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US Recovery Loses Steam; US Stocks Rally, European Stocks Surge; Barclays Apologizes; BP Siberian Court Defeat; IMF Warns Spanish Economy Will Shrink; Unemployment in Spain; Euro Gaining; Opening Ceremony Countdown; Parallels Between 2012 and 1948 London Games; Facebook Shares Plummet

Aired July 27, 2012 - 14:00   ET


MAX FOSTER, HOST: Growing but slowing. The US recovery is grinding to a halt.

Record high unemployment in Spain. We're live in Madrid.

And we're just two hours away from the Opening Ceremony. I just got back from Buckingham Palace, where the queen has welcomed world leaders. More on that later.

I'm Max Foster, this is QUEST MEANS BUSINESS.

Well, the US recovery is losing steam. The biggest economy in the world grew at an annual rate of 1.5 percent in the second quarter of this year. That's a marked slowdown from revised 2 percent in Q1.

The Commerce Department says weak consumer spending, government cuts, and a rise in imports are to blame. That rate of economic growth is only half of what's needed to make a serious dent in the unemployment numbers.

Presidential candidate Mitt Romney's team says it's dismal news for Americans looking for jobs. The White House says things are moving in the right direction, though, just not fast enough.


JAY CARNEY, WHITE HOUSE PRESS SECRETARY: On the issue of GDP, what we have seen is the 12th straight quarter of economic growth, positive growth. And that is a good thing.

We have also seen over the last three years an economy that has expanded by 6.7 percent overall, and the private components of the private components of the GDP have grown by nearly 10 percent, 9.9 percent.

And yet, as we say consistently, this is not enough, and this is -- growth is not fast enough. This is job creating that is not substantial enough. And that's why Congress needs to act.


FOSTER: Well, Julia Coronado is the chief economist for North America at BNP Paribas. She told me there are no surprises in today's figures, but there are some ominous signs.


JULIA CORONADO, CHIEF ECONOMIST FOR NORTH AMERICA, BNP PARIBAS: Well, it came in pretty much in line with expectations. The market consensus forecast was 1.4 percent for Q2 and we got 1.5 percent.

We also got an upward revision to Q1 of a tenth of a percent, so now we're at 2 percent instead of 1.9. So, really, pretty much it was exactly in line with expectations, a little bit better.

FOSTER: And what does it say about the state of the US economy compared with, say, the European economy?

CORONADO: Well, obviously, the US economy is putting in stronger growth rates than the European economy and is dealing with most of our downward adjustments are behind us.

We're still not immune to the slowing momentum both in Europe and globally, and I think that's what we are seeing in Q2 is that some of the momentum that we saw in Q4 and Q1 is fading, and that certainly is a worry.

Consumer spending is slower, and the manufacturing and inventory restocking that was helping activity around the turn of the year is now behind us. So, looking into Q3, the signals are for something that's probably even a little bit weaker than the 1.5 percent performance in Q2.

FOSTER: And then, we go into Q4, and there's this fear of this looming fiscal cliff. So, going ahead, the signals in the data coming out are not positive, are they?

CORONADO: Right. They're not very positive, no. And in particular, it's a -- it seems like there's a compounding of uncertainty. There's the fiscal cliff here in the US, which is not going to get any better before the November election. And so, those worries will intensify as we move forward.

There's the European situation and the ongoing uncertainties there. And then there's the global slowdown. China has slowed, we've yet to see that turnaround.

And that compounding of uncertainties seems to be leading business in particular to pull back on investment and possibly hiring, and that threatens that kind of self-reinforcing dynamic, and I think that's why even policy-makers here in the US and the Fed in particular is looking at taking some stimulatory action to help offset this.

FOSTER: You've referred to the election. What's your concern about the election happening at a time like this?

CORONADO: It's -- the US economy, the global economy is in such a vulnerable position right now that the last thing we need is the uncertainty of a change in government. Yet, this is democracy, so we have these things.

This is a problem Europe's been dealing with time and again, right? Just as you start to seem -- see some sort of stability, then it's time for another election, and everything gets thrown up in the air again.

So, it's really just the uncertainties, and businesses are right to wait and see who's going to win, what will the policy priorities be, what will their cost structures look like? They just simply don't know right now, and so at the margin, they postpone projects or postpone hiring people until some of those things have been resolved.


FOSTER: Well, despite that GDP figure, the Dow is sharply higher. There are unconfirmed reports that ECB president Mario Draghi is meeting with Bundesbank officials. Maribel Aber joins us now from the New York Stock Exchange. Thank you so much for joining us. Tell me, what do you make of all of this?

MARIBEL ABER, CNN MONEY MATTERS CORRESPONDENT: Hi, Max. You know, those Draghi reports are speculation, but are still driving the market up. Stocks are also rallying on comments from European leaders that they're committed to protecting the eurozone.

We've got investors -- they're actually having a pretty positive reaction to that, too, GDP reading. You can probably guess why here. The possibility of more stimulus. The Federal Reserve is set to meet next week, and Wall Street thinks that today's slowdown in economic growth should be enough to spur the central bank to take action.

Right now, the Dow is up triple digits, up 203 points at the moment, crossing that 13,000 mark for the first time since May.

And of course, Max, we're watching also Facebook shares today. Not having the same luck here as the broader market. They're plunging about 10 percent. The company reported revenue that slightly beat expectations and profits that met, but the sentiment from Wall Street is -- it seems to be that's good, but simply not good enough.

Investors also disappointed by the lack of any meaningful outlook from Facebook. We often talk about how forward guidance is almost just as important as the earnings themselves. So, the fact that Facebook didn't give any is a huge disappointment.

And also, one last stock we're tracking is Starbucks. Shares are down also about 10 percent. The coffee chain reported earnings that fell short of analysts' forecasts and, unlike Facebook, gave forward guidance, but lowered its full-year outlook.

CEO Howard Schultz cited significant global, economic, and consumer challenges. And we've heard similar statements from Ford, DuPont, and UPS early this week. Max?

FOSTER: OK, Maribel, thank you very much, indeed, for joining us. Well, we'll have more on Facebook a bit later in the program, but European stock markets have finished the week on a high. It was another day of strong gains.

Spanish banks pushed the IBEX up almost 4 percent. You might not have believed it at the start of the week, but all of these markets except for the FTSE have finished up on the week.

Shares in Barclays closed almost 9 percent higher. Its pre-tax profits rose 13 percent in the first half of 201 to more than $6.5 billion. The bank apologized again for its role in the libor scandal. Marcus Agius, the outgoing chairman, says he's confident Barclays can rebuild its reputation. Investors seem to agree.

Meanwhile, BP is being told to pay $3.1 billion to its Russian partners over the botched deal between BP and Rosneft. A court in Siberia says TNK-BP is owed damages from being shut out of the deal to explore the Arctic even though it never went ahead. BP is planning to appeal the court's ruling.

Now, one in nearly four people are unemployed in Spain. In a moment, we'll go live to Madrid and find out what people are doing to make ends meet.

Also coming up, 1948 was the last time London hosted the Olympics. In a post-war Britain, it was known as the Austerity Games.


DOROTHY MANLEY, 100M SILVER MEDALIST, 1948: We knew we weren't --



FOSTER: We'll turn the clock back and compare then with now after the break.


FOSTER: Tonight, we have two serious warnings about the state of Spanish economy for you. The IMF says the eurozone's fourth-largest economy is facing two years of deep decline. It predicts output will shrink by 1.7 percent this year and 1.2 percent next year. The Fund says Spain is in an unprecedented double-dip recession, and the outlook remains very difficult.

The IMF's grim outlook comes as the Spanish unemployment rate reaches record highs with 24.6 percent of the population, now, out of work. That's the highest rate since records began in the mid 70s after the end of the Franco dictatorship.

And the crisis becomes even more apparent when you look at youth unemployment. Among 16 to 24-year-olds, 53 percent, more than half, are looking for work. Let's cross live to Madrid and Isa Soares. Very, very bleak numbers, Isa. How are people feeling this in Madrid? I know you've been taking a taste of it.

ISA SOARES, CNN INTERNATIONAL CORRESPONDENT: Hi, Max. Well, despite that, they're very -- that warning from the IMF, the double-dip recession, and those very bleak, as you said, unemployment numbers, people here are fighting through the crisis. They're just not letting it dampen their spirits. Some of them, in fact, have found very creative ways of dealing with it.


SOARES (voice-over): The Puerta del Sol Square in Madrid is awash with talent. Here, newly created acts, often solos, share their young craft with the crowd. They're here to please, but also to make some cash, of course.

SOARES (on camera): If you walk these streets in Madrid, you'll hear stories of frustration, desperation, even anger, but also stories of survival.

SOARES (voice-over): Francisco Pacherres has one such story to tell. He lost his job more than two years ago.

FRANCISCO PACHERRES, UNEMPLOYED (through translator): I've sent my CVs everywhere in Madrid, but I still can't get a job, so the only thing I can do is to come here to Puerta del Sol to work as a mime.

SOARES: He's tried his hand as a street cleaner, a gardener, and even as a driver. Now, he dresses up as Mickey Mouse. Francisco doesn't always get a tip.

PACHERRES (through translator): They don't want to take a photo anymore, because they say we're in a crisis, we're in a crisis.

SOARES: And if they don't get a picture, Francisco goes home with nothing. He's lucky, in fact, if he makes $5 an hour working seven days a week with temperatures soaring around 100 degrees Fahrenheit.

Walk no further than to the other side of the square, several men with yellow jackets look to draw you in. They're here to buy your gold, provide you some fast cash, and help you get through the month.

UNIDENTIFIED FEMALE (through translator): We're in a situation where we don't know what to do with our money, put it in the bank, or keep it at home.

SOARES: If you want to find the real economic pulse of Madrid, look no further than these streets. Here, people battle through it in true --


SOARES: -- Minnie, Mickey, ninja, and Smurf. How long they can play this part? Now, that's another story.


SOARES: Francisco, Max, is one of the many acts around the streets of Madrid, and whilst to some he may be very comical, his story really does paint a picture of the state of the Spanish economy, especially when you think about what the government said only a couple of weeks ago.

They're only expecting the Spanish economy to expand in 2013, so which begs, really, the question: how long can the likes of Francisco keep the enthusiasm going? For how much longer, we'll have to tell.

FOSTER: And how much reform can they take? Because we saw today that the IMF is calling for even further reform. How much can the Spanish people take?

SOARES: Well, I don't think speaking to a couple of Spaniards over the weekend -- over these couple of days, I don't think they can take much more. We've seen $55.6 billion of cuts already, there's frozen wages, they've cut benefits.

People here said if we cut any more austerity, what we'll see will be very much barring and protesting from the streets, which we saw, Max, if you remember, only last week. So, they say out here they can't take anymore.

And pretty much, Max, every day, I'm seeing protests, whether it's from the taxi drivers, whether it's from the hoteliers. Very, very, very bleak picture here, Max.

FOSTER: OK, Isa, very much, indeed, for bringing us up this week.

Now, it's time for a Currency Conundrum for you. We've had figures on the size of the US economy today. Our question is, how big is the Monopoly economy? In the US version of the game, what's the total amount of available cash? Is it A, $15,440? B, $25,140? Or C, $40,140? We'll have the answer for you later in the show.

The euro is gaining against the US dollar currently for a third straight session. Right now, a euro will buy you around $1.23. That's up around 20 percent, actually, from Thursday. Sterling is gaining a similar amount. The yen is down by two-fifths of one percent at 78.65 against the dollar.


FOSTER: The wait is almost over. In two hour's time, London will host the Opening Ceremony of the 2012 Olympics, and right now, world leaders are at Buckingham Palace for a reception with the queen.

More than 80 heads of state will be at the Olympic Stadium to watch the ceremony, directed by the Oscar-winner Danny Boyle. Earlier, the flame was carried along the River Thames by the queen's royal barge, the Gloriana. I went down to Buckingham Palace to see the leaders arrive.


FOSTER: Presidents and prime ministers from around the world arrived here at Buckingham Palace for this final leg of the buildup to the London 2012 Olympics. The president of Brazil joined by Ban Ki-moon of the United Nations and Jacques Rogge of the International Olympic Committee.

Representing the United States was Michelle Obama, who arrived and then went in and mingled with all sorts of heads of state and prime ministers and royalty from around the world, royalty including the Duke and Duchess of Cambridge, of course, and Prince Harry, who in many ways have represented the Olympics here in London.

The queen gave her last speech before officially opening the London 2012 Summer Olympics.

HRM QUEEN ELIZABETH II, THE UNITED KINGDOM: My great-grandfather opened the 1908 Games at White City. My father opened the 1948 Games at Wembley Stadium. And later this evening, I will take pleasure in declaring open the 2012 London Olympic Games at Stratford in the east of London.

FOSTER: Rarely have so many of the world's most powerful people been in one place at one time, and there's complete lockdown here around Buckingham Palace, but the security's working, and actually, there's quite a jovial mood here at the palace because now, for heads of state, it's about throwing their support behind their teams and going for gold.


FOSTER: Well, the Opening Ceremony will be a grand spectacle at a time when the UK government is sticking rigidly to austerity, and that's exactly the same situation as when London last held the Games, as the queen was referring to, back in 1948.

Whilst today's Games are all about budgets and corporate sponsorship, the 1948 Olympics were a product of simpler times, as Nick Glass found out.


NICK GLASS, CNN INTERNATIONAL CORRESPONDENT (voice-over): It's grown, as we all know, into a commercial behemoth. Billions of dollars on television rights, sponsorship, and new stadiums. The 1948 Olympics were a quarter of the size, strictly amateur, and so frugally hosted, they were called "The Austerity Games."

These were the first Olympics after the war, the first since Berlin in 1936. Old sporting idealism was rekindled, along with the Olympic flame.

MANLEY: It all halted when money came into it, really. That's a few Olympics back, wasn't it? But up until then, we knew we weren't getting any payment for it, but we did it because we loved it.

GLASS: Taking part was more important than winning, so read Baron de Coubertin's Olympic creed, visible from every seat at Wembley Stadium. Germany and Japan weren't invited.

Marketing was relatively discreet: a Coca-Cola concession under the stands, and a full-page ad in the souvenir brochure. German prisoners of war helped build Olympic Way, the pedestrian walkway that led to Wembley. A new stadium has since risen on the site of the old. The original dated from 1923.

GLASS (on camera): Basically, it was a Greyhound racing track with a football pitch in the middle. Converting it into the main Olympic Stadium in 1948 took just two months.

GLASS (voice-over): The new Wembley still has the tablets of stone, a roll call of the 1948 gold medalists. One name recurs: the sprinter FE Blankers-Koen, Fanny Blankers-Koen from Holland. She won four gold medals in eight days.

The flying housewife, as they called her, won the 100 meters. Dorothy Manley came second.

MANLEY: Well, I was feeling terribly nervous, because I'd never run in an international race before, so I --

GLASS (on camera): Never?

MANLEY: Never, no. So, coming out onto the track and seeing all these 80,000 people there was a bit sort of --


MANLEY: When we were on our marks and the gun went, I thought that I'd got a flier because I really got a good start. Mind you, I would never have beaten Fanny, because she was a wonderful athlete. But I do -- I'm disappointed I wasn't a bit closer to her.

GLASS (voice-over): The Olympic Rings still symbolically link us all together, but the greatest sporting show on Earth has changed unimaginably in scale and spirit. The entire budget in 1948 was about $30 million, or roughly what they've spent this time just on the Opening Ceremony.

The Olympic Games of London 2012 may well come in a little under budget, but it will still cost $13.5 billion.

Nick Glass, CNN, London.


FOSTER: Well, here's how the euro is faring right now, to take you to the currencies. One euro will buy you around $1.23, that's up around 0.2 percent from Thursday, not the 20 percent that was in there earlier on, apologies for that.

Now, after the break, a status update from Facebook, and if you hold stock in the company, you're not going to like it. We'll tell you why its shares have never been lower.


FOSTER: Welcome back. I'm Max Foster, these are the main news headlines this hour.

Syrian activists say regime forces indiscriminately shelled homes in the Fardos district of Aleppo. The opposition describes what happened there as an horrific massacre. Activists say at least 90 people have been killed in the violence across Syria just today.

The English Football Association has charged Chelsea captain John Terry with racist abuse. The charge relates to an incident involving QPR's Anton Ferdinand during a Premier League game in October last year. Terry was acquitted of abusing Ferdinand by criminal court earlier this month. Now the FA has decided to proceed with its own charges.

Amazon CEO Jeff Bezos has donated $2.5 million to a charity promoting same-sex marriage. Bezos made the donation together with his wife, MacKenzie. The US charity Washington United for Marriage says it's the largest individual gift made to protect same-sex partners -- partnerships.

The 2012 Olympic Opening Ceremony begins here in London in around 90 minutes' time. Heads of state have arrived for a reception at Buckingham Palace, while a celebration concert has begun in the city's Hyde Park. Fans have gathered to see bands like Snow Patrol and Duran Duran.

Now, Facebook shares opened at their lowest point ever today after the social network's latest earnings report failed to impress. Right now, shares are down more than 10 percent. They're off the day's lows, but still, far short of the $38 price set on the day of the IPO.

Since then, Facebook CEO Mark Zuckerberg's net worth has fallen more than $7.5 billion. While the company's revenues and earnings met expectations, analysts are worried about the potential for growth, particularly when it comes to mobile advertising.

Simon Mansell is the CEO of TBG Digital, a company that deals with advertising in social media. He joins us from New York now. And full disclosure, you do have some links with the company, right?

SIMON MANSELL, CEO, TBG DIGITAL: Yes, Max. My companies helps big brands like Dell and Coca-Cola advertise on Facebook, so I'm a little bit biased when you ask me the questions, so --

FOSTER: No problem --

MANSELL: I'll try and do my best.

FOSTER: You have a positive view of the company, and that's why we got you on, because there's so much negativity about the company right now. So, I'm just looking at the figures, and other companies seem to be -- their share prices more reflective of what the company is likely to make in the future. Why do you think Facebook is a big profitable solution for the future?

MANSELL: Well, I think if you look at the sort of user numbers, nearly a billion people use Facebook, as was released yesterday in their earnings statement. If you look at the mobile usage, if you add all the people up in the US and all the people up in Brazil, Facebook have more mobile users than that. So, they have a huge amount of usage.

They also are the identity lair of the world. So, they know who you are, who you're connected to, and who -- what you're interested in. And I think that asset is going to be very valuable in the future.

I just don't think this is a 100 meter sprint. It's more like a -- decathlon event, where there's lots of things they need to get right over time. So, my opinion is, it's not a short-term bet, but I think in the long term, they're going to do really well.

FOSTER: Let's talk specifically about mobile, because when you're on a PC or a computer, there is pretty clear where they're making the money. But when it comes to mobile it's not very clear.

So where do you see the profits there?

MANSELL: Facebook make money on mobile from an ad unit they call Sponsored Stories. So to give you an example of that, let's say you go in, you discover a new restaurant and you like it on Facebook. That restaurant can then pay to make sure that all of your friends see the fact that you liked that restaurant. And it will then go into the central, you know, news feed on your mobile device.

Facebook only launched mobile ads in June of this year, and also -- you know, yesterday Cheryl Sandburg (ph) said that they're already running at $500,000 a day in revenue, which already makes them the second biggest mobile advertising platform in the world, behind Google.

So I think there's some promising early signs there. But, yes, early days.

FOSTER: So those shareholders that saw -- bought on the IPO and lost so much money, when do you think really actually the company's going to be worth what they thought it was worth, or at least the market will be convinced of that?

MANSELL: Well, I'm not a stock expert, so I can't sort of comment on, you know, the multiple valuations, that kind of thing. What I think, though, is I think that you need to look at this a bit like if you were buying Amazon, you know, Jeff Bezos was criticized for 7-8 years because they weren't making enough profit; they were trying to grow a big business.

And now that business is Amazon, you know, one of the most -- you know, the most valuable retail, online retail business. So I think you need to -- if you're going to invest in Facebook, in my opinion, you have to look at it like that and not like a short-term bet.

FOSTER: OK. Simon Mansell, thank you very much indeed for joining us from New York with that.

Now while Facebook's results were a flop with investors, Samsung's were a roaring success. Shares surged after the company reported a record quarter. Net profits jumped 48 percent in the same period last year to $4.5 billion. That was largely due to the phenomenal success of one of its products.

Charles joins us with details on that.

And this is something that people can understand. They produced a phone which people wanted.

CHARLES HODSON: Yes, absolutely. And according to IDC, which has produced a survey -- it's a Washington-based group -- and they say that Samsung, in the second quarter, sold 50 million phones. Compare that with Apple's mere 17 million. You see that they're really edging them out. And Samsung offers a wide range of handsets.

But it's the Galaxy S3 that, above all, makes it number one in smartphones, by a wide margin. Now this little phone has actually sold 10 million in two months since launch, Max. Now also contributing to Samsung's record operating profits was this thing. This is -- should be the Note.

And it's another member of the Galaxy family, quite similar in some ways to look at to the S3. And it's a tablet. It's smaller than Apple's iPad, and you can make a phone call it, for example.

Now I went along to Europe's leading independent retailer of mobile handsets in order to find out why they thought -- you know, I asked the people that actually sell these things why they sell so many of them. Was it about functionality or looks or what?


SABIA ALI, CARPHONE WAREHOUSE: It's a combination of both. It's got very good screen on there, and so the size of the screen, people that use it for media purposes, they find it a really nice sized screen. But the features on there are very, very good as well. So you know, it kind of ticks off both of the boxes.

HODSON: What about the Galaxy Note? That's only a little bit bigger, but that seems to be selling well as well.

ALI: It's really good device for people that, when you use it as a phone, but also for work purposes as well, so it comes with a stylus where you can go into -- onto the Internet, for example, copy something.

And then if you're wanting to enter it into a presentation, you can cop a button. It's available there. It's got very good-sized screen as well, which kind of attracts people to it as well. So overall, it's a very, very good phone.


HODSON: Interesting seeing as how these devices are starting to interlock, you know, how you -- the functionality is good because it allows you to access another functionality better, Max.

FOSTER: And they've done very well in Asia, haven't they, Samsung? Maybe originating in Asia, I guess, but everyone always then refers to the iPhone and brings Apple into the equation. They've got a phone coming out, haven't they? So is it -- can they catch up?

HODSON: Well, I mean, Apple and Samsung just aren't friends, although Samsung does supply Apple. I mean, you know, we have these perpetual battles, it seems, through the court about who actually really invented the tablet computer. I'll be fascinated to find out. But I think with this, going to be an awful lot of legal print and hot air before we ever get to the bottom of that one.

But in the smartphone market, that really matters. Apple said one reason for its disappointing results we heard about for the second quarter, we heard about those earlier this week, it said that its people, its fans, if you like, were holding back, not buying (inaudible) because they're looking forward to the 5th generation, the next iPhone.

And that could come in as early as September or October. And a lot is riding on that for Apple. I mean, games fans will be very interested in the power of the chipset inside it. But I'm going to be interested in three things, I think, above all. First of all, the size of the device. There are rumors that it may look like an elongated iPhone 4S.

In other words, a bit taller, but no wider. So it still fits neatly into a pocket or a handbag. Is it going to go in the same direction as the Galaxy Note? Possibly not. You know, if it's a smaller tablet, no, because that might cannibalize iPad sales.

The second thing I'm interested in is the functionality. You know, is it going to be significantly better at doing things and more things than the iPhone 4S? And the price, now, Apple has proved very good at keeping up the profitability. It is better than Samsung in terms of the gross profit margin per handset all over all. But will it drop the price in the interest of higher sales? Question in my mind anyway.

FOSTER: I say no, going on past experience.

HODSON: OK, yes, you're right, because in fact, it would be very un- Apple for Apple to drop the price at this point, because its philosophy has been get in there, open up new technologies, new gadgets, if you like, like the tablet computer, get in there with a really good set of technology, a great offering and charge a premium price.

Now the question is, can it keep on doing this? I think what's happening here is it's about the interlocking and whether Apple would do that in order to make sure that people buy, iPads, iPhones, iMacs, I'm not sure. But you know, I would bet against anything. And they are making their latest operating system, Mountain Lion, available at a bargain price. So they're not --


FOSTER: They are looking at price, to a certain extent.

Charles, thank you very much indeed.

Now as the world turns its eyes to London, we take a closer look at one of its most famous landmarks. Next, we go inside Tower Bridge for a look at the technology that keeps it going.




FOSTER (voice-over): It's time for the answer to today's "Currency Conundrum." Earlier, we asked you what's the total amount of cash in the U.S. version of the game Monopoly? The answer is A, $15,140, enough to buy 1,010 Monopoly sets, in fact.


FOSTER: Now the Bascule Bridge, French for seesaw, the London Bridge, features an innovation in engineering that lets tall ships, actually, pass under low bridges. And the Olympic Torch passed under it earlier today. Bridge master Eric Sutherns is the man who keeps this 118-year-old innovation moving. Let's see how it's done.



ERIC SUTHERNS, BRIDGE MASTER, TOWER BRIDGE: Tower Bridge is a 24- hour-a-day operation, 365 days a year.

Stand by, Bridge Tower, stopping motor (ph) traffic.

It's a piece of machinery. Parts of it are still original and over 100 years old. So the fact that we can do anything up to 950-1,000 bridge lifts a year, that is the achievement.

Back in the late 19th century, it was at the time a lot of shipping coming up to London Bridge. So one of the prerequisites of the design of Tower Bridge was it had to allow that shipping to continue up into the what is now known as the Upper Pool (ph).

We're actually underneath the road and below the water level. This is the chamber underneath the South Bascule, which is really where the design for the lifting bascules came from.

The rectangular section is actually a balance weight. The bascule is a seesaw mechanism. The long section of the seesaw is the roadway up top.


SUTHERNS: So the bridge driver, before he does any bridge lift, he goes around all the four machinery rooms and checks everything is as it should be, much like if you were going to fly an airplane, the preflight checks, you go around and you make sure all the little pins are out and everything's in its right place.

We're down in one of the four machinery rooms. Here we've got one of the hydraulic pumps and the gear box. It's a rack-and-pinion effect. So on the underside of each of the bascules, there are two racks. And the drive shaft along the back has got two pinions on it, and we just turn the drive shaft, which turns the pinions, which rotate the rack and the bascules come up.


SUTHERNS: Stand by, bridge staff, (inaudible) open row gate (ph).

I'm looking after what is probably the most famous structure in the -- in -- certainly in the U.K. It's an icon of London. If you see a picture of Tower Bridge, everybody knows you're talking about London. And to be involved in that is something special.


FOSTER: Just like Jenny Harrison.

JENNY HARRISON, CNN METEOROLOGIST: Oh, ho, look at his face. (Inaudible) -- that was a nice piece, wasn't it? We --

FOSTER: It was lovely. We love Tower Bridge. It's just this most spectacular icon of Britishness.

HARRISON: Absolutely, fantastic. And we both wish we were at the Olympic opening ceremony, like a certain Mr. Quest, who we now will not mention again, because he's there and we're not. But anyway, the weather for us, the next few days, in particular, this evening -- I'll get to that in just a moment.

Look at all this. This has been coming up in the last few hours. We did see some fairly heavy rain. But in fact, the really heavy rain was really across the Channel into the low countries and areas of France. But it has taken quite a while for that cloud to clear through.

The rain did also clear through. We can't just really -- we can't sort of say that we might not get a stray shower as we go through the next few hours, just can't really rule it out entirely. But what's interesting is actually the wind picked out of it, and in fact, the temperatures, they're up a little bit too to what it was an hour ago.

It's very warm and quite muggy night, really, across much of the U.K. Look at these temperatures, 19 right now in Coventry, 21 in Weymouth and of course, there are so many parties in London right now, outdoors, everybody gathering together to watch the opening ceremony. I'm sure it'll be the same across other areas throughout the country.

So look at this. By the time we get to 9 o'clock, the clock is ticking down still, it should be about 20 degrees Celsius and you know, a fair mix of cloud up there as well. But there is some rain coming down from the north as we go through the first part of the weekend. But in fact, Saturday, the first full day, should be fairly glorious.

By Sunday, we look to be seeing some fairly heavy rain come through and then Monday it'll turn to a much more showery sort of day. But here's something we've put together. This is the first time we're showing you this.

Here it is. What do you want to call it? The calendar. Your cloud calendar or you shower schedule. That was one we came up with in our department. And basically the white days are the best days. There is Saturday. There is Sunday. It goes on quite a long way out, Max.

So we're not going to, you know, really stick to exactly what we've got two weeks from now, but we're looking to give you a bit of a long-range forecast over the next two weeks, day by day.

FOSTER: Risky. But worth it, I think, on this occasion.

HARRISON: Absolutely.

FOSTER: Jenny, thank you very much indeed.

That is QUEST MEANS BUSINESS. Thank you for watching. I'm Max Foster in London.




Now coming up in this week's show, we take a look at how buffaloes are becoming a major cash cow for investors in Africa's gaming industry.

But first, East Africa is in the middle on an oil and gas bonanza. Uganda, Tanzania, Kenya and Mozambique, all enjoying recent discoveries. Well, for this week's "Face Time" interview, Nima Elbagir sits down with the CEO of Tullow Oil. Now Tullow is one of the companies that's made a major oil discovery in East Africa. They've also recently launched an initiative for people to invest into Africa.


NIMA ELBAGIR, CNN CORRESPONDENT: We'd love to talk to you about Invest in Africa. This is the new initiative, where you partnered with the Sutherland Football Club to encourage companies to actually come into Africa rather than be held back by a lot of the misperceptions, as you put it.

AIDAN HEAVEY, CEO, TULLOW OIL: Yes, we've been working in Africa for over 25 years. And a lot of the stuff that we do is long-term. So we're always looking for to build local companies and to build expertise locally.

And what we tried to do in the supply chain in the past is to bring in companies into the countries to work with local companies to build up the local companies. And we found over the years that it's quite difficult to do that, because people had an incorrect view of Africa.

And Invest in Africa was an initiative that we discussed with different governments and companies about how we could start changing that image and attract more companies to come in and invest in the continent.

ELBAGIR: And so how is this going to work?

HEAVEY: Every company that's involved -- and that will be involved with Invest in Africa -- will have a slightly different agenda. For us, it's to bring companies in to help in indigenous companies to grow and to expand their operations.

It's about increasing the investment climate in the countries, and that makes it easier for us to raise finance. It tends to increase transparency. It increases the view -- it -- you know, the whole population benefits from it.

ELBAGIR: And just then when you put it like that, that this is about -- this is much about benefiting your expansion and growth as it is about benefiting the African companies that are going to come on board.

HEAVEY: Yes, it's teamwork, you know, what benefits us long-term benefits the country, because you know, we're not in this to sell a product and then leave.

ELBAGIR: And you've just -- you're set to report record profits for the first half of this year.

Within the context of other companies looking to come into Africa and invest, why do you think that you have had the successes that you've had?

HEAVEY: Our approach is we do a lot of very good technical work long before we go into a country. We take our time; we do it properly.

ELBAGIR: And where are you going to be looking in the second half of the year?

HEAVEY: Well, I think we've got some -- over the last 3-4 years, we've opened up four new basins in the world in oil, which I think is a record for any company. But the one that's pretty exciting right now is Kenya and we've over 100 prospects to drill there. So that'll take quite a lot of our attention in East Africa.

Also, we're working very closely with the Ugandan government in relation to getting the developments downstream for the Lake Albert region.

ELBAGIR: What are your expectations for the Lake Albert region?

HEAVEY: Well, the Lake Albert region is -- it's a number of small oilfields, and spread out over quite a large area. And we will be talking to the government over the coming months about a basin development plan. And that plan should be looking at an export pipeline of maybe 200,000 barrels of oil a day. And the government also want a local refinery. And so we're also looking at that.

The question then, of course, is how that links in with Kenya and oil in the other part of East Africa. We will be drilling wells later this year in the Omo Basin in mid-Ethiopia. And then there's also oil in South Sudan.

So it's a very exciting area for East Africa, from an oil point of view. You know, I think the oil companies will be looking on investments of close on $100 billion in that region over the next few years. So it's a very exciting area.

And I think what you're seeing in East Africa, with all the resources developing down there, you know, this is where business is going to be. This is where the big investment is going to be. To look at an oil industry in East Africa, which will require an investment of over $100 billion alone just shows the opportunities in just one part of Africa.

You know, in West Africa, oil has been found. We've found oil in Jubilee Field. Look at Ghana. Ghana is fastest-growing economy in the world. You know, seven of the top 10 economies currently are African growth-wise. And so the opportunities are there. It's just people have to realize this, they're there, and get in there now.


CURNOW: Now that was an assessment of Africa's changing oil sector.

But coming up next, we're going to look at how the prospects of a (inaudible) return on your investment in one of these is luring investors into South Africa's gaming industry.



CURNOW: South Africa's gaming industry is flourishing. At a recent auction, the price of a buffalo hit a record high. And rare variations of color and genetics for impala and antelope are also in high demand, as farmers and investors are looking at increasingly creative ways of making money.



UNIDENTIFIED FEMALE: The animals you see here aren't being hunted, they're being tranquilized and transferred from one part of this farm to another for breeding.

On the ground, Tino Mint (ph) finds the darted animals before the recover from the sedative.

TINO MINT (PH): Mostly we dart -- the animals we dart is rare species, like sable, rowan (ph), buffalo and black impala.

UNIDENTIFIED FEMALE: These impala are part of a burgeoning agricultural business, a breeding program to create a herd of rare black impala. The rarer the color, the higher the price tag in South Africa's gaming industry.

JOHAN JONCK, GAME FARMER: I think your avid game lovers and watchers like to see something new and something exciting and something different. And I think the value follows that demand.

UNIDENTIFIED FEMALE: South Africa is the world leader in commercial game farming. And according to the industry group Wildlife Ranching South Africa, game farming is on the rise, with an annual revenue growth of about 20 percent over the last 15 years.

And it's not just the farmers who are cashing in. As you say, pilots are also important part of the program.

OLE SMITH, PILOT, OLJACO GAME DEALERS: Their work is coming up to every (ph). This year looks like we got bidding more work to do under the floridati (ph).

UNIDENTIFIED MALE: The buffalo's under the (inaudible).

UNIDENTIFIED FEMALE: Waltie van der Walt is a game breeder with very rare and exclusive herds, which means he can expect a high price when selling his game or their offspring at auction.

Van der Walt says animals like white impalas and golden wildebeests (ph) were hunted almost to the point of extinctions. But herein lies the business opportunity.

WALTIE VAN DER WALT, GAME BREEDER: There's a lot of countries; they used to be huge herds of buffalo and sables and there's countries who have none. We believe some day we will export to them. And there is money to be made in it.

UNIDENTIFIED FEMALE: But it's not just breeding. There's also animal viewing and managed hunting on game farms, drawing foreign, particularly American tourists and profits.

KEVIN RASMUSSEN, HUNTER: We've been here six days. It's a dream that I've had most of my life. We've probably seen more animals by noon than I've seen in my whole life. It's a real draw for the Americans to come here, just because of the variety.

KELLY WILSON, HUNTER: Usually a week hunt back home, you're going after one thing and one thing only. And here you -- week's hunt, we killed eight different animals.

UNIDENTIFIED MALE: One eighty (inaudible) one eighty. (Inaudible).

UNIDENTIFIED FEMALE: Money is also made at auction. A wealthy clientele turned out for this one in the town of Molemole (ph) in the northern Limpopo province, many hoping the money they will spend will lead to a hefty return.

Commercial gaming experts believe in this volatile economic climate, a rare-colored animal is a wise investment.

JACQUES MALAN, WILDLIFE RANCHING SOUTH AFRICA: A lot of the other investments that people has made are not paying dividends. People are seeing it and they are following the economical part of the trend of the game farming industry.

And they're seeing the huge dividends that they can get. And on top of that, they can also enjoy it. So what we find is we find that the very big businessmen are starting to invest into game farming.


UNIDENTIFIED FEMALE: Businessmen, like Peter Billingham. Last year, he spent 18 million rand or about $2 million U.S. on this buffalo bull called Sanacla (ph) for breeding. It was a massive cost, a bit too much to handle.

PIETER BILLINGHAM, GAME FARMER: After you've paid too much (inaudible), let's say you feel it. But I think at the end of the day, you know, that's -- if you do your sums and you look at your formula, you go for it on a day there's the only one there, you've got to go for it.

UNIDENTIFIED MALE: Three hundred 18 (inaudible).

UNIDENTIFIED FEMALE: Billingham said it's becoming an increasingly competitive market. In 2010, the annual value of game sold at auctions was close to $40 million U.S. That's up from about $20 million just two years prior. But even with so much cash at stake, Billingham believes in 10 years' time he'll get an unprecedented return on his investment.

BILLINGHAM: It's actually better (inaudible) investment at the moment. You can have anything from a 26 return up to a 50 percent return. But there's a lot of variables, obviously.

UNIDENTIFIED FEMALE: Some still believe that the industry is a bubble that could pop like many others before it. But to the business (inaudible), it's a risky game worth playing.


CURNOW: Remember, all of our stories and interviews are online at But for me, Robyn Curnow here in Johannesburg, see you again next week.