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Dow Hits 13,000; Greek Bailout Deal Reached; Greece's Second Bailout; Creditors Take Drastic Haircut; Analysts Cynical About Deal; European Markets Slip; Second Greek Bailout Dwarfs Previous Rescue Deals; Head of OECD Says Deal Better Late Than Never; Kingfisher Fights to Fly; A New Europe; Business Outreach; Interview with Garrett Bauer

Aired February 21, 2012 - 14:00:00   ET


RICHARD QUEST, CNN INTERNATIONAL HOST: It's a lucky number for investors. The Dow has hit 13,000.

Huge losses with huge benefits. Charles Dallara tells me tonight the Greek bank deal will work.

And fasten your seat belts. Kingfisher Airlines fights hard to avoid that hard landing.

I'm Richard Quest. Tonight, as always, I mean business.

Good evening. Two major stories top the business world tonight. A landmark day for Europe, and a landmark day for the United States, as Greece begins life under a brutal new bailout regime.

We start, though, with Wall Street's comeback, as the Dow steams further ahead, all the way above 13,000 earlier in the session.


QUEST: This is the way the Dow is trading at the moment. You will notice -- well, the observant will certainly -- we are just back under 13,000, still again, but it did go over 13,000. Around 11:30, it went over 13K, the first time since May 2008, before the crisis began.

Look at the graph and you'll see the journey that it has taken, which has been devastating. A -- such a sharp fall, from 13,028, when TARP was bailing out the banks left, right, and center. It bottomed out nearly half as much, 6,500.

And then, last year, last August, we had that hiccup back in the middle of the year, but now we're back up. Let's go straightaway to New York, Alison Kosik at the New York Stock Exchange on the floor of the exchange. There must've been some -- not exactly celebrations, but they must have been very pleased with 13K.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: They were pleased, yes, and I actually heard a sort of sarcastic cheer when you head the Dow kind of cross over that 13,000 mark. But what does it mean? What does it really mean?

So, I pulled Kenny Polcari aside to ask him, what does this really mean? What is the significance? And how did we get here?

KENNY POLCARI, MANAGING DIRECTOR, ICAP CORPORATES: Well, it's much more significant psychologically. It doesn't mean anything in terms of technical, it doesn't mean anything in therms of where our economy is, necessarily. 13,000 for everybody has been this goal that we have to reach. Remember, the last time we were hear was May of 2088. It's taken us a long time to get back.

So, in that sense, it's significant. But in terms of what does it really mean for investors, or what does it really mean for people in the United States?

It doesn't mean a whole lot, because people are still very concerned about the economy in general, and most people feel that the fact that we're even where we are is just because of massive Fed intervention and massive Central Bank intervention around the world, has forced the risk trade, people searching for yield, so they've forced the equity trade.

KOSIK: So, it's not really a reflection of improvement in the economy, you think?

POLCARI: Well, the sense is, our US macro data is getting better, but I think the market's ahead of itself, and I think the market's ahead of itself because of the liquidity that's been pumped in.

I think that certainly that we have turned the corner, I think the worst is over for the United States, but I don't think that our economy and the macro reports really are on par with Dow 13,000.

KOSIK: OK, we will keep our eye on it. Let's see, Richard, if we actually close at Dow 13,000 today. Richard?

QUEST: What's your betting, above 13K by the end of the session?

KOSIK: What's your guess, above 13,000 before the end of the session?

POLCARI: Today? No, I think it's going to struggle. I don't think - - I think they're going to try. They're going to try to push it one more time, but I think there's real resistance, there, and there's not a whole lot of volume, so not a lot of commitment. I think it'll be a struggle to get it to close there.

KOSIK: All right, there you go, Richard.

QUEST: Many thanks, Alison Kosik on the New York Stock Exchange.

And the other big story, to Greece and the bailout, and our coverage tonight will look in two distinct areas. We will look at what it means for the country and how Europe's rules have changed. The eurozone will never be the same again.

Greece's finance minister says the country has avoided that nightmare scenario. When he came back from Brussels with that second bailout secured, Evangelos Venizelos called the deal "possibly the most important in Greece's post-war history." He says Greece can now work towards regaining its lost status.


EVANTELOS VENIZELOS, GREEK FINANCE MINISTER (through translator): Now, we can find our place again in Europe and the world, a place that we've put in doubt for so long, building our wealth on clay legs. We need work, work, work and responsibility all on a stable ground.


QUEST: Now, it's been two years since the wheels fell off Greece's economy, which sent it veering off down the bailout road of seemingly endless negotiations, pouring money into what Germany's finance ministers called "the bottomless pit."

From Brussels, Juliet Mann has more on Monday night's deal that took an astonishing 13 hours to reach.


JULIET MANN, CNN INTERNATIONAL CORRESPONDENT: The eurozone finance ministers pulled an all-nighter to reach an agreement on a second bailout for Greece. Their objectives, to give Greece more time to deal with their debt, to get them more money, and to place a greater emphasis on the need to restore competitiveness.

Eurogroup president, Jean-Claude Juncker, said this deal paves a new way forward for Athens.

JEAN-CLAUDE JUNCKER, PRESIDENT, EUROGROUP: After a meeting of at least, I think, 13 or 14 hours, we have reached a far-reaching agreement on Greece's new program and private sector involvement that will lead to a very significant debt reduction for Greece and pave the way toward an unprecedented amount of new official financing being provided by the ESFS to secure Greece's future in your area.

MANN: The savings package is ambitious and it comes with strings, with greater fiscal intrusion into Greek affairs. They'll have to pass a law, which means Greece will end up paying interest on its debts before it can pay people like nurses, doctors, and other state employees.

That's going to be a tricky one ahead of Greek elections in April, but the European Commission's Olli Rehn says it's very important that Greece sticks to its side of the bargain.

OLLI REHN, EUROPEAN ECONOMIC AND MONETARY AFFAIRS COMMISSIONER: We expect that this unprecedented solidarity of Greece's euro area partners is now matched with a strong commitment by the Greek political leaders to fully implement the program, first and foremost for the benefit of their fellow-citizens.

MANN: What this deal does is prevents Greece going bankrupt on the 20th of March. And it also gives the politicians more time. The big question is what they'll do with that time, and how much progress can be made in rebuilding Greece's economy, when they've got problems that might take decades to resolve.

Juliet Mann, CNN, Brussels.


QUEST: We could only really understand the nature of this deal when we look at the detail and where it goes from now on, and at the super screen, you can see who brought what to the table last night.

On the Greek side, as Venizelos -- Evangelos says, "Work, work, work," that's what the fiance minister of Greece says, now. There will have to be structural reform, and that is going to be the most difficult part, the single most difficult part for the long-term success of this bailout package.

There will also be this constitutional change of debt servicing. Paying the debt will now become the number one priority, with an escrow account, and all sorts of things, because what they want to ensure is that Greece never puts them in the position when they don't have the money for debt and bond repayment.

And how are they going to do it? Again from the Greeks and the negotiations together, they do it with a permanent monitor in Athens and that escrow account. These together should -- should, should -- ensure that Greece doesn't ever find itself without the cash to pay the bonds.

And finally, the banks. The banks. What did they do? They gave a 53.5 percent haircut, and they were given back in return $40 billion as part of the sweetener. The banks, the PSI.

Charles Dallara is the managing director of the IIF, who led the PSI negotiations for the banks and the bond holders. He told me that when other parties brought extra money to the table, when others were doing their bit, it was only right that the banks also played their part.


CHARLES DALLARA, MANAGING DIRECTOR, IIF (via telephone): We knew when it became clear during the course of the day, and we had negotiations throughout the day and night, that the ECB, the national central banks of the euro system, and the eurozone governments, as well as the IMF, were all willing to put additional money on the table.

Then, we knew it was not only reasonable to expect us to, but that we should. What we were not willing to do was to give up on the $30 billion cash commitment, which is a huge dimension of the deal from the point of view of our investor base, nor were we willing to give up on the initial cash payment of all of the accrued interest.

We were willing, however, to give further concessions on the nominal haircut, which we thought was a fair contribution to the final deal.

QUEST: So, a nominal -- a nominal cut of 53.5 percent. What does that give as an MPV in their present value loss overall?

DALLARA: If, for example, you use a 12 percent discount rate, which many investors do, this generates a total loos for investors just north of 70 percent, 73 percent, to be precise. The losses are huge.

But investors get a number of benefits out of this deal, in addition the cash component, which is significant, because for every 100 euros worth of claims on Greece, they will get 15 euros cash up front.

But in addition to that, the new claims on Greece have English law, English judicial system, if adjudication is necessary, and co-financing structure with the ESFS, which protects the claims in the future.

QUEST: All right.

DALLARA: And as well, we have a GDP warrant, which gives us some upside if the Greece economy outperforms the expectations of the IMF.

QUEST: You say that you have all these things. What do you expect will be the taker, and is it now a racing certainty, as they say, that CACs will have to be used to dragoon the rest in?

DALLARA: We believe that when investors study the details, they're going to be drawn to this deal, while we respect the right that each one will make their decisions individually.

QUEST: This morning, there was one thing that seems to come from what I've read on the analyst reports, people are worried that it still won't be enough, it won't do the trick. Do you have any secret fears that A --

DALLARA: Well --

QUEST: Go on.

DALLARA: No, I don't, Richard. It is the largest restructuring ever. I think there will always be skeptics, there will always be cynics. It's not just a debt reduction exercise. We're eliminating debt that's equal to half of their GDP, which is an astounding figure, north of 100 billion euros.

And we're taking the remainder of the private sector debt, and the bulk of that is being pushed out, no principle payments for ten years. The rest of it is being extended at highly concessional terms over 20 years. And don't forget, this is an integral part, Richard --

QUEST: Right.

DALLARA: -- of a broader package, and we appreciate very much that the eurozone, the IMF are bringing their own money to the table. Greek banks will be capitalized, credit will be flowing again. And believe it or not, there will be a day, and my guess is it'll be sooner rather than later, when the Greece economy -- Greek economy is going to be growing again, creating investment and jobs.


QUEST: Charles Dallara who, by the time he spoke to me, had probably been up and working for 36 hours of negotiations in Athens.

When we come back in a moment, it's all well and good reaching the deal, what Greece has to do next could make last night look easy. Ahead of the OECD on the rescue and what needs to be done to make it work.


QUEST: Greece must succeed where it has failed so miserably before. That is Jose Manuel Barroso's warning after the second bailout was agreed. This time around, the Commission president says Greece has no choice to get it right.


JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: People can learn with their own mistakes. And the reality is that there is no alternative for Greece than to have a success.

And the fact that the euro area finance ministers unanimously agreed on such an important program now, it's a signal of confidence. No one would spend such an amount of money lending to a country if they don't believe it will work.


QUEST: Well, they may not believe it will work, and no one's putting that much money, but the analysts' verdict has already dropped into the inboxes around the world. Here's what they are saying.

This morning's early e-mail from Paul Donovan at UBS, Donovan says that at 120.5 percent of debt-to-GDP, the target is at an unsustainable level.

Barclays Capital describes the debt dynamics as "challenging" and also says that the debt will stay at excessively high levels.

HSBC, which came out with its document this afternoon, HSBC talks about the crisis being "far from over," and it says Greece will require aid for the foreseeable future.

And Stephen Pope of Spotlight Ideas who was on this very program last night, and you can always rely on Stephen to be blunt to the point of hitting you over the head with an instrument, Stephen Pope says "this deal is not a solution" and that he believes Greece will be back to borrowing in six months.

So, there, we bring you the inside track of what the analysts are telling their clients, so now you are just as informed.

And knowing what they are saying helps you understand these numbers. European investors seem far from impressed, red arrows all around, although at the most part, Greece's issue has been priced in. Banking stocks were down across the continent, higher oil prices were also weighed in London and in Frankfurt.

So, this is truly uncharted territory, and not just from Europe, but for global economics. I want you to look at the size and scale of this rescue plan.

As you can see -- and they may not be precisely to scale, but they are like nothing else before. Other deals don't even compare. This comes to us from Nomura, and it's adjusted for inflation.

Take Russia. In the year 2000, Russia had a bailout of some $40 billion. The bonds were cut back by 36 percent. But even so, Russia came back for a swift recovery and, within a couple of years, Russia was borrowing again in the debt markets. So, Russia largely regarded -- people would say the Russian bailout was largely a success.

A very different story in Argentina in 2005. There, the sum involved was $50 billion, but 29 percent haircut on the bonds, currency collapsed, deadly riots, the way in which the Argentinian crisis was handled was quite clearly a major, major blow for the country.

As for Greece, the big one. Well, just look at the numbers involved. $40 billion, $50 billion, and then, look at Greece, $270 billion, a 53 percent haircut, higher than any of the others. And -- and sovereignty badly shaken by Greece, and this one is still going on.

So, in this scenario, Angel Gurria of the OECD says quite simply it's better late than never.


ANGEL GURRIA, SECRETARY-GENERAL, OECD: It's very simple. This is two years late, but now it's done. It gives us time, it allows for a substantial reduction of the Greek debt, and now it is up to the measures themselves, to the policies that the Greeks adopt.

One percent, five percent, more or less, in 2020 is not going to be the difference between sustainability and non-sustainability. It's going to be how well those measures are executed. Now it's going to be implementation, implementation, implementation. Monitoring of the performance will be just as important.

But this provides a space, and it also at the euro level is clearly going to see -- at least we have closed one of the chapters that was pending. Now we can get on with the firewall, we can get on with the capitalization of the banks, and growth.

QUEST: If we look at the eurozone and the European Commission, they've also grown up in the last six months, haven't they? Particularly in the last month and the way they've handled this. Eurozone will never be the same again after this incident.

GURRIA: They, I think, will be better in the sense that first of all, when you see non-sustainability of a debt, you should recognize it, and this was the case in Greece since two years ago.

Second, don't stick to myths, like saying if you use a euro, a country cannot have financial problems, it should not restructure its debt. We should have done that, again, recognized that a long time ago.

But last but not least, Europe should get a sense of self sicherheit, of confidence in themselves. They can now focus on building a huge firewall, big and deep and thick and tall, that will deter speculation and that will tell people in the world, listen, we are now practicing what de facto is a fiscal union.

We're going to have the discipline, but if somebody wants to come and fight us, here we are, ready, we have a big bazooka, so don't come and bother us. That is going to be just as important.

This is, in a way, having closed Greece, gives you the time, the focus, the attention, and the energy, hopefully, the resources --

QUEST: Right.

GURRIA: -- to put the next steps in place.

QUEST: Do you have any confidence that Europe will do that? Because they need to refinance the banks, they need to fully fund the EFSF and the ESM. There are still philosophical differences between Germany and the Commission and the other eurozone countries.

So, I ask you, why do you -- why are you confident that they will build that firewall with the trillion euros needed?

GURRIA: Because it has now been proven very clearly how expensive it is to procrastinate and to be discussing about philosophical differences when the markets only understand one message and one truth, and that is, do you have enough firepower to face the test?

If you don't, they were overwhelm you. If you do, they will leave you in peace. And that is exactly what we should aim for. We don't -- Europe doesn't need the Chinese, Europe doesn't need the Brazilians.

They don't even need the IMF, frankly. But it would be good if the IMF comes in as a sign of international solidarity.

What they need is to use their European institutions to the fullest possible extent and, as I said, practice what today is a good principle, which is, we will provide a safety net. But if you ask us to underwrite a large part of the safety net, please make sure you're not going to have to use it. So, practice your discipline, practice your fiscal virtues.


QUEST: Practice your fiscal virtues. We'll talk more about that in the days ahead.

After mass cancellations and resignations, the future of Kingfisher, the airline in India, is very much in doubt. QUEST MEANS BUSINESS.



QUEST: India's Kingfisher Airlines has canceled another 30 flights on Tuesday. The airline continues to hit hostile headwinds. The carrier has cut the number of flights by more than a half since September. More cancellations have left thousands of people stranded.

Kingfisher's bank is way down by $1.3 billion of debt. Its bank accounts are frozen. It seems the only people guaranteed to be taking off are the pilots. Well, they've taken off quite literally. They quit. Kingfisher shares down nearly 20 percent.

Although, having sharply dropped, they did manage to rally, with rumors lenders are now about to throw the carrier a lifeline.

The trouble has come despite a 20 percent rise in passenger numbers. When you put it all together, it's a case of rising fuel prices and cutthroat competition means the country's airlines will lose billions.

More now from Mumbai from Mallika Kapur.


MALLIKA KAPUR, CNN INTERNATIONAL CORRESPONDENT (voice-over): Thousands of passengers booked on Kingfisher flights in India shocked and angry after flight cancellations over recent days with no prior notice.

Kingfisher Airlines says it just doesn't have funds to fly those routes. It blames the latest disruption on a decision by tax authorities to freeze its bank accounts over unpaid dues.

But that's only part of the problem. Several Indian airlines, like Kingfisher, have been struggling financially because of soaring fuel prices, high taxes, and a fierce price war between the competing carriers.

VIJAY MALLYA, CHAIRMAN, KINGFISHER AIRLINES (via telephone): Do we have a comfortable financial position? The answer is absolutely no. And there's no reason to be ashamed about it. Every business goes through these positions and comes out of it as well.

KAPUR: Billionaire chairman Mallya says Kingfisher is trying to find a solution, and the airline is hoping to get financial help from a consortium of bankers. It's unlikely to get any help from the government.

AJIT SINGH, INDIAN CIVIL AVIATION MINISTER: The government cannot direct banks or give direct money to any private industry.

KAPUR: One way forward, say analysts, is to allow a foreign carrier to pick up a stake in a domestic airline.

SANAT KAUL, AVIATION EXPERT: If it eases the problem of Kingfisher, because Kingfisher is not able to raise loans from banks or from private equity, and maybe some foreign airline would take interest in it if they have deep pockets, because the domestic sector in India in the future is going to be very bright, it's already very bright, it's doubled in growth. So, where else can they get a foothold into India except through Kingfisher?

KAPUR: Analysts say Kingfisher needs to find money quickly to pay off its debt or it may have to cancel all of its flights, leaving even more passengers angry, staff disgruntled, and the airline ground for good.

Mallya insists he won't shut down the airline unless he's forced to. He says it's too early to write Kingfisher's epitaph.

Mallika Kapur, CNN, Mumbai.


QUEST: Now, when we come back in just a moment, we turn our attention not so much to the effect the bailout has on Greece, but the crisis and how it's changed the eurozone forever. A look at the Greece situation and what it means for Europe's bankers in a moment.


QUEST: Hello, I'm Richard Quest.

More QUEST MEANS BUSINESS in a moment.

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

So we bring you up-to-date with the bailout session for Greece after an all-night bargaining session. Eurozone ministers did approve that deal. It was worth more than $170 billion. It will mean Greek bondholders take a more than 50 percent loss from a debt swap. Economists doubt the deal will truly end Greece's debt crisis.

This furious protest outside Bagram Air Base in Afghanistan prompted NATO's commander to apologize. He's ordered all forces to be trained in handling religious materials after reports that soldiers burned copies of the Koran. NATO hasn't confirmed that, but does say the materials were sent to an incinerator after detainees used them to send extremist messages.

The results of Tuesday's presidential elections in Yemen won't be a surprise, since the vice president, Abdurabu Mansur Hadi, was the only candidate. But many Yemenese are calling it the real fall of the former ruler and they're hoping it will be the beginning of a new era.

A Palestinian prisoner in Israel has ended his 60 day hunger strike after the Israeli high court agreed to release him in April. Khader Adnan was protesting against an Israeli policy that allowed him to be held indefinitely without charges. His doctor said he was near death.

The former head of the IMF, Dominique Strauss-Kahn, is to spend an additional 24 hours at a police station Lille in France. He's being questioned as part of an investigation into an alleged prostitution ring. Mr. Strauss-Kahn himself volunteered for questioning, saying this would help clear his name.

If Greece got the stay of execution that it sought last night, well, they weren't alone. So, too did the Eurozone. It survived a collapse by getting unprecedented control of the Greek economy, even forcing a rewriting of the Greek constitution.

Eurozone and Europe as we know it changed last night.

And as Jim Boulden explains, it will not look back from here.


JIM BOULDEN, CNN CORRESPONDENT (voice-over): After another marathon session around the table in Brussels, Europe's finance chiefs emerged bleary-eyed. After hours of talks, Greece will get a second loan to stave off bankruptcy, for now. More aid chosen over bankruptcy.

JEAN-CLAUDE JUNCKER, EURO GROUP PRESIDENT: It is the intention of nobody to have Greece the Euro Area. This would be a bad solution for the reason it would be not less that situation for the Euro Area.

BOULDEN: But with more aid, the second economic lifeline in less than two years, comes more oversight of the Greek economy and a fundamental change to the way Brussels oversees where its money goes.

CHARLES GRANT, DIRECTOR, CENTER FOR EUROPEAN REFORM: Every Eurozone country that borrows too much and has a problem raising money in the markets has to answer to Brussels and will have to give up some sovereignty to EU institutions. It's asymmetric. It doesn't apply to Eurozone countries that are not in trouble. It doesn't apply to Germany or to the Netherlands or to Finland.

BOULDEN: For instance, Greece is being told it has to change its law and then its constitution to make debt repayment a priority when it comes to the government paying its bills. Until that change, Greece will have to put debt repayments in an escrow account, with oversight from Brussels to make sure the money is there to pay bondholders.

It's all part of increased vigilance, to the worry of some.

ALISTAIR DARLING, FORMER U.K. FINANCE MINISTER: Well, I think there's a broader point about democracy here, and that is, you know, having to submit your national budgets to an unelected bureaucracy, now that seems to fly in the face of all concepts of democracy that I understand.

BOULDEN: Then comes the so-called fiscal compact, the countries that use the euro and many others in the European Union have vowed to monitor each other's budgets and deficits and stick to mandatory limits on public debt and enshrine balanced budget rules into national law so that another Greece shouldn't happen again.

(on camera): Twenty years ago, rules were put in place to keep debt from getting out of control. That didn't work. Greece got its first bailout after promises were made by Athens. That didn't work. Now, closer scrutiny of tax and spend is the new price to pay.

Jim Boulden, CNN, London.


QUEST: Ironically, officials in Greece are actually welcoming the new, harder supervision.

Stefanos Manos is the former Greek finance minister, now head of the minority Darasi Party.

Far from being angry at the supervision, he says this is a good thing.


STEFANOS MANOS, LEADER, DRASI PARTY: I think, in fact, it's beneficial that we're going to have increased monitoring and that there's going to be an escrow account. I think these are positive decisions, because we have proven, over several years, that we are not particularly good at handling such issues.

So we need help and that's going to be helpful.

QUEST: Why do you believe Greece is any more prepared to make those structural changes now than before?

MANOS: It is not, because, among other things, both this government and the previous government has not taken ownership of the program that is included in this memorandum. It has, up to now, claimed that it's against its own wish to do these things, that it is -- the -- the issues and the measures are forced upon it by the European Union and the IMF.

QUEST: With elections coming up, will the current parties receive sufficient support to get back into power or could we end up with a situation with a new coalition, a new cir -- set of circumstances, where the government would throw out this deal?

MANOS: I hope that the people will kick out both parties, I mean, the Socialist Party and (INAUDIBLE), because more than anything else, they are responsible for the mess we have landed in.

QUEST: But you obviously don't hope that whoever gets in kicks out the deal, because if that happens, then...

MANOS: No. Sir, well, let's -- you're -- you're absolutely right. These people have now made the deal. And -- and that's OK. But we should not forget, when we vote, that these people who created the mess are the least, probably, to pull us out, because don't forget that what we now have, we have a mega deal, but we also have a very heavy implementation schedule. And I -- I'm not -- I'm -- I don't trust that these people will make that work.

QUEST: Will Greece be back for another bailout and/or further debt relief from the banks?

MANOS: I hope not. Greece -- and I believe I've said that once before to you -- has assured wealth and assets that lie around, particularly land assets, which it should dispose, and by disposing them, reduce further the debt. There is ample scope for this kind of approach. But it's -- so far, it has not been -- it has not been followed. But that's something that ought to change.

QUEST: Finally, sir, when you look at the events of the last 24 hours and you look at the deal on the table, it is a hard deal. It is a punishing deal. It is, in some ways, a humiliating deal.

But is it the right deal?

MANOS: It is better than any other deal that's available.


QUEST: And, frankly, that is what you can say about the arrangements for Greel -- Greece. It is better than any other deal that was available.

Now, some news to bring you coming off the printer at the moment. It is confirmed, the Venezuelan president, Hugo Chavez, said on Tuesday, a short while ago, that he will need to undergo surgery to remove a lesion found in the same area where doctors removed a cancerous tumor from him last year. When we get more details on that, of course, and when that operation will be taking place and where, we'll bring that to you.

In a moment, Hillary Clinton gathers up an all-American team to tackle U.S. unemployment. And the prize for the winner, jobs.


QUEST: The U.S. secretary of State, Hillary Clinton, is hosting the first global business conference in Washington, where the aim is to gather U.S. agencies into one big team to fight for American business overseas.

Elise Labott is in D.C. and joins me now.

Look, is this basically rah, rah, American business, get them all together and sell whatever they can?

ELISE LABOTT, CNN STATE DEPARTMENT PRODUCER: No, Richard. I think it's a recognition that while countries like Russia, Brazil, India, have been promoting their businesses and seen record growth, the U.S. has fallen behind. And the U.S. really needs to kind of get on board. And the government needs to support its business overseas.

Secretary Clinton today said why is the secretary of State looking at market swings as much as missile silos now?

She said because Americans need jobs.

Let's take a listen to what she had to say.


HILLARY RODHAM CLINTON, SECRETARY OF STATE: America's economic strength and our global leadership are a package deal. You're not going to have one without the other. Our power in the 21st century depends not just on the size of our military, but also on what we grow, how well we innovate, what we make and how effectively we sell.

Rising powers like China, India and Brazil, understand this, as well, and we can't sit on the sidelines while they put economics at the center of their foreign policies.


LABOTT: So, Richard, what does that mean?

Well, the secretary is having ambassadors hold weekly conference calls and Wednesday conference calls with businesses around the world, wants to help promote Web sites, all these different types of things, kind of wants the embassies to be a one stop shopping for U.S. businesses, not just to help their market share in these developing countries, but also to create jobs and to also attract investment here to the US.

Over the last decade, you've seen a 30 percent drop in foreign investment here into the US.

QUEST: All right. The -- as you rightly point out and chide me on this point, the -- other countries are doing similar things. The British Foreign Office has made a great thing about it.

But the -- the truth is, these meetings should be held by Commerce, they should be directed by the businesses involved and whenever -- whenever diplomats get involved, it usually goes horribly wrong.


LABOTT: Well, I think that Secretary of State Clinton recognizes that the State Department, this is probably a new field for them. And let's face it, we're not reinventing the wheel here. Commerce, USTR, both Secretary Bryson and USTR representative, Ron Kirk, were here today, and, also, Vice President Biden going to be here later today. They've always been out there trying to promote.

But what the secretary is saying is, listen, diplomats are on the front lines in these countries. If they're going to be dealing with these governments and they're going to be talking about issues of national security, issues of health, food security, why shouldn't they promote -- be promoting American business?

And sometimes, they can open doors that the businesses can't themselves.

For instance, in Haiti, for instance. When you had the State Department getting Motorola on the ground three days after the earthquake, they were providing communications to the Haitian police. And that helped them get tenders later on.

So what the secretary is saying is the State Department needs to be more proactive, not just in areas of national security, but using a little commercial diplomacy, because these ambassadors do have a lot of credibility on the ground.

QUEST: Elise, many thanks, indeed.

I can -- I can fear -- I can hear and feel the wrath of diplomats from every country.

Elise, many thanks for -- for joining us.

I can feel diplomats all around the world frothing at the mouth at me suggesting that perhaps they're not -- well, I didn't quite -- I -- listen, you know the old saying, when you've dug a hole, it's best not to dig it any further. And at the moment, I rather think I'm jumping into it.

@richardquest is where diplomats can have their say back to me. That's the Tweet and Twitter address, @richardquest. Send me one anonymously or

Jenny Harrison, I think I've -- I've launched something that I'm going to regret with me insulting diplomats.


Well, listen, Richard, I'll tell you what, then let's move swiftly on.

And there you are across in Germany at the weekend. And I can tell you now that there's a bit of rain and snow coming into Germany. And it's really where we've still got some cold air in place, because things are really changing as we go through the next couple of days.

Now, first of all, the satellite. Let me just show it to you in the south. A bit of a storm system coming up into the Central Med. Some strong winds with that storm system in particular, and some rain. And then a lot of these clouds coming into the northwest. This is bringing mostly rain because it is so much milder. You can see, as I say, we have had some snow across Germany in the last few hours. That is likely to change to rain over the next couple of days.

Look at this. Now, we have gone, as we know, from temperatures well below the average across Central and Eastern Europe, even out across the west. And now, for the next couple of days, not only are temperatures going to come back up to the average, they are going to be above average. That cold air is almost off this particular portion of our map, as you can see. That is how far it has been pushed off towards the east.

The winds are strong right now, Inverness, 41 kilometers an hour. It will stay strong, those winds, across the northeast, but very mild air.

There's a problem, though. Let's have a look at some of these still images we can show you. This is actually from Serbia. This is all part of the ice that is coming out of the River Danube. Now, this has caused all sorts of problems. We know this. We've shown you the pictures of pontoons, boats, restaurants damaged, very severely, in some cases, by the Danube beginning to thaw. And then you have these massive blocks of ice that are coming down the river and literally just smashing into anything that is in the way. And that is because we've got this thaw on the way.

Now, come back to me. Not only have we got this thaw on the way, the winds are strong. I was just showing you that, coming in from the northwest, much milder. But the winds are likely to be causing problems if you're traveling over the next, certainly, 24 hours.

You can see here, look at this, all the way from the northwest into London, Glasgow, very long delays, as well, in some areas, Dublin, Copenhagen, up to an hour-and-a-half in the afternoon and overnight hours with those strong winds.

But as I say, they are very mild winds. There's no snow likely to cause delays as we go into Wednesday. Instead, we've got low cloud and possibly foggy conditions in Sofia, also, Zurich. This is why we've got most of this rain coming in, a lot of cloud with this system.

Snowy conditions across the north into Norway. That's where it will accumulate. But elsewhere, as I say, the worry now is all that snow that has built up and been sitting there for the last few weeks.

Will it thaw very quickly?

Temperatures in Kiev on Wednesday a degree above freezing, three in Bucharest and so it goes on. Look at that, 12 in London on Wednesday -- Richard.

QUEST: We thank you for that.

Warm weather is always welcome. I can put me long johns away, at least until the next -- well, maybe not too quickly. I'm washing them first.

Coming up next...

HARRISON: Oh, yes.

QUEST: Many thanks, Jen.

HARRISON: Goodness, do.


Coming up next, we turn to the very interesting and difficult area of insider trading and we hear the confessions of a man on the inside, Garrett Bauer, who faces 20 years in jail and says the millions that were made weren't worth it. His first TV interview, next.


QUEST: The prosecution of insider trading cases is on the rise, especially in the United States, where it saw an increase of 43 percent over the last three years. Not only are more prosecutions taking place, prison sentences are getting longer.

Which, of course, does not bode well for one man, who is called Garrett Bauer, facing up to 20 years in jail for insider trading. The deals involved made him and others $32 million.

In his first television interview, Bauer has told CNN's Felicia Taylor when all is said and done, the money certainly wasn't worth it.


FELICIA TAYLOR, CNN BUSINESS CORRESPONDENT: So, show me where this all took place.

Where did the crime happen?

GARRETT D. BAUER, PLEADED GUILTY TO INSIDER TRADING: Well, most of it -- well, the last four years, from this room.

TAYLOR (voice-over): For 17 years, Garrett Bauer traded on tips he got from his friend, Ken Robinson.

(on camera): And when a phone call came in from Ken?

BAUER: That happened once or twice a year on those type of -- those type of phone calls. But I did talk to Ken probably five days a week.


BAUER: So normally, we talked almost every single day.

TAYLOR (voice-over): Robinson got his tips from Matthew Kluger, a Washington lawyer who would get confidential, non-public information about mergers and acquisitions from his firm's e-mail servers. The trio shared the profits, a total of more than $32 million, according to court documents.

BAUER: The whole idea, really, was for me to do all the trades so there would be no connection to him and his connection to the lawyer. And then he started doing some of these trades when I said I didn't want to do them anymore. So it was really at that point where, you know, I guess I assumed the FBI and the SEC investigated him.

TAYLOR: When the FBI came for Ken Robinson, he turned in Garrett Bauer.

BAUER: After about a month or so, I sort of stopped being angry. Ken didn't force me to do what I did. You don't always know what you're getting into. You do know the information is illegal, but just like I thought, most people think that they're just not going to get caught.

And I'm trying to let people know that people do get caught.

TAYLOR: Bauer and Kluger pleaded guilty in December to securities fraud, conspiracy to commit money laundering and obstructing justice. They could face prison sentences of up to 20 years. Robinson pleaded guilty on two counts of securities fraud and one count of conspiracy and could get a more lenient sentence, possibly avoiding prison time.

Neither the prosecution nor the FBI would speak on camera about any matter currently before the courts. But in a statement, the FBI told us, "Securities fraud remains a top investigative priority."

BAUER: You know you're crossing the line when you're getting the information from someone who has a responsibility not to give you the information. It's very serious a crime, the penalty, what I'm facing, almost 10 years in prison. I'm losing everything I have. It's -- it's pretty serious.

TAYLOR: That includes millions of dollars in fines and civil penalties. The government has already seized all of Bauer's bank accounts and property, including the apartment he bought for $6.6 million in cash in 2009.

(on camera): Do you care about losing this apartment?

BAUER: Not that much. Really, I don't.

TAYLOR: I can tell.

BAUER: One of my friends is concerned if I take you around the apartment, it's not really going to show you who I am.

TAYLOR (voice-over): While he awaits sentencing, Bauer is keeping busy, giving speeches to groups of law and business students, trying to prevent others from doing what he did.

(on camera): What are the worst days like?

BAUER: The worst days are just thinking about not even being able to start fresh when I get out. That's -- it's sort of overwhelming to know that I'm going to owe all this money when I do get out of prison.

And how am I going to ever pay that money back?

TAYLOR (voice-over): Felicia Taylor, New York.


QUEST: A fascinating story to any of us who have followed the insider trading scandals of the past.

And no doubt, there will be more of them, especially as the market continues to rally. We're off now just a tad. In fact, the gains -- oh, well, as you can see, the Dow has -- we were over 13000. Ken Polcari was right in New York, when he said it was going to have another run at it, but probably wouldn't make it.

We were over 13000. We're now back into -- I'm still betting that by the end of the week -- look, we'll end above 13000. That's my gut feeling. The market wants -- seems to want to go there.

When we come back after this very short break, I'll have a Profitable Moment for you.


QUEST: Tonight's Profitable Moment.

If it all wasn't so serious and the outcome so, perhaps, worrying, well, we might be tempted to say the issues relating to Greece have an element of tragedy, humor, drama and that we're all heartily sick of the entire matter.

But we can't say that because the deal is done and the consequences are grave. The hard work begins now.

The only problem is, we've been here before, two years ago. Two years on and the holes still weren't filled properly.

Europe has been filling Greece's bottomless hole for the last 24 months. And the questions haven't changed that much.

Can this bailout even work?

Well, Greece will no longer be allowed to answer that question for itself. Sovereignty has been infringed, permanent bailout supervising and monitoring will take place.

As I say, if it wasn't also serious, we could find humor in it and say we were heartily sick of the entire matter. But it is serious and now we're in uncharted treaty, not just for Greece, but also for the Eurozone. We'll wait and see.

And that is QUEST MEANS BUSINESS for tonight.

I'm Richard Quest in London.

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

The news continues tonight.