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QUEST MEANS BUSINESS
Behind the Standard Chartered Settlement; Winners and Losers; Landmark Tobacco Ruling; Up in Smoke; Euro Weaker, Pound Stronger; Brazil's New Stimulus Plan; US Stocks Struggle for Gains; Peek in the Portfolio; Hypersonic Flight Fails
Aired August 15, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: Better expensive than embarrassing. Tonight, we investigate the real reasons why Standard Chartered settled in New York.
Smoke and mirrors. Tobacco companies hit back at an Australian court ruling on cigarette branding.
And on a Rolls. Demand for the luxury car's rising, and I'll get a firsthand look live.
I'm Richard Quest and, of course, I mean business.
Good evening. It's paid its penance, and now Standard Chartered faces old problems with new realities. A federal investigation still hangs over the bank's deals linked to Iran, and while some of the terms of the settlement, it also means its future will never be the same.
Here are the unresolved issues for Standard Chartered. First, the inquiry from the federal regulators. Now, it's ongoing. It includes bodies like the Fed, the US Treasury, and Justice Department, and Standard says it continues to negotiate with those authorities. So, that will undoubtedly in the fullness of time cost money.
Then there's the terms of the DFS settlement. Money-laundering monitors at the bank must now report to the regulators for at least two years. These are monitors that will be in Standard Chartered in New York, and those monitors will be overseen by newly appointed, permanent auditors. It's like having watch guards all the time.
The deal may have secured Standard Chartered's new bank -- New York banking license for now, but of course the jury is out on who won and who lost, and that is the big debating point. Join me over in the library and you'll see.
Well, you take the stock market's view, Standard Chartered won. The market's up now 4 percent. It's probably only showing a loss of about 6 to 9 percent over the total loss in the whole fiasco. But the share price came back. It's up 16 percent from its crisis lows. It's just off its down by about 5 percent year-to-date.
And what that price tells us is that pragmatism won the day. Standard Chartered settled for the $340 million to prevent a greater loss further down the road.
"Pragmatic" is exactly the word that's used by the company. According to the chief executive, Peter Sands, in an e-mail memo to staff, he said, "We had to settle, we had to act in the interest of our shareholders and customers in staff."
Best interests at heart. And he also says that there can often be various different reasons why people settle, $340 million.
Put it into perspective. It is less than ING paid, $619 million, for money-laundering charges. It is half the amount that HSBC has put aside for its Mexican money laundering charges. So, by putting the money and paying it now, even though -- even though there may be other liability further down the road, it has to some extend neutralized it.
Joining me now from New York is the attorney Alan Abramson who always helps us out understanding these US litigious matters. Alan, if you had to come off your lawyerly fence, who won and who lost so far?
ALAN ABRAMSON, ATTORNEY: Well, good evening, Richard. It's tough to come off this fence, but I think in the first round, I think Standard Chartered scored a technical victory. I think the $340 million penalty was quite small given the scope of the conduct, and I think they got off lightly here.
QUEST: So --
ABRAMSON: However, I do think the New York regulator score some points here, and the most important point was, initially Standard Chartered said that 99 percent of their transactions were perfectly legitimate and at most we were talking about $14 billion.
And as a result of this settlement, they've acknowledged that it involved hundreds of billions of dollars and that many of the transactions were not kosher --
QUEST: Right, but hang on a second. Hang on. Hang on. What you are basically saying is the rail politic of paying $340 million and hoping everybody forgets about it rather than going to the mat in a battle.
ABRAMSON: Well, what I said, though, is this is just the first round. This isn't the last battle that they're going to have to face. And I think for the first go-round with the first regulator, a local New York regulator, they did quite well. But I don't think this case is over yet. I think we have a long way to go.
QUEST: And if we take a look at the allegations: money laundering, tens -- hundreds of billions, Iran sanctions involved, they -- there are critics out there today saying if you or I did something like this in other circumstances, we'd be locked up for a very long time.
ABRAMSON: Well, those critics are correct. In addition to the allegations involving money laundering, clearly there are allegations involving filing false documents, wire fraud, mail fraud. All of those things are still on the table. And I can tell you that if anyone committed those sorts of crimes, if they are found out, they are prosecuted and, Richard, they go to jail.
And given the scope of these allegations, it seems incredible to me that there hasn't been a single prosecution yet of any of the individuals that were involved in making these decisions.
Having said that, when -- it's not over yet, and I believe that the state prosecutor in Manhattan, the New York District Attorney's office and the federal prosecutor in Manhattan and the southern District Attorney's office, they haven't given up on this yet, and I think they're going to be moving forward.
QUEST: So, you think it's still possible, even though Standard Chartered may have gone for a strategic victory, you think it's still possible that handcuffs will be out before Christmas or New Year?
ABRAMSON: I -- not only do I think it's possible, I think it's likely. The scope of this investigation is so large that I think that any prosecutors office is going to find that they have sufficient evidence to move forward and at least charge individuals for their individual decisions and their individual wrongdoing.
QUEST: Finally, Alan, the regulator involved, Mr. Lawsky, he came under such criticism for his florid language, "rogue institution," "staggering cover-ups" -- it read like a good bodice- ripper novel that you and I might read on holiday. Does he come away from this with credit for having led the way when others, perhaps, were fearful?
ABRAMSON: I think this is a real feather in his cap because, most of all, he got the bank to acknowledge that this was a widespread problem involving billions of dollars and not just an isolated incident.
QUEST: We'll have you back when the arrests -- if they do come -- come along to talk us through what happens then. Alan Abramson, always talking to us, he has a good common sense of what's happening in New York.
Coming up on QUEST MEANS BUSINESS in a moment, it's a big case, it concerns the tobacco industry. They've lost the battle against plain packaging in Australia and now, of course, the whole incident goes global.
QUEST: QUEST MEANS BUSINESS, good evening.
QUEST: It's being called the global tobacco industry's worst defeat ever, and for an industry that's had many of them, that's high talking, indeed.
Australia's top court has ruled it's lawful for the government to force the tobacco companies to sell their cigarettes in plain packaging. There are fears now from the industry it'll set a standard globally, and the companies fighting to keep their branded packets have hit back.
This is what Imperial had to say. It says, "This decision plays into the hands of the criminal gangs who profit from counterfeit tobacco."
Smokers' lobby groups Forrest, that's in favor, of course, says "It's an attempt to denormalize a legal product and stigmatize those who consume it."
In a moment, we'll talk more about it in detail and get the analysis. First, what did they decide and why did they decide it? Channel Seven's Alex Hart reports.
ALEX HART, CHANNEL SEVEN, AUSTRALIA (voice-over): Innocent observations about a guilty pleasure.
UNIDENTIFIED CHILD: It looks girly. I just like it.
HART: A British commercial demonstrates the appeal of cigarette packets to children.
UNIDENTIFIED CHILD: It just makes you almost happy by looking at it.
HART: But this is what they'll be looking at in Australia from December.
NICOLA ROXON, ATTORNEY-GENERAL: We have taken on big tobacco, and we have won.
HART: The high court today stubbed out the claim from tobacco companies that our world's first plain packaging laws were unconstitutional. It also ordered them to cough up the government's legal costs.
KYLIE LINDOFF, CANCER COUNCIL: They know this has an impact, so this is a great outcome for public health.
HART: And an outcome which has big tobacco fuming. It warns cheap counterfeit smokes will now flood the market.
SCOTT MCINTYRE, BRITISH AMERICAN TOBACCO: We think over time, potentially, it could actually increase smoking rates.
HART: As for smokers --
UNIDENTIFIED MALE: It's an addiction. I'm not buying it for the packaging.
HART (on camera): No difference?
UNIDENTIFIED FEMALE: No.
HART: The smoke hasn't entirely cleared yet. The government's still facing two other legal challenges claiming it's breached international trade rules, and that could result in huge compensation payouts.
CHRIS ARGENT, PHILIP MORRIS: Plain packaging won't reduce smoking, but it will impact the value of our brand.
HART (voice-over): If Australia succeeds, the UK government and many others are considering following suit.
UNIDENTIFIED CHILD: I think this one looks actually quite pretty.
UNIDENTIFIED CHILD: Yes.
HART: Alex Hart, Seven News.
QUEST: Now, the win has emboldened governments in other countries which are looking to follow Australia's example: New Zealand, the UK, India. The, of course, presenter for Sunrise on Channel Seven, David Koch, Kochie, joins me now from Sydney. Always good to have you making common sense on this program.
Kochie, where does the public stand in Australia? Never mind the lawyers. From what you can gauge, where do the public stand on this?
DAVID KOCH, PRESENTER, CHANNEL SEVEN SUNRISE, AUSTRALIA: Richard, almost universally in agreement with the high court decision and the campaign by our federal government.
About 40 years ago was when cigarette smoking was at its peak here in Australia, but virtually 100 percent of the adults smoked. That's down to 15 percent at the moment. And there's been an enormous cultural shift, mainly based around the health impact. A million Australians in the last 30 years have died prematurely from cigarette-linked diseases. So, it's massive.
QUEST: All right. But Kochie, you and I deal in the real world of business every day. When they say this is a legal product that is now stigmatized -- I'm not asking you to revisit the case, but you can see the tobacco companies have a point of view.
QUEST: If you're going to have it legal, sell it.
KOCH: Oh! Exactly right. And also, the great dilemma for governments around the world, including Australia, is the massive taxing pot on cigarette sales make up quite a significant amount of our federal budget here in Australia.
So, you've got politicians say, hey, we know it's bad for the health system, we know it's bad for the health of Australians, but we're earning billions of dollars in taxes out of this that supposedly are going back into the health system to compensate.
Now, critics of that say even though the tax tag is enormous, it's still not enough to overcome the strain that's being put on the hospital and the health system from the health impacts of smoking cigarettes.
So, there of course is a dilemma. A lot of people say, well, if you - - if you're so anti-smoking, just outlaw it in Australia. But then there's all the arguments of privacy, and even the tobacco companies now with this high court decision are saying it will encourage counterfeit cigarettes into the country.
QUEST: All right.
KOCH: Illegal cigarettes into the country, as well.
QUEST: Kochie, before we go, I do need to ask you about the general economic, briefly, situation. Australia, of course, the great hope of certainly the South Pacific, even though I promise I will not dwell on the personal grief of the Australian Olympic team --
QUEST: However, you are entitled -- you are entitled to say, "Yes, boo, sucks -- at least we've got a rousing economy."
KOCH: We do have a rousing economy, and we are the biggest gold exporter in the world, so rather than earn gold medals, we actually float the stuff for you to make them.
But look, the economy has soared here in Australia. One of the issues is that the Australian public are looking at this as a glass half empty situation than half full.
We have 5.2 percent unemployment, we have economic growth rate 2.5 to 3 percent. Things are pretty rosy compared with the rest of the world, but consumers are still in their bunker. They know all about Greece, they know all about Italy, they know all about Spain. They're spooked by it.
It's not being helped by the big drop in iron ore and gold prices as well. We've ridden the Chinese commodity boom, but that is starting to peter out.
QUEST: Good to see you as always, Kochie. Thank you for joining us live this morning from Sydney, just as he gets himself ready for his own early morning broadcast where, of course, it is just the early hours of the -- very early hours of the morning in Australia.
A Currency Conundrum for you, now. Tobacco was once uses as a currency in the 17th century. Where? In Virginia in the US, in Yunnan in China, or in Mysore in India? The answer's coming up later in the program.
The rates tonight: The euro's weaker against the US dollar amid concerns European aid is struggling. Sterling's higher by the jobs data in the UK. And the yen is hovering. Those are the rates --
QUEST: -- this is the break.
QUEST: Brazil has unveiled a new look stimulus plan, and at its heart is private investment. The world's second-largest emerging market economy needs $66 billion for new roads and rail, much of it over the next five years.
President Dilma Rousseff is confident the plan will pump new energy into the country's economy after 12 months of stagnation.
(BEGIN VIDEO CLIP)
DILMA ROUSSEFF, PRESIDENT OF BRAZIL (through translator): Today we are starting a stage in which Brazil will come out richer and stronger, more modern and more competitive. Brazil will finally get an infrastructure compatible with its size.
(END VIDEO CLIP)
QUEST: The package signals, perhaps, a change in tact for the president. Our Shasta Darlington now, who was in Rio earlier in the week, now back in Sao Paulo. Shasta, the reason for this stimulus package is a poor economic situation, but can Brazil afford it?
SHASTA DARLINGTON, CNN INTERNATIONAL CORRESPONDENT: Well, that's a good question, Richard. They've got to give it a try. And it really is a change of tact.
Up until now, President Rousseff has been trying to get the government to come to the rescue with more government spending, trying to get consumers spending by lowering taxes, lowering interest rates.
She's finally turning to the private sector, and in a very big way. She wants them to spend billions of dollars to expand and update roads, railways, also ports and airports.
And this is actually something that business has been asking for for years. We've got serious infrastructure bottlenecks here. That makes transport costs go up.
And, well, Brazil is a big commodities export country. We've got soybeans, coffee, iron ore, chicken, you name it. And they say that it's hard to compete on the global stage with these high costs. So, it's something they've been asking for. They'll certainly be pleased. And obviously, the idea here is that the private sector will pay for concessions to operate --
DARLINGTON: -- new roads, expanded railways. And they'll be the ones footing the bill. So, we'll see if they can do it, Richard.
QUEST: But -- if I look at the economic numbers, you've got China at 7 to 8, India 5 to 7, and Brazil down at 2 percent. So, I can see why economically you want this, for want of a better word, classic Keynesian stimulus package.
But as you rightly point out, it's the unusual way of asking -- the private sector to do it. What if they don't respond?
DARLINGTON: Well, in the past, Richard, they have. This is -- every since basically Brazil stopped being a military dictatorship and democracy has stepped in, they've slowly started privatizing industries. And this is a privatization. They're privatizing something that doesn't exist in some cases, these roads. But it has been a bit bumpy, but it's worked.
The telephones -- when I lived in Brazil 12 years ago, just trying to get a private line, you had to buy it on the black market and it cost $1,200. Now, you can, in theory, pick up a cell phone from one day to the next. It has worked, and they're hoping that they'll finally step in and do it again, Richard.
QUEST: Well done. We managed to get through this entire interview without a mention of the World Cup or the Olympics. There'll be plenty of time for you and I to chew over that particular economic conundrum in a moment. Thank you, Shasta, who's in Sao Paulo tonight.
Not as good -- the shot is not as pretty as it was in Rio. I think it -- as in all matters, when digging a hole, it's best to stop.
Manufacturing in New York unexpectedly shrank this month, the first contraction in ten months. Maribel Aber is at the New York Stock Exchange. Should we be concerned by this, or is it a blip?
MARIBEL ABER, CNNMONEY.COM CORRESPONDENT: Hi, Richard. Yes, we learned before the opening bell that manufacturing activity in the New York area took a tumble in August, really falling way into negative territory.
So, Richard, what this really points to is the deteriorating business conditions in the region, and it's just that latest factor reading to disappoint Wall Street recently.
The other thing we're looking at here, Richard, is we've got this separate report that showed inflation at the consumer level was unchanged in July from the prior months. So this is the second month in a row.
And analysts say that this really gives the Federal Reserve more room to think about stimulus. And as you know, the central bank is meeting next in September.
But as far as Wall Street is concerned here, Richard, there's one stock that we're watching today, and it's Deere, because it's plunging right now, down about 6 percent on weak sales in China, India, and other emerging markets. It's really pulling fellow equipment maker Caterpillar down also with it, Richard.
QUEST: One of the things that had investors really talking around the world is the way in which major investors, like George Soros and Warren Buffet have been rebalancing their own portfolios. Now, we all would like to think that we can emulate or at least make a bob or two by following them. What are they doing?
ABER: Sure, Richard. We looked at recent SEC filings just to get a glimpse into the playbooks of billionaires like George Soros and Warren Buffet.
Now, Soros, what he did was he jumped on the Facebook bandwagon by buying 341,000 shares of the social networking site. Based on its current share price and assuming that he still holds all his shares, that means he's already lost about at least $3 million. We're talking about Facebook here.
But he was less bullish on banks. Soros dumped all his major financial stocks, including Goldman Sachs, CitiGroup, JPMorgan, and Wells Fargo.
But on the other side of this, Richard, Buffet's Berkshire Hathaway sold all its shares in Intel after owning the stock for just nine months. So, this is a pretty rare move for Buffet. He's known to hold onto shares. He buys for the long run.
So, this is the only stock added here was an oil production company called National Oilwell Varco. So that -- in case of what these big movers are doing, this is what they're looking into, Richard.
QUEST: Thank you very much, Maribel at the New York Stock Exchange. Quiet, of course. It's in the middle of August.
Now, let's just talk about -- last night, do you remember on this program, we -- of course you do. We talked about the hypersonic transport that was being tested by the US military. It's called the X-51 A WaveRider.
Well, apparently, it didn't ride anything except to disaster and failure. Apparently, it launched itself successfully from the B-52 bomber. It separated. The rocket booster fired. But after 16 seconds, one of the booster control fins failed. Or there was a problem. It wasn't able to maintain control, and was lost.
The military say it's unfortunate. Now, they will look to see what -- they could do to get it right, and there's still one of the original four vehicles to have another go at. We shouldn't be too discouraged. That's the nature of progress. For the moment, though, very little.
In a moment, when the going gets tough, the tough start booking. The air miles are about to pile up among key eurozone leaders.
And also, the Greek prime minister's itinerary, along with other players in the pack. Where are they going and what are they talking about? In a moment.
QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN and on this network, the news always comes first.
Buckingham Palace says Prince Philip has been admitted to hospital with a bladder infection. He'll remain there for several days for investigation and treatment. The 91-year-old prince became ill with a similarly-described infection during the queen's Diamond Jubilee in June.
Syrian state media say a bomb blast in Damascus has wounded three people. A hotel housing UN observers was likely damaged. Rebels claimed responsibility but said they were targeting a nearby military complex. Activists said 191 people have been killed in fighting today in the Damascus suburbs and other Syrian cities.
A new United Nations report says war crimes are being committed by both sides in Syria's civil war. An independent commission blamed the regime of Bashar al-Assad for a number of incidents, including the massacre in Houla in May. The commission also said offenses in the regime side were worse in, and it says, "gravity, frequency, and scale."
A bomb attached to a bicycle has exploded in the western city of Herat in Afghanistan. Officials say the explosion injured at least 18 people, 5 of them critically. The bombing comes a day after separate attacks killed at least 47 people across Afghanistan.
Rafael Nadal will miss this month's US Open. The world tennis number three is still recovering from a knee problem that forced him to miss the London Olympics. Nadal has not played a competitive match since Wimbledon in June.
QUEST: Now when people go traveling in the summer, that is not a surprise. But the Eurozone leaders are about to go on the move once again. They are embarking on a flurry of meetings to try and address the crisis which is now expected to enter a critical phase. A lot of the talking will be about bailouts, banking, union (ph) regulations and of course budgets.
So let's look at the departure board and see where they're all going on the superscreen. The departures, here we go.
Starting off with flights that have already departed, and for that it is the flight to Ottawa, and it is Angela Merkel, who's in Ottawa, visiting the Canadian prime minister Stephen Harper on her and their agenda will be the debt crisis, free trade and convincing him -- because the Canadians have been very worried about the long-term Eurozone crisis.
Other boardings over the next few weeks will be the boarding flight to Athens, the head of the Eurogroup will be going from Brussels -- Jean Claude Juncker -- he's going to Athens. And we know there what's on the agenda are most possibly shorter terms for the Greek government and making sure they're keeping to the promises that they've already made.
How about this flight? The delayed flight from Athens to Berlin for the prime minister, Antonis Samaras. He was meant to go and visit Chancellor Merkel, but now, of course, that was put off because of his eye surgery. So he will be making plans to go there later on.
So other departures, particularly Ms. Merkel. She's on the road again, this time she's going to Madrid because she needs to see the prime minister, Mariano Rajoy. The question there, very simple: when are you going to apply for a bailout? And preferably sooner rather than later before more misery and mayhem is caused.
And finally, the prime minister -- thank you -- Rajoy is going to see the Italian prime minister, Mario Monti, and there, of course, they'll be negotiating and discussing when is it right to go to the EFSF or the ESM, the bailout, to help buy government bonds of both possibly Spain and Italy?
These are just a few of the meetings that we know about. We can imagine how many more are actually taking place. It's difficult to see these meetings in isolation, how they could solve the greater crisis. I spoke to the chief European economist, Nomura, Jacques Cailloux, and I put it to him, when you look at all these meetings and all these talks, and you look at the markets, things don't look good.
JACQUES CAILLOUX, CHIEF EUROPEAN ECONOMIST, NOMURA: Yes, absolutely, if we're looking at the situation from the outside in terms of the signs of stabilization in the market, I don't think that this is the reality of things on the ground in terms of the politics (ph) it, and in fact, the economics where both seems to be quite stressed.
So I think there is going to be a lot of negotiations in the background going into September with very important decisions to be taken in September.
QUEST: And what decisions to be taken? I mean, as far as one can see, they've got in place the ESM, which the constitutional court in Germany will rule upon. Draghi has to decide whether or not he's going to buy bonds. And Rajoy's got to decide whether he wants him to start buying them.
CAILLOUX: Yes, here we go. We have a lot of question marks in the short term. I mean, in terms of the backstops, obviously Spain needs to pull the trigger first if they want some support and then for the time being, they're resisting. I think it's political and economic costs who are calling for help.
And I think they're trying to minimize both of them, which is going to probably end up in a length process than one would have expected only a few weeks. That's not, I don't think, going to help market. Markets tend to like clarity around the outlook and the fact that you have countries waiting and negotiating in the background, I don't think is going to help - -
CAILLOUX: -- confidence.
QUEST: Let me just -- let me just jump in here. Again, negotiating about what?
CAILLOUX: Well, I think it is very important negotiation point in terms of the backstops at this stage in terms of the conditionality around it, if the creditor countries are accepting to disburse very large sums of money, to countries like Spain, they would probably want to have strings attached to that.
And the conditionality is around how much fiscal population (ph) there might be doing over the coming years, how much more structural reforms they might be implementing. And it would be very surprising that such a deal would come with no strings attached. And I guess on the Spanish side, the idea is to minimize those conditions. That's for the short term.
Then you have, you know, also very important discussions for the medium term around the banking union and the fiscal union and the agenda which was set back in June. And I think you are -- they've set themselves a very, very tight deadline of the end of the year to come up with a regulator and so on, so forth.
And this is going to bring about as well some very important discussions about membership of the so-called banking union.
QUEST: Right. Right. But are you confident that all this talk will, A, lead to results and, B, isn't just a load of more hot air?
CAILLOUX: Well, I think there has been, to be fair, if you look in the last two years or three years, there has been -- there have been results on all fronts.
The problem is that they always come short of what is needed, both in the short term and in the medium term in terms of the infrastructure which is needed to stabilize the situation and I think this time around we might still be in a situation where too little too late is being done.
And that's unlikely to bring about the sort of stabilization in markets that one would like to see. The -- there is not enough money on the table, essentially, when markets look at these backstops.
And when the ECB has itself already constrained the amount of buying they might be doing and attach themselves to very strict conditionality, you can see that the markets might be questioning again those backstops pretty soon.
(END VIDEO CLIP)
QUEST: Now (inaudible) European markets were down. The resource stocks were (inaudible) concerns about the growth in China. The FTSE ended the session half a percent off, despite a surprise fall in U.K. unemployment. That's, I suppose, not that much of a surprise, the fall in unemployment. It was noted it was a result of the Olympics.
India's prime minister says speeding up the country's growth is now an issue of national security. Manmohan Singh has unveiled several infrastructure projects as part of today's Independence Day celebrations. And as Ram Ramgopal reports, it includes one rather extraordinary extraterrestrial project.
(BEGIN VIDEO CLIP)
RAM RAMGOPAL, CNN CORRESPONDENT (voice-over): India's prime minister Manmohan Singh had a stellar -- actually, make that interstellar message for the world on the country's Independence Day, with the iconic Red Fort as a backdrop, India announced it's headed for the Red Planet.
In his speech, Prime Minister Singh told the crowd his cabinet has approved the Mars orbiter mission, calling it a huge step for India in science and technology. The unmanned spacecraft, part of the mission known as Mongolian (ph), will lift off next year on a 10-month-long flight, where it will just orbit, not land on Mars, sending back photos and data.
The mission's goal is to study if life ever existed or can be sustained on Mars. But India is facing a tight deadline with the launch plan for November 2013.
KIRAN KARNIK, INDIAN SPACE RESEARCH ORGANIZATION: Timing is important, because this is the time -- by the time the mission gets there, that Mars will be comparatively the closest. So the small window in which we need to make a launch, and that's the reason why the mission has to go up next year.
RAMGOPAL (voice-over): The announcement comes on the heels of the success of the latest U.S.-to-Mars rover, Curiosity. India will be the sixth country to launch a Mars mission after the U.S., Russia, France, Japan and China. But India's scientists caution the country should not get caught up in a global space race.
KARNIK: My only concern, if anything, is not the risk of failure, it's the risk that the program should not get diverted to the high visibility somewhat prestige related events.
RAMGOPAL (voice-over): But the rewards are considered huge and if the mission is successful, India would become the first Asian country to reach the Red Planet -- Ram Ramgopal, CNN, Atlanta.
(END VIDEO CLIP)
QUEST: News coming through the sports department for us: the English Premier League club Manchester United says it has reached an agreement with Arsenal over the transfer of Robin van Persie. Now it comes to us from the official ManU website.
Football fans may have seen it coming. The Dutch International striker last month turned down a new contract at Arsenal. That signal is likely departure -- they got much more of a signal than that -- from the North London side. So Manchester United now saying they have reached an agreement to transfer Robin van Persie from Arsenal.
After the break, what Google's acquisition of an old media brand tells us about the new media giant's plans and what it means for our travel (inaudible).
QUEST: Tonight's "Business Traveller," and the march of new media goes ever further into our traveling experiences, as Google buys the business of Frommer's, the travel books. Google hopes to become the Web's major destination for reviews. It already owns the restaurant review company, Zagat.
And buying Frommer's shows how much the travel market has changed ever since Arthur Frommer first published his guide, "Europe on $5 a Day" in 1957. Now Europe on $5 a day, no, I don't remember it, before you ask. Was -- it was described as written for American travelers who own no oil wells in Texas.
But let me show you in the library what it did show you. These are -- this is classic. It told you a three-course meal in Paris could be had for 85 cents, a hotel in Venice -- admittedly second-class -- for $1.30 a night and a deluxe hotel in Athens for $2 a night. And remember, this was in 1957. The last of the dollar guides was published in 2007. The title then was "Europe on $95 a Day."
Joining me now in New York, the man who certainly doesn't remember any of those, either, our technology expert and TV host, Shelly Palmer.
Shelly, why is -- why is Google buying Frommer's? What can it do, beyond just publishing another book online?
SHELLY PALMER, HOST, "LIVE DIGITAL WITH SHELLY PALMER": Well, here we have an interesting -- really an interesting day, because Google is going to be both search engine and content provider. They -- as you said, they own Zagat. And they weren't looking for Frommer's. Frommer's went up on sale -- for sale in March.
And Google just figured out a way to buy it. The price is extremely right if you're Google. They're paying nothing for this thing. Reports are in the $25 million zone. They're going to get a lot of content that's going to really help them sell travel ads. And, truthfully, that's all Google cares about --
QUEST: Yes, but hang on --
PALMER: -- selling travel advertising.
QUEST: But for me, as the consumer, I mean, do I -- as a traveler, as a frequent traveler, what's the interface? What do I get if I sort of search flights, London to New York, restaurants in Venice? How does Frommer's and Zagat help them?
PALMER: I think what we're learning is that as wonderful as the hype around crowd-sourced reviews, they're really relatively worthless, because you just don't know who's writing them. In Frommer's and in Zagat's you have more informed reviews.
Yes, they have consumer sections that are crowd sourced, but you have learned, scholarly people who have gone around; they've got some taste. They understand what you're trying to do.
And that information is incredibly valuable, especially if you're a business traveler and you just want somebody's trustworthy advice to tell you where to take a client to dinner, what hotel to stay at, what's a centrally located restaurant or conference center. These are the kinds of things that Frommer's is great at.
And by the way, rating restaurants by price and, you know, ambience was another thing that Zagat was great at. So for travelers, this is an incredibly good thing, and it needs an update. And Google's going to add that update. So from a traveler's point of view, this is a great purchase.
QUEST: OK. Now we've got these things now online. Crowd -- you call it crowd sourced or whatever it is reviews. Basically it's what the general public think. So far, it's pretty much only TripAdvisor that has managed in the travel industry, hasn't it, to really get the gravitas that goes along with this?
PALMER: Well, because when you think about crowd sourced review, if you own the pizza place down the block and you have competition, the ability to abuse the system of rating points and writing reviews is just too great. It's easy to create an email address. It's easy to register for a website.
And so it's incredibly easy to put a review that's bogus online, no matter what those safeguards are. The -- what happens in a professional environment is that you've got curated content that's been researched and it's got a trusted brand name.
And so for a professional traveler -- for any traveler, to be honest, that's just a better consumer experience and Google knows that, and that's probably why they thought it was a great idea to purchase the company.
QUEST: Many thanks. Thank you very much indeed, Shelly Palmer in New York for us tonight with that. Now wonderful holiday pictures, never mind the price, just look at the glorious weather that they must have been enjoying. We always have this halcyon view that things must have been better in bygone years, particularly the weather.
Jennifer Delgado is at the CNN World Weather Center to put me right.
JENNIFER DELGADO, AMS METEOROLOGIST: I am going to put you right. And we're going to start off right now looking at the radar, Richard, and rain is coming down. You have a really strong low just to the west of you. You can see the heavier rainfall moving through Ireland, northern Ireland. And you can see all the (inaudible) areas, including Scotland.
So what is going to be happening as we go through the next 24 hours? Well, a lot of rain out there. Here is the setup. With that low around, it's going to be spreading in that moisture for areas including Portugal as well as into Spain. And then as it shifts over towards the east, we're also going to see that rain affecting areas including Germany and eventually even into Poland.
But anywhere all along this we are going to be dealing with windy conditions and very heavy rainfall, potential over towards eastern Europe the rain is going to be tapering out. And this is the pattern as we go through Thursday.
But we are talking about a severe weather threat as we go through the morning hours anywhere you're seeing in the orange shading, you can still see the possibilities of some of these storms could produce some storms with some very gusty winds as well as very heavy rainfall. So that includes the Benilux (ph) region, very southeastern part of England. You can see even including the northern part of Italy.
Now it's not just all the bad weather we're talking about in the form of rain and storms. Also want to show you some video coming out of the Canary Islands. And this is showing you fire conditions still bad across the region. We're going to go very quickly through this video, because it gets a bit jerky at times. As I show you that video, we are hearing that people are starting to get back into their homes.
Let's pull off that video very quickly. But there's another area that's battling fires. This is in the western part of the U.S. We're talking about the U.S. state of Washington. Look at all the fires out there, Richard. More than 60 active fires affecting Idaho as well as Wyoming, other areas including California.
And we have some video to show you the conditions across parts of Washington, where officials had to declare a state of emergency. You can see the fires of course just spreading. And the problem is conditions are going to be favorable for them to spread as we go through the next couple days. We're not going to see any relief from the heat as I take you back over to our graphic. We want to talk a bit more about these fires.
We do know that 60 homes have been destroyed, anywhere you're seeing in the orange. And this is happening not very far from that area we call the Taylor (ph) Bridge. And you can see for yourself, this is not very good, 113 square kilometers have been burned. Only 10 percent contained, and then a high growth potential.
We want to leave you with something positive, though. Let's talk about those high temperatures today and tomorrow for Europe. For Thursday, it's still going to be nice and warm out there.
For Germany, we're talking highs in the mid- to upper 20s, a little bit cooler than it was over the last couple days, and they enjoying a lot of sunshine out there, Vienna, 29 for you; 26 in Paris; 22 degrees for a high in London tomorrow. And then (inaudible) mid-30s. We'll have more QUEST MEANS BUSINESS in just a moment. Stay with us.
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QUEST (voice-over): The answer to today's "Currency Conundrum," tobacco was once used as a currency in the 17th century in Virginia in the United States. There was a scarcity of gold and silver, so the state used tobacco as its main currency for more than 160 years from 1612. I'll bet you never knew that.
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QUEST: Now last night you had joined me when my mode of transportation was a good new, I should say, London black cabs. I'm sure there's one over there, but we've decided to leave public transport where it lies.
And instead tonight we've gone a bit up market. Well, you could say that. This is my transport for tonight. And oddly enough, there's a correct way, by the way, to get into a Rolls-Royce. You don't sort of jump into it. You step into it like a living room.
Rolls-Royce is having remarkable success at the moment. At the price of these cars, you might be surprised in austere times, but no more so than in the United States, where, frankly, sales are absolutely booming.
Felicia Taylor reports.
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FELICIA TAYLOR, CNN CORRESPONDENT: It's not every day that I get to travel in such high style from the Time Warner Center. But today, I'm being picked up in the latest edition 2012 Ghost Rolls-Royce to see how the really rich get around.
TAYLOR (voice-over): My destination? The largest Rolls-Royce dealership in North America, in Jericho, Long Island.
TAYLOR: This is arriving in style.
TAYLOR (voice-over): Where each gleaming Rolls-Royce carries a hefty price tag of at least $250,000. Despite economic uncertainty worldwide, 2011 was a better year for the company says David Archibald, the president of Rolls-Royce Motor Cars North America.
DAVID ARCHIBALD, ROLLS-ROYCE MOTOR CARS NORTH AMERICA: We had the largest number of sales in the history of the company going back to when it was formed in 1904. And we sold 3,538, every single one counts (ph), which was up 31 percent over the previous year.
TAYLOR (voice-over): Chalk that up to continued strong sales in emerging markets, where Rolls is beefing up its presence.
ARCHIBALD: China is the biggest region or the biggest country. Last year they were for the first time. The U.S. was second best. Russia grew massively last year. We had significant growth in India as well. We'll be opening a dealership both in Brazil and in Chile.
TAYLOR (voice-over): Other luxury car brands are experiencing similar spikes in growth markets. In the first half of 2012, Audi sales rose 38 percent in China. Jaguar Land Rover saw sales in China double.
JOHN CASESA, AUTO ANALYST: All automakers are concerned about slowing global growth, from China to Brazil, and that will impact the rate of growth in luxury cars. But there will still be growth in China, Brazil, in India, unlike the U.S., unlike Europe, because there's a new middle class and there's a new upper class being created.
ARCHIBALD: Then this door here is an umbrella.
TAYLOR (voice-over): Rolls-Royce executives take pride in showing off the little features that make their cars such distinctive vehicles.
ARCHIBALD: I did promise you the massage seats.
TAYLOR: Oh, yes. All right. Where's my massage?
ARCHIBALD: In the door, if you press the first button there?
ARCHIBALD: Just press that and then you will find, after a little while, a strange sensation.
ARCHIBALD: But the real test was taking the show on the road.
TAYLOR: It drives so smoothly. For a huge car, this turns on a dime.
TAYLOR (voice-over): Rolls says this smaller and relatively less expensive Ghost has helped the company gain market share with women.
UNIDENTIFIED MALE: This is your regular key.
TAYLOR (voice-over): But repeat customers like business man Robert Girards are also buying.
ROBERT GIRARDS, ROLLS-ROYCE OWNER: (Inaudible) executive, very stressful position, right? So the four or five times that I'm in this car a day, I have solitude. I process.
TAYLOR (voice-over): Consider it therapy on wheels for the well-to- do. Despite the ups and downs of the global economy, Rolls-Royce and other luxury car brands --
TAYLOR: It glides.
TAYLOR (voice-over): -- still appear have some get up and go -- Felicia Taylor, CNN, Jericho, Long Island.
(END VIDEO CLIP)
QUEST: And we'll have a "Profitable Moment" after the break.
QUEST: Tonight's "Profitable Moment," at the beginning of the week, we showed you the apartment in New York that's for sale for $100 million. And last night, somebody won $250 million on the euro lottery, very wealthy indeed.
Tonight, we show you the automobile that at $300,000 costs more than most people will spend on a home. Ironically, these were the very cars used in the closing ceremony of the Olympics, when the song "Price Tag," with the lyric, "it's not about the money (inaudible)."
But living the life of luxury, is it wrong for us to dream of owning vehicles like this, to dream about the homes and gardens of the rich and famous? Whether it's wrong or not, it doesn't matter. We actually do it. It's why we buy lottery tickets in the first place.
And here's another thought. It's because of those dreams that motivates many of us to go on to achieve greater things. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London. Whatever you're up to in the hours ahead, I hope it's profitable. I'll see you tomorrow.
JONATHAN MANN, CNN CORRESPONDENT: The headlines this hour, I'm Jonathan Mann at CNN Center.
Buckingham Palace's Prince Philip is back in the hospital with a bladder infection. He is to remain there for several days for what's being called investigation and treatment. The 91-year-old royal consort suffered a similarly described infection during Queen Elizabeth's Diamond Jubilee, you may recall, back in June.
Syrian state media say a bomb blast in Damascus has wounded three people. A hotel housing U.N. observers was lightly damaged. Rebels claimed responsibility but say they were targeting a nearby military complex. Activist say 191 people have been killed in fighting today in the Damascus suburbs and other Syrian cities.
A new United Nations report says war crimes are being committed by both sides in Syria's civil war. An independent commission blamed the regime of Bashar al-Assad for a number of incidents, including the massacre in Houla in May. The commission also said offensives on the regime side were worse in, quote, "gravity, frequency and scale."
In football, Manchester United have agreed to a deal to sign Arsenal's Robin van Persie. The Dutch striker will travel to Manchester to agree on personal terms Thursday. Van Persie made it clear to Arsenal earlier in the summer that he did not intend on signing a new contract with the club.
That's a look at some of the stories we're watching for you on CNN. "AMANPOUR" is next.