Return to Transcripts main page
QUEST MEANS BUSINESS
Bad Day in Spain; Banking Shares Drive Most European Stocks Down; Roadblocks to Recovery; Greece at Crossroads; Disney's Magic Numbers; AOL's Advertising Revenue Up; Yen Up, Euro Down, Pound Flat; US Stocks Struggle; Spanish Banks Struggle; Solutions for Europe and US
Aired May 9, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, HOST: Nine year low for Spanish stocks as the banks face a $45 billion crunch.
Isolation at home and in Europe. Greece's anti-austerity party fails to win support.
And A-OK. AOL's results impress. I'll be talking to the CEO.
I'm Max Foster. This is QUEST MEANS BUSINESS.
Hello to you. It's Europe Day, an annual celebration of peace and unity. Rarely has there been so little to celebrate, though, on this day. In Spain, the IBEX stock index has plunged to a nine-year low. Some reports that government is about to bring in tough new rules for the banking system. It could force lenders to set aside an extra $45 billion to cover bad loans.
The news pushed Spain's borrowing costs higher, with yields on 10-year notes passing 6 percent. Banks were the worst performers on the IBEX. CaixaBank dropped around 6 -- 6.7 percent and shares in Bankia dropped more than 5.8 percent.
That's Bankia's fourth straight session of steep losses. Its shares have actually suffered more than its Spanish rivals this week on news that it needs government cash injection. We're expecting to get details of that on Friday.
It's not just Spanish stocks that are suffering this Wednesday. Most of Europe's main indices ended the session in the red as banking shares fell. In Greece, the main index hit a fresh 20-year low. German shares on the uptick, though.
Wall Street has recovered from some heavier losses earlier in the session, the Dow currently down a third of one percent.
Holger Schmieding is chief economist at Berenberg Bank, he joins me, now, live. Thank you for joining us. Give us some -- give us something positive.
HOLGER SCHMIEDING, CHIEF ECONOMIST, BERENBERG BANK: There is not very much positive to be said on this day. Positive things in Europe, if you look at that, is we have had over the last few days news about the stronger than expected first quarter for a variety of key European economies, including Germany. So, there are pockets of the European economy where things are starting to get better.
Having said that, Greece is now in a dire political situation and there is some contagion from Greece to Spain.
FOSTER: Let's talk about Spain and focus on that, because the banking sector -- the government and everyone in the country is trying to assess what's needed there. Have you get any sort of assessment about what you think needs to be done to the banking sector and what it's going to cost?
SCHMIEDING: There actually is no way to assess how much it would cost in Spain. It's very much a matter of the state of markets. If markets give Spain time, then the banks can, of course, sort of recapitalize themselves just by playing the difference between earning 5 to 6 percent on holding government bonds and getting their money for 1 percent from the ECB.
But when markets are very nervous, just as they now are during the Greek saga, then things -- markets can force things in Spain to come to a head, and then there would be a significant risk that some institution, which may have to be Europe, will have to offer 50 or to 100 billion of euros to recapitalize banks fast in Spain.
FOSTER: Spain is in the danger zone, as they call it, in terms of interest rates, right?
SCHMIEDING: Well, they're not really in a danger zone, 6 percent is quite bearable for the Spanish government, if that's the borrowing cost. The danger is that having gone from 5.5 to 6, it doesn't stop at 6.
FOSTER: It's happened quite quickly, as well.
SCHMIEDING: Exactly. The danger is in the dynamic. If it goes from 5.5 to 6, and then on to 7, then it gets dangerous.
FOSTER: Where is the danger zone, in your view?
SCHMIEDING: It's probably --
SCHMIEDING: -- 7 to 7.5. That's really dangerous. Now, we're still safe, but just yet.
FOSTER: OK, Holger, thank you very much, as ever, for joining us.
In Greece, time is running out for the Syriza Party leader, Alexis Tsipras to break a political stalemate and form a new coalition government. Jim's been looking at that for us.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Yes, thank you, Max. Well, the coalition talks in Athens have ended for the night and, no surprise, there is no formation of a government since, of course, PASOK and New Democracy are sticking to the austerity pledges made with the EU and the IMF.
Now, PASOK's Evangelos Venizelos says he will soon have his turn to try and form a coalition of national unity. The main party, of course, New Democracy, they're the main party on the right, they failed earlier this week to form a government.
This is the man, now, trying to form a government from the far-left party. This is Alexis Tsipras. He also tried and appears to have failed to form that coalition, and that's because he stuck to his guns and upset Europe when he called for the cancellation of the pension and salary austerity measures.
So, didn't take long for the EC president, Jose Manuel Barroso, to continue to warn Greece it must stick to what's already been agreed.
(BEGIN VIDEO CLIP)
JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: There is an agreement between Greece and the euro area, all the euro area member states and European institutions. Greece has to respect its agreement as the other countries have to respect this agreement.
It's a question of credibility not only for Greece, but for the euro area as a whole. And this is very important to understand, that if this agreement is not respected, it will be very negative for Greece.
(END VIDEO CLIP)
BOULDEN: Now, after some worries earlier today that the EU might withhold the $6.7 billion of funds due to Greece on Thursday, there's now no indication that that would happen, since Greece is currently meeting the criteria for the bailout.
The euro recovered a bit after -- and so did shares after there was no confirmation that EU leaders would look to punish Greece before a government could be formed or new elections are called in early June as now seems very likely. Max?
FOSTER: Yes, in terms of -- people are talking more and more about another set of elections --
FOSTER: -- to sort this problem out. What are the predictions on a timescale there?
BOULDEN: It would be early June. Now, the question is, do the Greek people feel that they had their protest vote in May, but now they would have to vote for one of the three or four main parties? And would that then change the dynamic? Or would we just be back to where we are now, which is that no party can conceivably form a government?
The thought is, could Mr. Venizelos form a national unity government similar to what we have now? And that would then push the austerity through. But of course, the majority of Greek people voted for no more austerity.
FOSTER: Jim, thank you.
Next, AOL's first quarter profits are up almost 350 percent, would you believe? We'll go through the numbers with the chief exec, Tim Armstrong, next.
FOSTER: Well, you can always count on Disney to sprinkle a little magic when things get gloomy. Shares in the so-called House of Mouse are up more than 2 percent right now. That's after some impressive results in the second quarter of this year.
Their profits hit $1.1 billion, up some 21 percent. Even the notorious flop, "John Carter," couldn't hurt Disney's overall earnings too much, and now the company has new superheroes to save the day for the next quarter.
"The Avengers" broke US box office records over the weekend, taking in more than $200 million. That's the same amount of money Disney lost on "John Carter." We won't see the true "Avengers" effect until Q3, and Felicia Taylor asked Disney CEO, Bob Iger, if it was still risky to bet on big blockbuster movies.
BOB IGER, CHAIRMAN AND CEO, WALT DISNEY COMPANY: Hard to feel that way this week, but when you invest that much money in a film, of course there's a lot of risk involved.
Fortunately, we have an interesting marketplace in that there's been a great expansion in the number of film screens worldwide, particularly in emerging markets, China a great example of that. And so, while it's always risky to spend this much money on a film, there are more opportunities to monetize it.
But it also says a lot about quality. This film was a film that was rated by moviegoers an A-plus, created a huge word-of-mouth buzz, people like the film, told other people, and so on and so on. And that became a global phenomenon, and that's why we grossed $700 million in such a short time.
FELICIA TAYLOR, CNN INTERNATIONAL CORRESPONDENT: A recent trip you made to China, obviously that has to be a growing market for not only Disney, but for many companies around the world.
IGER: Yes, it's a great market for Disney. Our biggest project internationally these days is the development and construction of Disneyland Shanghai, which is going to occupy a pretty large piece of land in the Pudong area of Shanghai and will open in the latter part of 2015.
FOSTER: So, they're doing well. Another company doing well, it seems, at the moment is AOL. Profits shot up in the first quarter, net income rose to $21.1 million from $4.7 million the year before, a rise of 349 percent, would you believe?
Advertising revenue grew about 5 percent, an important goal for a company trying to transform into an ad-based digital publishing business. AOL chief executive Tim Armstrong joins me now, live from New York.
Thank you very much. Congratulations on those results. Where's the main driver in terms of the ad sales? Where is this real increase coming from?
TIM ARMSTRONG, CEO, AOL: Sure, Max, thanks. Nice to be with you. AOL reported great numbers today overall as a business as we continue to come back from the worst merger in history into something we hope will build into the next significant digital media company.
The results today for advertising specifically, we grew 10 percent globally in advertising, and the results that really matter for us are kind of in two different areas. One is around our performance, the ROI-driven nature of digital advertising, which was up double digits in the fourth quarter in a row that's grown.
And then, display marketplace, which internationally grew, and we're getting back an international. And domestically, we are working very diligently right now to transform that from the historical display model to the new model, which is built around high-engagement ads and video overall.
So, the results were great today as a company. We announced great results, we raised guidance, but we think there's a lot of room left for us to grow in advertising.
FOSTER: So, define AOL as a company for us. What is it?
ARMSTRONG: AOL, we think, will be -- is right now -- is the brand company built on changing from what was an access company into being the most significant digital media company in the internet age, and we -- that's our goal, that's what we're working towards on a daily basis.
FOSTER: And when you talk about access, you were famous in the early days, of course, for your dial-up internet access. And it will surprise many people to know that that's still a large part of your business, isn't it? It's a legacy business. But it's shrinking, so that's not the future, obviously.
ARMSTRONG: Right. So, the access business overall, I think, is what AOL was globally known for at one point. The company has pivoted into becoming a media and technology company now, serving up great brands like gadget and tech crunch, and Huffington Post, which just recently launched in the UK, as well as about 20 other major brands.
And so, I think consumers know us from the AOL.com homepage and their historical relationship with us, but I think now we're basically seeing about 200 million people globally across our brand suite, and people are going to know us a lot more in the future for those power brands.
FOSTER: And you're getting rid of parts of the business that you're not interested in anymore as you get more focus. You've sold 925 patents, is it, to Microsoft? So, that's raising more than a billion dollars, as I understand it. Always useful to have cash, but some suggestion you're going to give it all to shareholders. Have you decided what you're doing with that money?
ARMSTRONG: Yes, we announced today, actually, on our earnings call a number specific items that are meant to increase value for shareholders. The most significant one was actually our operating improvements, which will take guidance up this year and next year.
And then, the patent sale, which is we're giving 100 percent of the proceeds back once we receive them and the deal closes from the patent sale back to shareholders. So, you mentioned, that's about a billion dollars of value, which at the day we announced it was about 60 percent of the total market capita company.
So, one of the most significant returns of shareholder value probably out of any company in the last few years. So, we're excited to give that back to shareholders, we're still going to have a lot of cash to operate the business, and I think people are going to see us continue to invest in branded content and branded media, which we think is going to be a big part of the future of mobile and video and the internet.
FOSTER: And you're keeping 300 patents, aren't you? So what are they focused on? I presume advertising.
ARMSTRONG: We have patents that range -- actually, we have a number of services that are important for our business. The patents we sold were patents we could afford to sell because they really were businesses we weren't in anymore, where we had duplicate patents.
So, the 300 patents we've kept are incredibly valuable. Microsoft is actually licensing the 300 for about $100 million, to give you a sense of how valuable those are.
So, the patents we have are going to protect us currently in our environment, and we'll continue to add more patents to our portfolio over time, because we have a lot of innovation areas and products that we're focused on, and we'll be filing more patents over time.
FOSTER: And can I just ask you as a major chief executive, your thoughts on the global economy now, what's going on in Europe, what's going on in the US, and how concerned you are about the business environment right now?
ARMSTRONG: Yes, I was in Europe last week in London and Paris, and I got the general sense that people were concerned but had their hands on the wheel and were paying very close attention to what's happening, and I think a lot of people are focused on the government actions that are happening there and some of the elections.
And I -- so overall, I think people in general look at Europe as kind of at a pause mode to see really which direction it's going to go in.
And then, the US economy, I think, people actually -- it surprised people, it's been a little bit more bullish overall. It's not growing gangbusters, but it's made some improvements, and I think overall, globally, people are kind of looking at Europe as the question mark, and hopefully that improves. But US has been stable, and hopefully that will continue and hopefully grow at some point soon.
FOSTER: OK, Tim Armstrong, AOL, thank you very much, indeed, for joining us.
A Currency Conundrum for you, now, on which country's coins would you find the current world's longest-serving head of state. Is it the UK, is it Thailand, or is it Brunei? We'll have the answer for you later in the program.
Checking on those currency markets, it's all about risk aversion today, the yen gaining ground on its appeal as a port in the storm of uncertainty in Europe. The euro is dropping below $1.30 US, and sterling if flat against the dollar.
FOSTER: Stocks on Wall Street are continuing their decline. With so much concern over Europe, the old saying seems to be ringing true: sell in May and go away. Already, the Dow has fallen more than 2.5 percent this month, and we're only nine days in. Alison is over there at the Stock Exchange for us, a grim week for you, Alison.
ALISON KOSIK, CNN CORRESPONDENT: It has been a grim week. But you know what? You look at how stocks have been performing by the end of the session, and they actually wind up paring their losses. That's what we're seeing happen right now, the Dow down only 65 points. The Dow was down as much as 175 points earlier in the session.
But this is all about Europe. The political uncertainty in Greece and the odds of the country exiting the eurozone have gone up. Those worries are weighing on the market. We are also seeing some reports that a bailout agreement -- bailout payment, rather, to Greece will be delayed now. That is coming from some reports.
Also, there are continued worries about Spain. Bond yields are rising above 6 percent again, raising the chance of government intervention in banks there. So, without much economic data here in the US to change the tone and no resolution to what's happening in Europe, that is why you're seeing volatility in stocks.
But once again, Max, stocks are off their lows today on hopes, actually, about the possibility of another round of QE3. That is coming from analysts who are betting that there could be, when the Fed meets in June. Max?
FOSTER: OK, Alison, thank you very much, indeed, for that. More quantitative easing, eh? One economic expert says Spanish taxpayers may hold the key to fixing the country's liquidity crisis.
Martin Feldstein says Spanish households should buy government bonds to shore up confidence in the system. He's been an economic advisor to both US President Obama and President Reagan. He joins us now from Harvard University.
Thank you so much for joining us. What's great about your comments is you're giving some hope to Europeans. Just explain the solution you're suggesting here.
MARTIN FELDSTEIN, FORMER CHAIRMAN, US COUNCIL OF ECONOMIC ADVISORS: Well, the big problem for Spain is not its trade and current account deficit. That's relatively small.
The big problem there is how they're going to finance, how they're going to -- finance both their fiscal deficit and the rollover of the debt that's coming due. Those two together will be some 20 percent of GDP of Spain this year. So, that's not going to be easy to do at a time when the banks are under tremendous pressure and when foreign bond buyers of Spanish sovereign debt are walking away.
So, what I've suggested is that they have a fallback plan in which, if they need to do so, they will actually require households and businesses in Spain to buy government bonds. In effect, use the tax system to assess the amount that households and businesses need to buy. But it's not a tax, because they will be given in exchange a government bond.
And I don't see this as something that should happen, but rather something to be held in reserve. But the fact that it's potentially there should give confidence to foreign buyers and to domestic buyers to actually buy on a voluntary basis.
FOSTER: People would be forced, effectively, to take on these bonds, right?
FELDSTEIN: In a -- yes. In a sense, it would be -- you would say it's a tax, except that it's not an ordinary tax where you just send your money to the government and they say thank you very much. Here, you send the government the money, but you get in exchange a bond, or the electronic version of a bond, a promise of the government to pay with interest.
FOSTER: The problem with it is, politically, it's a complete nightmare, isn't it? Because you're effectively taking cash away from people at a time when they need it, even if you're promising future cash. So, a political party that enforces this is going to be extremely unpopular. So, it's not really workable.
FELDSTEIN: It's -- well, the alternative may be that they can't finance themselves, that they have to turn to the European Commission, which will impose tax increases, spending cuts.
I would think this would be a less painful thing to individuals who would say, well, "Yes, I have to finance this." It may be something they can finance out of existing cash rather than cutting back on their living standard, finance it because they're getting back an IOU from the government.
FOSTER: And this would be welcome news, I'm sure, on Wall Street, which seems so -- dominated by talk about what's going on in Europe and Spain, really top of the agenda right now.
But if I can talk about the US quickly, we're just hearing from Alison, there, at the Stock Exchange, more talk of quantitative easing in the US. Is that the right solution to help the US economy?
FELDSTEIN: I don't think it is. We've now had QE2, and then after that, we had Operation Twist, and both of these have helped to lower long- term interest rates and boost the stock market a bit. But they're not doing anything for the real economy. They're not doing anything for economic activity.
Housing remains in a slump. Businesses are not investing. Individuals have been reluctant to spend. So, it helps the financial markets, and that's why they are cheering for it, but I don't think that it's doing anything for real economic activity.
FOSTER: And what are your thoughts on the quality of the economic debate in the current presidential election?
FELDSTEIN: Well -- at this point, they're just sparring. I think the real fact that people will respond to is the state of the economy, and the state of the economy is quite poor.
There was a little burst of enthusiasm in the beginning of the year, but that's come off as job growth fell very sharply in the most recent month, as real incomes are falling, real wages are falling. So -- house prices continue to fall. So, it's not a very pretty picture.
FOSTER: Heading for recession?
FELDSTEIN: I think it's too early to tell, but certainly the odds are going up. All this talk of growth of 2.5 or 3 percent GDP growth, but I think we will be lucky if we get as high as 2 percent. Last year, we only had 1.5 percent.
If you look at the first quarter of this year, while the GDP number was 2.2 percent, almost all of it, three quarters of it, was just automobile purchases, catching up for last year's shortages of automobiles. So, it doesn't really suggest that there is strong consumer spending on ordinary goods and services, and certainly there isn't on construction or on business investment spending.
FOSTER: Thank you, Martin Feldstein --
FELDSTEIN: So, that's why there is an increased risk.
FOSTER: Martin Feldstein, thank you very much, indeed, for joining us. We appreciate your time.
After the break, the cuts must continue. German MPs tell Greece to stick to the script on austerity. We'll be speaking with one of them next.
FOSTER: Welcome back. I'm Max Foster. These are the headlines.
A bombing in the Syrian city of Dara struck very close to a convoy carrying UN observers. They escaped unhurt, but several Syrian soldiers escorting the group were injured. On Tuesday, the UN and Arab League's envoy for Syria called the UN monitoring mission the last chance to stabilize the country.
A Russian passenger jet carrying 50 people has gone missing on a demonstration flight in a mountainous area of Indonesia. The Sukhoi SuperJet 100 disappeared from radar screens 15 minutes into the flight. Around 200 police, military, and rescue workers were headed in vehicles and on foot towards Salak Mountain, where the plane went missing, but attempts to search by air have been hampered by bad weather.
A suspected terrorist fundraiser with links to al Qaeda has lost his appeal to stay in Britain. The European Court of Human Rights ruled on Wednesday they will allow Britain to deport Abu Qatada to Jordan for trial. His deportation was previously blocked out of concerns that he might be tortured.
A secret agent working for Saudi intelligence infiltrated al Qaeda in the Arabian peninsula and foiled a plot to bomb an airliner. That's according to a CNN source in the region. The source says the agent brought the bomb out with him and turned it over to US and Saudi intelligence.
There is no solution so far in talks the former government of Greece and anti-bailout leftist leader has one more day to attempt to make a deal. And then he must pass the baton onto a political rival. If a government is not formed by May the 17th, Greece will call new elections.
FOSTER: German chancellor Angela Merkel says Eurozone states must stick to their own rules and agreements, a nudge, perhaps, to Greece where the leader of the Syriza party has vowed to abolish certain austerity measures. Now Ralph Brinkhaus is the chairman of Ms. Merkel's Christian Democrat party. He joins us now from Berlin via Skype.
Thank you so much for joining us. In terms of your view of the political wranglings in Greece, how concerned are you about the impact that will have on the Eurozone?
RALPH BRINKHAUS, CHAIRMAN, CDU: We are not (inaudible). We are very well aware (inaudible) Greece is a problem and will be a problem. And after the election (inaudible) and to Greek people, just take (inaudible) negotiate (inaudible) otherwise (inaudible) any (inaudible).
FOSTER: Should funds, bailout funds be withheld from Greece until there's a political solution?
BRINKHAUS: Yes. We have an agreement that (inaudible) and (inaudible) we have (inaudible). We (inaudible) we have (inaudible) additional (inaudible).
FOSTER: OK. Ralph Brinkhaus, we've got some audio problems. We'll hope to come back to you. Thank you for joining us for now, though.
Scooting past check-in, bypassing security and (inaudible) we'll (inaudible) next on QUEST.
FOSTER: France's new president says he's Mr. Normal (ph), taking the train to work, doing the family shopping and flying around in this private jet. Francois Hollande is being accused of hypocrisy after it was revealed he swept into Paris in style just hours after winning Sunday's election.
Twitter users were swift to compare him to high-flying predecessor Nicolas Sarkozy, saying Mr. Hollande is just as keen on bling. Not a great start, but if you're a traveler unashamed of a private jet lifestyle, you might even consider traveling with the masses.
Here are a few new ways that you can do that and still stay a VIP, at least, just under $3,000 will allow you a bypass on immigration queues at Heathrow here in London. VIP fast track services allow six passengers at a time. You can be straight to the front. And I tell you, at Heathrow, that's pretty useful right now.
Ten dollars will get you US Airways access, sweeping you through check-in and security with its preferred access program. There is a catch, though. You'll only receive priority where available. And that's probably not at the busiest times, although I need to dig into it further. One hundred dollars, what can that buy you?
Well, that's the global entry program helping you avoid the hassle of full-body scans and patdowns at major U.S. airports. Free, though, if you're a frequent flyer, invited by your airline and getting approval by the Transportation Security Administration. TSA says it's now screened more than a million people. So is it worth it? Well, CNN's Lizzie O'Leary took a look at life in the airport fast lane.
(BEGIN VIDEO CLIP)
LIZZIE O'LEARY, CNN CORRESPONDENT (voice-over): Keep your shoes on, check. Belt two, check. Even a jacket, check. This is precheck.
PERRY DAVIS, PRE-CHECK PARTICIPANT: If you're in a hurry, the benefit is that you get through security a lot faster. And you don't have to take your computer out the bag or your liquids, you know, your shoes off and that saves some time.
O'LEARY (voice-over): It's a fast track route, complete with a dedicated security lane that will be in 35 of the busiest U.S. airports by the end of the year. The idea is that travelers who give the government more personal information -- your name, birthday and gender -- and are well known to the airlines, like frequent flyers, are less of a security threat.
TSA Administrator John Pistole calls it reducing the haystack of risk.
O'LEARY: How big a deal is that?
JOHN PISTOLE, TRANSPORTATION SECURITY ADMINISTRATION: Well, it's a significant paradigm shift, both for TSA and the traveling public. And the way we engage in a partnership to say, look, let's work together to say if you're willing to share some information about yourselves, then we can work with you perhaps to have expedited physical screening so we can focus on those that we know less about and can focus on those higher risks as what we assess.
O'LEARY (voice-over): Precheck is free and only for domestic U.S. flights. Select American citizens are invited to join by airlines. TSA officials won't disclose exactly who gets an invitation, but it's clear that they are very frequent flyers.
PISTOLE: The more prescreening we can do with individuals, because they're willing to share information, either through the frequent flyer program or trusted traveler programs, such as Global Entry under Customs Border Protection, then we can make some prescreen decisions and expedite their physical screening at the checkpoints.
O'LEARY (voice-over): The Global Entry program, which is separate from precheck, costs $100 and requires U.S. citizens to be fingerprinted and interviewed by customs officers. In return, they also get to use the fast lane and speed through customs.
These expedited screening programs are proving popular and TSA is expanding them to include some senior citizens, military personnel and kids. All pre-check members will still go through security and some will be subjected to random screenings. So it's not always life in the fast lane -- Lizzie O'Leary, CNN, Washington.
(END VIDEO CLIP)
FOSTER: We're going to bring you some more news. There's lots of developments coming out of European politics tonight, so we're hearing from the AFE news agency that the radical leftist Greek leader is giving up attempts to form a government which isn't positive news and does make another election very soon very likely, I'd say. We want to return, though, to Berlin.
Ralph Brinkhaus, the chairman of Ms. Merkel's Christian Democrats party, he joins us now from Berlin via Skype.
You were unable to give your response to a collapse in efforts to form a government in Athens.
BRINKHAUS: This is not (inaudible). This is not a surprise that the (inaudible) organizing the government because of the outcome of the election. So this was foreseen by us and (inaudible). I guess they will make a third attempt (inaudible) attempt and we are looking for (inaudible) election (inaudible).
(Inaudible) what the outcome of these elections will be. It's absolutely essential for us that we get a government in Greece which will organize steps towards more stability and for this reason we really hope that the next election will have a better outcome than the last one.
FOSTER: We're also getting reports that the EFSF is holding back loans to Greece, pending an outcome to the election. I presume you very much support that idea, because you don't want an anti-austerity party taking control of the funds?
BRINKHAUS: I don't like this word austerity. I guess it's a program for more efficiency and for a stable budget. But we also see (inaudible) done by the Greek people. It's a very hard task they have to do.
And we see the difficulties. And we see the difficulties also politicians, which have to organize this whole process. But at the very end of the day, to create a base for (inaudible) growth, we need this reformed and so we stick to all the treaties we have negotiated and there is no alternative to it.
FOSTER: How do you justify to your voters the huge amount of money they've put into the system, which is bailing out a country which actually doesn't want to meet many of the targets that you've set for them?
BRINKHAUS: This is really a problem for us. If I go back to my constituency and I have to explain it to my voters, that we're -- we have to pay this huge amount of money for Greece, it's really difficult to explain. But at the end of the day, to form a stable Europe, we have to pay this money.
And if we have, on the other side from the Greek side some effort, I can explain it to my people and my constituents, the constituency. If not, I will have some difficulties and we will have some difficulties in Germany to perform with our government. And so it's a process where both parties, the Germans and the Greek people, have to do their job.
And I'm really looking for what that we all do this job because I repeated again, the best way for Greek people would be to stay within the Eurozone. I guess it won't be a catastrophe if Greece will go out of this Eurozone.
But at the end of the day, I guess it's a better alternative if they stay in. And so I guess to get a solution for all the problems we have in Europe, you should work together and so the (inaudible) the meanings, the opinions we get from some Greece -- Greek politicians, are not as good as we expect.
FOSTER: OK. Ralph Brinkhaus, thank you very much indeed for your comments in responding to that breaking news we've been having tonight out of Athens.
Now the Eurozone is holding back $1 billion of euros we've been hearing (inaudible) of until there is a solution to that Greek election crisis, as many people are calling it. Another election due very soon.
Jenny Harrison is dealing with things at the Weather Center meanwhile. What have you got for us, Jenny?
JENNY HARRISON, CNN METEOROLOGIST: OK, Max, I'm afraid some more very wet, windy, stormy weather across the north and the west of Europe. I mean, you know, the situation there, just one system after another, and one (inaudible) another's just waiting in the wings, all this cloud indicative of that next storm system that's been since early.
This is to rain, some of it heavy in the last few hours across much of the U.K., southern Ireland picking up some very heavy amounts there in those thunderstorms. (Inaudible) across France, you can see the rain is continuing its journey eastwards and we're seeing more in the way of thunderstorms. The wind's also on the increase at this next system.
So right now winds in Plymouth around 40 kilometers an hour. That means some gusts at around 50 or 60 kilometers an hour, and that's the system as it works its way across the U.K., pushing up towards Scandinavia. So some very strong winds particularly at the end of this forecast, at the end of 48 hours, around those coastal areas of Norway and Sweden in particular.
So this is the system coming in with the rain, but also those strong winds. But at the same time, it is warming up in the south and the southwest. And as that's as well, though, caused the warm air across the east does mean we could still run the risk of some pretty severe thunderstorms, large hail, strong winds.
But this is the heat. Look at this building into the southwest. At the same time, I'm afraid, once again cooling down across the U.K. What it means is that for Madrid the next few days temperatures will be above average, some good sunshine.
Meanwhile, in Berlin, well, just a couple of days, really, bit of a warm two days, and then it cools right back down again as we head into the weekend and it's a very similar story in Paris. So even though you've got some thunderstorms on Thursday, it is likely to be fairly mild, 24 degrees Celsius.
But you can see the rain pushing in and still, because of this colder in the north, snow across much of Norway. Some delays at the major airports and mostly due to those strong winds that are already on the increase.
You can see there the morning, even to the evening hours across into Copenhagen, after those temperatures elsewhere, 16 in London. And there is that warm 26 in Berlin and also Vienna.
Now talking about wet windy weather, stormy weather conditions, it means it's pretty good for all those keen surfers out there and taking now, of course, just off the coast of Portugal and in particular the Nazare Canyon. And this is because of this. Have a look at this video. This is what happens off the coast of Portugal. This is world record-breaking stuff you're looking at here.
The canyon, the trench that's out there in the Atlantic is 170 kilometers long, 5 kilometers deep. These are the sort of waves that you get, these huge swells, these waves, all because of the position of that canyon.
And the man who's doing all this, Garrett McNamara, Max. And it's finally been confirmed that last November when he did this, it is now the biggest wave. It is nearly 24 meters high or 78 feet. And as I said, he will soon be going the Guinness Book of World Records, Max.
FOSTER: A legend in the surfing world is born.
HARRISON: Isn't that amazing?
FOSTER: All right. Great (inaudible) video as well.
HARRISON: You know, I tell you one thing, I've got a bit of a graphic here that shows him along this 78-foot -- look at this -- the crest to the trough, 78 feet, I say, just under 24 meters. But you know what, he began surfing at the age of 11.
I guess that's what you have to do to be able to take on something like this. You know, that wave is 13 times the height of him, Garrett McNamara, 13 times his height. That is how tall that is.
FOSTER: Amazing. Great pictures. Thank you very much, Jenny.
Up next, they've been Bluebirds all their lives. Now they're red with rage. We'll tell you why fans of one football club are tearing a strip off the team's owners.
FOSTER: Now the answer to the "Currency Conundrum", earlier in the show we asked on which country's coins would you find the longest -- the current world's longest serving head of state, and the answer is Thailand, the king of Thailand is the world's longest serving current leader. He's also the longest serving Thai monarch in history for you.
Now if you're a true football fan, there are many in Thailand, of course, you can never change your stripes. But the owners of Cardiff City want to do exactly that so they can market the team in Asia. Now Cardiff are known as the Bluebirds and wear an all-blue kit to match.
But the club's new Malaysian owners want to replace the team logo with a red dragon and change the color of the jerseys from blue to red. And they say that will make the club more attractive in Asian markets.
Some fans are outraged, though, saying it goes against tradition. There are plenty of other clubs who have changed their colors, though, so we've got a bit of history for you in the football strip (ph) world. Leeds United are known for their all-white kit.
But before the 1960s they used to play in blue and in yellow. They only switched because their manager, John Ruddy, wanted them to look more like Real Madrid.
Manchester United haven't always worn red. They used to play in green and in gold. You can't imagine that, can you? And when fans got upset at their current owners, they started wearing the old colors in protest. And Coventry City, well, they used to play in navy blue and white. Then in the `60s, manager Jimmy Hill rebranded everything at the club in sky blue for commercial reasons, we're told.
Let's bring in our "WORLD SPORT" anchor, Don Riddell, for a little more perspective on this.
First of all, Don, I want to ask you about Cardiff, because the fans, you know, got an Asian owner coming in, messing things up. Are they furious?
DON RIDDELL, CNN ANCHOR: Some of them are furious. I think some of them can see the commercial sense in it and from that perspective, if the club can bring in more money and if they can market themselves in Asia and if that means more money for players and a better stadium and better training facilities, then perhaps it would all be worth it.
But you're absolutely right. Some of them are really furious. More than 1,000 have now joined an online petition protesting some of the team's former players have spoken out. One of them, the former captain, Darren Purse says if you change the color, you change the soul of the club.
I can think of one very good reason why Cardiff fans wouldn't want to become red with a dragon, because there's already a Welsh team with a dragon that plays in red. They're called Wrexham. And they're not very good at the moment. So why would Cardiff want to be like them?
FOSTER: In terms of the colors, is it just because that's an attractive color in Asia or because for marketing, branding purposes and in the digital age red's just a better color?
RIDDELL: Well, you know, I think you could argue that red actually -- there's something about it. I know Tiger Woods isn't a particularly great golfer anyway, sorry, these days, but you remember that he always used to wear red on Sunday. It does kind of symbolize kind of strength and success.
They've actually done some research in English football. Between 1947 and 2003, these are the results, these are the most successful teams at home between those years, and you can see that the teams that won, two and four, Liverpool, Man United and Arsenal all played red. You could argue that it's just because they had better managers, better players, better fans or whatever.
But I mean, I think that is -- that is quite striking that red does seem to be associated with success. And of course, we all know that in Asia what the dragon means. It's a symbol of power and strength and luck.
And I can see why perhaps they would think that this would work in Asia. I think the biggest problem they've got is Cardiff aren't yet a Premier Elite team. If they want to be successfully marketed in Asia and China, they need to become a Premier League team first.
And right now, they're not. They were just thrashed over two legs by West Ham United in the semifinals of the playoffs. So they're still a championship side. They need to get themselves into the Premier League if they're going to be taken seriously in Asia.
FOSTER: Which is what Reading did with blue.
RIDDELL: Look, I'm not an expert on this stuff. This is just what I think. You know, it's not a bad idea. If they think they can bring more money into the club, I think ultimately the fans will come around. I think what's really stuck in some of their throats is that they haven't been consulted at all.
They've just been told this is what's going to happen and forget the fact that you've been playing in blue and your name's been the Bluebirds for over 100 years.
I think perhaps if there's a big of consultation, and perhaps if things were introduced gradually, perhaps it becomes an away strip first and then it becomes the main strip and it happens over a period of years. Maybe there will be a bit more amenable to change.
FOSTER: OK. Don, thank you very much indeed. We'll see how that one fits (ph) in. I'm sure it'll happen, but not easily, I'm sure.
One place where red is very unpopular for sure is Wall Street, because when you see red on the Dow, it means people are losing money, down half of 1 percent currently, still the big talking point is what's going on in Europe. And we've got this news coming out from Athens, that there might be an early election because they can't form a government there.
But actually that might not necessarily be negative because it might form the basis of a solution in Greece and also suggestions that bailout money is going to be withheld to Greece until that situation, the political situation is sorted out. But that's the focus on Wall Street and on markets around the world this week.
After the break, the queen talks business. We'll tell you what she had to say about it.
FOSTER: Queen Elizabeth has outlined the U.K. government's plans for the coming year. It's an annual tradition for the queen to read the speech, which is scripted, not by her, but by politicians. It's a crowned affair, the crown's out, as you can see, with the U.K. back in recession. New business, friendly legislation was one of the speech's key points.
(BEGIN VIDEO CLIP)
ELIZABETH II, QUEEN OF ENGLAND: Legislation will be introduced to reduce burdens on business by repealing unnecessary legislation and to limit state inspection of businesses.
My government will introduce legislation to reform competition law to promote enterprise and fair markets.
My government will introduce legislation to establish a green investment bank. Measures will be brought forward to further strengthen regulation of the financial services sector.
(END VIDEO CLIP)
FOSTER: While the queen was speaking in the U.K.'s House of Lords she's not allowed in the lower House of Commons. That's after a failed attempt by King Charles I to arrest lawmakers on the eve of England's 17th century civil war. They do hold their grudges.
That is QUEST MEANS BUSINESS. Thank you for watching. I'm Max Foster in London.
FOSTER: AFE is reporting that the leader of Greece's far left Syriza party has given up trying to form a coalition government. He refuses to compromise on his plans to cancel austerity measures as reported.
A bombing in the Syrian city of Dara'a struck very close to a convoy carrying U.N. observers. They escaped unhurt, but several Syrian soldiers escorting the group were injured. On Tuesday the U.N. and Arab League's envoy for Syria called the U.N. monitoring mission the last chance to stabilize the country.
A secret agent working for Saudi intelligence infiltrated Al Qaeda in the Arabian Peninsula and foiled a plot to bomb an airliner. That's according to an CNN source in the region. The source says the agent brought the bomb out with him and turned it over to U.S. and Saudi intelligence.
A suspected terrorist fundraiser with links to Al Qaeda has lost his appeal to stay in Britain. The European Court of Human Rights ruled on Wednesday that it will allow Britain to deport Abu Qatada to Jordan for trial. His deportation was previously blocked out of concerns that he might be tortured.
And that's a look at some of the stories we're watching for you on CNN. Thank you for watching. "AMANPOUR," though, is up next.