAL (IN DURBAN, SOUTH AFRICA): (INAUDIBLE) identifies the real issues and that is first a de facto, then maybe a (INAUDIBLE) fiscal union the necessary fiscal discipline in order to build a resilient, strong safety net and hopefully you'll never have to use it. But you have to have the awesome firepower, the very strong safety net. You have to have the bazooka so that you signal to the market that you have it, and then maybe the markets will quiet down with there'll be a truce. Right now, we started with a slingshot. We've been upgrading. Now is the time to use fully the balance sheet of the European Central Bank, to use fully the EFSF, and to use fully whatever possible it is with the IMF's own resources but also with many countries that want to lend into solution of Europe (INAUDIBLE) and that is happening as we speak.

QUEST: Do you fear that the treaty change mechanism that maybe forced on countries will be so slow and (INAUDIBLE) and difficult. I mean, we know how difficult Lisbon was that if they go down this treaty route, it can't happen in time.

GURRIA: We have lost a lot of time. We should have dealt with Greece two years ago, (INAUDIBLE) Greece but there was what I call the original sin. We said any country that uses the Euro cannot be restructured, cannot default. Well, this was an over-indebted country and we allowed a lot of contagion to happen and we're not paying a very high price. So it's never too late. The question is now, they said, you need to have the discipline and at the same time, come out with your big guns, come out with the with the firepower to say, "I can support Italy. I can support Spain. I can support France. I can support Germany." Well, of course, only a few days ago, could not face a bond issue.

QUEST: Final question give me some hope as to why I should believe this Friday, they stand any more chance than they did in October, in June, on bailout 2, on bailout 1. Why can they should they do it now?

GURRIA: Your skepticism is fully warranted but I think and I certainly hope that it will not be justified this time around because I think they've done a better job at identifying the fundamental variables. They've eliminated many of the ghost possibilities that they had been looking at and they know that we've run out of time. And the markets are now terrible judges, severe judges they are they're ready to hit when they see a vulnerability so we need to give signs of strength and we need to give signs that we are moving in the right direction.

QUEST: That's Angel Gurria. We'll be hearing more from him later in the show to hear why he thinks developed nations still aren't spending enough to tackle climate change.

At least one top finance minister still has faith. The only problem is this finance minister isn't actually fast or running a Eurozone economy.

U.S. Secretary Tim Geithner gave Europe a vote of confidence when he met Nicholas Sarkozy. CNN correspondent Jim Bittermann's in Paris tonight where he said he had trust that Europe would do it and it's very warming that Mr. Geithner came across the Atlantic to give them a vote of confidence but does it mean much?

JIM BITTERMANN, SENIOR INTERNATIONAL CORRESPONDENT (IN PARIS): Richard, he left a very small media footprint here. In fact, he talked to Nicholas Sarkozy for 45 minutes, came out, didn't talk to the press, neither did Sarkozy. A little earlier today, had a breakfast meeting with the French finance minister. He did have something more to say in front of the cameras and that was basically a service-standard Geithner message, kind of low-key and upbeat.

(BEGIN VIDEO CLIP)

TIM GEITHNER, U.S. TREASURY SECRETARY: A vote of confidence in what the President of France and what the minister are doing, working with Germany to try to build a stronger Europe. As I said yesterday, we're encouraged by the progress they're making, not just to put in place economic reforms across Europe to create the conditions for a stronger growth in the future but to try and build a stronger architecture for fiscal union, a fiscal compact, and as the minister said, try to make sure there's a sufficiently strong firewall in place to help support those efforts.

(END VIDEO CLIP)

BITTERMANN: And that fiscal compact that Geithner was talking about that's the new buzz word around Europe these days. Basically, it is contained in that Markozy letter you talked about earlier, Richard. It came out a couple of hours after Mr. Geithner left town.

Richard?

QUEST: Look, we've both got a copy of the Markozy letter. There's nothing new in it in the sense of the detail we've known about it. So I just need to know this, Jim, Nicholas Sarkozy in France are the French as concerned as maybe international investors are about the way this is going?

BITTERMANN: Well, I think they are very concerned about this issue, I mean, at its upper level here. On the streets, I don't think anybody really cares because they don't see it at the impact of this meeting from one meeting to the next unlike you've been saying that we go from one meeting to the next, nothing really changes very much. And the streets, I think, that's the way people do it (INAUDIBLE) all the economists here certainly understand the importance of this and I think that's why we've seen so many some of the such curious activity between Berlin and Paris and this letter today, I think is just some more evidenced that they're really laying down the gauntlet here as far as other people are concerned, particularly David Cameron or what he had to say about protecting British interests. They're saying they're going to go it alone if the other members of the European zone want to change the European treaty.

QUEST: All right. Jim, we are on Day 8 of the countdown to save the Euro. Jim Bittermann is in Paris. When I say, "We are on Day 8", I'm referring of course to the clarion call from Olli Rehn, the Euro's economics commissioner when he warned us last week that there were 10 days to save the Euro. Remember?

(BEGIN VIDEO CLIP)

OLLI REHN, EUROPEAN COMM. FOR ECONOMIC & FINANCIAL AFFAIRS: You know, entering the critical period of 10 days to complete and to conclude the crisis response of the European Union.

(END VIDEO CLIP)

QUEST: OK, so it's time for a (INAUDIBLE) next window. We have got some chocolate in here so there is some goody. Let me remind you of where we stood on November the 30th. It was the liquidity boost from the Central Banks that saved the Euro. On Thursday, these first it was fiscal union. That was the talk of Markozy. By the time we got to Friday, December the 2nd, the market was so happy about what was happening that we got these phenomenal responses or as they were going along. As we move to December the 5th where (INAUDIBLE) down there, December the 5th, we have new austerity drive from Mario Monti and that certainly also gave a great deal. By December the 6th, of course, we have the S&P warning of downgrades. Now, you may wonder why is that helping to save the Euro? Because as German finance minister Schaeuble pointed out, it was the best encouragement. In other words, a clarion call and a serious warning.

So what is today's sign towards saving the Euro? "I trust them." Tim Geithner, U.S. Treasury Secretary saying he trusts Europe to do what's right.

Tomorrow, as you can see, there's just the seventh, just the eighth, and then on the ninth, we'll be in Brussels.

In a moment, the sign investors (INAUDIBLE). In this environment, where do you put your money? (INAUDIBLE) thought on that.

(COMMERCIAL BREAK)

QUEST: Germany's debt auctions gone off without a hitch this time. It sold just 4.1 billion Euros of 5-year bonds and demand outstrip supply the so-called cover was twice over. Yields were marginally high than at a similar auction last month. A 1.1 percent well within barometers. The successful sale helped with yields on 10-year bonds lower. (INAUDIBLE) slightly though for Italy and for Spain. Italy still comfortably under the pain level of seven percent but nudging 6 and of course, the risk is always on the upside at the moment.

Standard and Poors is widening its European watchlist. Today, it put Germany's oil stock holding company and France's rail network on a credit watch negative just 24 hours after the 15 Eurozone countries and (INAUDIBLE) were also put on watch. The head of the company's Sovereign Ratings Committee says he'll be keeping a keen eye on Friday's summit.

(BEGIN VIDEO CLIP)

JOHN CHAMBERS, HEAD OF S&P SOVEREIGN RATINGS COMMITTEE: After the summit, we'll have to see what legislative steps have to be taken. We'll have to come to a judgment whether or not they will be taken. We'll have to see what measures are in store not only for the government bond markets but also for the banks which have a very high refunding requirement in the first quarter and which will be themselves creating a systemic pressure on the balance of payments of most of the Eurozone area countries.

(END VIDEO CLIP)

QUEST: And all we get from this summit is more Euro (fudge). We could see bond markets turn the heat back up under countries like Italy. That's the assessment from Bob Parker at Credit Suisse Asset Management. He also has some very strong thoughts about (INAUDIBLE) environment where (INAUDIBLE) best to look at risk allocation.

What's the risk if everything goes wrong on Friday?

(BEGIN VIDEO CLIP)

BOB PARKER, SENIOR ADVISOR, CREDIT SUISSE: Market expectations are rising reasonably high that there will be a resolution to the Eurozone crisis. And if we get a series of bland statements of intent coming out of the European Union's summit, then I worry that the market reaction subsequent to the summit could be very negative.

QUEST: Everyone believes, I think probably, that there will be a deal eventually on fiscal compact or (INAUDIBLE) union-

PARKER: Correct. Yes.

QUEST: --so I come back to my question. The market is really saying, "If you don't deal with the immediate fire, that's where the problem will happen after that."

PARKER: Well, we have a lot of volatility in the European capital markets. Though, if you and I had had this conversation two weeks ago, Italy was under severe stress. What you were seeing over the last two weeks is a fall in Italian bond yields as the market is now discounting. There will be an announcement of ECB's support. If they don't get that announcement, what happens to Italian bond yields? We go back to the stress levels we had two weeks ago.

QUEST: In the market at the moment, where do you like to what do you like to look on?

PARKER: We like corporate bonds and one longer-term theme is this shift in risk reward away from sovereign bonds in favor of corporate bonds. Also, I would include a merging debt risk reward there is very attractive. In equity markets, I think you've got to focus on large-capped American and Northern European countries which are global leaders and which don't have significant borrowings, very strong cash flow. So we'd like to just focus on those global leading companies in America and Northern European. Finally, emerging equities.

QUEST: Right. Before we go to emerging equities, I was just thinking of the one American companies because not only American companies, but the American economy. The numbers we are seeing suggests that anybody who thought that the American economy was dead and buried, is seriously wrong.

PARKER: That's correct. If we had this conversation in July, recession or risk in America, in July, was elevated. Since July, with the risk of renewed recession in America, this come down very sharply and it doesn't matter whether you look at production, exports, the survey data such as the ISM, consumption everything is holding up. Now, does that mean if American growth goes back to four to five percent? No. It means probably that we go back to two percent plus the risk of going back into recession and this is critical is now a very low risk.

QUEST: And the risk of going back into a recession in Europe?

PARKER: Is very high.

QUEST: (INAUDIBLE) percent? 60-70 percent?

PARKER: I would actually say in most of Europe, we are either in or close to recession and then for the Eurozone as a whole in 2012, I (INAUDIBLE) forecast as the growth (INAUDIBLE) to be 0.3 percent. And in many countries like Italy, like Spain, growth will be negative, sir.

(END VIDEO CLIP)

QUEST: Bob Parker with investment (INAUDIBLE) news. And always remember, whenever we have somebody like Bob giving you or talking about where to place money, markets go up and they go down and we're not recommending anything.

Well, he's right. Europe is keeping oil prices on the edge. Brent is harboring near $110 a barrel. It was $111 earlier in the day. Tensions in Iran and the west is what is largely driving this speculative move especially after EU signals it may ban imports of some Iranian crude. OPEC Secretary-General says Europe may want to think twice before blocking Iran's oil exports to the Eurozone.

(BEGIN VIDEO CLIP)

ABDALLA SALEM EL-BADRI, SECRETARY GENERAL, OPEC: The 860,000 barrel a day that Iran is selling to the EU, it's very difficult to replace and if you ask me if you ask my advice nobody's asked my advice but I would say that I don't think it is wise to cut that supply to Europe at this time because they're really facing a lot of difficulties. So I hope that that quantity will not be cut from the EU market.

(END VIDEO CLIP)

QUEST: (INAUDIBLE) a lock on what could be crucial to your world in 2012. Forget what you think you want. When we come back after the break, the (INAUDIBLE) head of a top advertising giant explains what they believe they know we want.

(COMMERCIAL BREAK)

QUEST: We do have an even more Eurozone stuff for you. New pictures just arriving. Geithner's that Tim Geithner, the U.S. Treasury Secretary the tour continues. He is now meeting the new and next Spanish prime minister Mariano Rajoy. Rajoy is in Marseilles but he won't be in Brussels he hasn't been sworn in yet. Geithner, as you will earlier have heard me say, has stated confidence in Europe.

One of the world's biggest advertising agencies predicts that whatever happens, it will be a crucial year for business in 2012.

JWT says that means a variety of lifestyle and trends. For instance, your brand we will all be wanting to give ourselves some treats. We'll want a sense of humor and a bit of fun. We all want to have a bit of a laugh. Apparently, people need to remember that customers are exhausted by years of economic activity and uncertainty. It's been dubbed the "New Normal".

So between treats, fun, and the new normal, we need to ask him how we're going to actually deal with this. JWT chairman and chief exec Bob Jeffrey is with me now.

We'll begin with the trends that we're going to see. Why do you think we are going to have this backlash, Bob, to some extent for (INAUDIBLE) wanting to (INAUDIBLE) with a light release?

BOB JEFFREY, CHAIRMAN & CEO, JWT WORLDWIDE: I think fundamentally, people regardless of what culture they're from are optimistic about the future or they want to be optimistic and I think as you said they're exhausted by economic uncertainty. They're exhausted by all the bad press. They're exhausted by hearing about the Euro and so on. And I think in their own world, they want to have a level of indulgence, they want to have some fun- -.

QUEST: But does it have to be measured?

JEFFREY: It's measured--.

QUEST: I don't want to sort of sound Presbyterian and (INAUDIBLE).

JEFFREY: No, no. It's not Presbyterian. The word we use is "a little indulgence". It's not a lot of indulgence but it's a little indulgence. It's a moment during the day and it's a sense of respite from all the difficult news out there.

QUEST: Right. So from your in terms of advising your clients, what do you say to them when you go and tell them, (INAUDIBLE) you're not going to go and buy Bulgari watches and Rolls Royces and go to the (INAUDIBLE).

JEFFREY: Well, we do have Rolex as a client and a lot of people are buying Rolexes around the world. But seriously, with most mainstream brands, I mean, think about it brands are fundamentally based on optimism because it's about the consumers' belief that by connecting with the brand and using their brand, they can improve themselves. So brands inherently have to be confident and it's a great time for brands to be confident as a counterpoint to all the economic news.

QUEST: But you how do you tell your clients that they have to sell that optimism because a Pollyanna optimism is quite dangerous.

JEFFREY: No, no. It's not it's not well, no, it's (INAUDIBLE) dangerous and it has to be authentic, it has to be realistic, and it has to be relevant to that brand. So for example, Macy's is one of the largest department store brands in the world, largest retail brand. We just did a fantastic commercial for them. It ran right before Black Friday with Justin Bieber. That spot was all about the excitement of going shopping. It was Macy's is going to be opened up in the midnight before Black Friday. So that was an example of people getting excited about the shopping experience and going to the store on Friday. But it all it came out of Justin Bieber huge celebrity, very energetic, and people went very enthusiastic with that.

QUEST: If we look at what you expect to spend the advertising (INAUDIBLE) to be next year it's a very good barometer in many ways. What I find fascinating was seeing a slight return of resurgence in the U.S. economy. The U.S. is coming back, Europe is still a basket case. Is that what you also see?

JEFFREY: Yes. I would say that we live in a two-speed world in a simplistic way. The fast growing economy there's a huge amount of momentum there but in the west, it's more difficult. But in the U.S., I don't claim to be a fortune teller but I definitely see that we're in a recovery albeit a slower one.

QUEST: And just finally, my I simply remembered that the year that you have a presidential election and you have an Olympics that's a (INAUDIBLE) for advertising.

JEFFREY: No, it's true. That's a major event and based on historical trends, 2012 should be a strong year for advertising.

QUEST: Well, come back again please. Good to have you on the program.

JEFFREY: Thank you.

QUEST: Many thanks onto you.

In a moment, we need to return to the what is, never mind the optimism. As European leaders worry about the economy, the head of the OECD's flagging up a longer term problem. Angel Gurria on why climate change literally (INAUDIBLE).

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest.

More QUEST MEANS BUSINESS in a moment.

This is CNN. And here, the news always comes first.

Nine months into the Syrian uprising and there's new violence erupting in the country's north. Video posted online appears to show intense artillery fire in the city of Barakeh. Opposition groups say security forces killed at least nine people today. Syria's president, in an interview with an American TV network, has denied ordering a crackdown.

National Guard jets move in missing man formation on Wednesday over Pearl Harbor in Hawaii. They're marking the 70th anniversary of the Japanese attack. On December the 7th, 1941, Japan bombed the U.S. Pacific Fleet, launching the U.S. into World War II. Pearl Harbor survivors were among those who commemorated the day.

No repeats on Wednesday of earlier opposition protests in Moscow. On Tuesday, Russian police arrested some 250 opposition demonstrators. Activists had called for another protest today but no one showed up -- that is, except for security forces. The former Soviet Union leader, Mikhail Gorbachev, has added his voice to those who say last week's election was rigged.

Angela Merkel and Nicolas Sarkozy have told the European Council president that a treaty change plan is Europe's only hope. It's an open letter to Herman Van Rompuy. The French and German leaders say their plan is necessary for the project to survive.

Even in times of economic crisis, developing countries are still paying to prevent criminal charge. The OECD says that between '08 and '09, members of the Development Assistance Committee doubled -- doubled the amount they spent on mitigating climate change. Together, they spent $17.5 billion. Another $5 billion was spent on adapting to changes, so-called mitigating the effect. Now, you might think, and I certainly thought, well, hang on, that's rather impressive, isn't it, at a time of economic recession, to go in that sort of growth, 8.6, 10.3, 17.5?

Not bad, indeed.

Not so for the OECD secretary-general, Angel Gurria, who's attending the EU climate change conference in Durban in South Africa. He says spending may be going up, but it's not enough.

(BEGIN VIDEO TAPE)

ANGEL GURRIA, OECD SECRETARY-GENERAL: It is only a fraction of what we have to put together.

Now, we came out and we said, yes, it's $23 billion so far. But, of course, there's $30 billion for a few years and then there's $100 billion once we get to 2020. But that's also part of the story, because the -- the real amounts are much greater.

Now, the important thing is that flows are starting to come in. Second, that it is possible by fighting the good fight, Richard, by fighting against climate change to obtain, if we use the right tools, to obtain the wherewithal in order to continue to fight the good fight.

That means that we use taxes, that we use economic instruments, that we use emissions trading schemes, etc. We can actually provide enough firepower, enough money in order to -- to reduce emissions.

QUEST: Right. But you can't fight the good fight when the developed countries are short of ammunition and they are hurting on their own austerity.

GURRIA: But, Richard, this idea that charity starts at home and that because there's a crisis, we can't go forward, there's only one home. The home is the planet. Unless you're a Martian, you know, we're sharing the planet. And -- and the emissions don't stop and CO2 doesn't stop with the border between France Spain or between Canada and the United States.

So -- so this idea that we can't deal with something which is important for our children and our grandchildren and we can't take decisions today because there's a crisis going on today is myopic, but also it's -- it's absolutely economically very, very inefficient.

The cost of inaction is many times higher than the cost of action that we know and that will lead us to the proper results, to the proper...

QUEST: OK.

GURRIA: -- 450 particles per million.

QUEST: Isn't the danger at this meeting and all these meetings, everybody nods respectfully to you, makes their commitments and then goes home and basically forgets about it, because there are much more pressing problems?

GURRIA: The pressing problems of today have to be addressed. We have to address a Europe with the bankings and -- and the problems of the debt crisis in Greece and everything else.

But if you get distracted about the medium and the long-term issues, we are going to have to pay a very high price.

QUEST: All right...

GURRIA: And we will need to be discharging our intergenerational responsibility. I can tell you, this is something we cannot let happen, that they -- when we go back, we forget about this problem.

QUEST: All right.

GURRIA: We'll have keep it front and central.

(END VIDEO TAPE)

QUEST: That is the secretary-general of the OECD, Angel Gurria.

When we talk about the crisis facing the world at the moment, particularly the economic crisis, we are endeavoring as best we can to bring you the views of those people who matter, the significant views of the people that are respected in international economics.

Trevor Manuel says the Eurozone crisis is a turning point for the global economy. The head of South Africa's National Planning Commission and a most respected former finance minister of South Africa, is at the Durban Conference

(BEGIN VIDEOTAPE)

ROBYN CURNOW, HOST: The Eurozone crisis, what's the direct impact on South Africa?

TREVOR MANUEL, HEAD OF SOUTH AFRICAN PLANNING COMMISSION: It's a very clear indicator of the shift in the global economic center of gravity from West to East. So the idea that we have this cozy relationship with our largest trading partners in Europe is -- is -- is likely to shift for all time. We need to understand that and -- and begin to shift how we trade as part of this tilt from West to East.

That's one -- one issue.

The other issue is that given the insecurities in the -- in respect to the euro itself, there probably is going to be the re-pricing of the rand because of the historic relationship.

CURNOW: So do you think there's been a failure of leadership in Europe?

MANUEL: I think there has been a failure. But there's also been a failure of leadership elsewhere in the world, across the world. You know...

CURNOW: So what's your next j

MANUEL: -- seven years ago, we were talking about global imbalances and what the impact will be. We didn't take decisions about it. And now you see the wheels come off progressively.

In the context of Europe, it's there, as well. You can't delay the necessary decisions. They're tough, they're mean, they're ugly. They impact on the quality of life for people in the short-term, but leadership is not just about happy days.

CURNOW: So what's your message to Europe's leaders, particularly about the impact beyond the Eurozone?

MANUEL: I think the impact, my -- my message to -- to leaders in Europe and elsewhere is that we must understand that there have been enormous benefits from global integration of the economy as borders have softened. There have been enormous benefits. Many of those benefits have actually accrued to the wealthiest countries, including every member state of the Eurozone.

But now, decisions must be taken because the world needs a rebalance. And their decisions are going to be fundamentally important in rebalancing the economy.

If they don't take the decisions, I think the global economy will be dragged down (INAUDIBLE).

(END VIDEO TAPE)

QUEST: And that was Trevor Manuel.

When we come back in just a moment, social media and beer -- a national partnership. Heineken is brewing up a strategy to make the most of its Facebook fan base. We'll explain in a moment.

(COMMERCIAL BREAK)

QUEST: Heineken is making friends with its customers on Facebook. Exclusively tonight, they're telling us that the brewer has struck a deal to use the social networking giant, Facebook, as a global marketing platform. Heineken says its Facebook fan page is already the largest for any beer brand in the world, some four million people friends or fans or whatever it is you are on Facebook.

It has high hopes for its newly announced global partnership.

The chief commercial officer, Alexis Nasard, joins me now in our London studio.

I already have committed a faux pas by putting a Z instead of an S in your name in my Tweet. I apologize.

ALEXIS NASARD, CHIEF COMMERCIAL OFFICER, HEINEKEN: That's OK.

QUEST: What is this strategy?

Why -- you've got four million people, fans on Facebook.

NASARD: Um-hmm.

QUEST: Why and what are you doing with them now?

NASARD: Now, the strategy -- to go back to your initial question -- is essentially to be present where conversations happen. Today, a highway of communication like Facebook, you cannot circumvent it anymore. And you've got to be in there. It's about being present, being interesting and relevant.

QUEST: So far so good. You're doing that already with your page.

NASARD: Right.

QUEST: So what does this arrangement that you're -- you're coming to with them, what does it involve?

NASARD: Four things. First, it gives us consulting. They know their products and their services better than anybody else, so they can consult us on how to best utilize their facilities.

The second one is education. They're going to come and help our people internally use these platforms to be more proficient in them.

The third one is innovation. We're going to have priority rights to the latest products and services that they offer.

And, lastly, there is also a pricing agreement. But you're not going to ask me about the price, right?

QUEST: I am.

Who's paying -- you're paying them. You're paying them a sizeable sum of money, is that the gist of it?

NASARD: Not really. No. There is a -- it's a global partnership. There is a pricing agreement, which is the more we spend, obviously, the better prices we get.

QUEST: Why would Facebook...

NASARD: Yes?

QUEST: -- no -- no disrespect to your brand or to your beers or anything like that.

NASARD: Yes.

QUEST: But why would they want to get into bed with one particular brand at the risk of alienating all the others?

NASARD: Well...

QUEST: When you're the leader in social media, surely you want an element of neutrality.

NASARD: The -- to clarify one thing, our agreement is not about one brand. Our agreement is about the 300 plus brands of the Heineken Group. What we talk about is, in particular, the Heineken brand...

QUEST: Right.

NASARD: -- because it has the largest following...

QUEST: But you know what I'm saying...

NASARD: -- at 4.6 million.

QUEST: -- I'm talking about other beverage manufacturers.

NASARD: Right. Right.

QUEST: So you've sold a (INAUDIBLE) on them basically.

NASARD: Not really. Today, this agreement is not exclusive, actually.

QUEST: Right.

NASARD: I mean there's nothing that's preventing Facebook from having agreements like that with everybody else. But the gist of this is to be the best in utilizing the facilities of Facebook.

To me, what are you doing on Facebook versus your competitors?

It's like you're asking me, what are you doing on TV versus your competitors, right?

Ultimately, if you can do a good TV ad or you can't do a good TV ad, this is what this is about.

QUEST: So this -- this is -- doing this deal and the other deals like on responsibility, which you -- you'll come back and talk to me about again in the future, doing this deal is for people of our age, it's a shift of emphasis, isn't it?

NASARD: Absolutely.

QUEST: You have to rethink the way you're going to communicate.

NASARD: Yes. You are so right. This evolution in social media for people of our age -- I'm assuming we're in the same bracket.

QUEST: I'm not going there.

(LAUGHTER)

QUEST: (INAUDIBLE) your turn.

NASARD: Is transformational, because not only do people interact with each other in different ways, they interact with society and with brands in different ways. They become wired differently. The metabolism of people is changing.

If you think about our generation, we're the generation of work hard, play hard. Today, people need to be solicited all the time. You know, going to the beach and throwing your BlackBerry away is totally off with the younger generation. They want to be solicited all the time. And social media are right in the middle of that.

QUEST: Thank you very much.

I still call it the information superhighway and look over my glasses when I'm trying to work out which button to push.

QUEST: Good to have on.

See you again soon.

NASARD: Thank you.

QUEST: Snow has been a long time coming for the ski resorts. Flying back from the Middle East today, I could see virtually -- I mean just, Pedram, there's just no snow there, is there?

PEDRAM JAVAHERI, CNN METEOROLOGIST: Yes.

QUEST: Well, it's getting better, but it's still very, very sparse.

JAVAHERI: No, we've got a long ways to go, Richard. And you had the perfect seat up there, looking down right at the Alps as you were flying over from the Middle East.

But you take a look, it's been really the long time coming because the pattern here, severe to extreme drought, not only across portions of the U.K. in the past nine months, but work your way into France and even portions of Italy, and, of course, the Alps, where we have a developing situation there as far as we're looking at the drought concerns and the lack of rainfall.

Now things changing gradually but a multi-billion dollar industry. This is an image here just from the past couple of days we've shard with you coming out of Val d'Iseres, one of those prominent ski resorts across portions of the Alps. And this is actually a perspective just a few hours ago before the sun set from that same exact resort.

So, yes, we are getting snowfall. This area, 120 million people visit the Alps every single year. So certainly a big business there. Some 600 resorts across the Alps as well. And that storm system right here moving in through the region, bringing in snowfall. And we have another round of moisture, heavy rain, some isolated snow across the higher elevations, as well.

But the pattern changing dramatically here in the next couple of days. So certainly this next storm system in line, with the temperatures that have now cooled off, going to cause a few problems out there. And take a look. Around portions of Scotland, the central region of Scotland, even out there toward the highlands, snowfall probability -- and we're actually getting some heavy rain -- snowfall as we speak. And that's the pattern here with this next storm system. And winds also gusting throughout Thursday. Take a look. If you've got travel plans out of Gatwick, out of Heathrow, working your way into Glasgow, the AMS there, working your way into Amsterdam from from Skipoen (ph) you're going to see travel problems there Thursday, up to 90 minutes a possibility. Again, we've seen wind gusts well over 100 kilometers per hour in a few spots.

I mean take a look out in Germany, 141 kilometers per hour. Skippel or Skipoen (ph), the latest observation, gives us an 80 kilometer per hour wind gust there. So certainly a heavy delay is going to be prominent there on Thursday. And, yes, snowfall also accumulating.

So the changes in the forecast, it looks like it is going to improve over the next couple of days. But the weather pattern, again, windy across the board no matter where you are across Western and Central Europe, Richard, looking at upwards of 60 minute delays even on Thursday out of Frankfurt with all the winds in the forecast there.

So stay -- direct your play out there.

QUEST: It is December and we should expect these sort of problems, as we travel around on our business.

Many thanks, Pedram.

JAVAHERI: Yes.

QUEST: Now, an electronic game may have cost the actor, Alec Baldwin, his airline seat. And it played out on Twitter.

Our Top Tweets of the Day tell us exactly what happened. First of all, Michael Wolf, the former president of MTV Networks, Tweeted: "On an American Airlines flight at LAX, at Los Angeles International, removed from the plane. We had to go back to the gate. Terrible but everyone had to wait."

Then, Baldwin himself Tweeted from the top: "Flight attendant on American reamed me out for playing Words with friends while we sat at the gate. And this is...

(LAUGHTER)

QUEST: -- there's nothing like ugh, kicking an airline when it's down, "not moving," hash tag, "no wonder American Airlines is bankrupt."

Bankrupt is now -- but Baldwin has now disactivated his Twitter account.

Finally, American Airlines jumped into the fray, another Top Tweet -- "Mr. Baldwin, we are looking into this. Please direct message us. Contact information."

It's unclear whether Baldwin was told to leave because he had refused to turn off a device. Of course, the big P.R. winner is Zinger, the makers of that mobile phone game.

And guess what?

Proving that there is synergies in the world around us, Zinger is having an IPO next week.

Tweets from my next flight. Following me @richardquest, where you and I can have an interesting debate and discussion.

In a moment, the mission -- if you choose to accept it, it's all about bonds, Eurobonds. We're breaking the jargon, in a moment.

(COMMERCIAL BREAK)

QUEST: It's war by memo -- in a leaked document, Herman Van Rompuy said he wanted to give Eurobonds another chance. Today, Merkel and Sarkozy wrote back and the idea was nowhere to be seen. The plan seems to be falling out of favor. As Markozy told us on Monday, Eurobonds, we're not buying it.

(BEGIN VIDEO CLIP)

NICOLAS SARKOZY, FRENCH PRESIDENT (through translator): What a strange idea it would be to mutualize the debt, so that France and Germany pay the debts of others without controlling this debt.

How could we convince others to make an effort that we ourselves are doing if we mutualize these debts from now on?

This has no sense.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

ANGELA MERKEL, GERMAN CHANCELLOR (through translator): This was said in Strasberg. Nothing has changed because we reject the idea of Eurobonds.

(END VIDEO CLIP)

QUEST: Eurobonds -- the idea has plenty of supporters across the 17 Eurozone countries. Understanding how these bonds would work for the 17 is more complicated.

So tonight, our man with the golden pun, Jim Boulden, explains bonds.

(BEGIN VIDEOTAPE)

JIM BOULDEN, CNN CORRESPONDENT (voice-over): The name is bond, Eurobond, 0017, with a license to borrow. Though some Eurozone countries don't like the look of it, one day a single currency could come with just one bond, the Eurobond.

(on camera): So what are my key ingredients?

Well, you start with the gin. That's the bond or the debt. Then we have the sweetener. It can be either vermouth or vodka. This is the yield, the interest rate on the bond. And because we're in Europe, a Mediterranean olive.

(voice-over): To have one bond would most likely mean mixing all the Eurozone's debts into one pool. The glass half full argument -- Greece and Ireland can ride the coattails of stronger countries, like Germany, so borrowing costs for all would fall. The glass half empty fear, Germany and France lose their AAA rating because of poor quality debt mixed in, so a Eurobond we do have a higher yield per interest rate to attract investors.

A Eurobond is not enough. First must come fiscal union. Governments that volatile new budget rules would lose control of tax and spend.

But would the 17 Eurozone countries, or, indeed, all 27 EU countries, swallow such a cocktail of new rules, unthinkable before the debt binge?

(on camera): But a problem shared, ah, Miss. Money Euro, cheers.

UNIDENTIFIED FEMALE: cheers.

BOULDEN: Is not always a problem solved.

(voice-over): However you package it, sovereign risk is still sovereign risk. The hope, of course, for the euro to live another day.

Jim Bond -- I mean Jim Boulden, CNN, London.

(END VIDEO TAPE)

QUEST: How he managed to walk back to the office, we will never really find out.

When we come back after this break, a Profitable Moment on why Angela Merkel might actually be right on treaty change.

(COMMERCIAL BREAK)

QUEST: Tonight's Profitable Moment.

Treaty change is the euro's only hope. So says Angela Merkel and Nicolas Sarkozy. None of us will know for sure if it will work. They are perfectly correct for demanding treaty change.

The virtue of the plan is only apparent when you compare it to Herman Van Rompuy, whose leaked memo suggested kicking the can down the road one last time for old time's sake. He wanted to use a protocol change to make the fundamental changes necessary, cobbling together a deal in the old, dying framework, the back room deals that we've seen all too often in Europe.

Well, we can't afford to swallow another batch of euro fudge. For too long, Europe's politicians and Euro-crats have worked to suit themselves. The needs of people they represent, perhaps they do it in their name, but seemingly, they've never actually asked them whether they approve.

When they see those same people suffering, they wonder why it all went wrong. The failure of EMU is a perfect example of it. So Sarkozy and Merkel are right to push for treaty change. Put the question once and for all.

And that's QUEST MEANS BUSINESS for tonight.

I'm Richard Quest.

Whatever you're up to in the hours ahead, I hope it's profitable.

END