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QUEST MEANS BUSINESS

Interview with Guy Verhofstadt; News Corp Split; Stock Market Update; The Millennials

Aired June 26, 2012 - 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: Just seven pages to save the Eurozone -- it's a plan which says the future is federal.

Breaking News Corp -- Murdoch's empire could be split in two.

And railing against the regulators.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Well, I think we're brutally regulated. But we're also brutally overtaxed.

(END VIDEO CLIP)

QUEST: The chief exec of United tells me red tape is stifling his business.

I'm Richard Quest.

And as always, I mean business.

Good evening.

I should really have a whistle with me tonight, not a bell. It's a case of all aboard the federalist express. This is the report. The first stop is Brussels on Thursday. The final destination, financial, fiscal and political integration.

The report is toward a genuine economic and monetary union. And driving the train seems to be Herman Van Rompuy. The European Council president wants EU leaders to agree to this seven page timetable at this week's EU Summit.

His exact words were, "I do expect to reach a common understanding amongst us on the way forward for EMU at our meeting at the end of the week," in the report.

If he succeeds, there will be no going back. A process will have begun. And if you join me in the library, you'll see what I'm talking about.

This is the biggie -- banking union. He wants a banking union with supervision at a European level, with preemptive powers to close down failing institutions.

Now, this all sounds very good, but the concept of a single European authority is something that is highly unlikely to find too much pleasure with the British, who, of course, guard jealously the city of London and the Bank of England under its new regulatory powers.

Also, there will be common deposit guarantees, something that might not be too welcome in other European countries.

Then there's the question of fiscal union. Now, everybody accepts that there has to be a greater arrival together, that there has to be tougher enforcement on budget, deficit targets and the like.

But here's the really controversial one, the question of common issuance, Eurobonds, some form of debt mutuality, as it's known, as the mutualization of European community debt.

Angela Merkel is very much against it and yet everybody, to a T, pretty much says that is the way forward.

So you've got banking union. You've got fiscal union. And you've got political union with joint decision-making.

The president says national policies can not be decided in isolation. There needs to be steps toward a federal Europe. And the president of the Commission, Jose Manuel Barroso, says it's a big leap forward. And he says that eventually treaty change is the answer.

(BEGIN VIDEO CLIP)

JOSE MANUEL BARROSO, EUROPEAN COMMISSION PRESIDENT: This integration process should be progressive. It should start with steps that can be taken immediately without a treaty change. These will lead to longer-term steps that may require such changes.

At its heart will be a guiding concept that greater solidarity and greater responsibility must go hand in hand.

What is at stake is not only the economic integration, it it also the overall economic confidence in Euro area, and, indeed, our commitment to the European project.

This is why we need to be bold and find the way forward.

(END VIDEO CLIP)

QUEST: We need to be bold and find the way forward.

The markets pretty much two up, two down, as you can see for the major bourses of the -- of the session.

What was announced today was very much the start of the process. The markets pretty much didn't like -- well -- well, they were pretty much nonplussed by what they saw, the biggest gain being in Zurich and the SMI.

Now, when Jose Manuel Barroso called this a defining moment for integration in Europe and Guy Verhofstadt says a closer union is the way -- the only way to safeguard the single currency, they are talking about the way in which the euro can be made to function better.

Guy Verhofstadt is the left-wing leader of the coalition parliament within the European Parliament.

And I asked him today if the report was the start of a new federal Europe.

(BEGIN VIDEOTAPE)

GUY VERHOFSTADT, PRESIDENT, ALLIANCE OF LIBERAL DEMOCRATS FOR EUROPE: Well, I think it's a first attempt to establish a -- a -- a real economic, fiscal and political union. And the -- the key question now is how a number of political leaders and especially Mrs. Merkel, shall react to that project for a more federal Europe.

QUEST: Right.

VERHOFSTADT: But it's clear that these building blocks are -- are crucial to overcome this crisis here.

QUEST: He's -- he -- President Rompuy's expectations are really quite modest for this weekend -- for this summit, though, isn't it?

He says I just expect to meet a common understanding amongst us of the way forward, which always sounds like we're going to get this thing started, kick the can down the road and the real fighting will happen in about six months time.

VERHOFSTADT: Yes, but I don't think that we have six months, that we have still six months. This crisis started in December, 2009. We have only seen half measures until now.

And I think what the markets are expect -- expecting now is a clear vision how Europe shall solve this crisis. And that can only be by establishing an economic, a fiscal union, a political union, also by mutualizing, at least partially, the debt in the Eurozone. And my fear is that if the leadership in Europe is not deciding on such a global approach, there could be an enormous turbulence on the markets on -- on Monday after this (INAUDIBLE).

QUEST: Right. So you think they've got to basically come out of this meeting saying we agree to the -- to the blueprint, if you like, or we agree to the road map and now we'll start to put the flesh on the blon -- the bones?

VERHOFSTADT: Yes. I think there are two key elements. They have to agree on two elements.

First of all, they have to agree on the way forward to a political union, where we transfer sovereignty on budget matters, on fiscal matters, two words, the European Union and European institutions.

And the second key element, where we need the approval of Germany, is to mutualize debt, to create, to establish Euro bills --

QUEST: Right.

VERHOFSTADT: -- to establish the European redemption fund, what is the only way to lower the interest rates for countries like Spain and Italy.

QUEST: The weak point, besides Germany's ascension to this, it comes up in -- in section four when it says, "Building public support for European wide decisions with a far-reaching impact on the everyday lives of citizens is essential."

Isn't the truth of it that in Europe, there still is not a consensus toward moving toward this fiscal and political union, however practically essential it may be?

VERHOFSTADT: Yes, there is maybe not a consensus, but everybody knows that the only way forward to safeguard the -- the euro, it's very clear now that if you have -- you want to continue with the monetary union, you need, also, an economic, a fiscal and a political union.

And I can tell you that more and more citizens in Europe are aware of that. More and more citizens are aware of the fact that it's only possible to continue with the single currency if you have a real federal union or so in the near future.

QUEST: Guy Verhofstadt talking to me from Brussels.

Finance ministers are still working out where they stand before Thursday's summit. Ministers from France, Italy, Germany and Spain are in Paris for negotiations.

Meanwhile, Greece has a new finance minister. Yannis Stournaras has been appointed to replace Vassilis Rapanos, who quit even before he'd been sworn in because of health problems. One in and one out.

The deputy shipping minister, Giorgos Vernikos, handed in his resignation to the prime minister, Antonis Samaras, early on Tuesday. No official reason has been given for the departure.

QUEST MEANS BUSINESS.

One of the world's biggest media companies, News Corp, could be tearing itself apart and doing so voluntarily. Investors are thrilled at News Corp's rising stock price. It's a possible vivisection.

But who and why, after the break.

Good evening.

(COMMERCIAL BREAK)

QUEST: Rupert Murdoch's media empire could very well be split in two. Today, News Corp confirmed it's considering separating the publishing and business arms from the television and film.

And if you look at this, you'll see exactly. We've sort of got the proportions pretty much.

Four year revenues for June to June of 2011 for the film and entertainment, which includes Fox, Fox News, Twentieth Century Fox, "National Geographic," that is some $23.5 billion, a sizeable amount of money.

Now, if you look at and see what happens on the publishing side, $8.8 billion, some very well known names -- "The Sun," "The Wall Street Journal," "The Times of London," "The Australian," but a huge discrepancy in the amount of revenue and profits contributed to News Corp.

And that's been the big problem, because investors have said, with all the scandals in the publishing bit, that has been weighing down the stock and the perception and the ability of them to make money on the whole port -- the whole portfolio.

Maggie is in New York, where News Corp has its headquarters -- Maggie, investors, shareholders have been crying out for this, or some form of recognition that there is greater value and income in the film and media section.

So what changed?

MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: That's right. Rupert Murdoch, it seems, is finally sort of caving into not only the shareholders, but maybe what also some of the board members have recognized, Richard. And, really, the catalyst is, of course, because of the phone hacking scandal that embroiled the newspaper. It has been the opportunity for those who have been pushing this to really make their case that this exposes the rest of the company.

And you're right, shareholders have wanted this. For years, they've been crying about it.

What's interesting today in what you're hearing is not only the sort of the revenue, the nitty-gritty, the forecast for what that TV and film business might now bring in, but also the fact that this is maybe yet another indication that News Corp is becoming a more sha -- more friendly to shareholders in general.

I mean that's got a lot of people excited.

QUEST: Right.

LAKE: Remember, there was always the Murdoch discount. News Corp traded at a lower multiple for Time Warner and News Corp because Murdoch did what he wanted to do and didn't always listen to shareholders.

QUEST: Right.

LAKE: Now -- go ahead.

QUEST: Well, but the -- but as I understand what they're doing -- forgive me interrupting you, but as I understand what they're doing, Murdoch will still have a -- a majority, or at least --

LAKE: Oh, yes.

QUEST: -- the Murdoch --

LAKE: Yes.

QUEST: -- premium, if you like, in both of those companies. It's just that investors would like --

LAKE: Murdoch --

QUEST: Go on.

LAKE: Right. He will still control both those companies.

But as -- as recently as May, Richard, he said, no way, we're not doing it. I know you all want me to sell -- divide off the newspapers, but I don't want to.

So the fact that he has now sort of acquiesced, if they go through with it, and sort of, you know, recognized the voice of the shareholders is one of the reasons that people are talking about maybe the environment is changing.

Put that on top of the fact that for the last year, they have been going through a stock buyback program, something Murdoch's not a fan of, but again, something the shareholders --

QUEST: Right.

LAKE: -- wanted to see.

Once again, the catalyst is the phone hacking scandal, but it's something that shareholders have been calling for for some time.

That leaves open the question, if this drip, drip of change. That leaves open the question, could -- could, the possibility, there would be a non-Murdoch in the top role. Remember, Rupert Murdoch still is chairman and CEO. Chase Carey's star has really been rising. Wall Street investors love this guy.

QUEST: All right.

LAKE: He is a TV and film guy. He is not a newspaper guy.

So do as -- now that they're separate --

QUEST: All right --

LAKE: -- at some point, does he take over the CEO role?

Rupert still owns the majority stake. He's still the chairman. He still has a large say.

But do you finally see a non-Murdoch in some important roles?

This is what has Wall Street talking today -- Richard.

QUEST: Hang on a second, Maggie.

I think I just heard a roar and an explosion from Sixth Avenue over -- when you said that --

(LAUGHTER)

QUEST: -- at News Corp headquarters (INAUDIBLE).

By -- all right, a -- now, I know that you're -- you're a woman of probity.

If you were a betting woman, which you may or may not be.

But would you bet that this -- this split takes place?

LAKE: Oh, yes, absolutely. Look at this --

QUEST: Yes?

LAKE: -- look at the stock prices. I'm not the only one who's betting this. The stock is trading up throughout the day, close to 8 percent here, as we enter the final hours, 7.24 right now. But that is moving higher as we speak.

Listen, people are saying that --

QUEST: All right.

LAKE: -- they would not have acknowledged the discussions are taking place, floated that trial balloon if they weren't really considering doing it. And when you see that kind of share reaction, it's very hard to back pedal now -- Richard.

QUEST: Well, I'm glad (INAUDIBLE) be sat on the fence on that particular question.

Maggie good -- Maggie Lake, good to see you in New York.

Many thanks.

News Corp may be rallying, but the overall market is looking a lot more choppy.

Alison Kosik is at the New York Stock Exchange.

Do you agree there that it's -- this split, the -- the balloon has gone up?

The market likes it. It's going to happen?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Of course the market likes it. Look, News Corp's shares are up 8.5 percent. Those shares have peaked -- are going higher and higher and higher. I say definitely Wall Street is cheering that possible move. I'm not a betting person, so I'm not going to gamble on that one.

So what's the market so happy about today?

As we see, the Dow was up 56 points. There's a mix of economic data. What they're happy about are housing prices. Housing prices actually rose from March to April by 1.3 percent in some of the biggest cities in the US. That's a good sign, even though one report does not make a trend.

We have been getting some fairly decent reports on the housing sector.

Now, what's limiting the gains is the report on consumer confidence. It fell in June. It fell short of expectations, as well --

QUEST: Right.

KOSIK: -- falling to its lowest level since January. As you know, it's raising these worries, Richard, that consumers may wind up pulling back on spending.

And we're even seeing that now with gas prices low. Retail sales are still not coming back very well. It shows that, you know, Americans are holding onto their money, even though gas prices are giving them the next - - a little extra cash in their pockets -- Richard.

QUEST: All right. I suspect you haven't got a dollar bill to hand. I suspect -- nearby.

Have you got one?

All right, here's the question, though.

KOSIK: Yes?

QUEST: Here's the question -- the currency conundrum question tonight, all right?

How many ways are there to make change for a dollar bill?

If you had a dollar bill -- here's the currency -- thanks, Alison.

If you had the dollar bill, how many ways could you make change?

With pennies, nickels, different variations.

All right, is it, A, 127; B, 196; or C, 292?

Remember, there are pennies, nickels, dimes and quarters.

That's the question.

Now the rates.

The euro is slightly down against the dollar after a disappointing Spanish fund auction. The pound has gained ground. The yen is higher.

Those are the rates. This is the race (ph).

(COMMERCIAL BREAK)

QUEST: So to our millennials. And here in London, a top executive, Joe Braidwood, is finally taking some time and kicking back. He is the chief marketing officer. And at only 27, he has to take down time seriously.

You can see why he has visited -- look at that. This is from his site. He has visited eight countries in six months and more than just numbers, because not only the countries, but if you look at where within the countries and in sometimes 25 cities in all.

This man is in over drive.

Also in South Africa tonight, we're going to be meeting our fashion blogger, Milli Bongela. Now, she is millennial to her core. But now she's learning more than she'd like about the consequences of overwork.

They are young, they are driven, they are learning fast, because they are the millennials.

(BEGIN VIDEOTAPE)

QUEST (voice-over): Previously on The Millennials, in Johannesburg, Milli Bongela took on a new project, with a little help from a friend.

MILLI BONGELA, FASHION BLOGGER: I believe in collaboration. I'm part of a -- a culture and a generation of people who like to use each other.

QUEST: While in London, Joe Braidwood welcomed a new team member and Joe admitted he can't do it all.

JOE BRAIDWOOD, CHIEF MARKETING OFFICER, SWIFTKEY: I have been struggling to deal with all my e-mail to -- to -- to make sure that I'm addressing absolutely everything in my -- in my to-do list.

QUEST: Tonight, Joe is putting those worries aside and instead, letting off some steam. He's catching up with some close friends that he hasn't seen in a while. His sister is also there.

BRAIDWOOD: There are these windows where I know I'm going to get home this day and probably be around for maybe a week or maybe two. And so, you know, one of the first things I do is figure out when I can see my family. And -- and then, you know, my -- my closest friends and -- and try and make sure that I've got a plan to see them.

I like your (INAUDIBLE).

QUEST: Joe makes the most of nights like this.

So I want to know what you've all been up to.

QUEST: And for good reason. So far this year, he's traveled 65,000 miles.

BRAIDWOOD: So I'm going to go and get a drink.

QUEST: -- leaving family and friends behind. It's even been a while since he saw the barman.

BRAIDWOOD: I'd love an old-fashioned please.

UNIDENTIFIED MALE: Just go, mate.

BRAIDWOOD: These are ready, there.

I suppose some people will -- will say, oh, I'm so jealous of all your traveling and, you know, the jet set life. But usually it's the people who are not quite as close to me, because they'll probably see, you know, Joe's gone abroad again on Facebook and think, oh, (INAUDIBLE), you know, always traveling.

But the people close to me, I think, just know that I'm just doing what I have to do to do my job.

(MUSIC PLAYING)

QUEST: As more friends join the group --

BRAIDWOOD: Yes! You've finally made it here.

QUEST: -- the drinks flow.

BRAIDWOOD: But who wants a shot?

QUEST: Joe leaves his title at the door.

BRAIDWOOD: Sometimes when people ask you what you do, and you say, oh, I'm the chief marketing officer of a -- of a company, they go oh, you know. But it's -- I think people take it at face value, you know (INAUDIBLE). I do think people pay as much attention as -- as you would think to stuff like that.

QUEST: In Johannesburg, workaholic Milli Bongela is learning that taking time out is not a luxury --

MILISUTHANDO BONGELA, FASHION BLOGGER: How are they selling?

UNIDENTIFIED FEMALE: Good.

QUEST: -- it's a necessity.

BONGELA: In October last year, I had done so much and, you know, was not taking care of myself, was just working, working, working. The shop assistant called and said that the kettle at the shop is broken, can I please bring a kettle?

And I just lost it, because I'm so -- you know, there's so much -- I just feel like it's, you know, taking, taking, taking or I'm giving to much and just, you know, I'm not replenishing.

Hello, Milli speaking.

QUEST: For someone who takes on every possible project, this is a shock. After all, it's the first time this millennial has hit her breaking point.

BONGELA: I just felt inundated with helplessness. I just didn't know what to do for myself. I didn't know how I was going to stop, which, of course, was very short-sighted, because the -- there was a solution. But at that time, I was very stressed. I was crying a lot. And I slept a lot.

These are haute couture.

QUEST: To 27 -year-old Milli, stress and overworking had become part of life. To the older generation who've been there, it's called burnout.

BONGELA: This is you, though. That's -- that's Kate, but this is you.

QUEST: Deep down, Milli knows it, too.

BONGELA: At the time, it did worry me. I was worried about the fact that, boy, you know, I'm so young for this to be happening. But I can't say that it's something I think about now.

The nice thing is I do recognize the part, that burnout now. I kind of know that it's OK to sleep a little bit extra during the day, because you do work at night when other people are sleeping.

QUEST: Now, Milli knows how to handle it.

BONGELA: I share what's happening in my life instead of keeping it all in and pretending that I was fine.

QUEST: Milli has learned. She isn't afraid to call on others for advice.

BONGELA: Now I call up my friends who are -- who own companies, who, you know, employ people, who also have these kind of crazy lifestyles. And I say, guy, what's happening?

How do I handle this situation?

QUEST: And more importantly, she has learned to be clear on her priorities.

BONGELA: What I would tell other millennials, you need to recognize what matters to you the most, whether it's time with your family or whether you want to be selfish right now and make everything about you and your career.

QUEST: Next week on The Millennials, I sit down for a one-to-one interview with Joe Braidwood and we say good-bye to our first millennials.

That's next week.

The head of the world's largest airline says over regulation is ruining his industry. It's United Airlines chief exec exclusively speaking to us tonight, saying some of the rules don't make sense, after the break.

(END VIDEO TAPE)

QUEST: That's all next week.

The head of the world's largest airline says over regulation is ruining his industry. It's United Airlines' chief exec speaking exclusively to us tonight, saying some of the rules don't make sense, after the break.

(COMMERCIAL BREAK)

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.

Turkey and NATO are condemning Syria's shooting down of a Turkish jet last week. Turkey's prime minister has called the attack inexcusable --

(COUGHING)

QUEST: Excuse me -- and NATO's secretary-general slammed what he called "Syria's disregard for peace, security and human life.

Tonight on "AMANPOUR," the Turkish ambassador to the United States talks to Ali Velshi about the increasing tensions between Turkey and Syria. "AMANPOUR" after this program.

Egypt's president-elect Mohammed Morsi is expected to officially take office this weekend, and he's promising an inclusive government. Morsi's policy adviser has told CNN he will choose a woman and a Christian to serve as vice presidents.

Jose Manuel Barroso says European integration needs a big leap forward. He's among E.U. leaders calling for closer political and fiscal union between European countries. A report from the E.U. Council President Herman van Rompuy calls for leaders to agree to closer ties at this week's summit in Brussels.

Rupert Murdoch's News Corp has confirmed it's considering splitting into two companies. One would be made up of its profitable film and television units. The other would include newspapers, book publishing, which brings in far less money.

The Queen is visiting Northern Ireland. Queen Elizabeth will meet with the former IRA leader and deputy first minister Martin McGuinness on Wednesday. Many say the meeting represents a watershed moment in the Northern Ireland peace process.

(MUSIC PLAYING)

QUEST: Overregulated and underappreciated, the chief executive of the world's biggest airline says the industry is being unnecessarily squeezed. In an exclusive television interview, United Airlines' Jeff Smisek told me that governments need to adopt a more rational approach to regulation.

(BEGIN VIDEOTAPE)

JEFF SMISEK, CEO, UNITED AIRLINES: Well, I think we're brutally regulated. We're also brutally overtaxed. And it's a problem, because we're a thin margin business as it is. And one of the reasons we're such a thin margin is business is because no nation, at least from the United States' perspective, the U.S. does not have nor do I think Europe has a coherent aviation policy.

QUEST: That's pretty strong stuff.

SMISEK: Well, it's the fact.

QUEST: What would you like them to be doing?

SMISEK: Well, I think we could be a lot --

QUEST: (Inaudible) so many -- because there's so many vested interests, aren't there? It's very difficult to have an aviation policy when you've got people complaining about runways in Germany and the U.K. You've got people complaining about this, that and the other in the U.S.

SMISEK: I think there could be more rational taxation of our business. I think there could be more rational regulation of our business. I think there could be more recognition of the value that our business brings to the world economy or the national economy in the U.S., from United's perspective. I think that there could be a more rational attempt to regulate us from an environmental perspective than having piecemeal regulations like ETS.

QUEST: ETS is not a good idea, in your view?

SMISEK: Well, I think ETS is a piecemeal regulation in a business that's global, that it makes no sense.

QUEST: Not every airline can buy an oil refinery.

(LAUGHTER)

SMISEK: Not every airline would want to buy an oil refinery.

QUEST: That's my question. If one came on the market, I mean, it was a nifty deal that Delta has done, which one can admire from afar. But would you do something similar?

SMISEK: No.

QUEST: Think about it.

(LAUGHTER)

SMISEK: No.

QUEST: Why not?

SMISEK: Well, look, you know, Delta's run by smart people and they have their reasons for doing it, I'm sure.

But we'd rather watch and see how they do their -- you know, we're going to focus on our fleet and having a fuel-efficient and a modern fleet, focus on running our airline efficiently and fuel prices. I don't think that's an area that we have any expertise in. We have expertise in the airline business. We don't have expertise in the refinery business.

QUEST: This is something -- this is nudging at something which people are saying sort of behind closed doors and behind their hands, Delta will live to rue the day they did this.

SMISEK: Well, I don't know whether that's true or not. I think the folks at Delta are smart. But they have an appetite for risk that probably exceeds my appetite for risk.

QUEST: American Airlines and US Airways, if it become a merger question, will United oppose a merger?

SMISEK: No.

QUEST: You will allow -- you would not be standing in --

SMISEK: Well, I'm not sure that we could prevent a merger if we wanted to. But I think that consolidation's been good for this business, and if American and US Airways want to get together, no, I don't think we'd be interested in standing in the way at all.

QUEST: Do you think it makes sense? I know it's always invidious to invite one to comment on one's competitors in any industry.

(LAUGHTER)

SMISEK: I think consolidation has been very good for the business, Richard. I think -- and I think further consolidation would be good for the business as well.

QUEST: Finally, are you having fun?

SMISEK: I'm having a blast. It's enormously fun. And this is the first time in my 17 years in the business where we have the prospect of turning the airline business into a real business that makes money every year and actually does something radical and increases -- and so much we can increase the cost of capital.

QUEST: You can't do it.

SMISEK: We -- no, we can exceed the cost of capital --

QUEST: You can't do it!

SMISEK: -- yes, we can. We can have a business -- we can have a business that actually -- that actually returns in excess of our cost of capital. We absolutely can do it.

QUEST: Half a percentage margin is the latest number for profits.

SMISEK: But that's across the world. That's not at United. Look, I'll tell you what, we'll make a bet. I'll come back here in a year. You'll see where we are. I'll come back in two years. You'll see where we are. How's that?

Deal.

(LAUGHTER)

(END VIDEO CLIP)

QUEST: There's a lot of betting going on on tonight's program. Maggie Lake, me and Jeff Smisek. I wonder who's going to have to pay up on any of these bets?

Coming up after the break, something you can't bet on, crisis of confidence. Europe is firmly on edge and this week's summit may not be enough to calm the nerves. So the markets will have to do it their own way. Where do you stand? After the break.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

(BEGIN VIDEO CLIP)

QUEST (voice-over): Time now for the answer to the "Currency Conundrum," how many ways are there to make change for a single dollar? The answer is C. There are actually 293 different possibility, which includes the $1 coin.

I can -- we've got a moment. It's not 100 pennies. It's -- that's one way, 100 plus a five. That's one way. Anyway, you get the idea, 293. I'm sure somebody's going to say that we are wrong. If you do think we're wrong, quest@cnn.com and better still, send it to Ali Velshi.

Now earlier, we heard the European Commission president, Jose Manuel Barroso, warn that without further integration, economic confidence in the Eurozone is at serious risk. This is the report toward a genuine economic and monetary union.

In Europe's biggest economy, Germany, consumer confidence is forecast to rise in July. The Germans are feeling more inclined to spend money, to spot what it is about the economy, according to GFA (ph). So that consumer confidence is considered to be good.

Switch the clock, in Italy, a drop in retail sales in April was more than twice as bad as expected, 1.6 percent. That's in one month. And we know the problems, of course, with Italy, also with rising debt on bond deals.

And in Spain, borrowing costs shot up today when it went to the financial markets. It sold 3.8 of short-term government bonds. And the interest rate was 2.362 percent, the yield just under 2.4 percent. Now triple what it paid in May.

And when you think of what Spain is paying for short-term money -- that's under three years -- and what Germany is paying for long-term money or 10-year-plus, and what the U.S. is paying for long-term money, you start to see exactly the problem. The spread over bunds, as they say, is growing ever greater.

Valentijn van Nieuwenhuijzen is the chief economist at ING Investment Management. He joins me now.

That's -- we'll get onto where you think everything's going in a moment. But that spread -- I can't recall what German bunds are at the moment; you'll probably --

(CROSSTALK)

QUEST: (Inaudible) change. But to short-term and long-term, that spread of 2.32 is not sustainable.

VALENTIJN VAN NIEUWENHUIJZEN, CHIEF ECONOMIST, ING INVESTMENT MANAGEMENT: It's absolutely not sustainable. So in the end, to solve this crisis, we really to make some kind of a trade between solvency and sovereignty, because that's the only way you're going to get those spreads down.

If there is some kind of fiscal pooling, if there is some kind of implicit fiscal transfer from the north to the south, it's still politically almost impossible to agree upon that. But we have to travel towards that end, though.

QUEST: Is the north capable and able and does it have the wherewithal to withstand that level of debt mutualization?

NIEUWENHUIJZEN: Well, it's capable and able. It's just not willing. I mean, it's pretty clear that if you look at Europe as a whole, there is still a trusted solvent unity. If you --

(CROSSTALK)

QUEST: (Inaudible) by a run of few countries, though, Germany, Austria, maybe (inaudible) Netherlands on a good day. You know, and some of the further northern countries. It's -- France as well. But it's -- that's -- can they withstand or eventually if they do go down the debt mutualization road, do they not feel the pressure?

NIEUWENHUIJZEN: Well, obviously they will feel the pressure. The question is to -- if they go the other route, what type of pressure will start to develop then? I mean, one of the big resisting forces, of course, is the European Central Bank and the mentality that (inaudible) German mentality.

However, at some point, the European Central Bank will realize that their baby, the euro, might well die in protecting the process. And at that point, they will lose all their principles and save the baby.

QUEST: What do you make of this report, seven pages, banking union, debt mutualization, budgetary, bank supervision, common insurance --

NIEUWENHUIJZEN: Yes, it's the well-known stuff that is needed for a European integration. If you just hid in an office in Brussels, you sort of designed it this way, you know that this needs to happen to make the Eurozone function.

But it doesn't tell you how to get there. It doesn't tell you that you should sort of go inside, that you should move next to each other rather than to sort of move one way or completely the other way.

QUEST: Isn't that what he's hoping to do now, though? Isn't that exactly what he's hoping to do? He's hoping to get an agreement in principle that the train should leave and then hopes everybody else gets on board and they'll work out where they're going. It's not a recipe for success, by the way.

NIEUWENHUIJZEN: No, it is not a recipe to success, because it's not the only thing. You should also at the same time realize we need to have growth. You cannot --

(CROSSTALK)

QUEST: OK, so what policies do you need for growth, then?

NIEUWENHUIJZEN: Well, it's --

QUEST: (Inaudible) people keep talking --

NIEUWENHUIJZEN: It's pretty clear. You need to reflate the overall economy.

QUEST: That's Germany again.

NIEUWENHUIJZEN: It's Germany unwilling, ECB unwilling, but that is what you need to do. So a version of that is ease financial conditions through additional interaction, intervention in financial markets. Next to that, you need to expand the growth initiative.

We had -- now have 130 billion of growth initiative for the coming years. That's way too little. It's 1 percent of Eurozone GDP probably spent over a couple of years. We need to think more in a Marshall Plan, 2.0 (inaudible).

QUEST: Right. Final question, if you are right, and if they don't do this, then you must (inaudible) best be pretty pessimistic about the outlook.

NIEUWENHUIJZEN: Well, you know, it -- I think in the long run you have to be pessimistic if they don't travel this route. What we have seen so far over the last two years is that of course, we are close to the edge.

But all the time we are sort of pushing the can down the road. We have said it so many times and I'm certainly not excluding that we will do it again. This end of the week, and then we will talk about this in six months' time, in probably 12 months' time, again and again.

QUEST: And you'll be back here talking about it for us.

NIEUWENHUIJZEN: Absolutely.

QUEST: We thank you very much. Many thanks, indeed.

Now the weather forecast. I do believe for about 10 minutes, when I looked outside, there might even have been a moment of sun.

But I would not put money on it.

JENNY HARRISON, CNN METEOROLOGIST: Hey, we are -- yes. You would have been OK. Put your money on that, Richard. There's more sunshine in your forecast, but I have to say I'm going to start talking about, first of all, about so this tropical storm Debby. Now you can see in the last few hours the eye's actually just off the coast of northern Florida.

Most of the activity in terms of rain has been to the north and east of this storm system, which is why we're seeing so much flooding across Florida, because the rain has really been ahead of the center of the storm.

Now this is a forecast track. And at the moment, it looks as if it's going to make landfall on Wednesday in the morning hours. Winds are just about tropical storm strength. That is very close to shore. Now the winds will obviously die down pretty quickly. This is all that it can be to models pretty much in agreement now that it's going to head across Florida and then push out into the Atlantic.

So once it makes landfall, the winds will die down. It'll become an area of low pressure. But then it's looking to push into the Atlantic, and you can see again, you can see the circulation on the storm center. So once again, it could become a tropical storm.

But when it comes to the rain, just look at this, over half a meter has fallen so far in St. Marks in Florida, 314 millimeters, right the way down Jacksonville 259. And let me just show you White Springs in northern Florida, this is an area of huge concern. I'm now going to move across to show you, the river, the Suwannee River, in the last 24 hours, it has risen dramatically because of all this rain. And right now it is actually at flood stage. So is there more rain in the forecast there?

Well ,there is. But in actual fact, most of the heavy rain should push to the east of those particular locations. You can see, of course, I was showing you the flood total for that particular region. But the rain, as I say, is going to continue (inaudible) the heaviest in the northeast quadrant of the storm. So still some big accumulations, but a little bit further east than where we have seen that.

But huge concern, of course, for the Suwannee River, because it still falls in this particular area. So easily another 80 to 150 millimeters in the next 24 hours. Now across into Europe, there has been some sunshine across the U.K. in the last few hours.

There are reports of a few more showers on the way. Central Europe really seeing some of the better weather, high pressure in control there. And warming up as well, and now it's been very warm across the southwest. But these showers, they will continue to work their way eastwards. And that warm air will filter it right the way into the northwest of Europe to the U.K., 44 in Cordova this Tuesday.

And you can see that 11 degrees above average. There's that warm air pushing up towards the northwest and then in fact, really, just northern Scandinavia with temperatures already a little bit below average. Even in Madrid, the temperature will actually come down steadily over the next few days, still above average.

And the, looking over the last few hours, (inaudible) you can see you have some cloud in the forecast. And there are a few showers heading that way, but they won't get there by the time we head to Portugal and Spain on Wednesday, partly cloudy skies and then Thursday in Warsaw again we should have fine, dry conditions.

And after Wimbledon, Richard, well, a few more showers likely on Wednesday. And then Thursday and Friday, windy, mostly cloudy. But it should hopefully stay mostly dry.

QUEST: Right. Well, I think we've made a proper small (inaudible) not getting waterlogged. But thank you and good bringing us up to date on those tropicals for us. Many thanks, Jenny Harrison at the World Weather Center.

So it was a depression, not a recession. Find out what else civil rights leader Jesse Jackson has to say about America, the global economy and the next stage of the Arab Spring. The Reverend is next.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

QUEST: He said, "My quest for justice and peace is insatiable." The words of the civil rights leader, Jesse Jackson. I've known Rev. Jackson a long time and he likes to see things improve. In an era of chronic unemployment and, in some cases, political upheaval, I asked him what he thinks of the race for the Oval Office, Egypt's new president and to begin with what America makes of the European debt crisis.

(BEGIN VIDEO CLIP)

JESSE JACKSON, CIVIL RIGHTS LEADER: Well, the instability in Europe affects our biggest trading market. So that's a factor.

And so that's important to us, the impact of the war in Iraq where we are -- spent more than $3 trillion in that war, found it to be the wrong target. So what would $3 trillion offer today? (Inaudible) state budget deficit and we'll hire police, teachers, firemen and regain strength for our economy.

QUEST: Do you get the feeling though, in the U.S., as it is an election year, that -- I mean, jobs are being created. But are they the jobs with which you are content and happy?

JACKSON: Well, they are being created. You know, when President Barack came in, we were losing 800,000 jobs a month. We were going into a sinkhole. The stimulus had the impact of stopping the hemorrhage and creating about 4 million new jobs.

Also Detroit, the automotive industry was gone. It's now number one again. One hundred thousand troops in Iraq, they are -- they are home now. The pay equity for women. So we've seen a steady growth, not big enough, but away from the sinkhole we were in three years ago.

QUEST: Do you believe that neither side, Romney nor Obama, is being quite honest with the public about just how long this might take to sort out, and how difficult it's going to be?

JACKSON: Well, I don't know. I think one can make (inaudible) case of dishonesty. I think we underestimated how deep the hole was, what was called a recession, in fact, was a depression. And banks without -- we globalized banking, globalized (inaudible), globalized human rights, workers' rights. We misread -- the economists misread the global market.

QUEST: And as a result?

JACKSON: And the result is the recovery has been slower than it would have been, but without the stimulus, there would not have been a recovery at all.

QUEST: But the public has never been really told that, have they? The public has never been said, listen, I'm going to be honest with you. You've got four more years or three more years of this.

JACKSON: Well, I think the public needs to know that it was a very deep hole and that we are in a global economy. And what happens in China with currency does matter to us. What happened with Greece and Spain and Europe does matter to us.

We are in a global economy. And the results of our bailing out, we've bailed out so few, left out so many. Plus the expense of these unnecessary wars, which we're all paying dearly for.

QUEST: You mentioned about the change in Egypt and the new president- elect, who will take office. That is a milestone moment. And I know you believe it could go one of two ways.

JACKSON: If it's focused just on religious arguments or focused on military argument, it become typical. But if, in fact, Mr. Mohammed, if he choose to focus on, we need a plan to wipe out malnutrition, to create all Egyptians drinkable water and to wipe out poverty. That will track a new view of Egypt. And guess what? It will track economic investment. And therefore economic growth.

QUEST: But the opposite is equally true, Reverend, isn't it? The first whiff of extremism, the first whiff of the Brotherhood taking a far position and that (inaudible) will evaporate.

JACKSON: Yes, and it will compound the crisis. But it seem his first moves, however, I'll be president of all of Egypt, is a good step. Putting some Christians and some women in the cabinet, these are steps away from kind of classical ideological Islam.

QUEST: Finally, Reverend, what keeps you going?

JACKSON: Well --

QUEST: I mean, you know, you're a year or two perhaps older than myself.

JACKSON: You know, this quest for justice and peace is insatiable. In my lifetime, we've made such progress. I mean, from the back of the bus, we struggle.

The right of what we struggle and from the pain, the balcony in Memphis, (inaudible) Barack Obama in the White House, these are huge steps from marching to Trafalgar Square or to free men (inaudible) to come hither state, we've -- there are dark moments. We've seen enough light to inspire us to journey on.

(END VIDEO CLIP)

QUEST: Reverend Jackson, always wonderful to see him. And if you do have a chance to actually see him preaching from the pulpit, he's quite an extraordinary orator.

Now, the markets, (inaudible) look at the Dow, up 47. It's tootling along at just at the moment, not really doing much. If you ever wanted to speak to us directly, how you can get back in touch with me, we are, of course, on Facebook and we are on email. It's worth taking a second or two.

The email address you see on the screen, quest@cnn.com, and I do assure you, I do read personally all the emails. And the Twitter, ah, dear old Twitter, tweet away, tweetarama, tweeteroo @richardquest is where we can talk to each other on that.

So those are the ways you can get hold of me. We really must have more of your tweets on the program in the days and weeks ahead.

When I come back after the break, it's a "Profitable Moment". And it's all about the latest E.U. report.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

QUEST: Tonight's "Profitable Moment" -- the report from Herman van Rompuy, president of the E.U. Council, it's the sound of the federal train getting up steam. What I've found extraordinary is the phrase -- and let me read it to you -- "national policies must reflect fully the realities of being in a monetary union."

Or how about this one? "Member states have to act and coordinate policies according to common rules." Goodness sake. Thirteen years after Stage III of monetary union, and only now our country's being reminded there needs to be a minimum level of convergence to function effectively.

Now this report is to be welcomed in one major respect: it's the recognition that without economic fiscal and political union, the whole thing can't work. What I'm just amazed at is that after this crisis has lasted so long they are only now starting to state the obvious. And when you think about the summit that will take place on Thursday and Friday, it's by no means certain that everybody's on board this train.

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.

(MUSIC PLAYING)

QUEST: The headlines for you: Jose Manuel Barroso says European integration needs a big leap forward. He's among E.U. leaders calling for closer political and fiscal union between European countries. A report from E.U. Council President Herman van Rompuy calls for leaders to agree to closer ties at this week's summit in Brussels.

Queen Elizabeth II is visiting Northern Ireland. She will meet with the former IRA leader and deputy first minister Martin McGuinness on Wednesday. Many say the meeting represents a watershed moment in the Northern Ireland peace process.

Egypt's president-elect, Mohammed Morsi, is expected to officially take office this weekend. He's promising an inclusive government. His policy director told CNN Morsi will choose a woman and a Christian to serve as vice presidents.

Turkey and NATO are condemning Syria's shooting down of a Turkish jet last week. The Turkey prime minister called the attack inexcusable. NATO's (inaudible) what he called serious (ph) disregard of peace, security and human life.

And Turkey's ambassador to the United States is talking to Ali Velshi about the increasing tension between Turkey and Syria. That, of course, is on "AMANPOUR," and that's up next.

END